1.
Acquisition
a. Possession
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b.
c.
2.
Possession gives rise to property rights
Basic Property Rights: Right to possess, Liberty to Use, Right to Exclude, Power to transfer or dispose.
Possession requires “both physical control over the item and an intent to control or exclude it from others”
Pierson v. Post (1805): Fox hunting. Law of Capture applies to wild, migratory animals and nothing short of it.
Certainty consideration (rigid rule over flexible reasonableness standard).
Popov v. Hayashi (2002): Baseball. 1. Did Popov possess the ball? No – “actor must retain control of the ball after
incidental contact.” 2. Can an action for conversion proceed without establishment of possession or title? Yes –
where “an actor undertakes significant but incomplete steps to achieve possession of a piece of abandoned
personal property and the effort is interrupted by the unlawful acts of others, the actor has a legally cognizable prepossessory interest in the property” Qualified pre-possessory interest: not a full right to possession, but can support
a cause of action for conversion.
Eliff v. Texon Drilling Co. (1948) Common reservoir of gas. Law of capture versus absolute ownership to oil and gas
beneath land. Right, title and interest under law of capture not lost b/c at time of removal they belonged to P.
Wrongful dissipation deprived owners of the right and opportunity to produce them. Holding had 3 part rule:
o Rule 1: Absolute ownership of minerals in place (“reasonable opportunity to produce fair share”)
o Rule 2: Law of Capture impacts that property right
(rule 1) b/c of the type of property at issue (migrating gas and oil). Thus, generally no liability for reasonable
and legitimate drainage from common pool.
o However, Law of Capture does not apply when there is negligent waste of the resource. Resort to rule 1.
Fairness & Social Utility concerns weighed in all of above. (SU – what type of behavior to condone. F – right to
possess versus freedom to use)
Labor & Investment
Moore v. Regents of Univ. of Calif. (1990) Patient wants possessory rights to cell line created from his cells. Cell line
result of inventiveness of researchers (“labor and investment” v. possession of raw material) and social utility
argument is strong (potential as endorsement for people to sell body parts and potential hindrance to researchers).
Court also mentions uniqueness, heavily regulated, and legislature’s role.
NOTA: “Repeatedly, they have stopped short of characterizing body parts as property because property law
recognizes a "bundle" of rights, including the right to transfer, devise, possess, and lease -- situations, for the most
part, inapplicable to human organs and tissues.”
Conquest
Johnson v. M’Intosh (1823) P’s ownership rights stem from a purchase from Indians. D’s ownership rights stem from
a US grant. P: Indians have possession because of occupancy – English common law says possession gives rise to
property rights. D: US has claim to property under “discovery” by British/Spanish/French. Holding is that US had
absolute title.
Government expropriation & distribution (versus possession): Historical process by which land rights were
originally created and distributed in the US. M’Intosh: Real property rights must be traced back to grant from
federal gov’t or preceding colonial power, so called “doctrine of discovery.
Possession & Prescription – Real Property
a. Adverse Possession
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Adverse possession When one possesses another’s real property in a manner that is actual, exclusive, visible (open
and notorious), continuous, and w/o the owner’s permission (adverse or hostile) for a period defined by statute, the
rules in force transfer the property from the true owner to the adverse possessor.
Elements: (OCEANS) – 1st 4 are physical, last are “mental” –See page 295
o Open and notorious: Possessory acts must be “sufficiently visible and obvious to put a reasonable owner on
notice that her property is being occupied y a non-owner.” Reasonable person would act to protect
property – true owner doesn’t have to know of use, but would be charged with knowledge if possessor
proves open and notorious. Much easier to apply this objective test than determining level of knowledge of
true owner. Counteract potential abandonment (think – not just rights, imposes duties on owners too).
o Continuous: Regularity based on how a true owner would normally use this type of property. (e.g. seasonal
use ok ) “Tacking” – can tack on time by earlier adverse possessors. Successors can add the original adverse
possessor’s holding period only if they are in privity with one another.
o Exclusive: Use is of a type that would be expected of a true owner of the land in question. Without
exclusivity, severely undermines AP claim. Adverse claimants possession cannot be shared with the true
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owner. (Although occasional entry by the true owner may not defeat the claim.) Two APs who possess
property jointly may acquire joint ownership as co-owners.
o Actual possession: must physically occupy the land in some manner that is “ordinary use to which the land is
capable and such as an owner would make of it.” Can be shown by enclosing property in a fence, or
engaging in significant activities on the land.
o Non-permissive: a/k/a “Adverse” or “Hostile” (Objective test, presumption in favor of AP once all physical
elements are proven) Court looks to whether or not true owner permitted use. State of mind of adverse
possessor is irrelevant – objective test in most jurisdictions. Courts usually hold that there is a presumption
that possession of another’s property is nonpermissive.
o Statutory period: (Varies widely: 5-40 yrs – note: SOL and Tolling) Intended to bring repose – prevent stale
claims from being filed where evidence may have been lost.
Once all physical elements are met, presumption is in favor of AP, burden of proof then shifts to true owner to
prove use was permissive.
Additional elements (variations):
o Subjective instead of objective test for non-permissive use: 1) good faith dispossession *(state legislatures
recently taken interest – intentional land grab by former judge in CO sparked protest, followed by enactment
of “good faith belief in ownership and that belief was reasonable under the circumstances”; and 2)
intentional dispossession – opposite of 1, takes literal meaning of “hostile.”
o Claim of right or title (variation on actual possession element that focuses on conduct instead of defective
title) – way of saying that you actually possess it based on behavior
o Color of title (e.g. written mistake) – backdoor way of getting good faith- that you thought by way of deed
that you actually use it – like Brown case. Could also be signature mistake, etc. Different (lower) SOL may
apply, but usually not an additional requirement to OCEANS.
o Payment of property taxes
Lawsuit types:
o “quiet title” – seeking declaratory judgment against title holder (true or record owner)
o Defense/counter-claim to action in ejectment (wrongful occupation)
o Defense to claim of trespass (unprivileged entry or intrusion)
Claims against the Government – generally can’t bring AP. Matters whether land is used for public purpose or quasiprivate use. Federal statute allows AP after 20 yrs for good faith possessor.
Assume back taxes if you acquire land through AP.
Brown v. Gobble (1996): When D purchased land in 1985, told fence (on 2’ tract of land) was theirs by realtor, and
by mistake on deed. P bought neighboring land in 1989 and had survey done finding fence was theirs. P did nothing
until 1994 when they wanted to build a road. 2 Issues: 1. Which standard of evidence should apply? Court says
while “preponderance of the evidence” is standard in civil cases, fairness requires more persuasive proof in this
situation and court adopts “clear and convincing” as standard. 2. Does evidence meet the standard? P claims D
only owned land for 9.5 yrs, not 10 yrs – BUT “tacking” applied to meet continuous use because previous owners
had land from 1937-1978, believed land was theirs, and exercised dominion over it. Court says unnecessary to even
consider what Gobble did given previous owners had already established AP and this was conveyed to D.
Nome 2000 v. Fagerstrom (1990): Alaskan Native family started using land seasonally in 1966, consistent with
“native system use.” Cabin built in 1978 - P brought suit in 1987. SOL = 10 yrs. Relevant time period becomes 19771978 during which Ds built reindeer shelter, lived in camper on the land every other weekend, and had cabin
building materials on the land. Nome 2000’s arguments: 1) exclusivity: no question that others used the land –2)
non-permissive/mental element - anthropologist testified to “native system use” which doesn’t recognize exclusive
ownership – 3) continuous: use only seasonal – 4) open & notorious: no significant physical improvements.
Fagerstrom arguments: 1) locals thought it was their land – 2) state of mind is irrelevant, an objective standard is
used (their native mindset towards land was irrelevant) - 3) court said that “quality and quantity of acts required for
adverse possession depend on the character of the land in question” – 4) conduct and improvements were beyond
“casual/occasional” – Nome needed evidence of permission in order to defeat claim, which they didn’t have.
Justifications for Doctrine:
o Certainty
a. predictability
o Social Utility
a. Repose (SOL)
b. Security in investment
c. Promotes maximum utilization of land
d. Assigns ownership based on value to possessor
Rights/Fairness
a. Protects settled expectations
b. Protects reliance interest
c. Owner “abandons” rights
Prescriptive Easements
Difference from AP lies in the interest: fee interested = possessory right; non-fee interest = use rights
True owner shares use with person who has easement
Same requirements, except two (in blue)
o Open and notorious (purpose is notice – very important)
o Continuous for statutory period
o NO exclusive use
o Actual use (not possession)
o Non-permissive (hostile or adverse – same presumption towards adverse, possession destroys claim)
a. Acquiescence: not usually an additional element by itself – may have known or should have known
of use and therefore acquiesced to use, but did not give permission – acquiescence not enough to
destroy claim – not the same as giving permission
o Statutory period
Community Feed Store v. Northeastern Culvert (1989):P operates wholesale and retail animal feed business, with
principal building of “the mill,” to the north of which is a gravel area which P partly owns. D owns adjacent land and
business, and part of gravel area. P uses gravel area for deliveries, and trucks would use gravel area for turning and
backing. P brings action for PE. Trial Court J/D b/c width and length of easement not proved clearly enough and use
of area by P was made with permission of D. [Note: P went for easement b/c use was not exclusive, would have
failed with an AP claim.] Elements with issues:
o A: “particularity” with which area was described: App. Ct. says absolute precision not needed, but general
outlines consistent with the pattern of use throughout the prescriptive period is enough.
o N: open and notorious use presumed to be adverse, and bop switches to true owner to show permission
existed. Presumption of permissiveness arises with “public use” – but here, court said it didn’t involve
“generalized public use.” D had to show permission (not acquiescence) which is difficult to do and they were
unable to.
Negative PE: Fountainbleu Miami example: 2 oceanfront properties and one builds higher, blocking sun of
neighboring hotel’s pool. Hotel goes after prescriptive easement for “air and light” – problem with ascertaining
where the trespassing is – action of using sunlight is not open and notorious.
Good Faith Requirement:
o Warsaw v. Chicago Metallic Ceilings (1984): Adverse possessor clearly knew it was using a neighboring lot
adversely. W built a large commercial building with insufficient space for trucks. Trucks required to travel
onto C’s property to turn and position, which they did for 7 yrs. When C wanted to develop his own land, W
brought prescriptive easement claim but C continued to build anyways. J/W and C required to remove its
structure at its own expense. Troubling because “wrongdoer” knowingly trespassed and wound up taking
property rights from innocent party.
o Arguments against good faith requirement:
a. Social utility: why put land to waste, promotes maximum utilization of land, assigns ownership
based on value, provides repose and security in investment.
b. Fairness: True owner watched and didn’t do anything, didn’t live up to his duty to take care of his
property/retain his rights to it.
c. Certainty: promotes security and is predictable
o Arguments for good faith requirement:
a. Fairness: People with superior knowledge of the law can take advantage and shouldn’t be
rewarded.
Relative Hardship
Another way to transfer title to real property – unlike AP, these rules may apply even when non-owners occupy with
permission.
The improving trespasser: Encroacher mistakenly builds on neighboring property and structure that is built could
either decrease or increase value of the neighboring property.
2 Different Standards:
o
b.
c.
o
3.
The Traditional (minority) Rule: Right to an injunction. True owner has absolute right to an injunction
ordering removal of the structure, which constitutes a trespass.
o The Relative Hardship (majority) Rule: Applies to encroachment that is innocent/in good faith. Hardship
incurred in removing the encroaching structure is disproportionate to harm caused by encroachment.
Elements:
a. Encroachment innocent (result of a mistake)
b. Harm is minimal
c. Interference in true owner’s property interests small
d. Costs of removal substantial
With Relative Hardship: Encroacher compensates true owner for loss of property rights, and in return, encroacher is
granted an easement or title (forced sale)
Note that once encroacher is put on notice, even if good faith mistake originally, encroacher must stop work
otherwise it undermines good faith.
Possession & Prescription – Personal Property
a. Finders
Common law rules
Original (True) Owner and Finder
o Lost or Mislaid – goes to true owner
a. Lost = unknown where it is
b. Mislaid = person may remember and go back for it
o Abandon property (“intent” to abandon) – goes to finder
a. Abandonment is question of fact
o **Note Mass Finders law doesn’t supplant common law, but supports/supplements it. 1 year statute of
limitations if reported within 2 days by one of 3 methods. If not reported, finder can lose it in the future.
Finder and Third Party (second possessor)
o Finder prevails over everyone but the true owner. Relativity of title, not absolute. Don’t want to encourage
stealing or dispossessing a finder.
Finder and Owner of Real Property where item was found
o Law is unsettled here
o If finder is on land without the landowner’s permission, landowner will win. Don’t want to encourage
trespassing.
o If finder is on land with permission, more variables exist:
a. In private home – landowner prevails
b. In area open to public – varies (some courts make difference b/w lost and mislaid property with
lost property going to finder and mislaid property to landowner)
c. Embedded in the soil – landowner usually prevails, with “treasure trove” exception (in U.S., usually
finder prevails provided finder was not trespassing – treasure is something that was buried to be
retrieved later, but difficult to ascertain)
Wilcox v. Stroup (2006):P found civil war documents in a closet in his late stepmother’s home. Documents have an
appraised value of $2.4M. P allowed them to be microfilmed for state archives. When P tried to sell the papers, D,
director of state archives, obtained temporary restraining order and sought declaratory judgment that he owned
the papers. Possession triggers presumption of ownership. (Benefits are that it 1. Resolves disputes simply; 2.
Provides stability; 3. Protects settled expectations.) Here, papers were in the family for 140 years. Also, practice
suggests papers belong not to the state but to the individual who generated them. Court wary of opening
floodgates by deciding in favor of the state. Public policy and equity not harmed in this situation and state has
option of buying them.
Charrier v. Bell (1986): P is “amateur archeologist” who researched and hypothesized location of ancient Indian
village and obtained permission of “caretaker” who he originally thought was the owner to excavate. P excavates for
3 years, at some point learning caretaker is not the owner. P finds buyer and lies about origins of artifacts. Buyer
investigates and P cannot sell artifacts without proving his ownership. P files suit against 6 non-resident landowners
for either 1. Declaratory relief confirming his ownership, or 2. Unjust enrichment. State intervened and buys land
and artifacts from 6 landowners and agreed to indemnify them. Tunica Indians also became a recognized tribe. Trial
Court says Tunicas = owners b/c P’s discovery not by chance and abandonment doesn’t apply to burial goods; also
no unjust enrichment b/c P acted for his own gain and possibly in legal bad faith. Issues:
o Adequacy of proof that Tunicas are descendants: proof of descent enough
o Ownership of artifacts: P did not acquire ownership because there was no abandonment.
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4.
Applicability of unjust enrichment: Owners not really enriched. P’s knowledge here was important – he
knew at some point that he didn’t have landowners permission and also knew that Tunicas would object;
therefore his own fault for impoverishment (he acted negligently or with knowledge).
Other countries have different rules:
o Britain: If you find something that’s considered an antiquity, it goes back to the crown and is sold to the
highest bidder of British museums – money is split b/w finder and real property owner
o International law: Protection and return of cultural property to country or group of origin
b. Bona Fide Purchaser
Common Law: Nemo Dat Rule: no one can give what he does not have
Two exceptions to CL:
o UCC
a. Contract/commercial law principle: BFP will prevail over the true owner when the TO has
entrusted the property to a merchant who regularly deals in such goods. (Justification is social
utility (create well functioning markets – don’t want consumers second guessing every seller) and
fairness (entrustment puts obligation on truster as to who they put trust in with their goods))
b. Voidable title exception under the UCC.
o Adverse Possession of Personal Property
c. Adverse Possession
OCEANS applies but S usually shorter period of time than it is for real property
Problem with O – very difficult to prove “open and notorious” for personal property
o Mass finders law: “publicizing” is making it “open and notorious”
o Remember that O is an objective test – finder can put notice out to prove O later on
Conversion rule = general rule. SOL starts running when the owner is dispossessed of the property. Must prove
OCEANS.
Discovery rule = NJ law. SOL starts after TO discovers where stolen property is, or reasonably should have
discovered where it is located. From that point on must prove OCEANS.
Demand rule = NY law. SOL starts when TO makes demand for return of property. From that point on must prove
OCEANS.
Discover and Demand rules take issue of “notice” out, and favor TO. Courts will look to SOL first.
Servitudes – Easements
a. Easements (express); licenses v. easements by estoppel
Servitude = right or obligation that “runs with the land”
License = permission that is informal and revocable at will ≠ servitude
o E.g. inviting friends over gives them a license to enter
o E.g. entering a store is done on implied license
o Revocable licenses are not transferable, cannot be inherited or left by will
o Licenses cannot be freely revoked when:
a. License coupled with an interest: Owner of real property cannot exclude licensee who reasonably
exercises his license to recover personal property
b. Promise: Promise to grant a license that is revoked can be sued for breach of contract
c. Easements by estoppels: Owner is stopped from denying continued access to his land for whatever
period of time is deemed just under the circumstances (effectively converts a revocable license
into an irrevocable easement) – See Holbrook v. Taylor
d. Constructive Trusts: Court treats property arrangement as if the grantor had created a trust
arrangement, regardless of grantor’s intent.
Easement = permission that is permanent and irrevocable = servitude
o E.g. “Right of Way” places obligation on owner of land to allow others to use road on that land for passage
o “Burdened” or “servient” estate – burden continues to owners of the land
o “Benefitted” or “dominant” estate – right to use runs to new owners of neighboring land
o Affirmative easement = right to do something on someone else’s land
o Negative easement = restriction to not do something on land ** folded into covenant law and not covered in
class
Restrictive servitude developed in 3 forms:
o Negative easements: developed first, courts limited # and kind
o Restrictive covenants: landowners making restrictive contractual agreements, enforced by law courts with
damages
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Equitable servitudes: enforced by equity courts to get around technical and substantive rules of law courts
for restrictive covenants and provided injunctive relief
Rest. 3rd of Property unifies law of the 3 forms above:
o Proposes to abolish terms “negative easement” and “equitable servitude”
o All obligations restricting what one can do with one’s land are to be called negative or restrictive covenants.
o Affirmative rights to do something on someone else’s land are to be called easements.
a. Profit = type of easement that retained special name = right to remove materials from another’s
property
Creation of Easements 5 ways:
o Express (writing)
i. Express Grant = deed for sale or deed for easement alone (to put world on notice to
know that you have this right, protects your right to continue using it against next person
who buys servient land)
ii. Express Reservation = deed reserving easement (reservation or right to continue using
land that is being sold)
iii. Express “In Gross” Easement = writing granting someone the right to come onto your
property and to use or control it (e.g. pipelines, railroads, telephone lines)
o Non-express:
a. Prescription
b. Estoppel
c. Prior existing use (implied easement)
d. Necessity (implied easement)
SOF: writing generally required to create an easement b/c easement is considered a substantial property interest
Failure to comply with SOF if:
o Easement granted orally
o Writing doesn’t comply with specific requirements of SOF
o Ambiguous deed reference
o Many courts will grant the easement if the grantor intended to grant it and the grantee invests substantially
in reasonable license
Irrevocable licenses: If owner intended a revocable license, easement by estoppel likely contradicts grantor’s intent.
Grantor’s right to exclude v. grantee’s reliance interest:
o Question is, does grantee “reasonably rely” on license and “invests substantially” on it, even if grantor never
intended to grant permanent rights?
a. Pro: Grantor should have known that a reasonable grantee would have understood the right to be
more than temporary.
b. Pro: Denying easement would allow grantor to commit a kind of fraud, whether intentional or
negligent.
c. Con: If grantee had been acting with care, they would have asked for a deed and offered to pay.
d. Con: SOF gives security and certainty and should be followed, so easements by estoppel should
not be recognized.
e. Con: It’s unreasonable to expend large sums of $ on a license
Holbrook v. Taylor (1976): H purchased property in 1942. H permitted a haul road to be cut to move coal from a new
mine in 1944. Mine closed in 1949. T bought adjoining land in 1964. T brings claim for right to use the roadway by
both prescriptive easement and easement by estoppel. Trial court justified in finding no right by prescription
because at all times prior to 1965, use of haul road was by permission of H. Court applies rule that if a licensee
exercises a privilege to build structures (at a considerable expense) on the land, licensor can’t revoke the license.
Court cites from previous case, Akers v. Moore, “The law recognizes that one may acquire a license to use a
passway or roadway where, with the knowledge of the licensor, he has in the exercise of the privilege spent money
in improving the way or for other purposes connected with its use on the faith or strength of the license.”
o Dispute happened in 1970, when H wanted indemnity from any damage that might happen to anyone on
the road. Mrs. H said it differently – was to avoid claim by T for right to use the road and attempt to force T
to buy the roadway. When dispute wasn’t resolved, H put up steel cable across the road and “no
trespassing” signs. T brought suit. Court said license to use the road cannot be revoked. Important facts
included that it was the only way into the property and H knew of T’s position and use.
o Elements are:
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b.
a. Reasonable reliance on promise or permitted access
b. Detrimental reliance by way of substantial investment in money, labor, and/or resources
PE v. E by E: permission will defeat a PE claim, however admitting to permission could open an E by E claim, as
happened in Holbrook.
Arguments for recognizing Es by E:
o Formal vs. informal parties intents
o Reasonable expectation/fairer result
o Licensee who invests in reliance on license values the entitlement more
o Honors social customs of parties
Arguments against recognizing Es by E:
o Right to revoke/power to exclude
o Licensee should bear responsibility of his conduct
o Clear rules supported by SOF: writing encourages planning and development, increases predictability and
certainty
o Encourages cooperation
Easements implied from prior use and necessity
Both require “common ownership” (not required for PE or E by E)
Implied from Prior Use: absence of express contract to create the easement. Can effectuate the intent of the
parties, as determined by their conduct. Can also contradict actual intent and be implied by law for public policy
reasons. = Quasi-easement. See Granite Properties.
By necessity: Has to be absolutely necessary, and still need common ownership. Don’t need prior existing use.
Usually used for landlocked land. Can’t prevent someone from getting access to a roadway. See Finn.
Granite Properties Limited Partnership v. Manns (1987): G brought suit to enjoin M from interfering with G’s “use
and enjoyment” of two driveways on M’s land. One driveway provides access to an apartment complex, and the
other to a shopping center, both owned by G. All property at one point owned by G (from 1963), parcel B bought by
M in 1982. G’s properties were developed prior to sale of parcel B. Parcel B is still undeveloped. G testified that if he
had been aware of easement problems, land would not have been deeded to M. M did title search and saw no
encumbrances/express easements. M saw driveways before he bought the property. G could have expressly
reserved the right to use the driveways – no reason why G didn’t do this.
o Two types of implied easements:
a. Easement by necessity: usually occurs when owner of land conveys to another an inner portion of
it which is entirely surrounded by land owned by the grantor – unless contrary intent is
manifested, grantee found to have a right of way across the retained land of the grantor for ingress
and egress.
b. Easement implied from preexisting use: same as above except owner retains the inner portion of
land. – also called a “quasi-easement” - unless expressly agreed to otherwise, conveyance
includes all the benefits and burdens which existed at the time, even if not reserved or specified in
the deed. Established by proof of 3 elements:
i. Common ownership of the claimed dominant and servient parcels, and a subsequent
conveyance or transfer separating that ownership
ii. Before conveyance or transfer severing the unity of title, the common owner used part
of the united parcel for the benefit of another part and this use was apparent and
obvious, continuous, and permanent
iii. The claimed easement is necessary and beneficial to the enjoyment of the parcel
conveyed or retained by the grantor or transferor
Elements of Implied prior use:
o Common ownership: what are now the dominant and servient parcels were commonly owned and then
subsequently separated by conveyance or transfer.
o Prior existing use: before conveyance or transfer, common owner used part of the united parcel for the
benefit of another part, and this use was visible (apparently obvious) and continuous (permanent)
o Reasonably necessary: claimed use is “reasonably necessary” for the continued enjoyment of the dominant
estate.
Finn v. Williams (1941): F&C purchased in 1937 landlocked plot of land, with easement over neighboring land
(originally owned by grantor to their land) to get to the main road. Grantor dies and W inherits land. In 1939, Ws
refuse to permit F’s to travel on right of way through their tract. D’s unable to take livestock and farm products to
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market, no means of egress or ingress from their 40 acres on which they live, and have to walk to the highway (3/4
mile) carrying produce.
o If land had been under “unity of title” at one time, the right to a way by necessity can lie dormant through
several transfers of title, but it is passed along with each transfer as appurtenant to the dominant estate and
can be exercised at any time.
Justification for E by N:
o Effectuate intent of the parties
o Promote the efficient utilization of property
a. Courts usually promote one more heavily than other – majority adhere closely to first (no
easement of necessity will be recognized if it is clear that the grantor intended to sell and the
grantee knew they were buying a landlocked parcel.
2 other ways to create an easement:
o Easement by reservation: grantor intends to retain an easement of property conveyed, servient estate is
subject to this.
o Easement by grant: grantor intends to grant buyer easement of property retained by grantor, dominant
estate is attached by this.
c.
Prescriptive Easements – covered earlier
d.
Running With the Land (subsequent purchaser)
Determine which type of benefit exists, intent of parties matters:
o Appurtenant: attached to the land, dominant estate
o In Gross: owned by person or entity to whom easement originally granted benefits the person or entity and
not he land
a. Most courts observe presumption of appurtenant
b. Appurtenant easement generally not severable from the land, transferrable by definition
Easements created by implication, necessity, and estoppel generally run with the land (if they were intended to do
so and are reasonably necessary for the enjoyment of the dominant estate)
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Easements not in one of the above categories run with the land only if:
o
the easement is in writing
a. Easement described in detail in the deed granting the property, or deed can refer to an earlier,
recorded writing (chain of title) – The required writing is the original writing creating the
easement – subsequent deeds do not have to include it.
o
the original grantor who created the easement intended the easement to run with the land
a. Easements bind future owners of servient estate only if grantor intends them to be bound
b. Intent can be clearly stated on deed or implied, especially if its of the type that’s not likely to have
been merely personal (such as right given to friend to swim in one’s lake)
o subsequent owners of the servient estate had notice of the easement at the time of purchase of the
servient estate
a. 3 types of notice
i. Actual notice: subsequent owners in fact knew of its existence
ii. Inquiry notice: if there are visible signs of use by non-owners, such as telephone poles or
utility lines
iii. Constructive notice: if deed conveying the easement is recorded in the proper registry of
deeds in the proper place and deed is in the chain of title
(Last two go to “should have known” – reasonable buyer would conduct a title search)
Green v. Lupo (1982): G had owned entire tract at once point, and now own several acres south of L’s land. L’s
purchased land from Gs by real estate contract. L’s requested a deed release to a small section of the tract to allow
financing for the construction of a home, while they were still paying the real estate contract. Gs agreed in return
for promise of easement along southern portion of north tract when L’s eventually obtained title. Promised
easement captured in writing. Tension between G and L over G’s development of land for mobile home occupancy –
occupants used easement as motorcycle practice way. When L’s obtained title they refused to formally grant the
easement and they set up obstructions (logs) to restrict access.
o
-
e.
Issue: whether parol evidence is admissible to construe an easement as personal to grantees where
easement is agreed in writing to be for ingress/egress and utilities purposes but the writing doesn’t
expressly characterize it as personal or appurtenant.
a. Court says parol evidence properly admitted, but conclusion that it was personal is erroneous. (Tr.
Ct. said easement was granted for use of G’s alone and could not be assigned or conveyed)
b. Parol evidence may always be used to explain ambiguities in written instruments
o L says purpose of easement was to serve G’s cabin on corner of the land, not the entire tract (the mobile
home site had alternative access roads). Court gave presumption of appurtenant. Equitable restrictions
could be imposed, but motorcycles are common means of transportation and trial court’s complete ban
abused discretion.
o Note – easement follows successive transfers unless otherwise stated. All subdivisions receive the benefit.
Questions Court would ask:
o Is it the “kind” contemplated by the grantor
o Whether use constitutes an “unreasonable additional burden” on servient estate
Scope (Appurtenant) and Apportionment (Easements in Gross)
-
-
-
Scope has 3 issues:
o Whether the use is of a kind contemplated by the grantor
a. General rights of way may be used for any reasonable purpose (generally – some courts disagree
and say that the right of way is limited to the specific purpose contemplated at the time they were
created)
o Whether the use is so heavy that it constitutes an unreasonable burden on the servient estate not
contemplated by the grantor
a. Depends on grantor’s intent – when its ambiguous, court balances interests of parties
o Whether the easement can be subdivided
a. Generally the dominant estate can be subdivided and use an easement for right of way for access
to all parcels
b. With easements in gross, question of divisibility called “issue of apportionability”
i. If easement is nonexclusive (grantor reserves right for themselves in conjunction with
grantee) the easement is held to be nonapportionable
ii. If exclusive (grantor has no right to use the easement in conjunction with the grantee)
the easement is held to be apportionable
iii. Rest. 3rd says easements in gross can be divided unless it would be contrary to intent of
parties who created it
Cox v. Glenbrook Co. (1962): Quill property, easement granted in 1938, property sold in 1945 with appurtenances to
Johnson, and sold again in 1960 to Cox, who wants to develop homes and subdivide land into 60-80 parcels.
Property surrounded on 2 sides by Glenbrook (resort). Quill easement is only existing ingress/egress. Glenbrook
friendship with Quill – Back Road extended to Quill land. Trial court said Quill easement limited to uses consistent
with the resort and for that originally thought of (access to a single family occupancy on Quill land), to use the roads
as they’re currently constructed and maintained (road is narrow and unpaved), and use of road by purchasers of
subdivided parcels would be an illegal and unjustified burden on servient estate. App. Ct. overturns:
o No question that easement is appurtenant, and limiting use to one family destroys appurtenant character of
it. Language “grantee, his heirs and assigns forever” is key. No restrictions written into the easement.
o Too restrictive – general rule is that owner of an easement may prepare, maintain, improve, or repair the
way to use it for the purpose it was created. Leveling the road is not an undue burden on the servient
estate, but widening it would be.
o Intentions by dominant estate owners is not an unreasonable burden. When facts of it become known then
a determination can be made.
Henley v. Continental Cablevision of St. Louis (1985): P’s predecessors granted easements to construct and maintain
electric, telephone and telegraph lines/service in 4/1922, and then granted easement to telephone and electric
companies in 7&8/1922. In 1981 and 1982, D exercised licenses from both utilities to enter the easements and
construct TV cable. P’s filed action to enjoin the trespass and compel removal, or $300k for use of property for D’s
profit.
o Easements are in gross, but question is whether they are exclusive and therefore apportionable by the
utilities companies to D.
o
o
o
f.
Modifying and Terminating Easements
-
-
-
5.
When servient owner retains privilege of sharing the benefit, easement is said to be “common” or nonexclusive and therefore not subject to apportionment by the easement owner.
a. One who grants a right to use land in a particular manner to another, but retains no interest in
exercising a similar right for himself, has no loss if the use is shared by the grantee with others.
Court here says no claim that P’s predecessors had any intention to use and maintain the land in the way the
electric/telephone company did and never during 63 years had trustees been authorized to furnish he
service – so easement granted to utilities was exclusive and therefore apportionable.
General rule is that easements in gross for commercial purposes are particularly alienable and transferable.
Easements last forever unless they are terminated:
o By agreement in writing (release of the easement by the holder)
o By their own terms (easement itself expressly states duration)
o By merger (when holder of servient estate becomes owner of dominant estate)
o By abandonment (if it can be shown owner of the easement, by their conduct, indicated intent to abandon)
o By adverse possession or prescription by owner of servient estate or by a 3rd party
o (Some) By frustration of purpose (easement no longer serves its purpose)
Marketable Title Acts: Requirement that easements, along with other encumbrances be re-recorded periodically
(every 30-50 years) to be binding on future purchasers. Purpose to limit how far back a buyer has to look in chain of
title. Can leave easement owner unprotected from subsequent purchaser of servient estate who may be entitled to
buy the property free of the burden of the easement.
Terminating Easements: From Class:
o Misuse
a. Generally not a termination issue, but rather a scope issue; injunction
o Merger or Unity of Title
a. If 2 estates are later separated, doesn’t arise automatically, have to go through process all over
again.
o Express Release
a. SOF applies – needs to be in writing
b. Note estoppel theory if not in writing (generally an oral release and servient estate holder relies
on promise and does something to his detriment) – can be exception to SOF
o Abandonment
a. Nonuse by DE holder not enough on its own
b. Nonuse by DE holder + intent to abandon is enough
o Adverse Possession
a. By SE holder
o Frustration of Purpose?
a. May just be limited for a particular use.
Servitudes – Covenants
a. Creation of Covenants – Express Agreements
-
When courts limited negative easements, landowners began entering into contractual arrangements to get around
limitations
Courts created exception to principle that contract rights are not assignable to others for real property
o Privity of estate – benefits of contract rights were assignable if they were conceived as being attached to an
ownership interest in the land – made it possible for both the benefit and the burden to run with the land
o Real covenants – Court originally held that an affirmative covenant is binding on successor in interest (from
law courts – relief is damages)
a. If it was in writing
b. If it was intended to be binding on future tenants
c. If it touched and concerned the land **necessary to draw in property law, otherwise would just be
governed by contract law
d.
o
o
-
b.
If there was privity of estate between the covenanting parties (simultaneous interest, like landlord
tenant, not like buyer seller)
Equitable servitudes – those who couldn’t find privity under law courts turned to equity courts – relief is
injunction. Owners bound by covenant even though no privity of estate existed between the original
covenanting parties because:
a. The covenant was in writing
b. It was intended to run with the land
c. It touched and concerned the land
d. The current owner had purchased with notice of the restriction and thus was bound by good
conscience to protect the expectations of the owner of the dominant estate.
Today, in U.S. law of real covenants and equitable servitudes is being matched. Restatement abolishes
distinction.
Affirmative easement: agreement to let someone else do something on your land (e.g. cross your property)
Affirmative covenant: promise to do something on your own land
*No affirmative easement to do something on one’s land; would be a covenant. Only question you have to ask to
distinguish between them.
Negative covenant: Promise not to do something on your land
Negative easement: RS 3rd treats it the same as negative covenant-------WILL NOT BE TESTED ON NEGATIVE
EASEMENTS ----- b/c U.S. has never really recognized negative easements, only a few types of negative easements
that the law recognized (air and light, lateral support, flow of stream)
Interpretation of ambiguous covenants
Traditionally courts interpret ambiguous covenants in the manner that would be least burdensome to the free use
of the land
-
-
-
-
-
Restatement 3rd new approach favors grantor intent and security and reliance interests of those who bought the
property in reliance on covenants restricting neighboring land and promotes those interests over interests in the
free use of the land.
Factors:
o Commercial vs. residential use (i.e. charging people for room and board = business)
o Structure vs. use (“single family dwelling” regulates architectural style, not relationship among occupants)
o State antidiscrimination laws may apply.
Rules for Interpretation
o Intent of Parties
a. Plain language
b. Ambiguous
i. Traditional Rule: presumption in favor of free use (against restriction enforcement)
ii. RS 3rd: Security and reliance interests of dominant estate.
c. Purpose of Restriction
i. Is purpose being undermined by activity?
o Plain Meaning of Writing
a. Parol evidence?
Blevins v. Barry-Lawrence County Associations for Retarded Citizens (1986): Blevins brought suit to enjoin BL from
using property across the street for theirs as a group home for mentally disabled. The subdivision has restrictive
covenants which says property is to be used for residential purposes only – single or double family homes not more
than 2.5 stories. Miss. Statute forbids zoning ordinances or restrictive covenants from excluding group homes for
mentally retarded individuals. D’s say covenant is void in light of this.
Courts don’t view restrictive covenants favorably generally – if there is ambiguity, restrictive covenants
will be read narrowly in favor of free use of property.
Group home has all the characteristics of a residential as opposed to commercial use. Home serves
surrogate family arrangement
D’s don’t intend to alter structure of residence, and 2 nd sentence of covenant goes to structure, not use.
a. Court says use as group home is ok.
Hagemann v. Worth (1989): Group home for the elderly. (seems similar to Blevin) but court found that restrictive
covenant limiting land to “Residential and recreational use” and buildings limited to “single family residences” did
not permit use in this way. Feels different because of payment to owners (Blevins, by state to be “surrogate” family
– here more like payment for a service from which they derived their primary income.)
c.
Modifying and Terminating Covenants (changed conditions; undue hardship; statutory regulations)
More ways to terminate covenants than easements, consider:
o Changed Conditions
a. Benefit unenforceable if fundamental change in intended character of neighborhood that renders
benefits underlying imposition of restriction incapable of enjoyment. – Covenant no longer of
substantial benefit to dominate estate.
b. Rest 3rd stringent test: Relief granted only if the purpose of the servitude can no longer be
accomplished (focus on dominant estate)
o Relative or Undue Hardship
a. Covenant not enforceable if harm caused by enforcement to servient estate greater by a
considerable magnitude than benefit to owner of dominate estate. (Mere economic harm not
enough – need to weigh it against the benefit.)
b. Rest 3rd treats hardship doctrine not as basis for termination/modification but as a factor in
determining remedies (focus on servient estate)
o Statutory Restrictions
a. 184 M.G.L. §30: Restriction not enforceable unless person claiming rights has actual and
substantial benefit. Statute favors damages. Covenant that is of actual and substantial benefit
enforceable by damages only if: changed character, unclean hands, impedes reasonable use of
land for which it is most suitable; inequitable, or not in public interest.
o Public Policy
Nine additional ways not covered in class (acquiescence, abandonment, unclean hands, estoppel, laches,
marketable title acts, merger, release, prescription, expiration in instrument)
-
-
-
El Di Inc. v. Town of Bethany Beach (1984) – Changed conditions
o P (Town) rec’d permanent injunction against D from selling alcoholic beverages at a restaurant owned and
operated by it. D purchased Holiday House in 1969. In 1981 filed app for alcohol license and was granted
one. Restrictive covenants prohibited both the sale of alcoholic beverages on the property and
nonresidential construction, but covenants often, and more so over time, not observed. Town has
commercially zoned section in which HH is located. Town changed from a church-affiliated residential
community to a tourist/summer resort. After town’s incorporation 85% of land not subject to the
restrictions.
o Changed conditions found sufficient to negate restrictive covenant – Covenant no longer of substantial
benefit to dominant estate. Also, permit “brown-bagging” but prohibit licensed sales is inconsistent and
contrary to public policy.
Blakeley v. Gorin (1974) – Mass. Statute
o In 1850 Back Bay filled and in 1857 state sold the land to private owners with “Commonwealth Restrictions”
in place. P relies on MGL ch 184 §30 that either 1) no benefit to person claiming rights exists anymore, or 2)
if benefit found, no enforcement except for money damages b/c of enumerated conditions. P wants to build
285’ high hotel-apartment building on lot at corner of Comm Arlington and Newbury streets connected to
Ritz . Ds own 12-14 Comm Ave which has an 8 story building with 8 apartments on each floor, the 32 rear
apts get principal light an air from 1 window in each facing the alley. Bridge connection to Ritz will block the
light and air. Court says no restrictions to be enforced, except award of money damages. Basis for denial
found in enumerated conditions 1, 4 and 5. Drastic changes in the neighborhood and bridge has only
moderate effect – also inevitable that someone would build on the empty lot. Continued enforcement of
restriction would impede reasonable use of the land. Lastly, public interest used to say vacant lot is not
beneficial.
Connaughton v. Payne (2002) – Mass. Statute
o C=landowner who proposes building 7 single family homes – restriction from her predecessor’s deed that
limits to 4 homes. Neighbors sued. At trial jurors found that maintenance of ecosystem was at stake and
restriction was enforced. App Ct. confirms. P says they purchased their land in reliance on the restriction
and wanted “wilderness” around them and have made foot trails through it. Development would affect use
of their trails (they would see the homes) and hurt wildlife.
o
d.
Findings of “actual and substantial” benefit are supported. Court also cites Blakely and says no benefits to
the general public to remove the restriction.
Running With the Land
-
As long as there’s a writing, intent, notice, and as long as it touches and concerns the land, covenant will be
enforced.
o “Touch and concern” is extra part, different from easement law, for determining if covenant runs with the
land.
-
Winn-Dixie Stores, Inc. v. Dolgencorp., Inc. (2007)
o WD = grocery store operator in a shopping plaza (anchor tenant). WD and landlord have restrictive covenant
in lease making WD exclusive grocery seller – covenant deemed to run with the land. Exclusives are common
in this line and “sophisticated” tenants. D = dollar store operator, became a tenant in 1998 and had
exclusive right to operate a dollar store. D violating the 500 ft limit from its restrictive covenant and
demanded landlord enforce it. When landlord didn’t, WD filed complaint against landlord and D. D says by
statute its unenforceable. Tr Ct agrees and says its not a real property covenant that runs with the land and
that D did not have constructive notice. Court disagrees – it’s a real property covenant and NOT a personal
contract obligation. Real covenant binds heirs/assigns, personal doesn’t. Covenant running with the land
concerns property conveyed, personal covenant is collateral. If performance of covenant “touches and
involves” the land and tends to enhance value, it’s a covenant running with the land.
To establish enforceable covenant running with the land, P must show:
o The existence of a covenant that touches and involves the land,
o An intention that the covenant run with the land, and
o Notice of the restriction on the part of the party against whom enforcement is sought.
o First 2 clearly met. Third, FL recognizes 3 types of notice: constructive, actual and implied. D had either
constructive or implied.
“Real” covenant
1. Writing
2. Notice
3. Intent
4. Touch & Concern
5. Privity (background only) horizontal & vertical
Equitable Servitude
1. Writing
2. Notice
3. Intent
4. Touch and concern
5. No privity required
Remedy: Damages, as well as an injunction
Remedy: Injunction only
Basically – need privity if you want damages – But
restatement 3rd does away with this
Writing: Lease, deed, etc. Almost anything will constitute a writing.
Notice: Actual, constructive, and inquiry
Intent: Express, or presumption of intent if it “touches and concerns” the land
Touch & Concern: If it affects the use and enjoyment of the land, affects the market value of the land, or affects
interests of landowner, it probably meets the requirement.
Privity: Need horizontal (b/w original parties) and vertical (b/w original parties and subsequent landowners/lessees)
to get damages
6.
Estate System and Future Interest
a. Present & Future Interests
Estates created by:
o Transfer or sale (deed)
o Lease
o Will (devise)
o Inheritance
o Trust
Interests in Land - Types
Non-Estate
Estates
Owners do not have “possession”; they have use rights or
servitudes
Easements
Covenants
Estates give possession, either present or in the future
-
-
Fee simple
Fee tail
Life estate
Future interests
LL/T (landlord/tenant) – b/c you get the right to
“live” there (possess it)
Freehold
o Fee
o Life
Future Interests
Nonfreehold – those associated with leaseholds, no
outright ownership, but possession
o Term of years
o Periodic tenancy
o Tenancy at will
Contemporary Estates System:
Fee Simple Interests
o Fee Simple Absolute

Property ownership without an associated future interest.

Owner of fee simple interest in real property has right to possess and use the property, right to sell or give it
away, right to devise it by will or leave it to heirs.

No one owns a future interest in the property.

Courts take presumption of fee simple unless the conveyance states otherwise.
o Defeasible Fees

Present interests that terminate at the happening of a specified event other than the death of the owner.

Two distinctions:

Whether future interest is in the grantor or in a third party

Whether the future interest becomes possessory automatically when the stated event occurs or
becomes possessory only if the future interest holder chooses to assert his property rights

Automatic transfer to grantor: present interest is called fee simple determinable and future interest called
possibility of reverter. (e.g. O to A so long as used for residential purposes)

Reasons for this would be personal generally – care about the purpose land used for and don’t want it
going to a different use or “others” hands.

Grantor has future interest

Transfer upon grantor’s assertion of property rights: current interest is called a fee simple subject to a condition
subsequent and future interest is called a right of entry (or power of termination). (e.g. O to A on condition that
property be used for residential purposes; in the event not so used, O shall have a right of entry)

Laches – court may prevent holder of a right of entry from waiting too long to assert the right

Policy – statute runs at moment condition is violated

O to A: A has present interest and O has future (just as with fee simple determinable) - differs though
b/c O has right of entry or power of termination, it does not automatically revert (unlike fee simple
determinable)

Note on Adverse Possession – With fee simple determinable, reversion happens immediately on
condition (if O doesn’t protect his rights, then A can get AP rights b/c A is immediately “trespassing.”)
With fee simple subject to condition subsequent, A’s AP claim dies because A is not trespassing until O
exercises his right.

Transfer to a third party: Future interest in a defeasible fee belongs to someone other than the grantor, present
interest is called a fee simple subject to executor limitation and future interest called an executor interest. (e.g. O
to A so long as used for residential purposes, then to B)

Shifting (from one grantee to another grantee)
o O to A and his heirs, but if B ever returns from Europe, then to B and his heirs.
o O to A unless premises are used for non-church purposes, then to B and his heirs.

Springing (from grantor to grantee)
o O to O until C finishes law school.
-
Life Estates
o Reversions and Remainders

O to A for life creates a life estate interest in A. Means A owns property during A’s lifetime, then the future
interest, called a reversion, to either the grantor or a 3rd party. (Difference with owner of a fee simple is that life
estate owner has no right to determine who owns the property after his death.)

If A sells to B, B has life estate for the life of another.

Reversions and remainders don’t cut present interest short (unlike defeasible fees).

Possible to create a defeasible life estate: O to A for life, so long as A lives there, if A should move then
to O. (Two FIs created for O – if A dies, and if A moves.)
o Contingent and Vested Remainders

Remainders :

never follow a fee simple

must be created at same time in same instrument

Cannot cut short a prior estate
o If any of above violated, TP interest must be executory.

Remainders are contingent if one or both of two conditions are met:

If the remainder will take effect only upon the happening of an event that is not certain to happen, or
o E.g. O to A for life, then to B if B has graduated from law school. If B does not graduate,
property reverts to O on A’s death. If B does, property springs to B.

If the remainder will go to a person who cannot be ascertained at the time of the initial conveyance.

Remainders are vested for persons who are identifiable at the time of the initial conveyance and for whom there
are no conditions precedent.

Absolutely vested remainders: not subject to change

Vested remainders subject to open: may be divided among persons who will be born in the future.

Vested remainders subject to divestment: may be destroyed by an event that occurs after the original
conveyance.
o Destructibility of Contingent Remainders

Traditional rule that contingent remainders are “destroyed” if they did not vest before the preceding life estate
ended, or by “merger.”

Modern approach is that contingent remainders are indestructible.
o Doctrine of Worthier Title

Remainder in O’s heirs is converted into a reversion in the grantor

E.g. O to A for life, remainder in the heirs of O – becomes O to A for life, remainder in O.
o Shelly’s Case Rule

Converts remainder in grantee’s heirs into a remainder in the grantee.

E.g. O to A for life, remainder to A’s heirs – becomes O to A for life, remainder to A and since A owns both the life
estate and the remainder the two are merged into a fee simple.
o Fee Tail

Purpose to keep the property in a family dynasty.

O to A and the heirs of his body – creates set of life estates, necessarily followed by either a reversion or a
remainder when blood line runs out.

Substantially abolished in US – only 4 states recognize (DE, ME, MA, and RI) – Mass recognizes it but easy to
destroy. Most states deem it as a fee simple absolute. Other states interpret as life estate in the first taker, with
fee simple absolute to her lineal descendants alive at her death.

Different from defeasible fees – b/c no condition for A to lose property during her lifetime with a fee tail, A keeps
it until her death (Defeasible fees cut short a prior estate and present interest).

Can use remainders to get at same aim without using a fee tail.
Present Interest
Fee simple absolute
Defeasibl
e fees –
could lose
Fee simple
determinable
Estate System: Freehold Interests
Words Used to Create
In grantor
“to A”
“to A and her heirs”
“as long as”
Possibility of
“while”
reverter
“during”
Future Interest
In third party
it
Fee simple subject to
condition
subsequent
“until”
“unless”
“provided that”
“on condition”
“but if”
Fee simple subject to
executor limitation
“until (or unless)…., then to….”
“but if…, then to…”
Life estate
“for life”
Right of entry
(for condition
broken) or
power of
termination
Executory interest
Springing
Shifting
Reversion
Remainder
-
Vested
Contingent
Regulatory Rules
Rule Against Creation of New Estates
o Intended to discourage social hierarchy characteristic of feudalism and to promote a market system
o A conveyance that does not fit within established categories, must be interpreted to create the most closely analogous
estate.
o Abolition of the fee tail – conveyance that purports to create a perpetual series of life estates will not be honored.
Johnson v. Whiton (1893): Land from R.Whiton to his 5 grandkids. Deed to J refused because one grandkid (Sarah) could not convey a
fee simple absolute. Action to recover deposit. Will says1/3 rd of estate “to Sarah and her heirs on her father’s side” and remainder to
the rest. Does S have a qualified fee and unable to give a fee simple? Court says a man cannot create a new type of estate – “on her
father’s side” to not effect the purpose intended and are rejected. Also – contrary to Mass. Law to deny Sarah ability to convey an
unqualified fee. J/D.
b.
-
-
-
-
Interpreting Ambiguous conveyances; presumption against forfeitures
Two important policies in interpreting ambiguous conveyances:
o Courts implement the intent of the grantor
o If unclear, public policy kicks in and courts further the free use and alienability of property by presumption against finding a
future interest.
Wood v. Board of County Commissioners of Fremont County (1988): Woods warranty deed to the county for a hospital. County sells
public hospital facilities to private company. Woods say language in deed created either a fee simple determinable or a fee simple
subject to a condition subsequent with a right of reversion in them. Language in deed: “for the purpose of constructing and
maintaining thereon County Hospital in memorial of…” Hospital built and ran hospital from deed date 1948 to 1983. Court says no
fee simple determinable because the language doesn’t clearly state that the estate will expire if land is not used for the stated
purpose. No language included like “upon condition that” or “provided that” so no fee simple subject to a condition subsequent.
Court adopts plain language approach.
o “for the purpose of” doesn’t cut it as far as court is concerned
o Shouldn’t grantors know what their intent was? Why doesn’t court accept this? Doesn’t want to allow different
construction for fee simple determinable. County should be on notice that they were given something other than a fee
simple absolute. No specification that it would expire in the future.
o Presumption Against Forfeitures

Court attempting to protect party with current interest

Must be made clear to everyone that there is a future interest
o Court construed as fee simple absolute – Woods have no future interest (language was “precatory” – not legally binding)
Cathedral of the Incarnation v. Garden City (1999): Cornelia Steward conveyed land for church use with restrictions “without any
power, right, or authority to grant, convey, or mortgage…”and that it was not to be “used or occupied for any other use or purposes
than as sites or grounds…connected with Cathedral and devoted to its religious or educational purposes.” Cathedral filed for
bankruptcy in 1933 and filed this suit so that it could sell the property. Court found that “absent any language in the deed itself
providing for the automatic termination of the Cathedral’s estate if the land were no longer used for church purposes” it refused
finding reverter.
Estates: Freedom of contract or free disposition would allow complete freedom, but not the process adopted – compromise interests
of grantors and grantees. Rule Against Creation of New Estates
Two conflicting rules of interpretation:
o
o
-
-
-
-
Effectuating grantor’s intent to the extent it can be discerned from the language, or maybe surrounding circumstances
When ambiguous, preference for construction that avoids recognition of future interest (especially when it means that
present possessor lost title to future interest holder) ---Presumption Against Forfeitures
Policy considerations:
o Favoring condition in original conveyance by requiring forfeiture:

Interests of grantor protected

Potential security for neighboring property owners who may benefit
o Presumption against forfeitures:

Interests of current owners – control property within their possession

Greater freedom to change land uses as economic conditions and social values change

Promotes social interests in deregulating economic activity – can shift land to more valuable or desired uses

Potentially grantors interests on theory they intended to give it away
Purpose Language:
o If conveyance includes language explaining purpose (Wood) – most courts hold it to be precatory (not intended to have any
legal significance)
o More eager to find future interest if property given for charity
Constructional Preferences (ranked)
o Fee simple absolute (precatory language; statement of purpose not intended to be legally binding)
o Fee simple absolute with covenant
o Fee simple subject to condition subsequent
o Fee simple determinable (less than above b/c condition subsequent creates right of entry, which is less harsh than
automatic reverter – party must exercise)
o Fee simple vs. life estate: Fees always preferred b/c more alienable.
Forsgren v. Sollie Hypo: Grantor = F, who lives next door. Grantee = Sollie “on condition that the grantee will build a partition fence
along the south side. This property is conveyed to be used as and for a church or resident purposes only.” LF comes in and wants to
put commercial enterprise on land.
o Lawyer for Grantor:

Argue its fee simple subject to condition subsequent.

Problems: “on the condition that…” relates to fence, not church. Also – LF able to counter argue on
rules of construction + if ambiguous, policy to favor present land owner therefore court should prefer
fsa with covenant.
o Court (to effectuate intent of grantor and employ presumption against forfeiture) may favor fsa with covenant.

LF doesn’t lose property, and grantor doesn’t lose interest in land. No covenant in gross argument, but need to go
through WINTC
o Court could also use constructional preferences
c.
-
Rule Against Perpetuities
Traditional Rule
o Rule Against Perpetuities: Future interests that may vest too far into the future are invalidated, will stand if they are certain
to “vest” or fail to vest within the lifetime of someone alive at the creation of the interest, or no longer than 21 years after
her death.

Breakdown:

A future interest is void…

Unless it is certain to vest, if at all…
o “vest” certain: when condition or contingency occurs

O to A for life then to B if B graduates from law school

B’s interest vested when A dies

O to A so long as used for residential purposes, then to B.

B’s interest vested when A stops using it residentially.

Within 21 years after the death of some life in being…
o “lives in being”: measuring lives = persons named in conveyance (and any intervening
generations) [NOT everyone in the whole world alive at the time]

O, A, and B above are “lives in being”
o Validating life = someone whose named in conveyance in whose life conveyance is certain to
vest.
At the creation of the interest.
o “creation” = moment of deed passing (with inter vivos conveyance) or moment testator dies
(by will)

B holds FI – created moment O passed deed to A. Contingent remainder exists, b/c
B has to graduate law school (condition precedent)
o Limiting Dead Hand Control: Prevent control of property by persons who died many years ago. RAP attempts to do this by
limiting the powers of present owners to control future use of their property. Analogous to changed conditions in
covenants.
o Application: 3 steps:

Determine what future interests have been created. (RAP applies only to nonvested interests – if possibility of
reverter, reversion, etc. RAP doesn’t apply.)

All future interests in the grantor are exempt from RAP – they are “good” and will be enforced.

The only interests in 3rd parties that are exempt from RAP are those that are vested remainders
(absolutely vested or vested subject to divestment).

Future interests subject to RAP are executory interests, contingent remainders, and vested remainders
subject to open.

If RAP applies, determine whether future interest in question is valid or invalid under the rule. (If there is any
possibility the interest can vest more than 21 years after the death of everyone alive at the creation of the
interest, it is invalid.)

Perpetuities period = time b/w creation of the interest and 21 yrs after the death of the last person
alive at the creation of the interest.

Look for a “validating life” – person within whose lifetime (or no later than 21 yrs + 9 mos) the interest
is certain to vest. If you can’t identify one, future interest is void. Corporations are not “lives in being.”

If the future interest is invalid, determine what interests remain.

Remedy is to strike out the offending language. E.g. “O to A for residential purposes, then to B.” If
conveyance to B violates RAP, strike out “then to B.” Left with “O to A for residential purposes” which is
a fee simple determinable. Possibility of reverter to O is not subject to RAP so O’s interest stands. BUT
“O to A, but if the property is not used for residential purposes, then to B” would create fee simple
absolute in A, because after “then to B” is struck out, the conveyance is not recognizable as a standard
estate. Some courts would convert both to A fee simple absolute.
Modern Modifications
o Wait and See, or Second Look test: Courts will not hold that a future interest violates the rule until the perpetuities period
has passed and they are certain that the future interest has not vested within that period.

Under traditional rule, future interest is void from the outset if there is any possibility that it will vest outside
perpetuities period. Under Wait & See, court will wait out the perpetuities period to see if it does vest. If it
doesn’t, then it is void.

E.g. O to A so long as used for residential purposes, then to B – invalid under traditional rule (possible that
property will be residential for 300 yrs, long after deaths of O, A, and B , so interest is void and left with nonrecognizable estate, so fee simple for A) – under modern rule, if property used for nonresidential purposes before
the perpetuities period has lapsed, executor interest is good (property shifts to B); or, if O, A, B die and 21 years is
pass, and the property is still used for residential purposes, at that moment the future interest in B (really B’s
heirs) is destroyed and left with fee simple in current owner of A’s interest.

Adopted in majority of states
o Cy pres (equitable reformation): Conveyance violates the rule by containing an age limit greater than 21. Courts may reduce
the age contingency to 21 if it will validate a future interest.

e.g “O to A for life, then to the first child of B to attain 25 years or age” – contingent remainder in first child of B
to reach 25 violates the rule since a child could be born after the conveyance and read 25 more than 21 years
after the deaths of O,, A, and B.
o Uniform Statutory Rule Against Perpetuities (USRAP): Validates future interests in donative transfers that otherwise violate
the traditional RAP if the interest vests at any time within 90 years of the date of its creation.

Adopted in more than half the states

Mass has uniform statutory RAP

Validates FI that would violate RAP if interest vests at any time within 90 years of the date of its
creation (rather than lives in being + 21 years)
o O to A so long as used for residential purposes, then to B, DOC = 2/3/2000
o Wait 90 years to see if FI vests. If not, future interest in B (or B’s heirs) is void.

-
o
Would strike all language up to “O to A” – no more fee simple determinable, and condition
struck too.
o
-
-
-
-
-
-
Abolition of the Rule

15 states have abolished RAP – to permit dynasty trust (either real or personal property that generate income for
beneficiaries in perpetuity) creation and take advantage of federal tax code provisions that make the gift tax-free.
Directly (NJ, PA, RI, SD) or indirectly by allowing very long perpetuities period (AK-1000yrs, FL-360yrs, WA-150yrs)
Other Statutory Limits on Future Interests
o Statutory cut-offs

RAP doesn’t apply to rights of entry or possibilities of reverter – so easy to avoid it when wanting to create fee
simple subject t executor limitation by breaking it down to two estates

In Mass, these two types of FIs (reverter and right of entry) are destroyed if they do not vest (condition
does not occur) within 30 years of the creation of the interest. (Trusts have exemptions.)
o O to A so long as used for residential purposes, DOC = 2/16/2000.
o O’s possibility of reverter void if condition does not occur by 2/15/2030.

Statutes that cut off interests in the grantor following defeasible fees if the condition does not occur within a
stated period after initial conveyance avoids this.
o Marketable Title Acts

MTAs require that future interests be re-recorded periodically in local registry of deeds (typically ever 30-40 yrs)
to remain valid and enforceable
Future Interests subject to RAP
o Contingent remainders
o Executory interests
o Vested remainders subject to open (class gifts – closed when life estate holder dies)
o Options to purchase and some rights of first refusal
Future Interests NOT covered by RAP
o FI’s created in grantor

Reversion, possibility of reverter, right of entry (no logical reason here – could potentially go on forever)
o Vested remainders

Absolutely vested and subject to divestment
Hypos:
o O to A for life, then to B if B graduates from law school.

Use measuring lives – kill them all off. If B dies before he graduates law school, certain to vest w/I 21 yrs of is
death – No violation of RAP
o O to A so long as used for residential purposes, then to B

Executory interest not certain to vest w/I 21 yrs. A to their FI AND B to their FI – both go on and on.
RAP applies from outset (no wait and see). Remedy:
o Strike or cross out offending language. If estate not recognizable, must strike until you have one recognized by law.
o Court will always strike the FI (+ any other language up to clause that makes sense)

O to A so long as used for residential purposes, then to B.

O to A, but if the property is not used for residential purposes, then to B.
Symphony Space v. Pergola (1996)
NY Rule against Perpetuities – D’s attempt to enforce restriction violates prohibition against remote vesting and is unenforceable.
o Symphony (non-profit) sold building to B in 1978 for $10k. B to hold mortgage and will lease back all commercial space for
$1 to Symphony (S gets free space and B gets tax break.) B has option to purchase to buy back on 4 option dates (1987,
1993, 1998, 2003)
o B sold all interests to D. D exercised option and put S on notice. Property now worth $7M.
o Lawyer for S says options subject to RAP and claimed it violated rule. (Since no lives in being its 21 years total and 2003 is
outside of perpetuities period) Even though B exercised option in 1993, which was within perpetuities period, doesn’t
matter b/c RAP makes options void from outset.
o NY operates under traditional rule.
o Lease goes until 2003. S got fee interest – huge windfall.
d.
-
Direct Restraints on Alienation
Restraints on alienation in fee interests held void traditionally
-
-
Restraints on lesser land interests, like leaseholds, generally upheld
Modern law – general test of reasonableness
o Restatement 3rd of Property provides that “reasonableness is determined by weighing the utility of the restraint against the
injurious consequences of enforcing the restraint.
5 types:
o Direct restraints on transfer

Types of “direct restraints”:

Disabling: Directly forbids owner from transferring her interest in the property – any attempt to do so is
automatically void. (O to A and his heirs, but any transfer hereafter shall be void.) – generally void,
despite Rule of Reason application.

Promissory: Covenant by which grantee promises the grantor not to alienate his interest in the
property (O to A and his heirs. A promises never to transfer the property.)

Forfeiture: Provides for a future interest that will vest if the owner attempts to transfer her interest
(grantor or 3rd person). (O to A, but if A attempts to transfer, then to B and his heirs.)
o Servitudes requiring the consent of either the grantor (the developer) or the association to transfer the property
o Rights of first refusal (a/k/a preemptive rights)
o Leasing restrictions
o Restraints designed to keep housing affordable by low- and moderate-income families
Horse Pond Fish & Game Club v. Cormier (1990) - Disabling
P got title to land in Nashua – deed free of restrictions. P deeded it two of its members on 12/9/1958, who conveyed it back the same day with
restriction in the deed that land couldn’t be alienated except with 100% approval by members or the club is dissolved. 1987 – P registered as a
charitable corporation. 1988 wanted land swap for land “more suitable to fishing and hunting.” D lives adjacent to club and is a member and voted
against it. P filed bill seeking declaration that restriction in deed was void as unreasonable restraint against alienation. Tr ct held it was
unreasonable in regard to justifiable interests of the parties – b/c it was unlimited in duration. App Ct says “express provision or condition against
alienation contained in a gift made to a charitable corporation may constitute a valid restraint.” – This can still be weighed though – if sale necessary
and in best interests of charity, sale could be allowed. Issue of P’s charitable status at the time the court ruled on P’s motion is an issue –
remanded.
Court applied rule of “reasonableness” – lower court held that it was unreasonable b/c not limited in time and no reasonable
purpose, and appellate court greed except:
o Charitable Exception might apply. – Restraints on land passed to charitable trust or corporation are inherently considered
“reasonable”
o (then will need to argue something other than law on direct restraint – such as changed conditions)
Club can get out from under restraint on alienation even though they created it.
Riste v. Eastern Washington Bible Camp (1980) – Read as promissory restraint
Bible Camp owns land that was subdivided – sells only to people who agree to subscribe to their church. P’s parents contracted with them to buy
two lots – P inherited and tried to sell – both sales contract and deed contained restructions but tried to sell contrary to them. Court says :
Clause prohibiting grantee from conveying w/o approval of grantor transferred a fee simple estate is void.
Restriction that people must conduct themselves on their land in accordance with church practices is also void
Treated as promissory b/c no question that church owned some of the land – treat as dominant. Land is benefitted- so can construe
as promissory – parents promise church that they will go to seller before selling their land for church to approve it.
Lawyers know restraint on alienation when they wrote it and included language that “…is reasonable and may be enforced by the
courts.”
Court: “restraint upon which there is a presumption of invalidity…”
***Can always apply covenant law for promissory restraints. Could say changed conditions here… but court made it simple here
and treated it as direct restraint on alienation.
7.
Common Ownership
a. Tenancy in common; Joint Tenancy
1.
Tenancy in Common
Each tenant in common has the right to possess the entire parcel – each has an “undivided interest”
When a tenant in common dies, his interest goes to his devisees under his will or to heirs under state intestacy statute.
Fractional amounts in contracts important only for questions as how purchase price divided when property sold
2.
3.
4.
5.
6.
7.
8.
Joint Tenancy
Each joint tenant has the right to possess the entire parcel (like tenancy in common). Joint tenants traditionally required to possess
equal fractional interests in the property (unlike tenancy in common).
Right of survivorship is main difference. When a joint tenant dies, property interest immediately transferred to remaining joint
tenants in equal shares. No right to devise this interest.
To create a joint tenancy, formalities include “unity of time, title, interest and possession” meaning (4 Unities to Create JT)
o The interest of each joint tenant must be created at the same moment in time
o All joint tenants must acquire title by the same instrument or title
o All joint tenants must possess equal fractional undivided interests in the property and their interest must last the same
amount of time
o All joint tenants must have the right to possess the entire parcel.
Severance: If A & B own property as joint tenants, and A sells her one-half undivided interest to C, joint tenancy is severed – B’s right
of survivorship is destroyed and B &C will own property as tenants in common.
o Joint tenant can destroy right of survivorship while retaining life interest by conveying it third party who conveys in back –
this destroys unity of title and time.
o Joint tenancy vs dual life estates with alternative contingent remainders: Indestructible right of survivorship by saying:

O to A and B as life tenants, with remainder in A if A survives B, and a remainder in B if B survives A

*Best way to create unilateral indestructible right of survivorship

A & B have life estates. FI to A and B, FI = remainder (follows life estate, doesn’t cut short others
interest, created at same time with same instrument). Remainder = contingent (b/c no condition
precedent to them taking it)

No way A and B can destroy right of survivorship unless they come together and agree. Can’t sever it
unilaterally (A can’t give away FI because its contingent on him outliving B.)
Ambiguity
If ambiguous – interpret conveyance as tenancy in common (some states by statutes, others by common law)
Transferability
Joint tenants and tenants in common are free to transfer their interests without the consent of co-owners.
Partition
Both have power to file lawsuit for judicial partition of commonly held property – court can order physical division or property to be
sold with proceeds divided
Co-owners can agree among themselves to partition it – voluntary partition
Restrictions against partition in deed or will are restraints on alienation – but modern courts likely to uphold them if reasonably
limited in time and have reasonable purpose.
Statutes prohibit partition of common areas of condos
Fiduciary obligations
Concurrent owners legally obligated to share certain benefits and burdens, but can vary arrangement by contract
Each co-owner has right to possess, if one chooses not to live there and the other doesn’t, general rule provides that the tenant in
possession has no duty to pay rent to the non-possessing tenant.
Joint tenants and tenants in common do have duty to pay rent to their co-owners if they have ousted them. Ouster = explicit act by
which one co-owner wrongfully excludes others from the jointly owned property. Constructive ouster happens when property is too
small to be physically occupied by all co-owners, and duty to pay rent arises.
Co-tenant has right to lease his interest without obtaining the consent of other co-tenants. Share of rent belonging to each co-owner
based on their fractional interest.
Co-owners have duty to share basic expenses to keep the property (mortgage payments, property taxes, insurance, etc. and usually
cost of basic maintenance and necessary repairs) in accordance with their fractional shares. No duty to share the costs of major
improvements unless they agree to do so.
In most states, co-owner who exclusively possesses the premises must bear the entire burden of expenses if value of her occupation
exceeds the payments (taxes, repairs, mortgage payments)
Co-owners can bring a judicial proceeding for an accounting to require co-owners to pay their portion of maintenance expenses or
force co-owners to hand over requisite portion of rents earned from 3 rd parties.
Trespass
Each co-tenant possesses the whole, so each entitled to invite others onto the premises even if co-owners object.
4th amendment right to be protected prevents police from entering home over objections of a physically present resident, even if coowner agrees to allow the search.
Adverse possession and ouster
9.
One co-tenant cannot obtain AP against another unless possessing tenant makes clear to the non-possessory tenant that he is
asserting full ownership rights in the property to the exclusion of other co-tenants
Mortgages
States with lien theory likely to hold that mortgages do not sever joint tenancies
o Lien theory: Borrow who grants the mortgage as title holder and bank who takes the mortgage as lienholder.
States with title theory may consider a mortgage to be a transfer of ownership which has effect of severing the joint tenancy.
o (Minority) Title theory: Lender takes title to the property, subject to an “equity of redemption” in the borrow who grants
the mortgage.
Creation Recap:
TIC
-
o
Deed, will, or intestate succession
o
o
Deed or will (not intestate b/c need unity of time and title and interest)
Must use clear language, otherwise default to TIC
JT
Carr v. Deking (1988) – Family Conflicts over Use of Common Property
George (father) and Joel (son) car = tenants in common. Land leased to Deking from ’74-’86 on year-to-year oral agreement. In 1986, J informed D
wanted cash rent (instead of traditional crop rent). D went to G and written 10 year crop-share lease entered into. J wants to eject D. J says lease
rights are subordinate to those of nonjoining tenant in common. Court disagrees - J not allowed to eject D b/c cotenant may lease without consent
of other –lessee “steps into shoes” of cotenant and becomes tenant in common with other owners for duration of lease. J entitled to benefit of
lease, until partition occurs.
J wants lease b/w G and D to be void – shouldn’t be able to bind J b/c he wasn’t a party to the contract. Court
disagreed – each TIC has the right to lease his or her interest without th permission of the other co-tenant b/c each
has a right to possess the whole.
J can elect to partition. J cannot evict D, could co-possess.
Tenhet v. Boswell (1976) – Death
Johnson and Tenhet own as joint tenants. J w/o T’s knowledge leases to B for 10 years and J dies 3 months later.
Does lease cause severance of joint tenancy? (either permanently or temporary) No.
o Court refuses to find severance in circumstance which “do no clearly an unambiguously establish “ joint tenants desire to
terminate. Because joint tenancy can be created only by express intent, and b/c there were other means of altering nature
of this estate, court holds that lease doesn’t sever. ----therefore, sole ownership vested in T upon J’s death.
Does surviving joint tenant take property unencumbered by lease? Yes.
o Interest of non-surviving joint tenant extinguishes upon his death.
o Court likens to debts and mortgages – creditors interest can attach only to debtor and interest terminated on death.
Encumbrances placed by dead joint tenant become unenforceable against surviving joint tenant.
o To allow J to lease for a term continuing after his death would indirectly defeat very purpose of joint tenancy.
b.
Obligations of Tenants in Common and Joint Tenants
Possession
o No obligation to pay rent to any co-tenant, unless ouster (b/c each have the right to possess the whole,
despite fractional share ownership)
o Ouster: actual or constructive – then duty to pay ousted co-tenant share of reasonable rent value
o Adverse possession difficult with ouster
Liability for rent
o None to co-tenants
o Rents from Third Parties: Either type of co-tenant can lease without other’s permission, but if A rents it out
and B owns 2/3, then B entitled to 2/3 rent.
Expenses
o Compulsory expenses
a. Mortgage, taxes, repairs and maintenance
b. Parties have to share these expenses based on fractional share
c. Q = what is “normal” repairs and maintenance
d. Improvements are NOT compulsory
o
o
o
Not in exclusive possession
a. Share expenses
Exclusive possession
a. If one party is in exclusive possession, he pays carrying expenses, only up to point that expenses
don’t exceed fair market rental value.
Accounting/Partion – available if disagreement
a. Court can partition property, of if can’t physically divide, property will be sold and proceeds divied
by fractional share. (First will reimburse person who incurred carrying expenses and benefit of
improvement.
i. Hypo:
1. Unimproved land $30k. With building, $60k.
2. A paid $4k taxes, made $1k repairs, and erected building for $10k w/o B’s
wishes. Parties can’t agree what to do – partition to happen.
3. B not entitled to benefit of building. So $30k/2 = $15k – half the cost of taxes
and repairs = $12.5k going to B
b. Agreement not to judicially partition
i. If for reasonable purpose and time, may be OK
ii. Otherwise restraint on alienation comes into play
Olivas v. Olivas (1989)
Husband appeals property division in divorce. Separated in 1983, divorce partial decree in 1984, final order dividing property in 1987. Husband
moved out during separation.
Was husband constructively ousted, entitling him to half of reasonable rental value of the home from time of initial separation?
o Home was community property during the marriage, then as tenants in common after dissolution. Ordinarily co-tenant has
no obligation to pay rent to other co-tenants not occupying property UNLESS ouster (denial of right to occupy jointly)(can
be constructive instead of resulting from an overt act)
o If hostility flows only from co-tenant out of possession, ordinarily no constructive ouster / departing spouse has abandoned
his interest in possession rather than being excluded.
o Husband has burden of proving ouster –evidence here to support that husband moved out of home in order to live with a
girlfriend + delay before demanding rent = support of inference of abandonment, so no constructive ouster.
c.
Tenancy by the Entirety
-
-
Form of joint tenancy available only to married couples – abolished in most states (20 states, including Mass have it)
Similar to joint tenancy except
o Co-owners must be legally married
o Property cannot be partitioned except through a divorce proceeding
o Individual interest of each spouse cannot be sold, transferred, or encumbered by a mortgage without the
consent of the other spouse – result that the right of survivorship cannot be destroyed by transfer of the
interest of one party
o Creditors cannot attach property held through tenancy by the entirety to satisfy debts of one of the spouses.
In states that have it, ambiguous conveyances to married couples interpreted as tenancy by the entirety usually (in
Mass, must specifically state that you’re creating it)
Precludes unilateral destruction of asset – good for protecting a family home.
Property cannot be judicially partitioned except with divorce (unlike JT and TIC)
Cannot unilaterally destroy right of survivorship (unlike JT)
Most states: interest in property, including right of survivorship, cannot be sold, transferred or encumbered by one
spouse (includes mortgage, liens, leases, etc.)
Most states: creditors cannot attach property to satisfy the debt of one spouse (except federal delinquent taxes)
Sawada v. Endo (1977)
1968, Sawadas injured when struck by car operated by K.Endo. Suits filed against him in 1969 by both Sawadas. At time of accident K owned
property in tenancy by the entirety with his wife. Before complaints served on him in 1969, Endos conveyed property to their sons (no consideration
paid – sons aware of accident and that K carried no liability insurance – and parent Endos continued to reside while reserving no life interests in the
property.) 1971 judgment entered in favor of Sawadas for $8.8k and $16.2k. Wife of K. Endo died 10 days later. Sawadas brought suit to set aside
the conveyance - trial court refused. Issue is whether the interest of one spouse in real property, held in tenancy by the entireties, is subject to levy
and execution by his/her individual creditors.
Court groups states which recognize tenancy by the entirety:
1. Mass, Mich, NC: common law tenancy by the entirety, un affected by Married Women’s Property Acts. Only in Mass is estate in its entirety
subject to levy by husband’s creditors. **Mass law described here is outdated.
2. Alaska, Ark, NJ, NY, OR: Interest of the debtor spouse in the estate may be sold or levied upon for his or her separate debts, subject to the
other spouse’s continent right of survivorship. (Alaska makes exception for homestead)
3. DE, DC, FL, IN, MD, Missouri, PA, RI, VT, VA, WY: Attempted conveyance by either spouse is wholly void and estate may not be subject to
separate debts of one spouse only.
4. KY and TN: contingent right of survivorship separately alienable by spouse and attachable by his creditors during the marriage.
HI joins group 3, recognizing 3 types of common ownership as distinct. Also Married Women’s Property Act of 1888 not intended to abolish tenancy
by the entirety (purpose was t abrogate husband’s common law dominance and place wife on level of equity in terms of ownership)
Court cites public policy and importance of single-family residences – doesn’t want to permit TPs to become tenant in common or
joint tenant with one of the spouses.
Holding: Estate by the entirety is not subject to claims of the creditors of one of the spouses during their joint lives. Therefore, conveyance to their
sons was not in fraud.
8.
Landlord-Tenant Law
a. Leaseholds
-
-
-
Division of property interests between landlord and tenant – classified as commercial or residential (analyzed by
courts differently for policy reasons – CL applied more often for residential than commercial as comm. tenants more
likely to have sufficient bargaining power.)
Leasehold is a form of estate: non-freehold, or estate of years
o Possessory or present interest / Reversion or future interest
Categories of Tenancies
o Term of Years
a. Lasts for specified period of time
b. May be terminated early on happening of some specified condition stated in the lease
c. FI retained by landlord is a reversion. (If interest passes to TP at end of leasehold, TP has a
remainder.)
d. Death of either party does not terminate the tenancy
e. Landlord not entitled to evict before end of the term, except if tenant breaches material term of
lease
o Periodic Tenancy
a. Renew automatically at specified periods unless either landlord or tenant chooses to end
b. E.g. month-to-month tenancies [Many states require a month’s notice to end one though]
c. Death of either party does not terminate the tenancy
d. Landlord can evict only by providing notice
o Tenancy at Will
a. Similar to periodic but can be ended with no notice by either party – effectively abolished in most
states by requirement to provide notice.
b. No difference between this and periodic tenancy if notice period mandated by statute is the same
for both, except…
c. Traditionally, death of either landlord or tenant terminates tenancy at will
d. CL required no notice, though state statutes now specify (e.g. Mass = 30 days)
o Tenancy at Sufferance (Holdover Tenant)
a. Tenant who wrongfully stays after leasehold terminated.
b. Term is to distinguish from a trespasser, who never had right to possess property. Legal procedures
for evicting trespassers differ. Eviction and court proceeding generally required to evict a tenant at
sufferance.
c. Landlord who accepts rent checks from a holdover tenant may be held to have agreed to a new
tenancy calculated by the rental payment schedule (e.g. monthly payment creates month-tomonth tenancy)
Statute of Frauds
o
o
o
-
-
-
-
-
-
b.
-
Interests in real property must be in writing to be enforceable.
Leases of more than 1 year must be in writing
Leases of one year or less are enforceable whether written or oral.
a. American states have statutes allowing for oral leases of one year or less, valid even if term is to
begin at some time in the future
b. Mass and Maine statutes differ: Oral transfer creates tenancy at will only
c. Note that only duration of tenancy is affected by SOF – Oral agreement still regulates other terms,
e.g. amount of rent payable and duty to pay heat
d. Even if lease violates SOF, may be given full effect under doctrine of part performance (especially if
substantial performance, such as making repairs, already undertaken)
Regulation of L-T Relationships
o Uniform Residential Landlord and Tenant Act of 1972 passed in some form in at least half the states
o Procedural Regulations (ordinarily notice and eviction proceeding for landlord to terminate)
o Substantive Regulations define parties’ obligations to each other (e.g. housing codes) – both statutory and
CL.
a. CL: all leaseholds include implied covenant of quiet enjoyment by which the landlord promises not
to disturb the tenant’s use and enjoyment of the property.
End of the Tenancy: Landlord’s Right to Recover Possession v. Tenant’s Right to Remain (Just Cause Eviction and
Foreclosure
o Landlord entitled to evict the tenant if T breaches material terms of lease (mainly failure to pay rent or
failure to pay rent on time). T cannot be evicted before the end of the term unless tenant has beached the
lease.
Landlord has no obligation to renew a leasehold – can refuse for any reason, with some exceptions:
o Federal and state antidiscrimination laws prohibit nonrenewal for discrimination
o Statutory or local rent control protected from eviction unless landlord shows just cause
o Some states or localities regulate eviction for purpose of converting apartment units into condos
o Federal law protects public housing occupants from eviction without just cause
o Ts protected if landlord’s motivation is to retaliate against them for asserting their right to habitable
premises (e.g. by calling the housing inspector to report code violations)
DC, NJ, and NH only states with statutes granting tenants in private housing to continue possession unless landlord
has just cause to end the tenancy or refuse to renew leasehold. Statutes all for eviction if tenant not paying rent on
time, damaging premises, violating reasonable rules, or if landlord or landlord’s family member wants to move in,
or if landlord wants to convert to non-rental use.
Section 8: Federal gov’t subsidizes low-income families renting from private landlords. Both private landlords and
public housing has rules limiting eviction without “good cause.”
Some states and many municipalities protect eviction of existing tenants when apartments are converted to condos
– some protect only particular classes (like elderly or disabled). Other statutes give tenants preference in purchasing
either the building or their particular units by granting Ts preemptive rights or rights of first refusal.
Landlord’s Right to Transfer the Reversion
o T ‘s leasehold includes right to possess in exchange for rent. L’s rights include reversion. Either may transfer
her property interest. If L dies or sells property, new owner receives what the landlord was able to sell or
give, that is the landlord’s reversion subject to the tenant’s leasehold.
o If L holds mortgage and loses property through foreclosure…
a. If landlord leased property first, then borrowed money, lease takes priority since it was first in time
b. If property subject to a mortgage and lease follows, mortgage takes priority. Mortgage gives
lender power to force a sale. Ts who rent take their apts subject to the mortgage
c. If landlord has life interest and dies, landlord’s interest ends when he dies and T’s lease ends
automatically.
Conflicts About Rent (Duties, Rights and Remedies)
Main rights reserved by landlord in relation to tenant are:
o The right to receive the agreed upon rent
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o Right to have the premises intact and not damaged, subject to normal wear and tear
o Landlord’s reversion at end of lease term.
If T breaches by not paying rent and refusing to leave – L seeks back rent and eviction.
If T breaches by not paying rent and moves out before end of term – L seeks back rent, and if new “rental price” is less than the rent under
the breached lease, L may sue for difference between new and old for remaining period of the lease.
Possession and back-rent:
o T may respond by asserting defenses based on implied warranty of habitability and retaliatory eviction, or attempt to evict is
unlawful discrimination.
The holdover tenant and the renewal of the tenancy:
o Most states hold that new tenancy is periodic if L accepts rent
o Minority of states hold that new term is created (same duration as original term of years) if L accepts rent.
o L also free to treat tenant as tenant at sufferance and sue for possession – must follow procedures to evict a month-to-month
tenant including providing requisite notice. L can avoid this by suing immediately and either 1 refusing to accept the tenant’s
proffered checks or b) cashing the checks while writing on the back that L is not agreeing to renew the tenancy but merely using
the check to cover rental value from the tenant at sufferance
Self-help:
o Almost all states hold that L cannot engage in “self-help” to remove tenant who breaches lease and refuses to leave. L must
generally evict through court proceedings. Legislature provides for summary procedure to allow L’s a relatively quick judicial
process for a court order.
o If LL uses self-help, setting up for huge liability (3x rent + attys fees)
Summary Process:
o Allows for relatively fast judicial determination of landlord’s claim of a right to regain possession of property
o Some prevent Ts from raising defenses
Landlord’s Duty to Mitigate Damages
o If T breaches lease and moves out, L can choose among 3 remedies:
o Accept tenant’s surrender
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By moving out, T has created implied offer to end term which L may accept.
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L can still sue for back rent owed but not paid for time before T abandoned property
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L can sue immediately for damages for breach of the lease (different from future rent) = agreed upon rental price
minus the fair market price + costs of finding a replacement tenant and lost rent in the meantime.
o Re-let on the tenant’s account
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L can refuse to accept the surrender and re-let the apartment on the tenant’s account for a new reasonable rent. In
some states act of re-letting may be taken as evidence that L has accepted surrender. Must be made clear to T that
refusal occurred in order to hold tenant to the rent later.
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Valuable if a second tenant comes in who also leaves before termination of lease and L unable to find replacement –
holds T1 liable for lost rent for entire term of the lease.
o Wait and sue for the rent at the end of the lease term versus mitigate damages
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L may do nothing, wait for end of lease term, and sue for remaining unpaid back rent. (To sue in middle of lease term L
must ask for damages)
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Almost all states reject this option now and instead apply contract doctrine that requires the aggrieved party to
mitigate damages. Obligation on L to act reasonably in seeking out another tenant. If L does not mitigate, can still
recover reasonable costs of dining a new tenant, rent for time that premises was vacant and L looking for a tenant,
and difference b/w the rental price and new rent paid if lower.

If duty to mitigate exists: LL limited to difference between rent and FMV, or if attempt to mitigate is made
without success LL entitled to entire rent due
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If no duty exists: LL entitled to entire rent due at end of term
A few states retain traditional rule that landlord has no duty to mitigate damages (AL, NY (conflicting), PA, DC). In NY statutes give tenants
right to sublease or assign with landlord’s consent and right to get out of lease if landlord refuses to consent reasonably to suitable
subtenant.
o In Mass, no SJC case on point. Most likely would be that LL has duty to mitigate in residential circumstances and unable to waive
this duty.
Common law duty to mitigate damages – landlord free to leave it vacant, but only entitled to difference between market rent and contract
rent and costs of finding replacement tenant. BUT some states, Uniform Residential Landlord and Tenant Act provides that a if landlord
doesn’t use reasonable efforts to rent the dwelling at fair rental, landlord can recover nothing.
Policy pro duty to mitigate: efficient use of dwelling, gives landlord benefit of the bargain b/c he can be re-compensated for extra costs
while still obtaining the economic value of the leasehold, effects without it on tenants could result in loss of social wealth.
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Policy against duty to mitigate: Landlord owns property right – tenant has no right to take this right from the landlord without offering
adequate compensation (remainder of bargained for rent)
“Acceleration clause” (making the rest of the rent due immediately if tenant abandons) is a form of liquidated damages. (Landlord
permitted to receive double.) Some courts allow them because parties voluntarily agreed to the terms, but will not enforce it if it
constitutes a “penalty” or amount is “unconscionable.” It’ll be unenforceable if they are not a reasonable estimate of the actual damages
the landlord is likely to suffer. Most courts don’t allow clause to waive duty to mitigate.
Majority rule is that landlord has burden of proof to show he attempted to mitigate damages.
Sommer v. Kridel (1977)
S=owner, L. K=T. K pays first month + security deposit on 2 yrs lease – before taking possession send L letter surrendering and forfeiting money
already paid. S did not reply to the letter. TP ready and willing to lease the space, but turned away. Space not re-rented until 1 yr 3+ months after
date of letter at same rate. S sued for total on full 2 year lease and included no reduction for $690 already paid. Trial J/D on “justice and fair dealing”
despite lease drawn to reflect “settled law.” Held that P’s failure to make response to letter was tantamount to acceptance, terminating tenancy and
obligation to pay rent. App. Ct. reversed.
Similar facts: RR Co v. P also decided. P entered 2yr lease which prohibited T from subletting w/o L consent. D took possession for 1 yr and paid
through it. RR filed complaint 9 months later demanding payment for rental for period apt was vacant. Tr. Ct. J/P. App Ct affirmed by decried rule. NJ
Sup. Ct. grants cert.
Court acknowledges trend in favor of mitigation requirement and adopts it. L carries burden of showing he used reasonable diligence
in attempting to re-let. For S v.K: Classic example and no showing that new tenant wasn’t suitable. J/D. In RR v. P: J reversed and
remanded because no factual determination made on L’s efforts to mitigate. BOP on L to do this. T may attempt to rebut evidence by
showing he proferred suitable tenants who were rejected.
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Massachusetts – Sample Notice & Process
o MGLc.186 §§ 11-23, 15A, 17
o 14 days notice required
o Provision to waive notice for nonpayment in residential lease is void (considered false/misleading term, consumer protection)
o Opportunity to Cure available to T (revive tenancy)
o Lease: Pay past rent owed (w/ interest and costs of filing eviction case by answer date if summons and complaint
received)
o Oral: 10 days after receiving notice
o Note that for Commercial leases, ability to negotiate around 14 day notice exists.
o LL, when evicting, surrenders back rent
Hypos: Procedural Differences
o Written month-to-month tenancy & T fails to pay rent for 3 months
a. LL can give notice and proceed with action (to recover back rent) after opportunity to cure has passed
b. OR, LL could terminate lease – 30 days notice all that’s required for month-to-month tenancies
o Written fixed term (3 year) lease & T fails to pay rent for 3 months
a. LL only able to end tenancy by Notice and Summary Process
b. No option to terminate earlier because of fixed term.
Beyond non-payment of rent
o T has to abide by other covenants (e.g. duty not to commit waste, noise) – LL can evict if “material terms” violated
o LL must use Summary Process
a. In Mass, notice for other violations outside of failure to pay rent = 30 days. Notice period can be stated in lease (standard
lease says 7 days.)
b. Generally no right to cure (although courts have equitable powers)
c.
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Conflicts About Occupancy (Delivery of possession, sublet, and assignment)
Landlord has duty to deliver possession of the rented premises to tenant at beginning of leasehold (majority rule)
o If prior tenant wrongfully holds over – landlord has obligation to remove tenant within reasonable time
o Failure to deliver actual possession is breach of lease by landlord
o
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Tenant who is shut out may either terminate and recover damages as compensation for having to find another place, or affirm
and withhold rent period during which she could not occupy and recover damages for cost of temporarily renting alternative
housing.
Minority of states follow traditional rule under which landlord only has duty to deliver right to possession, but no duty to deliver actual
possession – new tenants responsibility to evict holdovers, and obligated to pay rent even though not in possession. New tenant’s remedy
is to go after holder tenant for damages.
Landlord’s Right to Inspect and Repair: §3.103 of Uniform Residential Landlord and Tenant Act:
o A tenant shall not unreasonably withhold consent to the landlord to enter for specified purposes (inspect, repair, exhibit to new
purchasers, tenants, workmen)
o Landlord may enter in emergency without tenant consent
o Landlord can not abuse right of access or use it to harass tenant. Unless its not practical, landlord shall give tenant 2 days notice
of intent to enter and may enter only at reasonable times
o Landlord has no other right of access except 1. Pursuant to court order 2. Permitted to fix damage caused by tenant or in case of
extended tenant absence. Or 3. Tenant has abandoned
Tenants have nondisclaimable right to receive visitors and to marry and live with spouse.
Tenants Right to Assign or Sublet
o When lease is silent: Tenant can transfer by assignment or sublease (rule promotes alienability) – assignment means all future
rights transferred – sublease has future right reserved.
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Assignment: assignee directly responsible for all undertakings of the original lease (tenants covenants run with the
land; privity of estate)
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Sublease: covenant does not run with the land and landlord has no right to sue subtenant under original lease unless
subtenant expressly promises the tenant to pay the rent to the landlord (then landlord can sue subtenant as third
party beneficiary of contract)
o When lease prohibits: Despite restraints on alienation of fee interests generally held void, restraints in alienation of leaseholds
very likely to be upheld. Clause seen to protect landlord from being forced to accept a substitute tenant who may be less
creditworthy.
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Restraint here is generally held to be “reasonable” because of LL’s reversion right
o When lease requires landlord’s consent: Modern trend focuses on intent of parties so clause that says “subletting allowed
subject to landlord’s consent” interpreted to mean subletting or assigning. Q as to whether “reasonableness” should be implied.
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Arugments for LL
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Benefit of the bargain
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Not claiming right to act unreasonable but right not to have to defend actions in lawsuit
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Promotes alienability (if imposed on LL, LLs would simply say no to sublease altogether)
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Arguments for T
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Promotes alienability of leasehold
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Contract law: implied duty of good faith and fair dealing
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Restraint on Alienation law already requires reasonableness and this is a restraint
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No implied duty of reasonableness is inconsistent with duty to mitigate damages
o Slavin= Mass rule
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No requirement of reasonableness in residential leases – most concern over plethora of litigation over reasonableness
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Other factors: rent control so no financial gain, restraint on alienation allowed, legislature better than CL for this
Kendall v. Ernest Pestana, Inc. (1985)
o Issue is with provision in commercial lease that lessee may not assign or sublet without lessor’s prior written consent – in
absence of a provision that such consent will not be unreasonably withheld, a lessor may unreasonably and arbitrarily withhold
consent. 14.5k sq. ft. of hangar space at municipal airport, owned by city of san jose, leased to Perlitch who then assigned to
Pestana. Prior to assigning to Pestana, Perlitch’s entered into 25 year sublease with Bixler (original 5 yr term + 4, 5 yr options to
renew with rental rate increased every 10 years in some proportion as rents increased on master lease) B used space for
airplane maintenance business. B rented for 10 yrs then sold business to Kendall (+others); sale included lease. B requested
consent to assign to K from Pestana (Perlitches successor in interest) and Pestana refused to consent – and demanded increased
rent and more onerous terms as condition of consenting.
o Calif follows CL rule that leasehold interest freely alienable, but contractual restrictions permitted. Majority of jurisdictions that
when lease contains approval clause, lessor may arbitrarily refuse . Minority rule gaining ground recently is that consent may be
withheld only where lessor has a commercially reasonable objection – CT adopts minority rule.
o Impetus for minority rule
Lease as conveyance of leasehold interest: State code makes void unreasonable restraints on alienation. Rest. adopts
minority rule on approval clauses.
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Lease as contract: Emphasis on good faith and fair dealing inherent in every contract. Discretionary power (of lessor)
should be exercised in accordance with commercially reasonable standards.
Refusal to consent was reasonable = Q of fact. Some factors: financial responsibility of proposed assignee, suitability of the use
for the particular property, legality of the proposed use, need for alteration of premises, nature of occupancy. Denial solely on
basis of personal taste, convenience, sensibility, or with purpose to charge a higher rent than originally contracted for, is not
commercially reasonable.
Privity of contract or privity of estate (e.g. If Kendall stops paying rent - City can still sue Perliches on privity of contract. Pestana
can sue Kendall on privity of estate)
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Litigation:
o Landlord can seek back rent, or possession (eviction). Landlord can also seek damages (e.g. cost of repairs)
o Different defenses available to tenant under each. Tenant can also claim or counterclaim for damages or injunctive relief (e.g.
order landlord to fix the apartment.)
d.
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Covenant of quiet enjoyment; constructive eviction
Important implied term (no need to be written or even discussed, and may not be waivable) is covenant of quiet enjoyment.
Considered a dependant covenant – if L breaches, T not required to pay rent
Covers actual (substantial interference) and constructive (deprivation of space) eviction
o Actual eviction: If LL physically bars tenant, all obligation to pay rent ceases.
o Partial Actual eviction: T justified in moving out. But if T stays trend is to abate the rent (traditional rule relieved tenant of
obligation to pay rent completely, even if T stayed.)
o Constructive eviction: If LL substantially interferes with T’s quiet enjoyment of premises, T can move out and not liable for rent.
Theory is its equivalent to physical eviction.
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2 elements:
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Substantial interference w/ T’s use and enjoyment
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Wrongful act or failure to act by L
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Essentially a tort claim
o Partial constructive eviction: Traditional rule is that T can raise it as defense only if he moves out within reasonable period of
time and to establish must show no one in their right mind would stay. If T stays, evidence that interference is no substantially
serious. From Minjak – remedy is abatement of rent.
Tenant has duty (often express in lease, or by state statue) to not to disturb the quiet enjoyment of other tenants. If violated, LL entitled
to evict. If it rises to level of CL nuisance, other tenants may have claims too.
Traditionally, LL no responsible for acts of other tenants unless the lease specifies otherwise. Must show LL acted in a way that interfered
with tenants interest. Traditional rule holding in most states. Modern trend is to find constructive eviction.
Minjak Co. v. Randolph (1988): M = landlord – began summary non-payment proceeding. D’s say unable to use 2/3 if loft space due to landlord’s
renovations and were entitled to abatement of 2/3 rent and as to remaining 1/3 space, entitled to further rent abatement due to failure of landlord
to supply essential services.
Lease started 1976 as commercial (despite building used predominantly for residential and landlord informed that Ds would be living
there)
In 1977, tenant above them began to operate health spa equiptment business – jacuzzis and bathrubs filled to capacity with water. From
1977-1982 D’s had 40 separate water leaks from 5th floor. D’s expensive musical instruments ruined (space part used as music studio).
In 1981, landlord started construction work to convert building to Class A – converting freight elevator to passenger elevator – elevator on
their side of building removed and debris became a problem – tenants attempts to shield themselves with plastic sheets didn’t work –
medical problems and damage. Many examples of dangerous construction other conduct interfering with tenants use and enjoyment of
space.
Jury awarded rent abatements (tiered). App Ct reversed: doctrine of constructive eviction didn’t apply as tenants didn’t abandon
possession and struck punitive damage award. Sup Ct reinstates punitive damages – “morally culpable conduct in light of dangerous and
offensive manner in which the landlord permitted the construction work to be performed, the landlord’s indifference to the health and
safety of others, and disregard for the rights of others”
Blackett v. Olanoff (1976): D’s raise constructive eviction as defense against landlord’s claim. Tenants were “very substantially deprived” of quiet
enjoyment “for a substantial time.” Landlord leased nearby premises as bar/lounge – though he didn’t intend to create the conditions, he had it
within his control to correct. Landlord introduced commercial activity into an area leased for residential use – and lease contained provision that
lounge had to be constructed so that it could not be heard outside of the building. Court distinguishes from situations where annoyance of one
residential tenant by another occurs and landlord not chargeable with annoyance. If landlord “creates a situation and has the right to control the
objectionable conditions” he is liable.
e.
Implied Warranty of Habitability
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Traditional view caveat lessee – Majority rule today is implied warranty.
Implied in every LL contract by operation of law. Only couple states hold out without a case on point.
Mass case to recognize it is Boston Housing Authority v. Hemingway 363 Mass. 184 (1973)
LL obligated to comply with housing code.
Prior to 1970s, not the case – if T wanted it, had to bargain for it. Courts also held that contractual obligations of LL
and T were independent rather than dependent. Both repudiated in most states today. Law changed first with
Javins.
Majority rule: implied warranty of habitability.
o Some states measure by building code provisions, other by “general community standards of suitability for
occupancy” which include, but are not limited to, local housing codes.
o Implied warranty not violated until has been notified of problem and has had a reasonable opportunity to fix
it. (Minority – violation moment condition occurs. Or – violation on notification.)
Tenant’s Duty not to Commit Waste: T’s obligations include not damaging premises and keeping them clean/safe. T
who intentionally or negligently damages premises can be evicted.
URLTA: Uniform Residential Landlord and Tenant Act
o Remedies to vindicate T’s rights:
a. Rescission – right to move out before end of lease term
b. Rent withholding (implied warranty of habitability grounds distinguished from constructive
eviction – in CE, T ordinarily required to move out to become entitled to stop paying rent)
i. Advisable for T’s to deposit usual amount in an escrow account and to give notice to L
beforehand.
c. Rent abatement – usually rent withholding occurs and when sued by L, argues that rent should be
abated. Amount of rent reduction determined by “fair market value test” usually.
d. Repair and deduct: T pays for and makes needed repairs then deducts cost – regulated by local
statutes to limit amount deducted, or types of repairs allowed
o Injunctive relief, or specific performance – T brings suit
o Administrative Remedies: Local codes have procedures for enforcement by local housing inspectors –
inspector empowered to bring court action and seek damages (paid to state, not to T) – and often, egregious
violations may be punishable by criminal penalties
o Criminal Penalties
o Compensatory damages: T brings claim as independent lawsuit or as counterclaim to L’s suit – claim for
damages can seek amount greater than rent (rather than merely a reduction or reimbursement) – e.g. if
violation harms personal property, costs of staying in hotel, etc.
Commercial leases: Most states adopted position of dependant covenants, but some retained older view they are
independent, unless lease states otherwise. Some states find implied warranty of suitability for intended purposes.
Policy Considerations
o For
a. Urban dweller today is different – old property principles don’t make sense
b. Merchantability – Implied by consumer protection law, relates to products and services and today
T more like a consumer. Easy to tie to housing codes already enacted.
c. Unequal bargaining power, particularly for residential and for areas short on housing.
d. Substandard housing affects entire society and market values of whole neighborhood,
neighborhood safety, and health concerns
e. Ts function as mini-housing inspectors since state can’t supply enough to adequately enforce
housing codes
o Against
a. Freedom of contract
b. Property principles: T has only present interest, L has reversion interest
c.
d.
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Inconsistent with “summary process”
Undermines low and middle income housing stock – LL’s can take properties off the market (if no T
to pay rent, no $ to pay for repairs)
Must be a “material” defect (something that endangers or seriously impairs health or safety of T) Factors for court
in Mass (from Hemingway):
o Seriousness of defect and impact on habitability
o Length of time
o LL’s notice
o T’s conduct
o Whether premises can be made habitable w/i a reasonable time
Unlike COQE, fault on part of LL is irrelevant (no need to prove state of mind, or other tort requirements)
Once repair made, full rent due again (but T entitled to abatement/suspension for period of time it took to make
the repair)
Massachusetts Statute: T can withhold rent if:
o Notice made to LL or agents
o Conditions not caused by T or person acting under T’s control
o Conditions endanger or materially impair the health and safety of T
o Not a boarding house or hotel occupied for less than 3 months.
T cannot assume the risk for defects obvious and disclosed to T at beginning of tenancy. Court will view it as a
waiver, not allowed.
Notice
o LL presumed to have “notice” if condition exists at beginning of tenancy (supposed to inspect)
o After lease commences, LL must get some form of notice, doesn’t necessarily have to come from T (could
come from another T, agent, housing inspector )
a. In some jurisdictions, T must contact housing inspector
Commercial Leases:
o Generally no implied warranty of suitability
o In jurisdictions that recognize it, often held its disclaimable/waivable (more equal bargaining power, also T
more likely to redo or gut the space)
Remedies, in Mass:
o Terminate lease and move out
o Withhold rent
o Reimbursement for past rent
o Repair and deduct
o Injunction/specific performance
o Administrative remedies
o Criminal penalties (willful or intentional denial of necessary services)
o Compensatory or actual damages (damages beyond rent abatement, e.g. Minjak – not common)
IQOH v. COQE
o Similarities
a. Dependant clauses
b. Cover physical defects (but COQE can go beyond to cover things like noise and security)
o Differences
a. COQE must show substantial interference, within LL’s control (fault/foreseeability)
i. IWOH easier to prove
b. COQE only remedy is usually to cut short the lease (by T moving out, good way to demonstrate
that interference was substantial), otherwise rent abatement
i. IWOH has multitude of remedies and moving out is not required to invoke it
c. COQE implies in both commercial and residential leases (IWOH usually only in residential)
Javins v. First National Realty Corp. (1970)
Held that warranty of habitability (measured by standards set in housing regulations of D.C.) is implied by law into leases of urban dwelling units +
breach of warranty gives contractual remedies. 3 T’s sued by landlord for not paying rent in April – T’s alleged 1500 violations of Housing
Regulations.
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Court review traditional analysis as lease being conveyance in interest in land – may still be the case in rural, farming or commercial land –
but, modern times city dweller wants “shelter” (package of goods and services – including structure, but also adequate heat, light,
ventilation, plumbing, secure windows and doors, proper sanitation, etc. Trend to treat leases as contracts.
Sellers and developers now responsible for quality of their product – warranty of fitness. Why no extension to warranty of quality for
renters? No good reason court says except reliance on traditional rule.
Court gives 3 reasons for change:
o CL rule based on factual assumptions no longer true and can no longer be justified
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Land was more important than structures on the land (T require to pay rent even if structure was destroyed – T could
make repairs) from middle ages – 1800s began changing. Urban city dwellers are not “jack of all trades” farmers and
interest in space to occupy.
o Consumer protection cases recently require old rule to be abandoned to bring residential L-T law into harmony with it

L sells housing as commercial businessman – greater opportunity, incentive and capacity to inspect and maintain the
condition of the building – T must rely. Also, T may legitimately expect that apartment will be fit for habitation for time
period it is rented, and since T continues to pay same rent throughout lease, L should continue to keep premises as in
their beginning condition.
o Nature of modern urban housing market dictates abandonment

Inequality of bargaining power, T very little leverage to enforce demands for better housing, impediments like racial
and class discrimination, standardized form leases ---all mean that L place T’s in a take it or leave it situation. Shortage
of adequate housing in area. Poor housing detrimental to whole society.
Regulations provide standards, which party to meet each standard, and system for inspections/notifications/penalties. Regulations silent
on private remedies but two previous decisions held that regulations create legal rights and duties, enforceable in tort. [Prev. case: L
knew violations at time lease signed– lease void. Court says untenable not to take effect after lease signed]
This case: T’s obligation to pay rent dependant on L’s obligations (including warranty of habitability]. T’s must be given opportunity to
prove:
o Whether the alleged violations existed during the period for which past due rent is claimed, and
o What portion, if any or all, of the tenant’s obligation to pay rent was suspended by L’s breach.
f.
Retaliatory Eviction
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Famous case: Robinson v. Diamond Housing (1972): L lost suit against T when T raised defense of warranty of
habitability (WHO) violated: large pieces of plaster missing, no step, front porch shaky and unsafe, wall in bedroom
not attached to ceiling which moved back and forth when pressed, nails protruding in stairway, pane of glass
missing form living room window, etc. L brought second suit for purpose of ending periodic tenancy by providing 30
days notice. T again argued WOH violated, and L said he was unwilling and unable to make legally required repairs
and intended to take apartment off the rental market – if he were unable to evict, he would be unable to do so.
Court said T could successfully raise WHO even in these circumstances – to hold otherwise would undermine
protection. Court says jury can judge L’s state of mind by examining objective manifestations – here L’s desire to
remove a tenant who is not paying rent is not a legitimate purpose. L doesn’t have to be saddled with T forever in
such a situation, but must come forward with legitimate business justification and convince jury its desire to evict T
is motivate by this proper concern. Desire to take unit off the market, by itself, is not a legitimate business concern –
must have reason.
o Public policy: Other T’s might not complain in complex, or elsewhere, to assert their rights. If L really
couldn’t afford to fix and make repairs it WOULD have been sufficient per the opinion. (He was claiming he
was unable or unwilling.)
o CL in Robinson is codified in Mass
o Presumption of retaliation if w/i 6 months
a. Rebuttable by LL (must have sufficient independent business justification)
b. T then has opportunity to show reason is pretext
URLTA doesn’t explain how long T may stay. Some states have statutes that include a term of years for refusal to
renew. (e.g. NY – not required to extend past 1 year)
o Doesn’t mean LL can’t evict, but must show other reason
Reason for eviction must be related to property/tenancy
o E.g. LL mad that T’s organize against the election of his sister for mayor – Ts cannot claim retaliatory eviction
(Imperial)
Hillview Associates v. Bloomquist (1989):
T’s of mobile home park (125 of them) began to meet informally to discuss physical condition of premises and recent increases in rent – agenda
with specific concerns for health, safety and quality of living there generated. T’s contacted AG’s office + state rep. Meeting one month later (Feb. )
with park maintenance supervisor to lodge complaints – calm. Relationship erode after lack of action taken by management. April meeting resulted
in shouting match and physical altercation. Management then served ultimatums on tenants to sign park rules or be evicted + 30 day notice of
termination on select tenants present at April meeting. NOTs didn’t provide specific grounds, as required by statute, so re-served in June on same
tenants. At end of the 60 day period, all tenants remained in possession. Hillview filed for forcible entry and detainer action – T’s raised defenses of
retaliatory eviction and waiver.
Iowa act prohibits retaliatory conduct by L’s:
o L can not increase rent/decrease services/ bring or threaten to bring action/ fail to renew after any of the following:

T complaint to gov’t agency for enforcement of building or housing code violation

T complaint to L for violation

T organized or became member of T’s union or similar org.
o Evidence of complaint within 6 months prior to alleged act of retaliation creates presumption that L’s conduct was in retaliation.
No presumption if T makes complaint after NOT.
o L can bring action for possession, in light of above, if violation was caused primarily by lack of reasonable care by T, or T in
default of rent.
Factors tending to show L’s primary motivation was not retaliatory:
o L’s decision = reasonable exercise of business judgement
o L in good faith desires to dispose of entire property free of all tenants
o L in good faith desires to make different use of property
o L lacks financial ability to repair, and therefore in good faith desires it to be free of any tenant
o L unaware of T’s activities protected by statute
o L did not act at first opportunity of learning of T’s conduct
o L’s act not discriminatory
Here – T’s can organize and participate in activities designed to legitimately coerce L into taking action – expect arguments, but limit to
type of conduct tolerated. One tenant crossed line by striking manager so her termination is legitimate, not retaliatory.
Imperial Colliery Co. v. Fout (1988)
IC brings eviction proceeding against F – F defends it’s in retaliation over his participation in a labor strike. Issue whether retaliation motive must
relate to T’s exercise of a right incidental to the tenancy (Yes, it must relate). F works as coal miner for MC. MC and IC are interrelated companies – F
pays $1 annual rent with lease that is terminable by either party on one month’s notice. F receives 45 day notice, F’s attys say due to family and
monetary problems F unable to vacate by then. IC voluntarily agrees to two month extension. 2 nd letter at end of May requesting another abeyance
– IC doesn’t respond and sues for possession in June.
Court cites other cases/states where T’s activity protected against retaliation where it bore a relationship to some legitimate aspect of
tenancy (e.g. where L sponsors proposal to redesignate land as urban from agricultural and T’s testify against it )
Court refuses to extend this to F who says IC’s conduct violates public policy to promote rights of association and free speech by Ts.
Activity F points to as triggering his eviction is unrelated to habitability of his premises.
g.
Consumer Protection and Lead Paint Statutes
Treating T’s as “consumers of housing services”
Benefit over IWOH: some unfair trade practices/consumer protection statutes provide for multiple damages,
reimbursement of atty costs, or both.
-
-
Conduct must be found to be “unfair” or “deceptive” – like retaliatory evictions, or failure to maintain in accordance
with housing code - in Mass, including illegal or unenforceable clauses in residential leases, even if L never attempts
to enforce it and T admits to never having read it, are held to be a practice that “injures” Ts.
Traditionally, L’s immune from liability to Ts for injuries arising out of condition of premises – Currently though, L’s
are liable for injuries arising out of L’s negligence, which includes failure to comply with housing codes or implied
warrant of habitability.
o Strict liability – failure to comply, regardless of whether reasonable landlord would have known of and
corrected the defect applied, adopted in some states – California (T not in position to inspect for latent
defects – must rely on L’s implied assurances of safety).
o Negligence standard applies otherwise. – Prevailing rule
-
-
Some courts allow for damages for emotional distress resulting from violation of statutory duties and implied
warranty of habitability – ordinarily involve extreme and outrageous conduct – persistent lack of heat or severe pest
infestation, or L’s failure to change locks and woman’s apartment invaded and she was attacked a second time.
3 Questions to ask re Consumer Protection Statutes (responses based on Mass statute):
o Are T’s protected and is the L covered?
a. T’s protected?
i. Trade and Commerce: statute definition includes rental and sale of real property
ii. Tenant considered consumer of goods and services
b. LL’s covered?
i. Statute silent on LLs and if a class of them is covered or not
ii. Billings: Homeowner rented lower level of his house – court said “low level” LL was
engaged in transaction more “private in nature” – his purpose in renting the lower floor
was to help pay his mortgage, not to engage in business/commerce CP statute doesn’t
cover him.
o What kind of conduct constitutes unfair or deceptive acts or practices?
a. Not defined in statute – left up to statutory interpretations
b. Per AG’s office:
i. Deceptive = failure to disclose to consumer any fact which had it been disclosed would
have influenced the consumer not to enter into the transaction in question.
ii. Unfair = principles of fair dealing which the conscience of the community may
progressively develop
iii. Unfair deceptive acts include – unenforceable clauses, warranty of habitability,
retaliatory eviction.
c. From Case Law:
i. Torts such as negligence or IIED are covered (tort is “injury”). Still must prove all
elements of tort.
ii. Treble damages provide incentive for consumers to use the CP law to their advantage
where small amounts of money are involved.
iii. Haddad: LL is slumlord; property has many public health code violations, despicable
living conditions, threats and emotional distress. Also LL sued T first for not paying her
rent.
1. TT’s claims:
a. Breach of implied warranty of habitability
b. Breech of the covenant of quiet enjoyment
c. Negligent failure to maintain the premises
d. Intentional infliction of emotional distress
e. Retaliation
f.
93A consumer protection
o What is the extent of potential liability?
a. Elements of each claim:
i. 93A: meet LL/T requirements of statute, unfair or deceptive act (requires “willfull or
knowingly” action on behalf of LL)
ii. Negligence: all tort requirements (duty, breach, causation, damages)
iii. WOH: T is “renting” and there’s a housing code violation needs to be shown – strict
liability
iv. COQE: Substantial interference + fault/foreseeability (harder to show than WOH)
b. Lead Paint
i. LL’s obligation to remove or contain lead paint, protect children under 6yo
ii. Strict Liability
iii. For lead paint, don’t need to look to 93A – look directly to lead paint statute
iv. Damages:
1. Actual
2. Punitive if LL acts willfully (not even limited to treble damages like 93A! But
some constitutional limitations apply by state, may generally be 3x amount of
actual damages)
v. Parental contribution (as joint tortfeasors)
1.
2.
3.
h.
Allowed in Ankiewicz v. Kinder
Policy reasons against permitting this:
a. Purpose of statute no fulfilled
b. Disincentive for parents to bring claim on behalf of child
c. Practical limitation of reducing child’s recovery since family is usually
a single economic unit.
After Kinder, legislative change dictates parents can only be sued in a separate
action after judgment on claim by child - D cannot bring them in as TPD to
ensure jury doesn’t hear that evidence – short SOL too (1 yr)
Fair Housing
Regulates private discrimination
2 key aims:
o Allow everyone to obtain housing on the market regardless of sex, race, familial status, nationality, disability,
etc.
o Prevent stigma and sense of outrage associated with living in a society that condones public expression of
discriminatory selection criteria
-
Federal Fair Housing Act: 42 U.S.C. §§3601-3605, 3607, 3613, 3617, 3631
o Protected Classes: §3604
a. Race, color, religion, sex, familial status, national origin
b. Handicap
o Covered Conduct: §§ 3604, 3605
a.
o
Entities engaging in “residential real estate-related transactions” can’t discriminate (i.e. making
loans)
b. Can’t refuse offer or alter terms, conditions, privileges, of sale or rental, based on race, color,
religion, sex, familial status, or national origin.
c. Can’t publish for sale/rent that indicates preference for any of the above.
d. Can’t discriminate because of a handicap – or refuse to permit, at expense of handicapped person,
reasonable modifications of existing premises to be occupied by handicapped person – or refuse
to make reasonable accommodations in rules, polices, etc. to afford such a person equal
opportunity to enjoy a dwelling.
e. After 1988 – design construct common use portions of dwellings to be accessible to handicapped
persons
Exemptions: §§3603, 3607
a. Single family sales w/o ads or brokers
b. Rental of unit owner occupied building (4 apts or less) w/o ads or brokers
c. Religious organizations and private clubs
d. Older persons housing
i.
o
-
Doesn’t limit applicability of reasonable local/state/federal restrictions on max #
occupants
ii. Doesn’t limit housing specifically designed and operated to assist elderly persons
iii. Doesn’t prohibit conduct against a person convicted of illegal manufacture or
distribution of drugs
Enforcement By: §3613
a. Any aggrieved person (not just victim)
b. Civil action w/I 2 yrs after occurrence
c. Court can appoint an atty for a person alleging discriminatory housing practice
d. Actual and punitive damages may be awarded in civil actions + reasonable atty’s fee and costs.
Mass Fair Housing Act
o Protected Classes
a. Broader coverage than federal; also includes ancestry, sexual orientation, veteran status, receiving
public assistance, others…
o Conduct Covered
a.
o
o
Entities include: owner, lessee, sublessee, licensed real estate broker, assignee, management, or
persons furnishing financing of a residential or commercial space
Exemptions
a. Similar to federal with size differences (2 family dwelling instead of 4
SOL = 1 yr.
Asbury v. Brougham (1989)
P (Asbury) brought suit under above claiming Ds refused to rent to her on bass of race and/or sex. Jury trial awarded A $7.5k compensatory + $50k
punitive.
Sufficiency of Evidence for Finding of Racial Discrimination:
o P must prove discriminatory intent.
o Also, failure to provide minority applicant with same info on availability or terms of rental as provided to others results in false
information being provided and is cognizable as injury.
o Three part burden of proof analysis for prima facia case:

P = member of racial minority

P applied and was qualified to rent

P was denied opportunity to rent or to inspect/negotiate for rental, and

The housing opportunity remained available
o (A went to inquire, was denied and suggested she go to other park of mostly black families. Next day, A’s white sister-in-law
went to inquire on availability and was provided with info denied to A, and shown available apartments. Data sheets showed
townhouses were available for rent and unoccupied at time of A’s visit. )
o Burden of proof after prima facia case established shifts to D to prove a legitimate, non-discriminatory reason for denial of
housing.
o (BE cites policies that families with one child could rent townhouses but not apartments and families with more than one child
not permitted. A showed evidence that frequent exceptions made to the rules. BE showed percentage of minority occupancy
rebuts claim of intentional racial discrimination – court says this is relevant but not dispositive.)
Sufficiency of Evidence for Punitive Damages
o May be awarded against D when conduct shown to be motivated by evil motive or intent, or when it involves reckless or callous
indifference to federally protected rights of another. Jury has discretion.
o (Among policies established by B were that employees routinely and untruthfully tell people there were no vacancies.)
9.
Real Estate Transactions
Pre-K
Executory Period
P&S signed
-
-
-
-
Post-Closing
Closing (deed delivered)
Pre-K
o Decision to sell
o Listing w/broker (or not)
o Offer to Purchase (OTP) & Negotiation
Executory Period
o Inspections (may often be done earlier, between OTP and P&S)
o Financing and loan application (often done earlier)
o Appraisal and credit check
o Title examination
o Document preparation
Post Closing
o Title protection
o Warranties
OTP
o Agreement between parties or a preliminary statement? Tension.
o Whether OTP = binding K is question of fact: Whether “parties evidenced an intent to be bound by their actions”
o
o
-
P&S
o
o
o
o
o
o
-
-
Tobin v. McCarthy: unusual circumstances. P&S not signed by deadline, but continue negotiating. Oral agreement – B signs P&S
on Friday to be delivered and signed by S on Monday. Over weekend, S sells to another buyer for a higher price. Second buyer
not truly good faith purchaser (knew of earlier deal, likely thought remedy was monetary damages b/w contract price and
market value). Court found OTP constituted binding K and ordered specific performance.
Could include “safe harbor” language to make non-binding intent known. B’s face risk, might be resistant to it, and not a safe bet
anyways (w/ right set of facts, could show evidence of intent to go contrary to safe harbor language.)
Definitely a binding K.
S performance not contingent on anything usually, so if S backs out, more likely to have breach. If B backs out, do analysis.
Material Terms of K

Parties, price, property description, closing date
Buyer’s performance contingent on:

Seller delivering “good and clear record and marketable title” (cl. 4, 10, 11, 12)

“marketable” = if free from reasonable doubt

Adverse Possession: If S claiming ownership through AP, could have doubt

Encumberances (e.g. covenants, easements, unpaid mortgage):
o Basis for buyer to walk away, but seller has opportunity to cure
o Cl. 4specifically lists items “of record”

Chain of Title Defect: Deed provides improper description of property (Gobble)

Buyer making “diligent” effort to get financing (cl. 26)

Pre-approval often required today – not definitive, but shows credit-worthiness

Satisfactory inspection of premises (cl. 9, 30) {often dealt with at OTP stage though}
Other terms:

Lead Paint Notification (cl. 28) {federal law – S *must* sign, but no incentive to disclose they positively know}

Breach of warranty of Habitability – new homes only
Seller’s performance contingent on:

Possibly finding a new home
Attorney’s Role
o Attys only involved in 40% of real estate transactions
o Sometimes “attorney approval clause” included giving parties 3 days after signing to consult with an attorney and withdraw if
they wish
o Office of Foreign Assets Control (OFAC) – directed by Pres. Bush to block transfer of property owned by foreign persons on
watch list – property “blocked” – lawyers must review list to assure no payer/transferor or recipient/transferee is on the list.
Real estate lawyers now including antiterrorism clauses in sale and lease agreements.
o USA Patriot Act – passed 2001 – contains anti-money laundering program requires every “financial institution” (including
“persons involved in real estate closings and settlements”) to prevent financing of terrorism – effect is lawyers obligated to
confirm identity of all parties in transaction
o Fair Debt Collection Practices- lawyers who bring foreclosure actions on property classified as “debt collectors” and subject to
provisions
Broker’s Role
o Most cases, sellers hire real estate brokers (agents, realtors) to help sell a property. Broker and seller sign contract – broker
agrees to look for prospective buyers and show the property in exchange for commission (5-7%) of the sale price.
Simple Listing Agreement
“Seller grants Broker the exclusive right for ___ (90 days) to sell the property for ____ ($500,000). Seller agrees to pay the commission of
__ (5.7%) of the selling price when Broker finds a “Ready willing and able buyer”
“Ready, willing and able buyer”
Buyer backs out of deal after P&S agreement but before sale completed
o In Mass: Tristram’s Landing says expectation of seller is that they aren’t going to have to pay a broker’s fee unless the sale is
completed. Sale must be consummated (closing) in order for broker to get commission.
Seller backs out…
o Breach of K b/w broker and seller. Broker most likely entitled to commission, but must look at agreement to see specific terms.
o
3 types of broker listing agreements:
Exclusive right to sell

Broker has right to collect commission if property sold to anyone during period of the contract, even if the
sale is to a buyer that the owner found w/o broker’s help

Exclusive agency

Broker entitled to commission, or share of commission, if property sold by her efforts or efforts of any other
broker, but not if the property is sold by the owner

Open, or nonexclusive

Broker entitled to commission only if she is the first person to produce a buyer who is ready, willing, and
able to buy. If anyone else, including seller, finds a buyer first, broker gets no commission
Net listing (broker takes commission out of purchase price to extent it exceeds seller’s initial asking price) discouraged or
prohibited by state law b/c it creates conflict of interest
Option listing (broker promises to buy property at set price, revealing commission only when option is exercised – also creates
conflict of interest and is discouraged by state regulators
When buyer wrongfully backs out of deal, brokers often allege they have right to sales commission because they fulfilled their
contractual obligations. Traditional rule was broker entitled. Many courts have changed this to broker only being entitled to
commission if sale is completed. (Seller has duty to pay commission if the seller defaults and backs out of the deal without a
good reason.)

Some courts find the rule to be nondisclaimable, others permit parties to contract around it.
Multiple listing services – established by local real estate board. Every broker who is a member registers every exclusive listing
she receives with it – other brokers have access – if any sale goes through, commission is shared by listing service and broker
who arranged for the sale.
Unauthorized Practice of Law: Brokers who provide legal advice or draft complex legal docs may be subject to penalties. Brokers
often provide standard land sale contracts for use – if they do not more than fill in the blanks, activities are “incident to the
business” and OK. Brokers cannot draft deeds, mortgages, or other docs that transfer interests in real property, conduct closings,
express opinions on status of titles and zoning law, etc.
Brokers Duties to Buyer: Broker is formally agent of the seller, but buyer may feel broker is also working for them. Even though
no contract in place, courts can impose fiduciary obligations (e.g. revealing lead paint could lead to suit for fraud)
Buyer’s Duties to Broker: If buyer attempts to arrange with seller to buy property independent of broker to save on commission
– broker can sue seller, but may also sue buyer (implied promise on part of buyer to complete the transaction with them)
Buyer’s Brokers: More common – seen as more trustworthy to act in buyer’s best interests. Paid from percentage of sale price,
fixed fee, or hourly rate.
Dual Agency: Possible but many states regulate this – disclosure requirement. Also can allow “designated agency” where one
broker in agency represents S while another represents B

In Mass: Consumer Protection/Agency Relationship applies

Principle broker discloses dual agency role

Informed written consent from all
Fiduciary obligations of brokers:

Distinction b/w misrepresentation (misfeasance – always actionable) and non-disclosure (nonfeasance, not always
actionable)

CL liability for fraudulent misrepresentation in ALL jurisdictions:

Affirmative statement known to be false

Material to transaction

Buyer reasonably relied on

Caused damage

CL liability for fraudulent concealment, or nondisclosure, in SOME jurisdictions:

Representing seller,

Has actual knowledge

Of material facts

Not known or accessible to the buyer

Duty to disclose

In Mass, courts haven’t expanded CL tort to include nonfeasance as well as misfeasance, BUT brokers nonetheless do
have a duty to disclose

Consumer Protection Statute 93A covers it:
o Buyers and brokers covered in statute (trade and commerce)
o Unfair or deceptive practice (nondisclosure of material fact)

o
o
o
o
o
o
o
o
o
o
o

-
-
-
-
-
Material fact (condition that is of sufficient materiality to affect habitability, use and enjoyment of
the property, and/or market value of property)
Q is “what is known or readily observable by buyer” – Duty to disclose?
o Termites – YES
o Property encumbrances – YES (but keep constructive notice in mind – could be Q of fact – if not
recorded but broker knows of it, would be liabile)
o Long-term lease – YES
o Off-property defect, like landfill - GRAY AREA (look to local statutes/cases on point)
o Haunted or site of homicide – GRAY AREA (In Mass, “psychologically impacted home” no duty to
disclose. In California, “stigmatized house” yes, duty to disclose)
Seller’s Role
o Johnson v. Davis: trend in the law, but not the law everywhere

Majority view: no distinction b/w misfeasance or nonfeasance – seller has obligation under both (too fine a line)

Dissent view: CL tort liability expanded
o In Mass, Seller’s failure to disclosure (nonfeasance) is not actionable (although broker does have the duty to disclose)

Possible to use 93A to capture Seller

But, remember Billings – seller has to be acting in a “business context.” Sellers selling their own home, aren’t
intended to be reached with 93A; but, seller with large inventory can be.
Sales Contract
o Usually no written or oral contract b/w broker and prospective buyer
o When buyer makes offer to buy, usually pays nominal fee to show seriousness ($1k or so)
o Seller may accept, or counteroffer for price b/w buyer’s proposal and initial asking
o Must also agree on other general terms (who will pay backtaxes, move out date, which side has burden of repairing known
defects, etc.)
o After price and general terms agreed to, next formal step is purchase & sale agreement

Written contract, generally prepared by lawyer who works for either B or S (probably lawyers on both sides)

S agrees to convey title at specific date in future when closing takes place

B makes immediate down payment or deposit (earnest money depost) – often 10% of purchase price

B also promises to pay the rest at the closing

Date of closing negotiable – usually 1-2 months after P&S signed

B’s obligations normally contingent on:

S’s ability to convey marketable title

B’s ability to get adequate financing for rest of purchase price

Inspections for structural defects, terminates, environmental hazards

S’ performance usually conditioned only on B’s paying purchase price (but could also be conditioned on S finding new
place to live.
Executory Period
o Period b/w P&S signature and closing – many lawsuits arise here if one party drops out
o Arrangements:

Inspection

Financing

If B owns house they’re selling too, can get bridge financing for period between

Mortgage = agreement by buyer that if buyer defaults on the loan or other material terms, bank able to
foreclose on property (bank will insist on with the loan)

Title search

Bank also wants assurance of clear title. Can research this itself in registry of feeds, can require buyer to hire
a lawyer to do this and provide evidence, or require buyer to buy title insurance (insurance company
researches title, guarantees sellers title in return for fee.
Closing
o B pays rest of purchase price (or lender, either through B or directly to S) – B simultaneously signs loan and mortgage
agreement with bank.
o May make last minute checks to ensure property not sold or encumbered during interim
o S delivers deed (describes property, may contain reference to easements/covenants, warranties by which S covenants that he
has good title)
o Bank or S’s lawyer generally immediately arranges to record the deed.
After the Closing
o
o
-
Deed replaces P&S as complete contractual agreement
Deed must explicitly provide so if P&S to ”survive the deed”

Careful – B can sue for breach of warranties in deed but in P&S otherwise
o Some obligations do survive even if not in deed - e.g. if S lies about condition of house, B can sue for fraud
Sample Offer, P&S, and Deed – pgs 844 – 850.
Hickey v. Green (1982)
G owns lot for sale. Hs orally agree to buy for $15k and immediately hand G deposit check for $500 marked “deposit on lot…subject to variance
from Town…” H left payee line blank – unsure if it would be G or her brother and left it for them to write on. G never endorses or cashes check.
Within same month H found buyer for their house and accepted deposit check (which they deposited). W/I 12 days of deposit G tells H she no
longer intends to sell to him and has another buyer for more money – H tells her he’s already sold his house and offers the same higher amount – G
refuses. H files complete seeking performance. G says SOF violation. Court finds promissory estoppel – H acted in reasonable reliance (facts
indicated quick sale and he moved quickly). Comment in Restatement shows that if oral agreement is admitted or clearly proved, only requirement
to show is reasonable reliance. And G did not repudiate in time. G’s conduct can’t be condoned – court also notes its not the type of sale for which
either party contemplated a P&S – if written agreement had been expected, a different situation might have existed.
Ways of Avoiding SOF:
Part Performance: Three factors that ordinarily suggest a contract has been made:
Payment of all or a substantial part of the purchase price
Taking possession of the property, and
Making substantial improvements on the land
States differ as to whether all 3 required or 1 or 2 of them. 1 alone not often enough because B can be made whole by having money returned.
Estoppel: Alternative basis for part performance: “If one party to the transaction induces the other to make a substantial change of position to his
or her detriment in good faith reliance on the first party’s actions, then the first party may be estopped from denying the transaction.”
Constructive Trust: Applied to prevent unjust enrichment (e.g. if the funds of one person are used to acquire the property but title is held in the
name of another) Applies when “property has been acquired in such circumstances that the holder of the legal title may not in good conscience
retain the beneficial interest.”
Applying SOF:
In general, memo must reasonably
o Identify parties to the contract and show that a contract has been made by them or offered by the signatory to the other
o Indicate the nature of the contract and its subject matter
o State the essential terms of the promises to be performed under the contract
“Binder” (short K intended to lead to negotiations) sometimes not enforceable – usually enforceable if parties, property price and time
are included (essential terms)
Johnson v. Davis (1985)
D’s enter into K to buy home for $310k – $5k initial deposit, $26k additional deposit within 5 days, and closing next month. After $5k, but before
$26k deposit, D’s see buckling and peeling plaster around corner window frame and stains on ceiling – J’s tell Ds that problem had been corrected
long ago and that there had never been any problem with roof or ceilings. Several days later, after heavy rain, D’s enter home and see water
“gushing” in. 2 roofers hired by J’s broker concluded that it could be fixed for under $1k. 3 roofers hired by D’s found roof was slipping new $15k
roof needed to make area watertight. D’s filed complaint for breach of contract, fraud and misrepresentation, and wanted recession of K and return
of deposits.
Fraud granted if all 4 present:
A false statement concerning a material fact,
The representor’s knowledge that the representation is false,
An intention that the representation induce another to act on it, and
Consequent injury by the party acting in reliance on the representation
Court says:
Fraudulent statements don’t need to be at signing of K, can be after
Even if problem could have been ascertained by an investigation – not required to put that on buyer unless he knows the representation is
false or falsity would be obvious
Seller of home has duty to disclose latent material defects
o Tort law distinction b/w misfeasance (action) and nonfeasance (inaction) – but in practice this line is hard to draw.
o Court finds both violative of fair dealing and good faith – and both obtain same effect
o Court does away with distinction in FL – seller has duty to disclose
-
(Dissent here says “flood of litigation” and facilitate “unjust” outcomes – if change needed, should come from legislature)
-
Misrepresentation
o Consists of:

A fact that is known to be false,

Is material to the transaction,

Is reasonably relied on by the B in deciding to purchase, and

Causes damage as a proximate result
o Opinions don’t count.
o May be denied if reasonable buyer would have inspected and discovered it – so reliance on S was unreasonable
For apparent defects – traditional rule of caveat emptor still applies. However, if B acts to conceal the defect or otherwise suppresses
knowledge, exception can apply.
No CL duty to disclose latent defects still the law in a number of states. Recent trend is to require S to disclose.
When required: info disclosed must generally included that which a reasonable buyer would want to know that might affect terms of
transaction (esp market value and habitability) [one court found fact that murder had occurred there 10 yrs ago relevant]
Some states allow sellers to avoid disclosure by getting B to sign a K disclaiming reliance on any information by the S.
Generally a merger clause stating written agreement embodies the whole agreement does not protect D from claim of fraud. BUT
(Dannan Rule) where P in plain language announces that is not relying on any representations by S, destroys an allegation of reliance.
{Some courts have rejected Dannan rule}
o General merger clause vs. a very specific clause:
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General waiver/ “as-is” clauses won’t do it
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The more specific the language that points to the actual fraud issue, the more likely the K is to be upheld
Implied warranty of habitability adopted in most states
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Sellers Failure to Provide Marketable Title
o B excused from deal if S can’t provide by closing
o Main defects = encumberances (possessory interests such as conflicting titles or leases and non-possessory interests such as
easements, covenants, mortgages and liens) and chain of title defects (mistakes or irregularities – a prior deed forged or present
deed misdescribing property)
o S’s claiming ownership based on adverse possession marketable if AP can be clearly established – can make requirement that
title be “valid of record” rather than “marketable” to get around this.
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Seller’s Breach of Warrant of Habitability
o Exists in builder’s initial sale of new homes, but not in sal e of old homes.
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Buyer’s Failure to Make Good Faith Efforts to Obtain Financing
o B must take “reasonable efforts” b/w P&S and closing to obtain financing, otherwise S keeps deposit.
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Remedies
o Buyer’s
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Specific Performance
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Injunction to order S to convey for agreed upon price
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Tobin: property unique, more likely for court to grant it
Damages
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Difference between parcel’s market value at time of breach and contract price (expectation of benefit of the
bargain damages)
o BUT – Flureau v. Thornhill rule: B not entitled to expectation damages if seller acted in good faith
and believed he had good title at time agreement made – followed by several states.
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Return of the deposit
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Any additional expenses caused by breach
Rescission
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Rescind deal and recover down payment or deposit
Vandee’s lien
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Rarely used
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Premise that S’s breach creates debt (amount of deposit) secured by lien against property
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o
Seller’s
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Property can be sold to raise funds to pay back the deposit
Specific Performance
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Force exchange – theory is that land is unique and that money judgment won’t put buyer in position she
would have been in if contract had been performed. Also flip is that money is not unique and seller
shouldn’t care whether money comes from buyer or someone else. (Usually on grounds that seller unable to
find another buyer)
Damages
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Contract price – market price at time of breach + other expenses
Rescission
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Usually P&S provides that S can keep down payment or “earnest money” if B breaches the contract
Vendor’s lien
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Rarely used
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Presumes property belongs equitably to te buyer, who is obligated to purchase
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Presumes seller has a lien on buyer’s equitable title and property can be sold to satisfy buyers obligation to
pay the rest of the purchase price to seller.
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Risk of Loss During Executory Period – Equitable Conversion
o E.g. house burns down – who bears the loss?
o Many courts say risk of loss is on the buyer
o B has equitable right to have contract enforced – courts treat buyer as equitable owner during executory period (despite S
retaining right to possess property until closing)
o Criticism
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S much better position to exercise care to avoid the loss
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S more likely to have insurance
o Most P&S’s place risk of loss on vendor
o If S has insurance, most courts do not allow S to keep insurance proceeds and purchase price – constructive trust on insurance
proceeds and require purchase price be reduced from that amount.
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Deeds & Title Protection
o Essential Terms

Must
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Identify parties
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Describe the property being conveyed
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State the grantor’s intent to convey the property interest in question, and
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Contain the grantor’s signature
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Does not need to be recorded to transfer title – delivery to grantee is sufficient (but should be recorded to protect
grantee’s rights)
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Most states require deed to be acknowledged by notary public or other official and one or more witnesses
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Description must be sufficiently precise to locate boundaries
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Reference to Official Surveys
o Most land in US under Government Survey System devised by T.Jefferson
o System divides land by a series of N-S, E-! lines and defines townships, further subdivided into
“sections”
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Plats
o Subdivision map – produced by private developer (not a gov’t official)
o Subdivision divided into “blocks” and blocks into “lots”
o Generally approved by local agency before being filed in recording office – Deed then describes lot
by referencing a recorded plat.
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Metes and Bounds
o Starts at defined point (usually a natural or artificial “monument” such as a street edge) and
identifies direction and distance of first border, until perimeter is described
o Direction notated in degrees east or west of due north or south (e.g. border running northwesterly
would be notated as north 45 degrees West 30 feet)
o Delivery
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Deed must be delivered to grantee to effectuate transfer of ownership
Problem when:
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Someone obtains physical possession of a deed – may record the deed: both give rise to a presumption that
grantor intended to transfer ownership – must be overcome by extrinsic evidence

Someone makes out a deed in front of notary public granting ownership to a child, places deed in safety
deposit box, and tells child property theirs on condition that parent can live there until her death. Say parent
dies, child never sees deed and other child/sibling claims half interest. Courts reluctant to find delivery
unless deed is physically handed over – but can find “constructive delivery” (writing + engaging in conduct
that demonstrates intent to transfer = enough)
Title Covenants
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Warranties of Title
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Title search may not reveal some important defects in chain of title – so title covenant is additional
assurance for buyer (or mortgage lender) – 6 types
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Present covenants: breached, if at all, at time of conveyance/closing – SOL starts to run
o Covenant of seisin:
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Grantor’s promise that he owns what he is purporting to convey (e.g. someone with a
leasehold is breaching if they purport to convey a fee simple)
o Covenant of the right to convey:
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Grantor’s promise that he has the power to transfer the interest purportedly conveyed
to the grantee. (functions same as covenant of seisin in most cases – but some instances
different – e.g. life estate burdened by an enforceable restraint on alienation would
violate this if owner purported to convey it to the grantee)
o Covenant against encumbrances:
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Grantor’s promise that no mortgages, leases, liens, unpaid property taxes, or easements
encumber the property other than those acknowledged in deed itself
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Future covenants: Breached, if at all, after the closing, when disturbance to grantee’s possession occurs –
SOL runs when disturbed
o Covenant of warranty
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Grantor promises to compensate grantee for any monetary losses occasioned by
grantor’s failure to convey the title promised in the geed
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General warranty deed: Covenants against all defects in title *includes defects of any
previous owner, not just Seller
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Special warranty deed: Limits covenant to defects caused in the title by the grantor’s
own acts but not the acts of prior owners
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Quitclaim deed: No warranty of title whatsoever – it suffices to transfer whatever
property interest the grantor has to grantee – but w/o any real assurance. *Means
something different in Mass. *Also note, misrepresentations/fraud action could still
apply.
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In Mass, can only pass Warranty Deed (general) or Quitclaim Deed
o Warranty: Ch. 183 §10:
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(1) [the grantor] was lawfully seized in fee simple of the
granted premises, (2) that the granted premises were free
from all encumbrances, (3) that [the grantor] had good
right to sell and convey the same to the grantee… (4) that
[the grantor] will… warrant and defend the same to the
grantee and his heirs and assigns against lawful claims
and demands of all persons.”
o Quitclaim: Ch. 183 §11:
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were free from all encumbrances made by [the grantor],
and that [the grantor], his heirs, and executors ….shall
warrant and defend the same to the grantee and his
heirs and assigns forever against the lawful claims and
demands of all persons claiming by, through or under the
grantor, but against none other.”
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o
o
Covenant of quiet enjoyment
Covenant that grantee’s possession will not be disturbed by any other claimant with
superior lawful title
o Covenant for further assurances:
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Rarely used – requires seller to take further steps to cure defects in grantor’s title (such
as paying an adverse possessor to leave the property or paying the owner of an
encumbrance to release it)
Remedies for Breach of Warranty

COW most common – if it turns out that S did not have right to convey, B can sue. Runs with the land and
can be enforced by subsequent grantees.

Damages measured by price paid for property that has been lost (at time of closing – near the market value
generally)
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If breach discovered after closing, ousted buyer not able to recover increased market value at time of ouster.
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Damages for breach of covenant against encumbrances is either cost of removing the encumbrance or
difference b/w the value of the property w/o and w/ encumbrance.
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