Property Outline
Printed: February 6, 2016
I. Theories of Property
A. Labor Theory - he who does the work should own.
1. Ex: Person who enters a mine and exploits it should own the title to the
mine.
2. Ex: Person who expends labor pumping oil out of the ground should
own it.
B. Social Utility Theory - the person who can make the best use of the property
should own.
1. Ex: Person who has a mine entrance on his land should own the mine
because he is the only one who can access it.
2. Ex: Person who has the ability to pump oil out of the ground should
own the oil because he is the only one who can access it.
C. Economic Theory - market forces will determine who should own.
1. Perfect property system has 3 attributes:
a. Universality - all property should be ownable or exploitable by
someone.
b. Exclusivity - the right to exclude persons give the owner a
greater incentive to invest money in it.
i. exclusivity is not absolute because you can't use your
property in ways contrary to public policy (destroy it, harm
others with it, etc.)
c. Transferability - so that resources can be shifted to where they
are best allocated.
II. Ways to acquire property.
A. Finding (occupancy) - taking what was previously unowned.
1. Abandoned or undiscovered property - possessor has exclusive rights
against the world.
a. Policy: reward the person who brings the property to social use.
b. Ex: Meteorite falling to earth should belong to person who
discovers it and reduces it to possession.
i. Policy: meteorite does not become the property of the
owner of the land because he never knew it existed. Create
incentive for persons to discover.
c. Requires Intent to possess and Actual taking (but not physical
touching).
i. expressing intent to possess (warn others away).
ii. have the means to possess (equip. necessary).
iii. persistent effort to possess (diligence).
iv. Policy: Reward the person who reduced to possession
because that is most of the battle. To reward the discoverer
over the possessor would be to create a disincentive to
reduce to possession unless you were the finder. Those
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things found by a person who doesn't have means to possess
would remain unused.
v. Policy: don't require physical touching because it would
promote physical fighting between two competing finders.
vi. Ex: Person who locates sunken wreck in river.
2. Lost Property - "treasure troves"
a. "Public Areas" (or unknown)- Finder has exclusive rights against
all but original owner.
i. Ex: (Public area) Customer finds money in "public area" of
store.
ii. Ex: (Unknown area) Chimney sweep finds a jewel.
iii. Policy: Reward the person who returned it to social use
over the owner of the premises because the owner had no
knowledge it was there and would never have brought it to
social use.
iv. Policy: Prevent a "string of thefts" so that the original
owner would more likely find it.
b. "Private Areas" - Owner of the land has rights because he intends
to exert "positive control" over the property.
i. Ex: Pond cleaners find ring in pond, owner takes.
ii. Policy: Weigh the exclusive property rights of the
premises owner over the rights of the finder because it
would create a perverse incentive to rummage through the
property of the owner looking for things to which the owner
may not have a solid claim.
iii. Policy: Owner might more easily be reunited with the lost
property because he is relying on the good faith of a host
towards his guests, especially if they have a lost and found
policy.
5. Mislaid Property - Owner of area where property was mislaid has
exclusive rights against all but the original owner.
a. Ex: Wallet left in barbershop belongs to barber as bailee.
b. DOES NOT apply when the item is mislaid in a moveable chattel
such as a guitar or car, because it defeats the policy that the owner
would more likely be able to find it.
c. Policy: Owner is more likely to come back for the property once
he remembers, so weigh the rights of the true owner over the rights
of the finder.
II. Bailments
A. Three types of bailments
1. Gratuitous bailment - lowest standard of care (holding someone's wallet
as a favor).
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2. Bailment for mutual benefit - standard of reasonable care (lost and
found at a hotel).
3. Bailment for benefit of bailee - highest standard of care (borrowing a
car).
B. Can be voluntary or involuntary, but once it becomes voluntary, bailee has a
duty to deliver the chattel to the right person.
C. Can be actual or constructive - a court might deem that a bailment was created
even though there was not express contract.
D. Responsibilities of a bailee
1. Absolute duty not to take any overt acts to destroy the property.
2. Protect the reasonably foreseeable contents of containers that are bailed.
a. Ex: (Unforeseeable) Mayan relics in the trunk of a car parked in a
garage are not reasonably foreseeable.
b. Ex: (Foreseeable) Jewels in a mislaid purse in a luxury hotel are
foreseeable.
c. Policy: To hold bailee liable for unforeseeable contents would
cause them to rummage through purses, invading privacy to
determine the exact contents, or to do away with lost-and-found
altogether.
III. Bona-Fide Purchaser in the ordinary course of business.
A. Requirements of a bona-fide purchase.
1. Must be in ordinary course of business from a person who deals in that
commodity.
2. Purchaser must have no knowledge that the property is "tainted".
3. Purchaser must take reasonable steps to verify title before buying, based
on nature of property and surrounding circumstances.
a. Real-Estate and Autos have recording statutes to protect the
owner and buyer from fraud because the property is very valuable,
and in the case of autos, frequently stolen and hard to locate.
B. Cannot give away more title than you have.
1. Owner must have "Entrusted" the item to the dealer.
a. Voluntary delivery to the dealer.
b. Acquiescence in retention of possession by the dealer.
c. Therefore, thief, bailee, and finder have not been "entrusted", and
so have no title against the original owner, so owner wins against
bona-fide purchaser.
2. Con-man acquires "voidable title" which is perfected by sale to a
bona-fide purchaser because owner "entrusted" con man.
a. Ex: Motorcycle purchaser bounces check, then sells to another
(owner wins because of recording statute).
b. Policy: Puts risk of loss on owner who could have avoided
selling to con-man.
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3. Policy: Promotes stability and security in commercial transactions, thus
promoting alienability of property.
C. Equitable Estoppel
1. Owner clothes the trustee in "indicia of title."
2. Bona-fide purchaser relies on "indicia of title."
3. Ex: Painting hanging in living room of trustee could be sold to bona-fide
purchaser if trustee is art dealer.
IV. Adverse Possession.
A. Policy - put old issues to rest and repose. Land that would otherwise lay
dormant is brought to social use.
B. Requirements
1. Actual possession (must actually possess the entire amount of property
that he desires title to, not just one corner of the lot).
2. Uninterrupted possession.
a. Tacking is permitted between successive possessors who are in
"privity" with each other.
i. descent (inheritance).
ii. deed (sale or transfer by legal document).
iii. devise (splitting the land into parts).
b. Policy - to prevent successive squatters from taking land when
they have made no investment in it, and to promote repose.
3. Open and Notorious (not secretive).
a. The owner is imputed to have constructive notice, even if he
doesn't visit the property, if the action should have been known if
the owner was paying attention to the property.
4. Hostile and Exclusive (not a lease, not permissive).
5. (Optional) Good faith claim of right (you must think it really is yours).
6. Statute of limitations must have run.
a. "Discovery Rule" - Statute of limitations does not begin to run
until owner knows, or should know, the identity and intentions of
the adverse possessor.
i. Only works with chattels and not land because land is
more important to the social good to make exceptions, and
chattels are sometimes hard to find even if publicly
displayed.
V. Improving another's property by mistake (Accession).
A. Improver obtains title when:
1. Nature of the property has been changed drastically in substance or
value.
a. Ex: Grapes become wine.
b. Ex: Wood at $5 becomes barrel hoops worth $750.
c. Ex: (Counter-example) Trees at become cut/stacked cord wood original owner retains title, improver gets nothing.
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2. It would be unjust to award title to the original owner (Equitable relief).
a. Ex: Contractor mistakenly builds house on wrong property.
b. Owner still has a right to reimbursement for raw materials,
otherwise there is no incentive not to be a mistaken improver.
c. Unless it is unjust, give title back to owner in order to motivate
the mistaken improver to be more careful.
d. Policy: must weigh the exclusivity of the property rights of the
owner to the labor value of the improver.
3. Improver is acting on a good-faith claim of right (thief who improves
property gets no title, no matter how much improvement is made.).
a. Otherwise, to give to thief would promote theft, because, at most,
the thief would be liable for the actual value of the raw materials,
and might stand to make a large profit from his theft.
B. Policy - reward the person who has expended the effort. Avoid
over-penalizing a morally innocent trespasser while overcompensating the
injured party with a windfall. (Labor and Social Utility Theory).
VI. Donative Transfers (don't involve consideration).
A. Requirements
1. Donative intent (present intent + something to give).
2. Delivery (must be actual unless nature of gift precludes physical
"handing-over").
a. Policy - to be sure after the person is dead that their intent was
manifested, therefore reducing invalid claims.
b. Policy - protect gift givers from their own folly and the
whimsical nature of juries.
3. Acceptance (presumed for most cases).
B. 3 Types:
1. Inter-vivos (irrevocable gift during the lifetime, without pending death).
a. Overrides a will because it is a present gift which vests
immediately, and a will only vests rights after the death of the
testator.
2. Testamentary (regulated by strict statutes of wills).
a. based on conditions precedent - "do not pay until my death."
b. can be revoked by inter-vivos gift, but intent must be examined
closely when overriding with a causa-mortis gift.
c. Policy: very respected because it involves so much rigor that it is
a good reflection of the grantor's intent. Want to protect beneficiary
from latent claims after the grantor is dead and cannot provide
evidence of his intent.
3. Causa Mortis (in anticipation of impending death).
a. based on conditions subsequent - "pay, but not if I live."
b. delivery must occur during lifetime of donor, which means that
the donee owns it before donor dies.
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Property Outline
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c. per se revoked if person does not die in manner anticipated, or if
he recovers.
d. can be revoked at any time prior to death (for instance, by
express bequeath in a will).
VII. Freehold Estates
A. Definitions of grant language - who gets what.
1. Words of purchase - describes who gets the property rights; vests an
interest in someone.
a. Ex: "To Jones" vests an interest in Jones.
2. Words of limitation - describes what rights the grantee gets; does not
vest an interest in someone.
a. Ex: "To Jones and his heirs". The phrase "and his heirs" are words
of limitation that describe the estate - a fee simple. There are no
rights vested in the heirs by this grant.
b. Ex: "To Jones and his assigns". The phrase "and his assigns" are
words of limitation that describe the estate - a life estate.
B. Fee Simple - the whole interest in the land.
1. Passes either by transfer (sale), succession (inheritance), or escheat
(reversion).
a. Escheat - owner of property dies and there are no persons alive
who have a right to inheritance; property reverts to the state.
i. Escheat happens only after the statutory distribution can
find no heirs.
ii. The state is the original owner of the land and always
owned a reversionary interest in the land.
iii. Not subject to inheritance tax because the land does not
pass by succession (inheritance), but by reversion. - In Re
Connor's Estate.
2. Fee Simple absolute - no conditions.
3. Fee Simple Defeasible - grant of fee simple can be "undone" if a
condition happens, in which case the land reverts.
a. Fee Simple Determinable (FSD) - upon violation of the condition,
the land reverts automatically as a matter of law.
i. The future interest is a "possibility of reverter".
ii. Grant language includes: "until", "so long as", "during".
b. Fee Simple Subject to Condition Subsequent (FSSCS) - upon
violation of the condition, the next taker must take action to recover
possession.
i. The future interest is a "power of termination" or a "right of
re-entry".
ii. Grant language includes: "upon condition that", and
"provided that".
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Property Outline
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iii. CANNOT RESULT IN ADVERSE POSSESSION because
the possession is permissive until the exercise of the power
of termination.
c. Policy: Court is more likely to construe ambiguity between FSD
and FSSCS to FSSCS because it promotes alienability of land so that
it can move to its highest value use.
d. A third person may be designated as the person entitled to
possession after upon termination of the defeasible fee.
e. Both possibility of reverter (from FSD) and power of termination
(from FSSCS) are inheritable interests.
e. Possibility of reverter and power of termination may not be
transferable unless it is specifically intended by the grantor.
f. Three ways to limit defeasible fees and turn them back into fee
simple absolute:
i. Judicial - the court reads into the document that a
reasonable time had passed or that the entire grant was
contrary to public policy (FSD that reverts upon sale gives
the grantee no incentive to improve it).
ii. Intent of grantor - the condition could be held to be no
longer applicable if the grantor's intent was to make it of a
finite length.
iii. Statute of limitations - extinguish all powers either 1 yr.
after breach or 30 years after grant.
g. Precatory language - If the grant does not indicate what will
happen upon failure of the condition, the court will construe the
conditional language as "precatory", granting a fee simple absolute,
and not a defeasible fee.
i. Ex: "To A and his heirs, to be used for school purposes
only." grants a fee simple absolute.
ii. Policy: the mere expression that property is to be used for
a particular purpose does not turn a fee simple into a
determinable fee - promotes alienability at the sacrifice of the
grantor's intent.
h. Restrictive covenant - like CC&R's take the conditions put upon
the grant and construe them to be enforceable by contract law and
not property law, thus you can create a cause of action even if the
grant language is precatory.
i. Policy: provides a remedy while still promoting more
alienability than a defeasible fee.
i. The gov't cannot condemn a possibility of reverter without
paying for the value of that future interest.
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D. Life Estates - for the lifetime of a person (normally the grantee). When the life
tenant dies, the remaindermen take possession or the land reverts (depending on
how the grant is written).
1. Two kinds of life estates: for the life of the grantee, or for the life of one
other than the grantee (pur autre vie).
2. Life tenant can only grant the interest that he has, for whoever's life the
possession is good.
3. Life tenant owes a fiduciary duty to the remaindermen to prevent
waste.
a. The remainder is the more valuable estate, because it lasts
forever.
b. Voluntary (commissive) waste - committing some deliberate
destructive act (kicking down a wall).
c. Permissive waste - failure of the life tenant to exercise reasonable
care for the preservation and protection of the state (allowing
weather damage to a wall).
d. Meliorating waste - an improvement of the property is not waste
if it increases the "value" of the property (subjective).
i. Ex: an abandoned house is torn down to make way for a
shopping mall - which is more valuable?
ii. If a life tenant adds value and then destroys it, the
remaindermen may have a case for waste.
iii. The heirs of a life tenant who made a significant
improvement in the value of the land might sue the
remaindermen for title by accession, but the courts would be
reluctant because of the sacredness of land, claiming the
improvement was not mistaken.
e. Remaindermen may recover compensatory damages for waste by
the life tenant.
E. Fee Tail - an estate inheritable only by lineal descendants, none of whom can
convey more than an estate for his own life - "to A and the heirs of her body".
The words are both of limitation (life estate for successive generations) and
purchase (creates interest in the children directly).
1. Creates a condition of "indefinite" failure of issue because the condition
must be evaluated at every generation. A "definite" failure of issue relates
only to the death of one person and does not create a fee tail.
i. Ex: "To A, and if she dies without lawful issue, to A's heirs" is a
condition of DEFINITE failure of issue depending only on A's
death, NOT granting a fee tail, and NOT marketable during A's
lifetime because the condition could not be determined until her
death.
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1. Can be interpreted as a fee simple conditional which empowers the
grantee to convey a fee simple absolute if and when a child should be
born to him, but if he dies, it still passes to his heirs.
2. Can create a fee tail subject to any disentailing statutes.
a. Common recovery - a person owning a fee tail attempts to grant
a fee simple to another who then grants it back, destroying the fee
tail by action of statute.
3. Can be completely disregarded as a void transfer.
4. Can be interpreted as a life estate for one generation, and then convert
to a fee simple absolute.
5. Can be interpreted as granting a fee simple absolute directly to the
grantee.
6. Unless otherwise specified, the grantor retains a reversion in fee simple
when the line of issue fails because all fee tails eventually die out and is
therefore less than the whole fee simple estate.
7. Can go to a grandchild directly if there are no living children.
VIII. Future Interests
A. Vested Remainder - grants property rights directly to the remainderman,
without having to satisfy a condition precedent. (rights granted "unless"...).
1. Becomes marketable immediately upon grant, but if it contains a
condition subsequent, that condition goes with the remainder, and if
violated, results in a reversion.
a. Ex: "To B for life, remainder to C unless she dies before she is 21"
is vested because it is a direct grant subject to a condition
subsequent which could defease it.
2. It is a present right to future enjoyment.
3. Requires a person to be in being ready to take.
a. Ex: "To B for life, remainder to B's children" is vested if B has
children now.
b. Ex: "To B for life, remainder to B's wife" is vested if B has a wife
now, and the intent was to refer to the person in being.
4. If the conditional element follows the grant the remainder is vested.
a. Ex: "To B for life, remainder to B's children, unless no children
survive him" creates a vested remainder in the children, subject to
being defeased if they don't survive.
5. Although children may grow in number and diminish the individual
shares in a vested remainder, more children only affects the quality of the
vested remainder and does not create a condition precedent (contingent
remainder).
B. Contingent Remainder - the property right does not come into existence until
the condition precedent is satisfied. (rights not granted "until"...).
1. Is not marketable until the condition precedent is satisfied, thus vesting
the remainder.
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a. Ex: "To B for life, remainder to C when she reaches 21" is
contingent because she may not survive until her 21st birthday as a
condition precedent.
2. Result of a grant where there is no person in being ready to take.
a. Ex: "To B for life, remainder to B's children" is contingent if B has
no children because the birth of children would be a condition
precedent.
b. Ex: "To B for life, remainder to B's wife" is contingent if the intent
was to grant to a class of persons, rather than a specific person, thus
C's wife was not determinable until B's death.
3. Even though the life tenant will certainly die, if his death is required
before ascertaining the condition, it is contingent remainder.
a. Ex: "To B for life, remainder to B's heirs" is contingent because B's
heirs cannot be determined until B's death as a condition precedent.
b. Ex: "To B for life, remainder to B's surviving children" is a
contingent remainder because the surviving children can't be
determined until B's death.
C. Policy: Where there is ambiguity in grant language, the court will construct in
favor of a vested remainder because it is sellable.
D. The grant of a remainder leaves a reversionary interest in the grantor because
the life estate plus remainder is still less than the entire fee simple.
1. For vested remainder, the grantor retains a power of termination for
any subsequent conditions that defease the remainder.
2. For contingent remainder, the grantor retains a reversion in fee simple if
the condition precedent is not satisfied, even if there are two alternate and
mutually exclusive contingent remainders.
a. Ex: "To A for life, then to A's surviving children, but if A dies
with surviving children, then to B." there are alternate contingent
remainders to A's children and to B. One must take possession, so
the reversion in the grantor will never become possessory.
E. The life tenant can join together with the remaindermen to sell all they own,
but it would still be subject to any conditions subsequent, or the vesting of any
contingent remainders.
1. Ex: A father as the life tenant, joins with the vested children, as their
guardian, to sell. They can only sell as much as they own, so the buyer
would risk having his share reduced if any more children were born who
were entitled to a vested interest.
F. Destructibility of Contingent Remainder
1. By "gap in seisen".
a. The contingent remainder must vest before or at the moment of
the expiration of the supporting estate or it is destroyed.
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i. Ex: "To Jack for life, then to Jill's heirs." Jill must die before
Jack, or the contingent remainder to her heirs is destroyed,
and the land reverts back to the grantor.
b. A contingent remainder must have a supporting estate,
otherwise it is destroyed.
2. By merger of life estate with reversion.
a. If one person owns two successive estates in time, the lesser
merges into the greater - Life Estate -> Reversion = Fee Simple, and
destroys any contingent remainders supported by the original life
estate.
i. Ex: Father grants "to daughter for life, then to daughter's
surviving children.", and then later leaves all of his estate by
will to his daughter. Then the daughter owns the life estate,
plus the reversion she inherited by the will. The two merge
into a fee simple and destroy the contingent remainder in
the surviving children.
b. Does not work with an intervening life estate or vested
remainder because the first life estate and the reversion are not
successive estates.
c. Can create a motivation between two successive estate owners to
join together to destroy a contingent remainder in-between.
G. The Rule in Shelley's Case - can't vest a remainder in "heirs".
1. "When a person takes an estate of freehold,...and in the same
instrument, there is a limitation, by way of remainder, either with or
without the interposition of another estate, of an interest of the same
legal or equitable quality, to his heirs [contingent remainder], or heirs of
his body [fee tail]...the limitation to the heirs entitles the ancestor to the
whole estate [fee simple absolute]."
a. Ex: "To A for life, then to the heirs of his body" [fee tail] or "To A
for life, then to A's heirs" both result in a fee simple being granted
to A.
2. Requires that the grant be a freehold of land.
a. Ex: "to B for 100 years if B so long live, then to B's heirs" is not a
freehold, but an estate for years, so Shelley does not apply.
3. Can have an intervening life estate or vested remainder.
a. Ex: "to B for life, then to C for life, then to B's heirs": the rule
applies but does not destroy the life estate of C. It does give B the
life estate plus the remainder, but the intervening vested remainder
is not destroyed.
4. Can be for the second life estate and not the first.
a. Ex: "to B for life, then to C for life, then to C's heirs".
5. Must be of the same legal or equitable quality.
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a. Ex: "to B for C's life in trust for C, then to C's heirs" - Shelley does
not apply because the trust to C is of lesser equitable quality than
the remainder to the heirs.
6. It can be used to destroy a condition subsequent in a vested remainder.
a. Ex: "to A for life, unless A remarries, then to the heirs of A's
body" - applying the rule grants a fee simple in A and the condition
subsequent is destroyed because the reversion formerly held by the
grantor now becomes part of A's grant and so if the condition
failed, it would still be A's by reversion.
7. It is an absolute rule of law and not one of construction, so it happens
automatically without court reformation of the deed.
8. Policy: prevents heirs taking by purchase, and makes them take by
inheritance, thus subjecting the estate to inheritance tax, and to creditors.
Promotes unencumbered alienability of land.
9. Policy: Very narrowly interpreted because it necessarily defeats the
intent of the grantor. A "trap and snare for the unwary."
10. Has been abolished prospectively in most states, but not retroactively
because of reliance of previous purchasers.
H. The Doctrine of Worthier Title - you can't grant a remainder to your own
heirs, they obtain by inheritance and not purchase.
1. A grant of a life estate, with a remainder to the heirs of the life tenant
(or the grantor), does not create a contingent remainder in the heirs [as
words of purchase], but rather grants a fee simple to the grantee (or leaves
the reversion in the grantor) [as words of limitation], which will pass by
inheritance to his heirs by normal operation of law.
a. Ex: "to A for life, then to revert to myself or my heirs" does
not create a contingent remainder in the heirs of the grantor,
but rather leaves the reversion in the grantor.
b. Ex: "To N for life, then to B, but if B doesn't survive N,
then to B's heirs" grants a fee simple to B so that B's heirs
take by inheritance and not purchase.
2. A rule of construction not of law (as Shelley's) which can be rebutted by
evidence of the grantor's intent.
3. Policy: subjects grants to inheritance tax and creditors, as well as
promoting alienability of land.
I. Executory Interests
A. Statute of Uses: eliminated the "channel" by which one person could hold the
legal title "for the use of" another by "executing" the use.
1. Ex: A enfeoffed B and his heirs for the use of C and his heirs.
a. Before SOU, B would have legal title and C would have equitable
title.
b. After SOU, B has nothing and C has a fee simple.
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2 Ex: A enfeoffs X and his heirs for the use of C and his heirs when C
reaches 21.
a. Before SOU: A would be presumed to have a resulting use until
C reached 21, and C would have a "springing" use when he reached
21.
b. After SOU: A has a fee simple subject to an executory limitation,
C has an executory interest.
B. "Shifting" use is when the whole estate shifts from one grantee to another;
"springing" use is one that defeases the grantor.
1. Ex: Shifting use: To B and his heirs, but if B marries, then to C and her
heirs.
2. Ex: Springing use: To B for life, then to C 10 years after B's death. The
gap in seisin becomes a reversion to the grantor subject to an executory
limitation.
C. Difference between Executory interests and remainders:
1. Executory interests are not destructible like contingent remainders.
2. Remainders are "left-over" after something less than the whole estate
has been granted; executory interests defease the possessor of the interest.
3. Rule in Purferoy's case: if it could be a contingent remainder, then it IS a
contingent remainder.
a. Ex: To B for life, then to C's surviving children who reach 21. C
has a child D, age 10. - could be a CR if D reaches 21 before B dies,
otherwise it is a springing executory interest.
b. Policy- promotes alienability of land by allowing possible
destruction of the contingent remainder.
II. Rule against Perpetuities
A. "No interest is good unless it must vest, if at all, not later than 21 years after
some life in being at the creation of the interest." - Gray
1. Better phrased as "an interest is void if it could possibly vest >21 years
after a life in being at the creation of the interest."
2. The interest fails from the beginning, it never comes into being.
3. Does not apply to reversions, powers of termination, or possibilities of
reverter (grantor's interests).
4. Applies to all forms of property: real, personal, legal and equitable
given in an inter-vivos or testamentary form.
5. The life in being could be anyone in the world, but only persons
relevant to the deed give you any advantage because someone outside the
deed could die immediately.
B. How to determine if rule against perpetuities is applicable:
1. First figure out what the vesting event is.
2. Then determine if this could happen outside of 21 years after any of the
death of the relevant lives in being at the time of the document's execution
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(immediately for inter-vivos gifts, at the grantor's death for testamentary
gifts).
C. Tricks
1. The rule applies only to when the interest vests, not when it becomes
possessory.
a. Ex: to A and his heirs 25 years from the date of this grant. This
does not violate the RAP because it vests immediately.
2. As long as a person is alive they can have other children who may then
survive longer than 21 years after a life in being.
a. Ex: "to A for life, then to A's children for life, then to the survivor
or A's children in fee." - The grant to the survivor violates the RAP
because as long as A is alive, she can have more children who could
survive 21 years longer than any of her other children.
3. The measuring life can not be a class of persons (such as "A's children")
a. Ex: "To A for life, then to A's children who reach 25" violates the
RAP even if A has children at the time of the grant because the
vesting event is when the child reaches 25, and future children
could be born who would reach 25 more than 21 years after A's
death.
4. It is irrelevant that the interest could fail, so long as it must vest OR fail
within 21 years of a life in being at the time of creation of the interest.
a. Ex: Testator devises Blackacre "to my youngest child who shall
be living 25 years after my surviving widow." Testator has a child
A. This does not violate the RAP because at Testator's death, the
class of children closes. It does not matter that the child may not
survive the widow or the widow may not survive Testator because
if the child does survive Testator, he is a life in being at the time of
the creation of the interest (Testator's death), thus it must vest, if at
all, within the child's lifetime.
5. As long as someone is alive, they can remarry someone who is not a
life in being at the time of the grant, and they can have more children.
a. Ex: "to A for life, then to A's widow for life, then to A's children
who survive A's widow" violates the RAP because A could remarry
a person who was not alive at the time of the grant, they have more
children, and then the widow lives more than 21 years after A (who
is the only life in being at the time of the grant).
III. Concurrent Ownership
A. Tenancy in Common
1. Each tenant can force a partition sale.
2. No right of survivorship.
3. Ex: "To B and C and their heirs."
4. Preferred construction when there is ambiguity.
B. Joint Tenancy
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1. Each tenant can destroy the "jointness" by selling their interest to
another party. Then it becomes tenancy in common.
2. Right of survivorship.
3. Ex: "To B and C as joint tenants."
4. Requires 4 "unities" (which can be avoided by a strawman conveyance).
a. Interest - all have equal undivided interest
b. Title - all get their interest from the same event (will, grant, etc.)
c. Time - both interests vest at the same time
d. Possession - all interests are for the whole estate, not just part.
5. The estate is in fee simple, not a life estate + CR to survivor, thus, the
estate does not go through probate.
6. A joint tenant can't will his interest to another because at his death, his
interest vanishes.
C. Tenancy by the Entireties
1. Neither husband nor wife is recognized as an individual owning an
undivided interest.
a. Neither can effect a severance of the interest by conveying
unilaterally to a third party.
b. Neither can compel a partition.
2. Terminated when:
a. The spouses jointly convey to a third party.
b. The spouses divorce (becomes tenancy in common).
3. Creditors may only collect against the land if the debt is the legal
obligation of both spouses.
a. A debt incurred by one spouse is not collectible against the other.
b. Protects the surviving spouse from other's debts.
IV. Landlord-Tenant
A. Leases
1. Exclusive possession of a definite space.
a. Counter-ex: a dormitory room contract is a license to use that
does not have the right of exclusion, so tenant laws do not apply.
1) A licensee does not have the right to exclude others, only
the landowner; and the landowner does not need to go
through the courts to evict a licensee.
2) Policy: not to let a landlord create a document which
claims to be a license if by its terms it is a lease. Tenants are
in an inferior bargaining position.
b. Ex: a moving but well defined space is leaseable, for instance a
car.
2. Statute of frauds requires leases >1yr to be in writing.
a. Although there is a contractual relationship between the lessor
and the lessee as soon as they sign the lease, the estate may not take
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effect until the tenant actually takes possession. Thus, a tenant
might be liable for breach, but not rents if he breaks the lease before
moving in.
3. Types of tenancies:
a. Tenancy for years - a definite term with a beginning and a
definite end.
1) Counter-ex: a lease which ends on "the day that the next
republican president takes office" or "for as long as the camp
is run at a profit" is not valid as a tenancy for years because
the end date is unknown.
2) Policy: if a document fails as a tenancy for years, it will be
viewed as a periodic tenancy, not a tenancy at will, requiring
statutory notice to be given before termination.
3) Policy: rejecting perpetual leases frees up land for
alienation, and leases that appear to create a perpetuity are
presumed to create an option for a single renewal.
b. Periodic tenancy - based on an anniversary year.
1) Ex: to get out of a year to year lease with anniversary date
of Sep 1, you must give notice 6mo. prior (Mar 1) or you may
become liable for the whole next year as a holdover tenant.
2) Policy: statutory notice periods can not be reduced by
bargaining because the tenant is in a weaker position.
c. Tenancy at will - either party can terminate the lease at any time.
4. Holdover tenants
a. A landlord does not have the right of self-help if there are
summary eviction statutes. Thus, he can not change the locks while
the tenant is out.
b. When the previous tenant remains past the time for the new
tenant to move in:
1) Commercial properties- the tenant must take action to
evict because the landlord no longer has the possessory
interest, so it is a wrong against the tenant.
2) Residential properties - the landlord must take action to
evict because the tenant is in a weaker position to evict.
3) In either case, rent is not due until the new tenant takes
possession.
c. The landlord can evict or view the holdover tenant as making an
"offer" to continue for another term, this gives incentive for the
tenant to move out on time (within reason) to have certainty of
property rights.
5. "Quiet enjoyment" - undisturbed possession, breach results in
non-payment of rent
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a. Not proportional. Any breach goes to the whole liability for rent
because the whole property is being rented.
b. Landlord does not have to cause the noise, as long as it is under
his control.
1) Ex: bar adjacent to apartment is too noisy. If both are
owned by landlord, tenant doesn't have to pay rent.
2) Policy: applies only to the commercial/residential
interference, not residential/residential. Otherwise,
landlords would discriminate against noisy families.
c. Tenant can recover damages for as long as the condition exists,
but may have to move out to show good faith to show constructive
eviction.
6. Default of rent by original tenant
a. Under contract theory, landlord must mitigate damages by
reletting the property as "agent" of the tenant, but the original
tenant is still liable for the contract-market differential as damages.
1) Landlord is not liable to the old tenant for excess rents
from the new tenant, because the estate has ended.
2) If the new tenant defaults, landlord can sue either tenant,
and whichever pays has a right against the other for
subrogation.
b. Or there can be an acceleration clause, requiring immediate
payment of all rent due,
1) but this only works if the tenant has abandoned the
property, thus the estate continues with the duty to pay rent
and the right of possession
2) if the landlord re-lets, the rents go to the tenant.
3) NOT and option in eviction because the estate does not
continue, and thus the tenant is not liable for any future
rents, only damages.
7. Implied warranty of habitability
a. If living conditions violate housing codes, the tenant has no
obligation to pay rent while the conditions exist, and can not be
evicted during, or in retaliation for reporting the violations.
1) Policy: Creating a private action is necessary for the
enforcement of the housing codes.
2) However, violation must be more than de minimis, and
the tenant would probably have to pay rent into the court
during the dispute in good faith pending resolution.
3) warranty can not be waived because the housing codes
are statutory, not subject to negotiation by a tenant who
wants less.
b. Problems with this policy:
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1) additional obstacle in summary eviction is the defense of
violation of warranty of habitability.
2) may increase abandonment because repairs would be too
costly
3) increase in rent to make repairs
8. Rent Control
a. Allows landlords only to make a "just and reasonable return" on
the building, but not taking into account the hardship on the
tenant.
b. Policy: Prevents collusion among landlords to raise rents above
the level where they could be affordable.
c. Landlord must keep building in substantial compliance with
building codes before being able to raise rent, otherwise, they could
still make high profits by letting maintenance go bad.
d. Problems:
1) deters investment in new buildings
2) black markets develop for the right to rent in a rent
control building.
9. Discrimination
a. Unruh act prohibits arbitrary discrimination based on
membership in a class (race, education, age, dress...)
10. Transfer of Leasholds
a. Assignment - the exact estate that the original tenant had is
transferred to the subsequent tenant.
1) Original tenant is still liable for rents because of privity of
contract with the landlord.
2) Subsequent tenant (assignee) is liable for rents to the
landlord directly because of privity of estate.
b. Sublease - something less than the whole estate is transferred
because the original tenant retains a reversionary interest.
1) Original tenant is still liable for rents because of privity of
contract with the landlord.
2) Subleasing tenant is liable only to the original tenant, he
has no privity with the landlord.
c. Determination of whether a transfer is an assignment or a
sublease is based on the parties' intent, not the term.
d. The original tenant remains secondarily liable for rents, and any
other assignees can end their obligation to pay rent entirely by
assigning their interest to someone else, UNLESS their assignment
contract explicitly stated that intermediate tenants would remain
liable for rents.
e. Rule in Dumpoor's case - a landlord who requires approval in
writing before allowing an assignment waives that right forever if
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he waives it once, unless the requirement is phrased as being
"multiple" (required with every assignment.)
V. Easements
A. A property right of use which is permanent by default, and must be
incorporated into the grant.
1. Different from lease, license and covenant.
a. Not a lease because it does not involve exclusive possession.
b. Not a license because it is not terminable at will.
c. Not a covenant because it is a property right of use, not just a
contractual entity.
2. Easement in Gross- to an individual, but not automatically to his heirs
and assigns.
3. Appurtenant easement - can not be separated from the land, because it
has no meaning aside from the land. Runs with the land.
B. Easement vs. License
1. A license could look like an easement if it were irrevocable due to
reliance by the licensee, but it would only be irrevocable as long as
necessary to protect the reliance.
a. Policy: prevent extortion once there has been an investment in
reasonable reliance on the continuation of the use.
2. A license coupled with an interest is irrevocable:
a. Ex: A gives B a license to park his car on A's land. A can not
revoke B's license to enter and recover his car.
b. Policy: do not want thievery.
C. Easement by implication
1. Easement by necessity arises over the grantor's land when he grants a
landlocked parcel of land to another.
a. Policy: infer that an easement was intended but not written
down. This is in tension with the statute of frauds.
b. Becomes appurtenant to the land, even against a bona fide
purchaser who has done a title search and found no record of the
easement.
c. Can spring up at any time as long as the necessity remains, but
vanishes when the necessity vanishes because that is the implied
intention of the easement.
d. size and location are whatever is "reasonable".
e. There are statutes that operate like eminent domain giving the
needy person a right of way, but making him pay for it.
2. Easement by existence of a prior use
a. Apparent, obvious, continuous and convenient use creates an
easement over land granted away.
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1) Policy: intent of the parties must have been that it would
continue, but was left out accidentally, however, since the
grantor drafted the deed, and the easement is for his own
benefit, there is some authority that he should not be
allowed to complain.
b. Does NOT evaporate when the use is discontinued, because the
implication is that it was intended to be permanent because of the
continuous use.
3. Easement by prescription
a. Similar to adverse possession, except you only gain a use, not
title.
b. Policy: based on the theory of a "lost grant" of easement which
become conclusive as matter of law after 20 years.
c. once established for a particular use, it can not be expanded
without going through the whole cycle again.
1) ex: easement by prescription established in an alley for
making deliveries to a store can not be used for making
deliveries to other adjacent stores.
d. Can not establish a prescriptive negative easement for light or
air, because such uses are not adverse to the rights of the owner.
1) ex: Fountainbleu v. Eden Rock.
2) counter ex: use of a sidewalk to maintain a marquee was
phrased as a positive easement, as opposed to the negative
easement of keeping the marquee visible from the sidewalk,
which was contrary to the use of the public sidewalk
because it was private.
D. An easement can not be abandoned without intent to abandon. Thus, simple
non-use of the easement does not show intent to abandon.
VI. Covenants
A. A covenant that runs with the land ends the former title holder's liability
under that covenant, unlike that of the first lease holder.
B. To Run with the land at Law, a covenant must:
1. "Touch and concern" the land
a. Ex: affect the value of the land
2. Intent to run with the land
a. "I bind my heirs and assigns"
b. apparent from circumstances
3. Privity of Estate
a. Vertical privity (sale or succession of the entire estate), AND
perhaps
b. horizontal privity (covenant was created at time land was
transferred) OR
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1) can be rigged by a straw transaction
c. Mutual privity (continuing interest in the same piece of land)
1) ex: lease; landlord and tenant
2) ex: easement over another's land
d. Policy: requiring privity makes it harder to encumber land with
hidden covenants. However, modern recording statutes avoid most
of this problem, and many covenants are good.
4. Benefit land as well as burden land; a covenant in gross does not run
with the land.
VII. Equitable servitudes
A. Equitable counterpart to a real covenant in law
1. Provides separate remedies (injunction, ejectment or replevin instead of
damages).
2. Alternative where the covenant would fail to run in law because of
some technical issue with privity, but does not undermine the law because
it is only granted in special cases:
a. where the harm outweighs the benefit of keeping strict
adherence to the law,
b. where there has been some inequitable conduct
c. only applies to restrictive covenants and "negative" easements
(refrain from something), not affirmative covenants.
B. To run in equity, against a subsequent purchaser a covenant must:
1. "touch and concern" the land
2. Intent to run with the land
3. Subsequent purchaser has notice (actual or constructive)
4. NO privity requirement.
5. π maybe must have an interest in the land benefited
C. Subdivisions
1. Reciprocal negative easement applies where subdivider burdens first lot
of land with a covenant (such as to use for residential purposes) which
benefits the developer's remaining land.
2. Intent and notice can be implied from a "common scheme" of
development.
a. this is in tension with the statute of frauds if the original deed
does not word the covenant as being incorporated into all further
grants.
b. Appearance of the neighborhood can be used as evidence of
notice, even if a title search comes up empty for one particular lot.
c. However, buyers prior to the creation of a common scheme
would not be retroactively bound.
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