I. OWNERSHIP IN REAL PROPERTY
1. Estates in Land
- Estates in land: possessory interests in land (present or future)
↔ nonpossessory interests: easements, profits, covenants, and servitudes
2. Present Estates
2.1 Fee Simple Absolute
- Largest estate permitted by law
- “To A”
- Absolute ownership of potential infinite duration
- Freely devisable, descendible and alienable
- NO accompanying future interest
2.2 Defeasible Fees
- Conveyance with conditions
- Express conditional language, clear durational language necessary
- Ownership terminated upon the occurrence/non-occurrence of an event/condition
- Absolute restraints on alienation (sell or transfer) are void
a. Fee Simple Determinable (and Possibility of Reverter)
- “To A for so long as”, “To A while”, “To A until”, “To A during”
- Clear durational language required
à Automatically reverts to the grantor if the stated condition is violated
- FSDPOR (Frank Sinatra Doesn't Prefer Orville Redenbacher)
b. Fee Simple Subject to Condition Subsequent (and Right of Entry)
- “Upon condition that”, “provided that”, “but if”, “if it happens that”
- Right of Entry: possession continues until the grantor exercises power of termination
à Reverts to the grantor
- Express reserve of the right of entry necessary
- FSSC + ROE
c. Fee Simple Subject to an Executory Interest
- “To A, but if X happens, then to B”
1
à Automatic forfeiture, passes to a third party
2.3 Fee Tail
- “To A and the heirs of his body”
- Limited inheritance to lineal descendants, no matter what
- Today, a fee simple absolute is created instead of the fee tail
2.4 Life Estate
- “To A for life”
- When A dies, it reverts back to the grantor or its heirs
- Must be measured in explicit terms and NEVER in terms of years
a. Life Estate Pur Autre Vie (Life of Another)
- “to A for the life of B”
b. Rights and Duties of Life Tenant—Doctrine of Waste
- Life tenant entitled to all ordinary uses and profits from the land
- Must not commit waste (anything to harm the future interest holders)
i. Affirmative (Voluntary) Waste – Natural Resources
ú
Life tenant cannot exploit natural resources on the property
ú
Open Mines Doctrine: if mining was already open, it can be exploited
ú
Exceptions: PURGE - Prior Use, Reasonable Repairs, Grant, Exploitation
ii. Permissive Waste
ú
Life tenant holds the obligation to repair, to pay all ordinary taxes
iii. Ameliorative Waste
ú
Life tenant may alter or demolish existing buildings if the market value of the
future interests is not diminished AND EITHER
ú
The remaindermen do not object OR
ú
A substantial and permanent change in the neighborhood conditions
3. Future Interests
- A future interest is a present, legally protected right (not an expectancy)
3.1 Future Interests in Transferor—Reversionary Interests
a. The Possibility of Reverter: accompanies only the fee simple determinable
2
b. The Right of Entry (a.k.a. Power of Termination): accompanies only the fee simple
subject to condition subsequent
c. The Reversion
- The grantor can transfer a lesser estate (in the durational sense)
- The residue left in the grantor, which arises by operation of law, is a reversion
3.2 Future Interests in Transferees
- If a future interest is held by someone other than the grantor, it has to be either:
ú
A Contingent Remainder OR
ú
A Vested Remainder OR
ú
An Executory Interest
a. Remainders
- A future interest in a third person that can become possessory upon the natural
expiration
- Must be expressly created
- Remainderman is sociable
ú
Always accompanies a preceding estate of known, fixed duration
ú
Preceding estate is usually a life estate or a term of years
ú
“To A for life, then to B”, “To A for ten years, then to B”
- Remainderman is patient and polite
ú
Never follows a defeasible fee
ú
Cannot cut short or divest a prior transferee
ú
If present estate is a defeasible fee, then future interest is NOT a remainder
à It will be an executory interest, if held by someone other than the grantor
- Remainders cannot follow a time gap after the preceding estate
ú
“To A for life, then to B” Remainder O
ú
“To A for life, and then 10 years later, to B.” Remainder X
b. Remainders – Either Vested or Contingent
i. Vested: ascertained person AND NOT subject to any condition precedent
- Transferable, devisable, and descendible
- Indefeasibly Vested Remainder
ú
NO conditions attached
3
ú
"To A for life, then to B."
- Vested Remainder Subject to Total Divestment (subject to a condition subsequent)
ú
NOT subject to any condition precedent
ú
BUT could be cut short due to a condition subsequent
ú
“To A for life, then to B, but if B ever divorces, to C”
- Vested Remainder Subject to Open (class gift)
ú
Vested in an ascertained person
ú
Additional takers not yet ascertained can still qualify as class members
ú
"To A for life, then to B's children"
ii. Contingent: Unascertainable person OR IS subject to a condition precedent OR BOTH
- Transferable inter vivos
- Usually devisable and descendible
- Only contingent remainders are subject to the Rule Against Perpetuities
- Subject to a condition that must occur before the remainderman can take
c. An Executory Interest
- Transferable inter vivos
- Usually devisable and descendible
- An interest that divests the interest in another
- If it is not a remainder because the preceding estate is not a life estate
à it must be an executory interest
- “Shifting” executory interest: cutting short some interest in another person
ú
"To A, but if B returns from Canada sometime next year, to B"
- “Springing” executory interest: cutting short some interest in the grantor or her heirs
ú
"To A, if and when he marries"
4. The Rule Against Perpetuities (“RAP”)
- Future interests are void if there is any possibility, however remote, that the given
interest may vest more than 21 years after the death of a measuring life
- Perpetuities period begins to run at the time the interest is created
- Future interest is “vested” (RAP does not apply) when it becomes
ú
Possessory OR
ú
An indefeasibly vested remainder OR
ú
A vested remainder subject to total divestment
- Only people whose lives affect vesting can be used for RAP
4
- Interests Exempt from rule
ú
Charitable gift following a charitable gift
ú
Vested interested (other than open class gifts)
ú
Reversionary interests
- The Rule in Operation—Common Pitfall Cases include
ú
Executory interest that follows a defeasible fee 조건부 소유권 언제 깨질지 모름
ú
Age contingency beyond age 21 in an open class 안 태어난 애들을 어떻게 앎
ú
Fertile octogenarian 80살 노인도 애를 낳을 수 있긴 함
ú
Unborn widow or widower 배우자가 안 태어났으면
- Perpetuities Reform Legislation
ú
Wait and See statute
ú
Cy Pres approach: Let’s carry out the grantor’s intent as nearly as possible
ú
Uniform Statutory Rule Against Perpetuities: Let’s wait 90 years
5. The Rule Against Restraints on Alienation
- Any restriction on the transferability of a legal interest in property violates the
common law Rule Against Restraints on Alienation and is void
- Types of Restraints on Alienation
ú
Disabling restraints: attempted transfers are ineffective
ú
Forfeiture restraints: attempted transfer forfeits the interest
ú
Promissory restraints: attempted transfer breaches a covenant
à VOID
- Restraints on a Fee Simple
ú
Any total restraint on a fee simple (forfeiture/disabling/promissory) is void
ú
The grantee may ignore the restraint and freely transfer the property
ú
Forfeiture or promissory restraint for a limited time and for a reasonable
purpose may be upheld
- Restraints on a Life Estate
ú
Forfeiture and promissory restraints on life estates are valid
ú
Disabling restraints on legal life estates are void
- Options and Rights of First Refusal
ú
The right to have the first opportunity to purchase real estate when it becomes
available, or the right to meet any offer, is valid if reasonable
ú
For example, by specifying fair market value or other reasonable price
5
6. Concurrent Estates
6.1 The Joint Tenancy
- Two or more own WITH the right of survivorship
a. Distinguishing Characteristics
- Right of Survivorship: when 1 owner dies, their share instantly transfers to the survivors
- Alienable 양도성O
- NOT Descendible 상속가능성X or Devisable 유언가능성X
b. How to Create a Joint Tenancy
- The Four Unities: joint tenants must take their interests (TTIP)
ú
T: at the same Time
ú
T: by the same Title (same instrument)
ú
I: with identical, equal Interests; and
ú
P: with identical rights to Possess the whole
- Clear Expression of Right of Survivorship
ú
If not, it is presumed to be a tenancy in common
c. Severance of a Joint Tenancy
- A joint tenancy will be severed (terminated) and a tenancy in common results
- Sale And Partition (SAP)
d. Severance and Sale
- A voluntary conveyance by a joint tenant destroys the joint tenancy
- Even without the other’s knowledge or consent
à The transferee takes as a tenant in common
e. Severance and Partition
- By voluntary agreement
ú
An allowable peaceful way to end. relationships
- Partition in kind
ú
An action for physical division of the property
ú
If in the best interests of all parties
- Forced sale
ú
Judicial action, if in the best interest of all
6
ú
Where the land is sold, and the sale proceeds are divided up proportionally
f. Transactions that Will NOT Result in Severance
- Mortgages
ú
Most states follow the lien theory of mortgages
à A joint tenant’s execution of a mortgage on her interest will not sever the
joint tenancy
- Effect of one joint tenant’s murdering another
ú
Under the Uniform Probate Code, when a beneficiary unlawfully and
intentionally kills a joint tenant, any joint property is transformed into a tenancy
in common
g. Testamentary Disposition Has No Effect
- A will is ineffective to work a severance
- Because at death, the testator’s interest vanishes
6.2 Tenancy by the Entirety
- Protected marital interest between spouses with the right of survivorship
a. How Created
- Arises presumptively in any conveyance to married partners
- Unless the language of the grant clearly indicates otherwise
b. Very Protected Form of Co-Ownership
- “Can’t Touch This”
- Creditors: creditors of only one spouse cannot touch the tenancy
- Unilateral Conveyance or Encumbrance (소유권에 영향을 미치는 청구권, 유치권, 책임)
ú
One spouse, acting alone, cannot defeat the right of survivorship by unilaterally
conveying to a third party
c. Severance
- Only death, divorce, mutual agreement, or execution by a joint creditor of
both the spouses can sever a tenancy by the entirety
- On divorce, the tenancy by the entirety becomes a tenancy in common
7
6.3 Tenancy in Common
- Two or more own with NO right of survivorship
- Multiple grantees are presumed to take as tenants in common, not as joint tenants
- Each co-tenant owns an individual part, and each has a right to possess the whole
- Each interest is devisable, descendible, and alienable
6.4 Rights and Duties of Co-Tenants
a. Possession
- Each co-tenant is entitled to possess and enjoy the whole
- Wrongful exclusion of another co-tenant from possession of the whole or any part
à Wrongful Ouster
b. Rents and Profits
- From co-tenant in exclusive possession
ú
In most states, a co-tenant in exclusive possession has the right to retain profits
from their use of the property
ú
They don’t need to share profits with other co-tenants absent ouster or an
agreement to the contrary
- From third parties
ú
A co-tenant who leases all or part of the premises to a third party must account
to their co-tenants, providing them their fair share of the rental income
ú
Co-tenants in exclusive possession must also share net profits gained from
exploitations of the land, such as mining
c. Adverse Possession
- Adverse possession: if you use someone else’s land like an owner, openly and long
enough, it can legally become yours
- Unless a co-tenant ousted the other co-tenant, the co-tenant in exclusive possession
for the statutory adverse possession period cannot acquire title to the exclusion of the
other co-tenant
d. Carrying Costs
- Each co-tenant is responsible for her fair share of carrying costs
- Such as taxes and mortgage interest payments, based upon the undivided share she
holds
8
e. Repairs
- The repairing co-tenant enjoys a right to contribution for necessary repairs,
provided they gave notice to the other co-tenant of the need for the repairs
f. Improvements
- During the life of the co-tenancy, there is no right to contribution for “improvements”
made by one co-tenant
g. Waste
- A co-tenant must not commit waste
- A co-tenant is permitted to bring an action for waste against another co-tenant
- 3 Types of Waste
ú
Voluntary waste: willful destruction
ú
Permissive waste: neglect
ú
Ameliorative waste: unilateral change that increases the value
h. Partition
- 3 Types of Partition
ú
Voluntary agreement
ú
Partition in kind
ú
Forced sale
- A joint tenant or tenant in common has a right to bring an action for partition
- Courts prefer partition in kind but will permit partition by sale when a fair and
equitable physical division of the property cannot be made
- Generally, this right may be exercised at any time
- Restraints on partition by co-tenants are valid, provided they are limited to a
reasonable time
i. Effect of One Concurrent Owner’s Encumbering the Property
- A joint tenant or tenant in common may encumber her interest (e.g. by mortgage or
judgment lien) but may not encumber the interests of other co-tenants
- Tenancy in Common
ú
If one tenant mortgages her interest, the mortgagee can foreclose only on the
mortgaging co-tenant’s interest
9
- Joint Tenancy
ú
A mortgage or lien does not sever the joint tenancy
ú
But a foreclosure sale 경매 will
ú
A mortgagee or lienor runs the risk that the obligated co-tenant will die before
foreclosure, extinguishing the mortgagee’s or lienor’s interest
j. Duty of Fair Dealing
- A confidential relationship exists among co-tenants
- For example, one co-tenant’s acquisition of an outstanding title 소유권 or lien 빚
that may affect the estate is deemed to be on behalf of other co-tenants
à difficult for one co-tenant to adversely possess against other co-tenants
II. LANDLORD AND TENANT LAW
7. The Four Leasehold or Non-freehold Estates
- Leasehold: an estate in land under which
ú
Tenant has a present possessory interest in the leased premises
ú
Landlord has a future interest (reversion)
- Four Leasehold Estates
ú
Tenancy for Years
ú
Periodic Tenancy
ú
Tenancy at Will
ú
Tenancy at Sufferance
7.1 Tenancy for Years
- A lease for a fixed, determined period of time
- Whenever you know the termination date from the start, you have a tenancy for years
a. Termination
- Ends automatically at its termination date, no notice necessary
- Termination upon Breach of Lease Covenant
ú
Landlord reserves a right of entry upon any breaches
ú
Failure to pay rent: even in the absence of a reserved right of entry
- Termination upon Landlord’s Acceptance of Tenant’s Surrender
10
ú
If T surrenders the tenancy & the L accepts
b. Writing
- A term of years greater than one year must be in writing
- Required by the Statute of Frauds
7.2 Periodic Tenancy
- A lease which continues for successive intervals
- Until either the L or the T gives proper notice of termination
à Continuous until properly terminated (no end date, notice required)
a. Creation
- Can be created Expressly: “month to month”, “year to year”
- By Implication/Operation of Law
ú
NO mention of duration, BUT the payment of rent at set intervals
ú
Oral term of years (in violation of the Statute of Frauds), creates implied
periodic tenancy, measured by the way rent is tendered
ú
If L elects to holdover a T who has wrongfully stayed past the original lease, an
implied periodic tenancy arises, measured by the way rent is now tendered
b. Termination
- Notice (usually written) must be given
- How much notice?
ú
At least equal to the length of the period itself, unless otherwise agreed
ú
e.g. month-to-month: one month notice
ú
If longer than year-to-year, only 6 months notice is required
ú
It must end at the conclusion of a natural lease period
7.3 Tenancy at Will
- A tenancy for no fixed period of duration
- “To T for as long as L or T desires”
a. Creation
- Unless otherwise expressly agreed, payment of regular rent
à Court treats the tenancy as an implied periodic tenancy
11
- If the lease gives only the landlord the right to terminate, a similar right will be implied
in favor of the tenant
- However, if only the tenant has a right to terminate, a similar right will NOT be implied
in favor of the landlord
b. Termination
- Can be terminated by either party at any time
- Most states, notice and a reasonable time to quit (vacate) are required
- Can be terminated by operation of law (due to death or commission of waste).
7.4 Tenancy at Sufferance
a. Creation
- Created when a T wrongfully holds over past the expiration of the lease
- This will permit the L to recover rent
b. Termination
- Until the L either evicts the T OR elects to hold the T to a new tenancy
à Short-lived
- No notice of termination is required
7.5 The Hold-Over Doctrine
- If a tenant continues in possession after their right to possession has ended,
the landlord may:
ú
Evict the tenant OR
ú
Bind the tenant to a new periodic tenancy (max. year-to-year)
- Exceptions: tenant remains after termination
ú
For only a few hours or leaves a few personal items
ú
The delay is not the tenant’s fault (severe illness)
a. Commercial Tenants
- Technically, the length of the new tenancy is based on the way rent was computed
ú
If the lease is over 1 year: new tenancy can be year-to-year
ú
If the lease is under 1 year: new tenancy is month-to-month
b. Residential Tenants
12
- New tenancy is month-to-month (regardless of the original term)
- If L notifies T before the lease expires that the rent will increase, T holding over equals
assent
7.6 Leases
- A lease is a contract that governs the landlord-tenant relationship
a. Dependence of Lease Covenants
- Common law
ú
Covenants were independent
ú
Breach of the covenants à the other party could recover damages
ú
BUT the landlord-tenant relationship persisted, and the lease endured
- Modern law
ú
L can terminate the lease for nonpayment of rent
ú
T can terminate the lease when L breaches the covenant of quiet enjoyment or
the implied warranty of habitability
b. Options to Purchase
- A continuing offer to sell the land at a specified price
- Sometimes attached to leases
- A separate contract supported by consideration
ú
Consideration: 계약을 유효하게 만들기 위해 주고받는 대가
à Consideration이 없으면 무효
- Must be in a signed writing
i. Exercise of Option
- Absent a contrary provision, the option lasts as long as the lease
- The method of exercise is determined by the agreement
- The party granting the option may keep the consideration regardless of whether the
option is exercised (can keep the option fee “consideration”)
- The consideration is for the continuing offer, and not money for the purchase
- ii. Enforcement
- RAP applies to options
- Exception: options to purchase attached to leases (even if it violates the RAP)
- Remedy
ú
Specific performance (by court) 강제 매매 명령
13
ú
Damages are also available 손해배상
8. Tenant’s Duties
- Two primary duties
ú
To repair
ú
To pay rent
8.1 Tenant’s Duty to Repair
a. Tenant’s Duty to Repair When Lease is Silent
- 임대차 계약서에 특별한 수리 의무 조항이 없을 때
i. Obligation to Maintain Premises 합리적으로 괜찮은 상태로 유지
- T is required keep the premises in reasonably good repair (routine repair)
- T is not required to a repair occasioned by ordinary wear and tear 자연 마모
ii. Tenant Must Not Commit Waste 훼손하면 안됨
- Voluntary waste: overt harmful acts 적극적 파괴
- Permissive waste: neglect 방치
ú
T fails to take reasonable steps to protect the premises
ú
T has a duty to report deficiencies promptly
- Ameliorative waste: alterations that increase the premises’ value
ú
Generally, the tenant is liable for the cost of restoration
ú
Modern exception: if T is a long-term tenant and the change reflects changes in
the neighborhood
b. Tenant’s Duty to Repair When Express Covenant in Lease
i. Destruction of Premises
- Historically: T responsible for any loss including loss attributable to force of nature
- Today: T may terminate the lease if the premises are destroyed without T’s fault
ii. Residential vs. Nonresidential Contexts
- Residential
ú
L obligated to repair (except for damages caused by T)
ú
Due to the nonwaivable “implied warranty of habitability”
- Non-residential
ú
T’s covenant to repair is enforceable
ú
L maybe rewarded damages for breach based on lease 전과 후 condition 비교
ú
NO specific reference to ordinary wear and tear: covenant includes such repairs
14
ú
Repair covenants: frequently exclude ordinary wear and tear
8.2 Tenant’s Duty to Pay Rent
a. Tenant Breaches and is in Possession of Premises
- Evict or Sue for Rent
ú
Evict through court under the unlawful detainer statute
ú
Sue for rent due: continue landlord-tenant the relationship
- Landlord Must Not Engage in Self-Help
ú
Self-help such as changing the locks, forcibly removing the tenant
à outlawed and punishable civilly and criminally
b. Tenant Breaches but is Out of Possession
- e.g. T wrongfully vacates with time left on a term of years lease
- Surrender
ú
L treats T’s abandonment as an implicit offer of surrender
ú
L accepts à the lease is terminated
ú
Surrender: T, by words or actions, shows she wishes to give up the leasehold
ú
If the unexposed term is longer than 1year, surrender must be in writing
- Ignore the abandonment and hold T responsible for the unpaid rent
ú
ONLY in minority states
ú
L ignores the abandonment à do nothing
ú
Hold T responsible for the unpaid rent until the natural end of the lease
- Re-let the premises on the wrongdoer T’s behalf, and hold him liable for any deficiency
ú
Majority rule: L must at least try to re-let à “mitigation principal”
à SIR
c. Rent Deposits
- Most states restrict the amount of security deposit to 1 month’s rent
- L needs to pay interest on security deposits
- Punitive damages 벌금/손해배상 for a L’s improper refusal to return a security deposit
- L can retain a security deposit for damages suffered to the premises 보증금에서 까기
8.3 Condemnation of Leaseholds 임차권 수용
- Entire leasehold taken by eminent domain 정부 강제수용
ú
T’s liability for rent is extinguished
15
ú
Because leasehold임차권 and reversion환수권 merged in the condemnor 수용자
ú
Lessee is entitled to compensation
- Temporary or partial taking
ú
T is NOT discharged from the rent obligation
ú
But entitled to compensation (a share of the condemnation award수용보상금)
8.4 Tenant’s Duty to Not Use Premises for Illegal Purpose
- If T uses the premises for an illegal purpose
ú
L may terminate the lease or obtain damages and injunctive relief
9. Landlord’s Duties
9.1 Duty to Deliver Possession
- (Majority) L must put T in actual physical possession of the premises at the beginning
of the leasehold term
ú
If a prior T holdover, L is in breach, and the new T is entitled to damages
9.2 The Implied Covenant of Quiet Enjoyment
- T has a right to quiet use and enjoyment of the premises without interference from L
or a paramount title holder
à Applies to both residential and commercial lease
a. Breach by Wrongful Eviction
- Actual Eviction
ú
L/paramount title holder/hold-over T excludes T from the entire leased premises
à Terminates the T’s obligation to pay rent
- Partial Eviction
ú
T is physically excluded from only part of the leased premises
à by L relieves T of the obligation to pay rent for the entire premises
b. Breach by Constructive Eviction
- Constructive eviction: L’s breach of duty renders the premises unsuitable for occupancy
- To claim for constructive eviction: SING
ú
Substantial Interference: attributable to L’s actions or failure to act
à must be a “chronic problem”
ú
Notice: T must give L notice of the problem, L must fail to respond meaningfully
16
ú
Goodbye (or Get out): T must vacate within a reasonable time after L fails to
correct the problem
à T may terminate the lease and may seek damages
i. Acts of Other Tenants
- L liable for acts of other tenants? No
- Exceptions
ú
L has a duty to abate a nuisance on site 공해 제거
ú
L must control common areas (elevator etc.)
9.3 The Implied Warranty of Habitability
- Applies only to residential leases
- The warranty is nonwaivable
a. Covenant of Quiet Enjoyment vs. Implied Warranty of Habitability
- Covenant of quiet enjoyment: T must vacate to plead constructive eviction
- Implied warranty of habitability: T could vacate but is not required to
b. The Standard
- The premises must be fit for basic human habitation (bare living requirements)
- Appropriate standard may be supplied
ú
by the local housing code or
ú
by an independent judicial conclusion
ú
e.g. failure to provide heat in the winter, lack of plumbing, etc.
c. T’s Entitlements When Implied Warranty of Habitability Is Breached
- Tenant’s options M R 3: Move, Repair, Reduce, Remain
ú
Move out and terminate the lease
ú
Repair and deduct the repair cost from future rent (after T makes repairs)
ú
Reduce rent or withhold all rent until the court determines fair rental value
à Typically, T places the withheld rent into an escrow account for good faith
ú
Remain in possession, pay full rent, affirmatively seek money damages
9.4 Retaliatory Eviction
- IF T lawfully reports L for housing code violations, L is barred from penalizing T
ú
Many statutes presume a retaliatory motive if L acts within 90-180 days after T
17
exercises their rights
ú
e.g. raising rent, ending the lease, harassing T, etc.
9.5 Anti-Discrimination Legislation
a. Civil Rights Act
- Bars racial or ethnic discrimination in the sale or rental of all property
b. Fair Housing Act
- Protects tenants and potential tenants from discrimination based on race, color,
religion, national origin, sex, disability, familial statues (except in senior housing)
i. Exemptions does not apply to
- Owner-occupied buildings with four or fewer units
- Single-family homes sold or rented by an owner who owns no more than three
single-family homes
ii. Prohibited Actions include
- Refusing to negotiate, rent, or sell housing or make available a mortgage loan or
other financial assistance
- Providing different terms or conditions for the sale or rental of a dwelling or for a
mortgage or other financial assistance
- Falsely representing that a dwelling is not available for inspection, sale, or rental
iii. Discriminatory Advertisements Also Prohibited
- Unlawful to make, print, or publish any notice or ad that indicates any preference or
limitation based on race, color, religion, sex, disability, familial status or national origin
- Applies to both persons who makes a discriminatory ad (landlord) AND ad publishers
- Exemptions mentioned above in i. do not apply to advertising
iv. Reasonable Accommodations
- L must permit disabled tenants to make reasonable modifications at T’s own expense
- L must make reasonable accommodations in rules, politics, services when necessary
10. Transfers of Leaseholds and Landlord’s Tort Liability
10.1 Transfer of Leasehold–The Assignment Versus the Sublease
- Assignment: transfer of the entire remaining term of lease
- Sublease: transfer of some part of the remaining term
18
a. The Assignment
- “Privity of Estate” – relationship between Assignee and Landlord
ú
Each is liable to the other on all covenants in the lease that “run with the land”
- “Privity of Contract” – relationship between original Tenant and Landlord
ú
The lease contract remains in effect and enforceable
ú
T remains liable on the original contractual obligations (pay rent etc.)
- Covenants that “Run with the Land”
ú
With original parties’ intents 다음 소유자에게도 적용하자는 의도
ú
AND if the covenant “touches and concerns” the land 땅과 관련 있음
à Covenants “run with the land” 임대목적물+권리의무가 같이
- Rent Covenants
ú
A owes rent directly to L due to “privity of estate”
ú
L can sue T, if A cannot pay the rent due to “privity of contract”
ú
If A reassigns to A2, A NO longer has “privity of estate” with L
à A has NO liability for A2’s failure to pay rent
b. The Sublease
- Sublessee(T2) pays rent to the original lessee(T1) who then pays L
- L ßà T2: NO privity of estate, NO privity of contract
ú
T2 not liable to pay rent or the covenants in the main lease unless T2 expressly
assumes the covenants
- T1 ßà T2 YES privity of estate, YES privity of contract
- L ßà T1 YES privity of estate, YES privity of contract
i. Landlord’s Remedies
- If this lease ends, the sublease btw T1 and T2 automatically terminates
ii. Rights of Sublessee
- T2 cannot enforce any covenants made by L in the main lease
- Except a residential T2 may enforce the implied warranty of habitability against L
c. Covenants Against Assignment or Sublease
- L can prohibit T from assigning or subletting without L’s prior written approval
- Once L consents, L cannot object to future transfers by T unless L expressly reserves
the right
à “Rule in Dumpor’s Case”
- Covenants restricting assignment and sublease are strictly construed against L
19
ú
Covenant prohibiting assignment does not prohibit subleasing and vice versa
- If T assigns or sublets in violation of a lease provision
ú
L may terminate the lease or sue for damages
ú
The transfer is NOT void
d. Assignments by Landlords
- L may assign the rents and reversion interest they own
- Usually done by deed when L conveys a building to a new owner
- Tenants’ consent is NOT required
i. Rights of Assignee Against Tenants—Attornment
- Once T is given reasonable notice of the assignment, they must recognize and pay
rent to the new owner as their L
- The benefit of all T covenants that “touch and concern” the land, runs with L’s estate
to the new owner
- Attornment 새소유주
ii. Liabilities of Assignee to Tenants
- Burden of L’s covenants that touch and concern the land runs with L’s estate to A
- A is liable for the performance of the covenants
- Original landlord also remains liable on all covenants made in the lease
10.2 Landlord’s Tort Liability
a. Common Law of Caveat Lessee
- Comon law: let T aware
- In tort, L was under no duty to make the premises safe
à Caveat lessee: 세입자가 알아서 조심해야 한다
i. Five exceptions to caveat lessee: CLAPS
- Common Areas
ú
L has a duty of reasonable care in maintaining all common areas
(e.g. hallways, stairwells, elevators)
- Latent Defects Rule
ú
L must warn T of hidden defects (dangerous condition T could not discover by
reasonable inspection)
ú
Otherwise, L is liable for any injuries resulting from the condition
ú
If T accepts the premises after disclosure, T assumes the risk, L is no longer
liable
20
ú
L’s obligation in tort is a duty to warn, not duty to repair
- Assumption of Repairs
ú
Once repairs are undertaken, L must complete them with reasonable care
- Public Use Rule
ú
If L leases public space (convention hall/museum),
ú
L aware of the significant defect AND
ú
Short length of lease (that T could not have time to repair)
ú
The defects cause injury to public
à L is liable (both elements must be met)
- Short-Term Lease of Furnished Dwelling
ú
Fully furnished premises for a short period (e.g. summer cottage)
ú
L is under a stricter duty, responsible for any defect condition injures T
(whether or not L knew of the defect)
b. Modern Trend—General Duty of Reasonable Care
- L owes a general duty to reasonable care toward residential tenants and will be held
liable for injuries in tort resulting from ordinary negligence
ú
IF L HAD notice of a defect and an opportunity to repair it
- Defects Arising After Tenant Takes Possession
ú
L is held to have notice of defects existing before T took possession
ú
L is NOT liable un tort for defects arising after T takes possession UNLESS L
knew or should have known of them
- Legal Duty to Repair
ú
IF L has a statutory duty to repair (housing codes), L is liable in tort for injuries
resulting from L’s failure to repair or negligence in making repairs
- Security
ú
Some courts hold L liable in tort for T injuries inflicted by the criminal conduct
of third parties
ú
In cases where L failed to comply with housing code dealing with security,
maintain ordinary security measures, or provide advertised security measures
ú
e.g. surveillance cameras
c. Tenant’s Liability
- Duty of care owed by T to third persons is discussed in Torts
21
10.3 Fixtures
- Fixture
ú
Chattel개인소유물 affixed to land,
ú
Ceased being personal property, become part of realty
ú
Fixture passes with the ownership of the land and must stay put
a. Chattels Incorporated into Structure
- How to distinguish fixture?
ú
When items are incorporated into realty so that they lose their identity
ú
A chattel affixed to realty is a fixture when its removal would cause considerable
damage to the premises
ú
e.g. plumbing, heating ducts, furnace
b. Common Ownership Cases
- Chattel and land BOTH owned by the same person
- Objective intention to make the item part of the realty, determined by
ú
Nature of the article
ú
Manner of attachment
ú
Amount of damage that would be caused by its removal
ú
Adaptation of the item to the use of the realty
c. Divided Ownership Cases
- Chattel and land each owned by different persons
- Annexor’s intent to make the chattel a permanent part of the realty determined by
ú
Landlord-Tenant: agreement btw L and T is controlling, annexed chattels must
be removed by the end of the lease term
ú
Life Tenant and Remainderman: same term applies, but life tenant’s
representative may remove annexations after life tenant’s death
ú
Licensee or Trespasser and Landowner: licensees are treated like tenants,
trespassers lose their annexations, some courts allow a good faith trespasser
recovery measured by the value added to the land
III. OWNERSHIP IN REAL PROPERTY
Servitudes
- 부동산 사용에 제한을 걸거나, 다른 사람을 위해 권리를 주는 것
22
11. Easements
- Easement 남의 땅을 특정 목적을 위해 쓸 수 있는 권리, 소유X, 점유X
ú
Grant of a nonpossessory property interest that entitles its holder to some form
of use or enjoyment of another’s land
ú
Easement holder has the right to use another’s tract of land for a specified
purpose, but has no right to possess or enjoy that land
ú
Presumed to be of perpetual duration 영구적으로 unless the grant specifically
limits the interest
ú
e.g. right to lay utility lines, right of way over, right to tap into a neighbor’s
drain
ú
Servient tenement 지나가게 해줘야 하는 땅
ú
Dominant tenement 지나가는 이익을 얻는 땅
ú
Majority: easement can be reserved only for the grantor
11.1 Types of Easements
a. Easements Are Affirmative or Negative
i. Affirmative
- Most easements are affirmative
- Right to go onto and do something on servient land
ii. Negative
- Entitles its holder to prevent the servient landowner from doing something that
would otherwise, be permissible
- Recognized in four categories: LASS
ú
Light
ú
Air
ú
Support
ú
Stream water from an artificial flow
ú
Minority states: allow negative easement for scenic view
- Can ONLY be created expressly, by a writing signed by the grantor
b. Appurtenant or in Gross
- Easement Appurtenant 땅 두개가 붙어있음
ú
When it benefits its holder in his physical use or enjoyment of his own land
ú
Two parcels of land must be involved: dominant and servient tenement
23
ú
“It takes two, baby”
- Easement in Gross 거리를 두고 있어서 땅 두개X
ú
If it confers upon its holder only some personal or pecuniary advantage that is
not related to their use or enjoyment of their land
ú
Servient land is burdened but no benefited or dominant tenement
ú
Because the easement benefits the holder rather than another parcel
ú
e.g. right to place a billboard, right to swim in another’s pond, utility company’s
right to lay power lines on another’s lot
11.2 Transferability
a. Easement Appurtenant
- Passes automatically with transfers of the dominant tenement regardless of whether it
is even mentioned in the conveyance
- The burden also passes automatically with the servient estate, unless the new owner is
a bona fide purchaser 선의의 무과실 매수자 without notice of the easement
- Easement appurtenant passes automatically with the dominant tenement, and cannot
be conveyed apart from the dominant tenement
ú
Only exception: conveyance of the easement to the owner of the servient
tenement to extinguish the easement
b. Easement in Gross
- Is not transferable unless it is for commercial purposes
11.3 Creation
- Easement can be created by PING
ú
Prescription
ú
Implication
ú
Necessity
ú
Grant
a. By Grant
- Any easement must be memorialized in writing and signed by the holder of the
servient tenement
- Unless its duration is brief enough to outside the coverage of a particular state’s
Statute of Frauds
24
ú
Easements to endure for greater than one year must be in writing
ú
That writing must comply with all the formal requisites of a deed
ú
Writing to evidence the easement is called “a deed of easement”
b. By Implication
- Created by operation of law, it is an exception to the Statute of Frauds
i. Easement Implied from Preexisting Use
- “Quasi-easement”
ii. Easement Implied Without Any Existing Use
- Two limited situations, easements may be implied without preexisting use
ú
Subdivision Plat: when lots are sold in a subdivision with reference to a recorded
plat 구획 or map that shows streets leading to the lots
ú
Profit à Prendre: the holder can pass over the surface of the servient land and to
use it as reasonably necessary to extract from the servient property its minerals
or some product of the servient property (timber, fish), as specified by the terms
of the profit
c. By Necessity
- Another form of easement by implication
- When a landowner conveys a portion of her land with no way out except over some
part of the grantor’s remaining land (landlocked)
- Servient parcel owner can decide 어디에 길을 낼지
d. Prescription
- Maybe acquired by analogy to adverse possession
- Elements to acquire a prescriptive easement COAH
ú
Continuous and uninterrupted use for the given statute’s period
ú
Open and notorious use (discoverable upon inspection)
ú
Actual use that need not be exclusive
ú
Hostile use (use without the servient owner’s consent
- Permission defeats the acquisition of an easement by prescription
- It requires that the use be hostile
e. Additional Method–Express Reservation
- When a grantor conveys title to land but reserves the right to continue to use the tract
25
for a special purpose
11.4 Scope
- Determined by the terms of the grant
- No specific limitations in the grant, courts assume that it was intended to meet both
present and future needs of the dominant tenement
- Overuse or misuse of an easement does not terminate the easement
ú
Unilateral expand is not allowed
ú
Appropriate remedy for the servient owner is an injunction against the misuse
a. Use of Servient Estate—Repairs
- Servient owner may use her land in any way she wishes so long as her conduct does
not interfere with the easement
- Easement holder has the duty to make repairs if she is the sole user
11.5 Termination
- Eight ways to terminate an easement: END CRAMP
ú
Estoppel
ú
Necessity
ú
Destruction
ú
Condemnation
ú
Release
ú
Abandonment
ú
Merger
ú
Prescription
- Otherwise, it may be terminated under its stated conditions
a. Estoppel
- An oral expression of an intent to abandon an easement will NOT terminate it
- Unless it is also committed to writing (a release) or accompanied by action
(abandonment)
- BUT if the servient owner materially changes their position in reasonable reliance on
the easement holder’s assurances, the easement terminates through estoppel
26
b. Necessity
- Easements created by necessity expire as soon as the necessity ends
- Unless the easement was reduced to an express grant
c. Destruction
- Destruction of the servient land, other than through the willful conduct of the servient
owner, will terminate the easement
d. Condemnation
- Condemnation of the servient state by governmental eminent domain power will
terminate the easement
e. Release
- A release given by the easement holder to the servient landowner will terminate the
easement
- Also applies to an easement in gross, which is otherwise inalienable
f. Abandonment
- They must show by physical action (blocks access to the easement) an intent to never
use the easement again
- Release vs. Abandonment
ú
Release: writing required
ú
Abandonment: physical action required + intent to never use the easement
à Mere nonuse, mere words, are insufficient to terminate by abandonment
g. Merger (Unity of Ownership)
- An easement is extinguished when title to the easement and title to the servient land
become vested in the same person
- If the same person acquires ownership of both the easement and the servient land,
those estates merge and the easement is destroyed
- Selling after the merger, the easement is not automatically reinstated
h. Prescription
- A servient owner may extinguish the easement by interfering with it in accordance with
the elements of adverse possession: COAH
27
ú
Continuous interference
ú
Open and notorious
ú
Actual
ú
Hostile to the easement holder
- Sufficient passage of time is not enough
12. Licenses and Profits
12.1 The License
- A mere privilege to enter another’s land for some delineated 기술된 purpose
- Unlike an easement, a license is not an interest in land
ú
Revocable at the will of the licensor
- Personal to the licensee and inalienable
- Any attempt to transfer a license result in revocation by operation of law
a. Creation
- A writing is NOT required
- A failed attempt to create an easement results in a license
b. Revocation
- Freely revocable, at the will of the licensor
- Unless estoppel applies to bar revocation
ú
Ticket cases: management can deny admission under property law, though
perhaps not under contract law
ú
Neighbors talking by the fence: beware of seemingly oral easements
à more than a year: writing is required, not enforceable, license created
à less than a year: enforceable
i. Estoppel
- When the licensee has invested substantial money or labor or both in reasonable
reliance on the license’s continuation
ú
The license becomes an easement by estoppel which lasts until the holder
receives sufficient benefit to reimburse him from his expenditures
ii. License Coupled with an Interest
- A license coupled with an interest is irrevocable as long as the interest lasts
- e.g. the buyer of a chattel may enter the seller’s land to remove the chattel
28
12.2 The Profit
- Entitles its holder to enter the servient land and take from it some resources
ú
Soil, some substance of the soil (minerals, timber, oil), or
ú
Some product of the property (fish or game사냥감)
- All the rules governing creation, alienation and termination of easements are applicable
to profits
- It may be extinguished through surcharge (misuse that overly burdens the servient
estate)
13. Restrictive Covenants
13.1 The Covenant
- Covenant is a written promise to do or not to do something related to land
- Unlike the easement because it is not the grant of a property interest
- It is a contractual limitation or promise regarding land 작위/부작위 의무계약
- Normally found in deeds, may run with the land at law
ú
Subsequent owners may enforce or be burdened by the covenants
a. Negative and Affirmative
- Negative Covenants
ú
Known as restrictive covenants
ú
A promise to refrain from doing something related to land
ú
“Not to build for commercial purposes”
- Affirmative Covenants
ú
A promise to do something related to land
ú
“To maintain common fence”
b. Covenant vs. Equitable Servitude
- Covenant: if P wants money damages
- Equitable servitude: if P wants an injunction
c. Running with the Land
- One tract is burdened by the promise and another is benefitted
- The covenant will run with the land when it is capable of binding successors
29
d. Requirements for Burden to Run
- Any successor in interest to the burdened estate will be bound by the covenant as if
they themselves had expressly agreed to it: WITHN
- Writing: the original promise must have been in writing
- Intent: the original covenanting parties must have intended that the covenant would
run, usually found in the language of the conveyance
- Touch and Concern: it must affect the parties’ legal relations as landowners
ú
Restrictive covenants: if they restrict the burdened parcel owner in her use of
that parcel of land
ú
Affirmative covenants: if they require the holder of the servient estate to do
something that increases her obligations in connection with the land
- Horizontal and Vertical Privity: BOTH must be met
ú
Horizontal: the nexus between the original promising parties, the two must have
shared some interest in the land independent of the covenant
ú
Vertical: the nexus between the successor in interest and the originally
covenanting party. Requires non-hostile nexus (contract, devise, descent). When
the successor acquired her interest through adverse possession, no vertical
privity
(burdened parcel)
A
¬ ¬¬«®® ®
B
(benefited parcel)
¯
horizontal
¯
Vertical
¯
privity
¯
Vertical
privity
¯
¯
privity
A-1
B-1
- Notice: the successor must have had notice of the promise when she took
ú
A subsequent purchaser for value must have had actual, inquiry (물어봤다면 알
수 있었을 경우) or record notice
e. Requirements for Benefit to Run
- Does the successor have standing to enforce the covenant?
- Following requirements must be met WITV
- Writing: the original promise must have been in writing
30
- Intent: the original parties must have intended that the benefit would run
- Touch and Concern: the promise must affect the parties as landowners
- Vertical Privity: non-hostile nexus between the original promisee and the successor in
Interest. Horizontal privity is not required
f. Specific Situations Involving Real Covenants 부동산 약속
- Generally, promises to pay money to be used in connection with the land
- Covenants NOT to compete 경쟁 금지 run with the land
- Racially restrictive covenants are unenforceable
e. Remedy—Damages
- A breach of a real covenant generally is remedied by an award of money damages
- Collectible from the defendant’s general assets
- If an injunction is sought, the promise maybe enforced as an equitable servitude
g. Termination
- As will all other nonpossessory interests, a covenant may be terminated by
ú
A written release
ú
The merger of the benefited and burdened estates
ú
The condemnation of the burdened property
13.2 Equitable Servitudes
- A promise that equity will enforce against successors of the burdened land regardless
of whether it runs with the land at law
- Unless the successor is a bona fide purchaser
- Money damages à real covenant
- Injunction à equitable servitude
a. Creation
- Created by promises contained in a writing (+ no violation of Statute of Frauds)
- To create an equitable servitude that will bind successors WITNES
- Writing
- Intent
- Touch and concern
- Notice: actual, inquiry or record notice of the covenant
- ES, for equitable servitudes
31
- No privity of estate is required
b. The Implied Equitable Servitude—The General or Common Scheme Doctrine
- Exception to the general requirement that the original promise be in writing
- Elements of the Common Scheme Doctrine
ú
When the sale began, the subdivider had a general scheme of residential
development with included the defendant’s lot (scheme evidenced by: recorded
plat, general pattern of restrictions, oral representations to early buyers)
ú
The defendant lot-holder had notice (Actual, Inquiry, Record) of the promise
contained in the prior deeds when it took
ú
The scheme arises after some lots are sold, no implied servitude can arise
c. Equitable Defenses to Enforcement
- A court will NOT enforce an equitable servitude if
ú
The neighborhood conditions have changed significantly that enforcement
would be inequitable
ú
Unclean hands: the person seeking enforcement is violating a similar restriction
on his own land
ú
A benefited party acquiesced 조용히 허용 in a violation of the servitude by a
burdened party
ú
A benefited party acted in such a way that a reasonable person would believe
the covenant was abandoned or waived (estoppel)
ú
The benefited party fails to bring suit against the violator within a reasonable
time (laches 태만, 의무불이행)
ú
d. Termination
- Like other nonpossessory interests, an equitable servitude may be extinguished by
ú
Written release
ú
Merger of both estates
ú
Condemnation.
IV. ADVERSE POSSESSION
Titles
- Possession for a statutorily prescribed period time can ripen into title to real property
- Results from the operation of the statute of limitations for ejectment
32
- If an owner does not take action to eject a possessor, title vests in the possessor
14. Adverse Possession
14.1 The Elements of Adverse Possession
- For possession to ripen into title, it must be COAH
ú
Continuous
ú
Open and notorious
ú
Actual and exclusive
ú
Hostile
a. Continuous
- An adverse claimant’s possession must be continuous throughout the statutory period
- Intermittent periods of occupancy are NOT sufficient
- There need NOT be continuous possession by the same person
- An adverse possessors can tack her own possession onto the periods of adverse
possession of her predecessors
b. Open and Notorious Possession
- The adverse possessor’s occupation must be sufficiently apparent to put the true owner
on notice that a trespass is occurring
c. Actual and Exclusive
- Will gain title only to land they actually occupy
- If an adverse possessor enters under color of title (invalid deed)
ú
She is deemed to be in constructive possession of ALL the land that the deed
describes
ú
As long as she is in actual possession of a reasonable portion of that land
- Exclusive possession: the possessor is not sharing with the true owner or the public
ú
Two or more people acting together could succeed in obtaining title by adverse
possession
à They would take title as tenants in common
d. Hostile
- Hostility requirement is satisfied
ú
If the possessor enters without the owner’s permission
ú
The adverse possessor’s state of mind is irrelevant
33
- Possession does not become adverse until the possessor makes clear to the true owner
the fact that they are claiming “hostilely”
- Co-Tenants—Ouster Required
ú
A co-tenant must oust others or make an explicit declaration that they are
claiming exclusive dominion
- Grantor Stays in Possession—Permission Presumed
ú
If a grantor stays in possession of land after their conveyance, they are
presumed to be there with permission of the grantee
- Claim of Right
ú
A possessor enters under claim of right when they reasonably believe that the
property belongs to them (invalid deed, etc.)
ú
An invalid deed does not give the possessor permission to be on the land
ú
If someone assumes possession with what they mistakenly believe is valid title,
the possession is hostile and adverse
e. Running of Statute
- The statute of limitations begins to run when the true owner can first bring suit
- Filing a suit will not stop the period from running, but the suit must be pursued to
judgment
f. Payment of Property Taxes Generally Not Required
- Most states do NOT require the adverse possessor to pay taxes on the property
- But consider such payment good evidence of a claim of right
14.2 Tacking
- One adverse possessor may tack on to his time with the land his predecessor’s time
ú
So long as there is privity between the possessors
- Privity is satisfied by any non-hostile nexus (blood, contract, deed, will)
- Privity is absent when the possessor acquires possession by ousting his predecessor in
possession
14.3 Disabilities
- The statute of limitations will not run against a true owner who is afflicted by a
disability at the inception of the adverse possession
ú
When the cause of action first accrued
34
- Only the disability of the owner existing at the time the cause of action arose is
Considered
- e.g. insanity, infancy, imprisonment, etc.
14.4 Adverse Possession and Future Interests
- The statute of limitations does not run against a holder of future interest until the
interest becomes possessory
- The statute does not begin to run until the right is asserted by the grantor
ú
Because until that time, the grantee’s continued possession of the land is proper
14.5 Effect of Covenants in True Owner’s Deed
- If an adverse possessor uses the land in violation of a restrictive covenant in the
owner’s deed for the statute of limitations period, they take free of the restriction
- If the possessor’s use complies with such a covenant, they take title subject to the
restriction
14.6 Land That Cannot Be Adversely Possessed
- Title to government-owned land and land registered under a Torrens system cannot be
acquired by adverse possession
ú
Torrens system: in small minority states, title is established with a governmental
authority that issues title certificates to owners
15. Land Sale Contracts
- Contract requires: an offer, an acceptance and consideration
- The contract must comply with the Statute of Frauds and there must not be any
defenses to enforcement
a. Conveyance of real estate consists of a Two-Step Process
- Step I: The land contract, which conveys equitable title. The land contract endures until
step II (계약서를 쓰는 단계; 계약법 적용)
- Step II: The closing, where the deed passes legal title and becomes our operative
document (완전한 권리가 넘어감; 재산법 적용)
b. Keeping the Two Steps Separate
35
- The closing date is generally set in the contract
- The buyer and seller meet on that date a title insurer’s (부동산 소유권 관련 보험사)
office to exchange the purchase price for the deed
c. Common Issues Before Closing
- Escrow period: the period between the signing of the contract and the closing date
ú
Change of heart and try to back out of the contract
ú
e.g. title defects, termites, bad plumbing à wish to rescind the contract
d. Common Issues After Closing
- Most likely to arise when title problems or encumbrances are discovered after closing
ú
e.g. the seller sold the property to multiple buyers, the buyer discovers that a
neighbor has an easement over the property, a judgment creditor has a lien on
the property
15.1 Statute of Frauds Applicable
- Real estate contract requires a writing signed by the party against whom enforcement
is sought- signed by the party currently being sued
ú
Only one party has to sign the contract, not both
- To land contract must
ú
(i) being writing
ú
(ii) be signed by the party against whom enforcement is sought
ú
(iii) describe the land
ú
(iv) state some consideration
a. Inaccurate Description of Land
- When the amount of land recited in the land contract is more than the actual size of
the parcel
- The contract says 100 acres, but the farm is actually 98 acres
à B’s remedy: specific performance with a pro rata reduction purchase price (계약은 그
대로 이행하되, 실제 면적에 맞춰 가격을 깎아라)
b. The ONLY Exception to Statute of Frauds “The Doctrine of Part Performance”
- If either of these two exceptions is present, equity will decree specific performance of
an oral contract for the sale of land
36
ú
B takes physical possession of the land, and pays all or part of the purchase
price
ú
B takes physical possession and makes substantial improvements to the
property
- Any two (2) of the following three (3) factors will establish part performance
ú
Possession: the evidence that the parties entered into a contract must be
unequivocal 실제점유 on its own is not enough (e.g. tenants)
ú
Full or partial payment: 매매대금 지금 on its own is not enough
ú
Substantial improvements: 맨땅에 집을 짓기 시작했다 등, 세입자들은 수리를
하지 않지만 장기세입자는 하기도 함, so on its own is not enough
- In MEE, state the Statute of Frauds first and then the part performance rule
15.2 Doctrine of Equitable Conversion
- Under the doctrine of equitable conversion, once the contract is signed, equity regards
the buyer as the owner of the real property
- The contract conveys equitable title to the buyer
- The right possession rests with the party who holds legal title thus seller is entitled to
possession until closing
a. Risk of Loss
- 계약과 동시에 equitable title이 buyer에게 넘어갔기 때문에 seller가 책임을 져야 함
- What if the property is destroyed during the escrow period?
ú
Even if the risk of loss (손해발생의 책임=위험부담) is on the buyer, if the
property is damaged or destroyed, the seller must credit any fire or casualty
insurance proceeds they receive against the purchase price the buyer is required
to pay (매수인이 지불해야 할 매매 대금에서 차감)
b. Passage of Title on Death
- What happens if one of the parties dies during the escrow period?
ú
A deceased buyer’s interest passes as real property to their estate (재산법)
ú
A deceased seller’s interest, the right to the purchase price, passes to their
estate as personal property (계약법)
- The contract remains enforceable, with the deceased party’s estate taking the
decedent’s place in the transaction
37
15.3 Two Promises Implied in Every Land Sale Contract
a. Seller Will Provide Marketable Title
- “Every contract contains an implied covenant that the seller will provide marketable title
at closing”
- Marketable title: reasonably free from doubt and the threat of litigation
- A seller has the right to satisfy a mortgage or lien at closing
à if the closing will result in that mortgage’s discharge, then the title is not
unmarketable
i. Defects in Record Chain of Title
- Adverse possession
ú
If the title rests on adverse possession, it is unmarketable
ú
Title acquired by adverse possession often does not appear in the record
- Encumbrances
ú
Mortgages, liens, restrictive covenants, easements, options to purchase, and
significant encroachments render title unmarketable unless the buyer has waived
them
ú
If an encroachment is very slight, it will not render title unmarketable (But, an
encroachment of a foot or more likely will)
ú
An easement that is beneficial, visible, or known to buyer does not impair the
marketability
- Zoning violations
ú
They do not affect marketability, but an existing violation of a zoning ordinance
does render title unmarketable
- Future interests held by unborn or unascertained parties
ú
Courts will not appoint a guardian ad litem (당해 소송에 관하여) to represent
the unborn or unascertained parties for the purposes of conveying land
ii. When Title Must Be Marketable
- Title must be marketable on the day of closing
- In an installment land contract, the seller need not provide marketable title until the
buyer has made his last payment
- The seller is liable only for express promises made in the deed
iii. Remedy if Title Not Marketable
38
- The buyer must notify the seller that title is unmarketable and give the seller
reasonable time to cure the defects
- If the seller fails to cure the defects, the buyer’s remedies include rescission 계약해제,
damages 손해배상, specific performance with abatement 감액된 이행 강제, and a quiet
title suit 소유권 확인 소송
- A quitclaim deed (있는지 없는지 모르겠지만, 내가 이 땅에 어떤 권리가 있으면 그냥
줄게) does not in any way affect the implied covenant to provide marketable title
b. Seller will Not Make False Statements of Material Facts
- “The seller will not make any false statements of material fact”
- If they knowingly made a false statement of material fact that the buyer relied on,
actively concealed a defect, or failed to disclose known defects in the property
ú
e.g. a leaky roof, flooding basement, termite infestation, wallpapered over water
damage
i. Failure to Disclose
- The seller must know or have reason to know of the defect
- The seller must realize that the buyer is unlikely to discover the defect
- The defect must be serious enough that the buyer would probably reconsider the
purchase
ú
Factors increasing the likelihood that liability will be imposed include whether
the property is personal residence, whether the defect is dangerous, and
whether the seller created the defect or made a failed attempt to repair it
c. Disclaimers of Liability
- Can the seller avoid liability for fraud or failure to disclose by including in the contract
a general disclaimer of liability “property sold as is” or “with all faults”
- If the disclaimer identified specific types of defects (e.g. seller is not liable for any
defects in the roof), it will likely be upheld
d. No Implied Warranties of Fitness or Habitability
- The land contract contains no implied warranties of fitness or habitability
- Caveat emptor (“let the buyer beware”) is the common law norm
- Exception—New home construction: most courts recognize a warranty of fitness or
quality in the sale of a new home by the builder
- A person may sue a builder for negligence in performing a building contract. Some
39
courts permit the ultimate buyer to sue the builder despite lack of privity
e. Time of Performance
- Time is not of essence in real estate contracts
- The closing date is not absolutely binding
- A party late in tendering their own performance can still enforce the contract if they
tender within a reasonable time after the closing date
- Time is of the essence if:
ú
(1) the contract so states
ú
(2) the circumstances indicate that was the parties’ intent
ú
(3) one party gives the other notice that time is of the essence
- If time is of the essence, a party who fails to tender performance on the closing date is
in breach and may not enforce the contract
- If time is NOT of the essence, a party who is late in tendering performance is liable for
incidental losses (계약은 유효하지만 지연으로 인한 부수적 손해는 책임져야 함)
f. Tender of Performance
- The buyer’s obligation to pay and the seller’s obligation to convey are concurrent
conditions
- Neither party is in breach until the other tenders performance (even if the closing date
passes)
- If neither party tenders performance, the closing date is extended until one of them
does so
- A party is excused from performing if the other party has repudiated the contract 계약
을 거부 (계약의 명시적 거부; anticipatory breach 예정위반) OR
- It is impossible for the other party to perform such as when unmarketable title cannot
be cured
g. Remedies for Breach of Sales Contract
- The nonbreaching party is entitle to damages OR
ú
Difference between contract price and market value on the date of breach, plus
incidental costs
- If the land is unique, specific performance
- If the buyer wishes to proceed despite unmarketable title, they can usually get specific
performance with an abatement of the purchase price
40
- Sales contracts usually require the buyer to deposit “earnest money 계약금” with the
seller and provide that if the buyer defaults in performance, the seller may retain this
money as liquidated damages 예정 손해배상
h. Real Estate Brokers
- Real estate brokers are the seller’s agents but should disclose material information
about the property if they have actual knowledge of it
ú
Traditionally, agents earned their commissions when they produced a buyer who
was ready, willing, and able to purchase the property. The commission was
owed regardless of whether the deal actually closed
ú
The growing trend is to award the commission only if the sale actually closes or
if it fails to close because of the fault of the seller
- Under an exclusive listing agreement with a real estate broker, the broker’s best efforts
to sell the property is consideration for the broker’s commission
ú
Best efforts include expenditure of time, effort, or money
- If the property is sold by the seller or another agent during the listing period, the seller
still may have to pay a commission
- Exclusive right-to-sell agreements additionally preclude the seller from selling the
property themselves without paying the commission
i. Title Insurance
- A title insurance policy ensures that a good record title of the property exists as of the
policy’s date and promises to defend the record title if litigated
- An owner’s policy protects only the person who owns the policy (usually either the
owner of the property or the mortgage lender) and does not run with the land to
subsequent purchases
- A lender’s policy follows any assignment of the mortgage loan
41