Property Outline
Property Law: Governs the relationships among people that involve control over
valuable resources. Distribution of property is governed by property law which therefore
governs the distribution of social power.
- Property & the legal system: It is part of private law (includes Torts and Contracts)
- Tort and criminal law protect property owners
- Contract law allow property owners to transfer their property rights
- Wills & Estates law allows property owners to transfer their property rights
- Ownership of property does not give absolute power and control of property
- Property rights are never absolute. They are limited by public policy.
- Property rights are a bundle of rights: the right to use, to exclude others, and transfer
property.
- * Institution of property mediates people’s conflicting desires over resources by
allocating rights to them.
Options for Establishing Occupancy or Possession (Wild Animals):
- A. Actual Possession
- B. Certain control (Wounding or trapping)
- C. Reasonable prospect of taking
- D. Pursue with large dogs or hounds
Pierson v. Post Rule of Capture
- Issue: What acts amount to occupancy or possession for acquiring the right to wild
animals?
- Holding: Animals, ferae naturae, is still in the commons until an act of possession
creates occupancy over it. The Court conceded that acts not amounting to actual
killing may suffice. Such acts may include mortal wounding or trapping. Pursuit
alone is insufficient to establish possession. Therefore, Post’s chasing the fox with
his hounds did not establish possession.
- Dissent: Some combination of “C” or “D” above is can establish possession.
Suggests that ownership over the fox should be granted to any pursuer with a
reasonable prospect of catching the animal.
Theory of Acquistion:
- The majority in Pierson relied on the Rule of First Possession:
- 1. First Possession v. Labor
- Labor Theory was first advanced by John Locke. According to this theory, once a
person mixes labor with particular common goods these goods become his
property
- The dissent in Pierson referred to Post as a “saucy intruder” which was an
inference to Labor Theory.
- 2. Rule v. Standards
- Rule= Drive @ 55 MPH. Standard= Drive @ a reasonable speed.
- Pierson was an application of a rule. The dissent was an application of a standard
-
What advantages to rules have to standards?
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A. Rules are more clear cut and certain
- 1. Certainty reduces the likelihood of conflict
- 2. Certainty provides a solid basis for expectations.
- B. Rules are easier to apply
Disadvantages?
- A. Rules are inflexible. Their application in particular cases will result in an
injustice or inefficient outcome.
Fairness v. Efficiency
Theories are woven throughout legal system and have shaped many legal doctrines.
While there is no single definition of fairness, theories of fairness is widely associated
with justice and equality.
Efficiency is a utilitarian theory that calls for maximizing wealth.
Legal norms v. Social/Extralegal Norms
Post was trying to prove a social custom of the times; the reasonable prospect of
taking which was the social norm.
If social norms are exclusive then the law must intervene.
Ghen v. Rich
- Issue: Does the industry custom of lancing give Ghen entitlement to the dead whale?
- Holding: Ghen prevails because the Court held to the industry custom.
- Rule: The first taker must pursue, mortally wound, and make marks of appropriation
upon a whale in order to take possession.
- The judge in the case at hand followed these precedents and further established that if
this custom, which only applies to a few, were abandoned, then the whaling industry
would cease to exist, because no one would labor after these whales if appropriation
could be established by a chance finder.
- When can a court use an industry custom?
- 1. It has to be specific t a narrow range of cases
- 2. Must be widely recognized
- 3. The effect of abolition on the industry
- The Court in Ghen was able to break away from Pierson because:
- 1. Elimination of custom would have undermined the industry
- 2. The act of killing established possession.
- In Ghen the well being of people was affected by the industry, whereas in Pierson it
was a sport.
- Also, the custom in Pierson was broader. It referred to all animals, and Ghen simply
refers to whales.
- Customs of whaling industry were in place to maximize the welfare of whalers.
- Why was this custom in place? If it was not in place:
- 1. Safety would be decreased
- 2. Diminished productivity
- 3. Increased labor
- Group customs may be unfair to non-members or sometimes may be inefficient when
they conflict with the public at large.
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Most industry customs leader to over-whaling which affect the public at large- Overconsumption problem.
As a general rule Courts are more likely to be fair to industry practice and other extralegal norms when they are fair and aligned with a larger social interest.
Keeble v. Hickeringill
- Facts: At had set up a decoy pond to seduce ducks to his pond, at which point he
would kill them, and profit from his creation. Ae, who disagreed with At actions,
went to the At pond and fired off 6 shots which frightened away the wildfowl. Trial
court found in favor of the At with damages to be paid.
- Issue: Does a landlord have a right to attract wild fowl, or engage in trade, unimpeded
from distractions?
- Holding: Court likened the P’s activity trade. Court found D’s activity to be
malicious interference.
- Rule: One can interfere with another’s effort at trapping wildfowl only if it was their
intention of killing the fowl in the process of interference, not merely with the soul
purpose of simply interfering.
- How is this different from Pierson?:
- 1. Constructive possesssion by Keeble
- 2. Trade v. sport
- 3. Competitors v. Interlopers
- 4. Useful activities v. harmful activities
- Related doctrines regarding animals:
- 1. Relativity of property rights
- L.O. > Poacher > Any other person
- Designed to minimize future conflict
- 2. Habit of Return
- RULE: If wild animals escape from the possessor, they then become common,
and fall under the rule of capture. Not so for domestic animals who leave and
then come back.
- Want to give people who possess domestic animals the right to benefit
economically from roaming and grazing
- 3. Rule of Increase
- RULE: The title to offspring of domesticated animals will always fall under the
title to the mother.
- This rule promotes certainty and because it is simple and cheap to administer.
Fugitive Resource; Gas & Oil:
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Originally the common law rule of capture governed the appropriation of gas and
water
Courts later made them analogous with migratory animals to resolve disputes. First
in time could drill out all of the oil form a well.
Problem arose when the 1st in time on a reservoir reinjected gas or oil into the well
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Hammonds v. Central Kentucky Gas Co.


Reservoir
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Issue: Did the gas still belong to the gas company when it was reinjected?
Rule: The Court established that due to the migratory nature of gas it remains in
common ownership until actual possession has been taken via extraction. However,
the owner of land under which the gas lies, may acquire and appropriate, the oil and
gas directly beneath.
Tragedy of the Common (Hardin):
- The application of the rule of capture for gas and oil created a problem
- Hardin observed that in many real world situations rationale individual behavior
would result in overuse of commercial resources and thus lead to an undesirable
social result.
- Oil wells in Texas are a good example. Oil was taken out too quickly and as a result
many wells with plenty of gas and oil were squandered. But the “rule of capture”
caused people to drill. Even if people wanted to conserve he had to jump into the race
in order to avoid being beaten by others.
- Oil industry was caught in a dilemma because transaction costs were too high to
establish cooperation. Courts couldn’t tell under whose land the oil was under to
avoid overdrilling. Because there were so many people drilling it made it impossible
to negotiate.
- Solutions:
- 1. Proportional Extraction
- 2. Pooling; The owners of tracts of land above a reservoir would share in the costs
and benefits of drilling. An agency could be created to manage the oil.
- 3. First appropriation- reasonableness
- 4. Regulation: # wells, space, monthly extraction
- 5. Nationalization
Water
Stratton v. Mt. Hermon’s Boys School
- Issue: Did the ’s use of the water violate the ’s right to the use of the water?
- Holding: Court changed the rule of law that diversion is not enough to prove injury.
- Rule: “A proprietor may make any reasonable use of the water of the stream in
connection with his riparian estate and for lawful purposes within the watershed ,
provided he leave the current diminished by no more than is reasonable, having
regard for the like right to enjoy the common property by other riparian owners. If he
diverts out of the watershed or upon a disconnected estate, the only question is
whether there is actual injury to the lower estate for any present or future reasonable
use. The diversion alone without evidence of such damage does not warrant a
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recovery even of nominal damages.” To be unreasonable the use has to injure the
present and future interest of neighboring parcels.
Coffin v. Left Hand Ditch Co.:
- Issue: Did the Ae have priority of right and priority of appropriation of the water over
the At?
- Rule: In the absence of express statutes to the contrary, the first appropriator of water
from a natural stream for a beneficial purpose has, with the qualifications contained in
the constitution, a prior right thereto, to the extent of such appropriation. The right to
acquire water by priority of appropriation is not in any way dependent upon the locus
(place) of its application to the beneficial use designed.
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Demsetz and Hardin: Agree that communal property regimes always lead to abuse
and over-exploitation.
Feminist Theory: People are not self-interested maximizers and have the ability to
cooperate and solve the overuse problem.
Q: Will P.P. always be more efficient than communal property?
A: NO! Under certain circumstances P.P. may give rise to inefficiencies of another
sort.
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Tragedy of the Anti-Commons:
Under a P.P. regime rights to resources may often be too fractured and dispersed and
this will lead to under-utilization of valuable resources (e.g. when a person divides
property among a lot of people).
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Charles Reich: P.P> is instrumental in maintaining independence, dignity, and
pluralism by protecting individual owners from state intervention. Likewise, Milton
Friedman argues that P.P. is essential to political freedom. On the other hand, P.P.
might break down notions of sharing and community. The choice between communal
property and P.P. turns on a score of economic and non-economic factor. Common
ownership is most desirable under conditions of abundance or if we wish to foster
values of sharing and community. Private ownership will work better when resources
are scarce and a problem of waste exists. Or if we wish to inculcate value of liberty
and individualism.
Acquistion by Creation
Moore v. Regents of the University of California
- Facts: ’s used Moore’s removed spleen to create a potential cell-line whose
commercial value was estimated to run in the billions.
- Issue: Did the D’s unauthorized use of P’s cells constitute conversion?
- Holding: D did breach a fiduciary duty and lack of informed consent by not telling P,
until after the fact, that his cells were being used for research. The Court, on the issue
of conversion, did not agree with the P for a number of reasons.
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I.
Under the existing laws
A.) In order for conversion to occur P must have retained ownership interest the
cells after they were remove from his body. However this did not occur because:
1.) No judicial decision support P’s claim either directly or by close analogy
2.) California statutory law severally limits a patient’s continuing interest in
excised cells. (Health and Safety Code section 7054.4) See p. 72
3.) The subject matter of Regent’s patent- the patented cell line and the
derivative products cannot be P’s property.
- 1) The reason for lack of judicial support is that law governing such things as tissues
and other objects sui generis is that they are regulated to achieve policy goals rather
than general law on personal property.
- P attempted to make analogy between one’s persona and cases involving unwanted
publicity (Lugosi v. Universal Pictures and Motsehenbacher v. R.J. Reynolds) with
that of genetic material. Court dismissed analogy on basis of scientific information
provided in the patent.
- 2) Regarding P ownership of D’s patent The Court sided with D. They claimed that
Patent law rewards the “inventive effort”, not the discovery of naturally occurring
raw materials.
II.
Should Conversion Liability be Extended
A. 3 reasons why it should not be extended in this case
1.) Policy issue > Extending the Tort
2.) Problems in at hand better suited to legislation
3.) Tort of conversion is not necessary to protect patient’s rights
a.) 2 major policy considerations: 1) Protection of a competent patient’s
right to make autonomous medical decision. This is already found in
fiduciary duty. 2) Not to threaten with disabling civil liability innocent
parties who are engaged in socially useful activities, such as
researchers, who have no reason to believe that their use of a particular
cell sample is against a donor’s wishes.
b.) Balancing policy considerations. Need to balance liability based on
existing disclosure obligations, rather than unprecedented conversion.
c.) Since patients are already protected from every type of harm by the
fiduciary duty and enforcement of disclosure obligations Moore’s
conversion claim is unnecessary.
Majority
Arabian
Mosk
Policy
Scientific research
affordable
Moral issue: commodification
Statutory
Interpret.
Remove or excised
Parts should be
Destroyed
Institutional
Competence
Legislature
Legislature
Property
Theory
Relatively Narrow. No ownerShip after excision or removal
Can’t sell
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2 ethical principles:
(1) respect for human body
(2) fair dealing
Can’t be sold for certain
Purposes. Increase
transplantation. Can’t be
sold for others.
Court, until legislature
moves
Court could do at least what
’s can do
Inalienability
Donations (not sales)
Sales
Availability
liitle
Some
More
Quality
0
Good
poorer
Potential
For abuse
Black market
Black market, but less
Black market (less)
Involuntary takings
Effect on
Human
dignity
good
good
bad
Intellectual Property (creation)
- Driving theory: John Locke’s Labor theory which maintains that expenditure of labor
and money which represents past effort is the foundation of property rights.
Cheney Brothers v. Doris Silk Corp.
1929
United States Court of Appeals, 2nd Circuit
Justice= Learned Hand
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Facts: P is a corporation that manufactures silk. They produce multiple designs each
season. P does not secure patents on the designs. D copied one the P’s popular
designs and sold it at a reduced price. D claimed they didn’t know the design was the
P’s. P only asks for protection of designs during the season because they are shortlived.
Issue: Could the  get seasonal protection for his dress designs even though they
were uncopyrightable and for the most part unpatentable?
Rule: In the absence of some recognized right at common law, or under statutes, a
man’s property is limited to the chattels which embody his invention. Others may
imitate these at their pleasure.
The Court said that “it is not the law” that anyone who has contrived a design,
process, machines, or secrets that others are forbidden to copy them.
The Congressional scheme does not offer protection for dress designs and therefore
they are unprotectable.
Analysis: The Court believed that International News Service v. Associated Press, the
case central to the P’s argument, was not intended to produce a general doctrine
regarding all copyrights. In fact, the Court said that even though the law ordinarily
speaks in general terms, the Court in that case was keeping the focus of the issue at
hand. Furthermore, the Court believed that it cannot be assumed that the court in INS
v. AP intended to create a sort of common-law patent or copyright for reasons of
justice because it would be a flagrant violation of the way Congress has for dealing
with these matters. The Court felt that although a dismissal would be unfair to the P,
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it was not their position to decide on a matter that may or may not prove to be
paramount.
Economic Concernprevent monopoly: Raise price above competitive market price
and certain consumers cannot buy a product anymore (deadweight loss).
Institutional concerns
Economists: Copying is okay, however, it reduces the incentive to create. People
who are creative would not want to put goods on the market because they would get
copied.
Cheney Brothers -brand recognition, -lead time (1st on the market)
Smith v. Chanel
- Facts: In this case , Smith, compared his perfume to ’s trademarked perfume,
Chanel 5.
- Holding:  both had the right to copy ’s famous perfume and use his trademark in
advertisement.
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GENERAL RULE: Copying is okay
Exception to rule INS v. AP p. 62 D&K
- Facts: INS used to copy news from AP’s east coast bulletin boards and then transmit
them to the west coast and publish them there. AP sued. The Supreme Court, in a
split decision, held that AP has a “quasi-property” interest in its news and could thus
prevent competitors from copying them.
- This exceptional holding was criticized by Professor Baird who attacks the natural
right holding saying that it is not evident or obvious that any individual has the right
to reap that which he has sewn. Baird, argues that the interest of the public is better
served when ideas and news can be freely copied.
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There is a conflict between fairness and efficiency:
- Efficiency encourages free copying to drive the market price down and thereby
benefiting consumers. We want goods to be consumed at the lowest possible
price and the lowest possible price is established through competition.
- On the other hand, copying cuts the incentive to create
- Therefore, on the one hand, society’s interest in creativity against keeping prices
down
- Balancing these two interests is tricky and in the context of IP, courts often defer
to legislation.
- Congress chose to protect patents for 17 years (soon it will be extended to 20) and
copyright for the life of the owner + 50 years (soon will be extended to life + 75
years). Trademarks are protected for as long as they are used in commerce
infinitely. As for other things such as designs, we still have lead time; first on the
market.
- Self-help. If you are outside the Congressional scheme then you are on your own.
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Rights of Publicity
- Celebrities now have a special kind of property interest in their name, likeness, and
distinguishing characteristics
- See p. 64 for examples
- Media, technology, and advertising constantly create potential markets for new
commodities and since property rights is a prerequisite for successful exchange, new
rights are being created and recognized.
- This is very in line with Demsetz and his example of the fur market and the
development of personal property.
- It is quite unclear that there would be fewer celebrities if they did not have exclusive
right to their publicity. Publicity is instrumental in creating new celebrities and
ironically has to bear the cost of doing so.
Personal Property (PP)
- Includes everything except land. Chattel or moveable objects.
- (1) Acquisition by creation (law of accession)
- (2) Purchase (bona fide purchaser for value, BFPV)
- (3) Find (bailment)
- (4) Gift
Creation:
- Property rights in moveable object may be acquired by creation; e.g. a car
manufacturer own the cars she produces and a carpenter owns the furniture he creates.
- However, unlike with IP, the production of new moveable goods requires raw
materials and the need for raw materials sometimes creates conflicts between various
claimants. The Law of Accession controls such conflicts.
- The Law of Accession comes into play whenever one person uses another persons
property to create something new. Such situations occur, for example, when A chops
B’s tree to build a rocking chair or when T takes O’s paint to paint a mural.
- Law of Accession: The new product goes to the owner of the raw materials. Don’t
want people taking from each other without permission. However there are two
exceptions: (1) Wholly disproportionate value to the raw materials and (2) if he acted
in good faith, then he will get to keep the new product. In such cases when an
improver gets to keep the new product he has to compensate the other person for the
value of the raw materials
Purchase:
- When you buy a good from a previous owner it becomes yours.
Innocent owner
Scum bag- interrupts purchase by BFPV
BFPV
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This problem arises whenever a person who wrongfully possesses a good (i.e. a thief)
sells it to a BFPV.
A BFPV needs to satisfy two conditions
- (1) Has to give value
- (2) Must have no knowledge of illegal possession by person you purchased it
from.
Usually, you can’t sue the SB because they are insolvent or disappear.
GENERAL RULE: A seller cannot convey a better title than he himself has.
Therefore, if the seller is a thief, the owner will prevail.
- EXCEPTIONS: (1) Voidable title; (2) Estoppel
(1) Voidable title
- The BFPV may prevail over the owner when the scoundrel from whom he
purchased the goods had gained possession of them not through theft, but through
fraud or misrepresentation. If the scoundrel paid for example with a bad check or
deceived the owner about his identity and later sold the good to a BFPV, then the
BFPV will prevail.
- If the title is not voidable, but void, then the BFPV will prevail.
(2) Estoppel
- Comes into play when the original owner entrusts a good to a merchant who then,
in violation of the agreement between them, sells the good to a BFPV. Under the
common law, entrustment alone is not enough, so today UCC §2-403(2) provides
that any entrusting of possession of goods to a merchant who deals in goods of
that kind give him the power to transfer all rights of the entruster to a buyer in the
ordinary course of business.
- Rationale: Can be explained on fairness and efficiency. When no moral fault
attaches to the owner, as in the case of theft he would prevail, but when the
owner through his behavior somehow helped the scoundrel, the BFPV would
prevail. In efficiency terms this is called the least cost avoider (focuses on
who is better situated to prevent the risk. In the case of entrustment, an
innocent owner is in a better position to prevent the risk. In the case of theft,
no one is better situated, so the status quo should prevail.
- Security in Commerce: People who buy things “in the ordinary course of
business” should be safe.
Find:
Amory v. Delmirie
- Rule: Finder has superior title to everyone except for the rightful owner and prior
finders (over subsequent finders).
- Reasoning: (1) Preserves public order; (2) protect the interests of the true owner.
If you don’t give the finder anything, then they will just suppress the goods and
the owner will never recover; (3) When it comes to moveable property,
possession is the only way to prove ownership.
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3 types of property:
- (1) Mislaid- Finder acquired no right to property
- (2) lost- Finder is entitled to possession against everyone but the true owner
- (3) Abandoned- Finder is entitled to keep anything deemed abandoned
Mislaid – intentionally put somewhere, but forgotten
-Rule: Mislaid goes to owner of premises
- The distinction between lost and mislaid was to help the true owner to track down his
property. It does not make sense. As long as the true owner didn’t abandon his property
they will try to track it down.
- In the case of mislaid property, the owner may be able to find it.
- If finders know that they only get to keep the property when it is lost but not mislaid
they will not report the finding of mislaid property and the owner will never be able
to retrace it.
- A reward system is a way of solving the problem
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Bailment:
- McEvoy case held that the shop owner had a duty to keep the mislaid property for the
true owner. The same is true of finders of lost property. As against the owner the
finder is considered a bailee. If the true owner claims the find, the finder has to return
it to him or her, and if the finder sold the property, he has to return the money he
received.
- A bailment exists whenever someone rightfully possesses goods or property without
being the true owner. Bailment can be created by:
- (1) Agreement
- (2) Find
- (3) Implicitly- e.g. if you lend someone your notes. Must exercise a duty of care.
- The most common example of bailment is that of a Park & Lock lot where the
owner of the parking lot gets to keep the keys.
- In all cases of bailment, the bailee (rightful possessor) owes a duty of care to the
bailor (truthful owner). The exact level of care depends on the circumstances.
- 4 Categories of Bailment:
- (1) Mutually beneficial- Commonly occurs when the bailee is paid or otherwise
benefited as in the case of a hotel that keeps valuables for its patrons, the bailee
must exercise ordinary diligence.
- (2) Sole benefit of bailor- e.g. asking someone to watch you bag. Bailee will be
liable only for gross negligence.
- (3) Sole benefit of bailee- e.g. giving someone your notes. Bailee must exercise
extraordinary care.
- (4) Involuntary bailment- e.g. leave car outside of a garage and it disappears.
Bailee must exercise slight care.
- **Various standards of care a subject to contractual alterations. If a bailment is
created by contract the standard provided for in the agreement will usually
control.
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Gifts:
- GENERAL RULE: When delivery can be physical, it must be manually delivered.
- Therefore, on Question 3, p. 170 D&K, O’s gift is not valid.
- When manually delivery is impractical due to size or weight of the object or its
inaccessibility constructive or symbolic delivery will be allowed.
- Constructive delivery constitutes the handing over of a key or another object that
gives access to the subject matter of the gift.
- Symbolic delivery constitutes in the handing over of the written instrument declaring
gift of the subject matter. P. 170, Question.
Newman v. Bost
- (1) $3000 life insurance- not entitled because of manually delivery
- (2) $200.94 value of household property- entitled to bureau and other items opened
by key
- (3) $300 piano insurance payment- new trial
- (4) $45 value of ’s bedroom furniture- entitled; manual delivery
- Holding:  not entitled to insurance policy because it could be manually delivered.
Gift:
- A present, voluntary of property from one person to another without any
consideration or compensation.
- A gift must be a present transfer for if it is to take effect in the future it is an
unenforceable promise because of lack of consideration.
- Gifts inter vivos: Regular gift between two living persons.
- Gifts causa mortis: Gift made in contemplation of immediate approaching death.
- Once you make an inter vivos gift it is irrevocable. Causa mortis is automatically
revoked if the donor escapes the peril of death.
- 3 requirement for gifts:
- (1) Delivery- either physical, constructive, or symbolic
- (2) Intent
- (3) Acceptance
-
If you want to give someone a gift after or upon death, it is controlled by the law of
wills and estates.
LAND- REAL PROPERTY:
- Reasons why land is different
- (1) Stationary
- (2) Unique
- (3) Finite (almost, limited resources)
- (4) Ownership of resources (additional rights and entitlements)
- (5) Valuable/central to creation of wealth (conflicts)
- (6) Problem of externalities (generated by use of land)
- (7) Eternal (almost)
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Johnson v. McIntosh
- Facts: This case is a debate over the ownership of land. P’s seek an action of
ejectment on the grounds that they purchased and were conveyed land from the Ds.
The Ds claim that they have right to the land because it was conveyed to them via a
grant from the United States.
- Issue: Did the D have a right to sell and convey the land they occupied to the P’s?
- Rule: Acquisition by discovery of land was transformed into acquisition by conquest
as the legitimate law of the land due to the nature of the way in which the system of
land granting was established when the United States was formed.
- In most other situation; modern times, one acquires possession by discovering either
real property or chattel to which no one but the discoverer has a right in ownership or
possession.
- Right of discoverer gave them preemptive right over the Indians
- Creating stability was probably the goal of the courts.
- See Professor Rose’s excerpt on p. 18-19 D&K- The European conquerors did not
really think that the Indians possessed the land because they moved around.
- Europeans prevailed on the legal theory that “might makes right”
- Why was the court so eager to produce the status quo?
- To prevent litigation and the Court was afraid of creating uncertainty. By opening
the door in this case the Court could have undermined the entire land owner
system that existed at the time.
- The Native Americans suffered terribly. The difficult question is how to remedy those
terrible things- (1) money; (2) land; (3) governmental and judicial autonomy (to an
extent
- See p. 167 D&K. Returned to Native Americans lost human remains, funeral objects,
and other sacred objects
- The preferred solutions regarding real estate was damages in money and some degree
of autonomy.
- In 1948 a special claims committee was created to decide what compensation they
should get. The committee came to no conclusive answer.
Ellickson Article: Should cover Demsetz and Harding
Private
Communal
Small (cultivation)
Medium (damn or pond)
(1) Lower/ no external costs
(2) Lower monitoring costs
Higher demarcation and
fencing costs
(1) Fewer people affected
(2) Coordination (easier)
*Coordination
*Transaction costs
*Risk sharing (better)
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Large (fire or pollution)
(1) Risk sharing
(2) Economies of scale
Group
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Private or individual ownership is most common form of ownership in Western states
In the U.S., though, we have open access regimes; e.g. streets, highways, parks,
beaches.
Communal ownership can be found in home owners associations and residential coops.
Government or state ownership is commonly used with regard to public property.
Blackstonian Model:
- The rights of persons who own land in fee simple.
- What rights and privileges come with the bundle of ownership rights?
- Blackstone’s model includes 6 elements:
- (1) Ownership by a single individual
- (2) In perpetuity
- (3) Of a territory demarcated horizontally by boundaries extending up to the
heavens and down to the bottom of the earth.
- (4) With absolute right to exclude
- (5) With absolute right to use and abused the land
- (6) Absolute right or power to transfer
-
The term we now use for ownership is fee simple
Restrictions:
(1) Encroachments
(2) Trespass- limitations on the right to exclude
(3) Risk of adverse possession
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Under traditional common law an uninvited encroachment by a person onto another’s
land no matter how slight was considered a violation of property rights which gave
the encroached upon owner the right to remove the encroaching property.
Pile v. Pedrick
- Facts: Due to a surveyor’s mistake the foundation of 1 of the walls of Pedrick’s
factory encroached 1 3/8” on Pile’s land. All attempts at settlement failed and Pile
brought a law suit to remove the wall. Pedrick could have scraped the 1 3/8” but Pile
would not let Pedrick onto his property.
- Mr. Pedrick could have tried to buy the injunction, the property right. However, Pile
will probably want a lot of money for a small piece of land.
- Modern law, however, provides for a “good faith improver” defense that denies
injunctive relief and grants damages instead where the encroachment could only be
removed at a heavy cost. No irreparable harm is caused to the . This is the law in
25 states.
Raab v. Casper:
14
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-
Facts:  encroached on ’s land. No survey was taken until after the cabin was built.
Rule: (1) Must act in good faith; (2) Don’t act negligently
Holding: Court found that because there was no survey and because  ignored the
warnings of the , he did not satisfy the required duty of due care and therefore he
was not a “good faith improver.”
It is noteworthy, however, that the Court said that the greater the investment of the
encroacher, the more likely a court is to recognize a good faith improver defense.
This is similar to the law of accession, but accession deals with moveable property.
When the encroachment improves the encroached upon land, as in the case where the
person builds a house on their neighbors property, several states give the encroached
upon party a choice between:
- (1) Keeping the house and paying damages (call option)
- (2) Selling the encroached upon part to the encroacher (similar to put option)
Trepass:
- The modern law of trespass reflects a retreat from the absolute right to exclude under
traditional common law, yet because trespass can be an intentional tort it is likely to
be punished severely.
- GENERAL RULE: Courts will condone trespass if it serves an important social good,
but discourages trespass otherwise.
Jacques v. Steenberg Home
- Facts:  delivered a mobile home across the ’s land because it was the easiest way,
though not the only one, to deliver it.  sued for intentional trespass. A jury
awarded $1 in nominal damages, and $100,000 in punitive damages.
- Supreme Court of Wisconsin reversed the Appellate court and upheld the large
punitive damages, holding that whenever a jury awards nominal damages they can
award punitive damages.
State v. Shack
- Facts: ’s are workers of a relief organization partly funded by the government. They
entered the ’s private property to aid migrant farm workers. The land owner asked
them to leave and they refused.
- Issue: Did the D’s trespass upon the P’s land when they came to the farm to find
workers and provide them with medical and legal aid?
- Rule: An owner’s possessory rights are not violated if someone enters onto the
owner’s property after identifying who they are and stating their purpose of visiting
with a worker to assist them in a charitable way that either is run by the state, federal,
or private funding.
- Analysis: Although a land owner has a bundle of rights, those rights are not absolute.
The Court decides on a policy concern between the right or the owner and the
interests of the general public. It is not really an issue of whether the migrant worker
should be considered a tenant and acquires the rights therein, rather whether the
farmer has the right to isolate the worker from anything significant to the worker’s
well-being. The Court felt that there was no reason that a farmer should be able to
deny the worker any aid available from State, federal, or local services, or from
15
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charitable groups seeking to aid the worker. Also, the worker has the right to have
visitors as long as they are not harmful to others. The Court does not intend to open
up a farmers land to the public, but rather to not deprive the migrant worker of things
they need. Legal advice and medical attention are aids that may help the worker
better adapt to the rapidly changing technological world. The employer does not have
the right to deny the worker a right to privacy as the P did by requiring that the legal
advice occur in front of him and in the P’s office.
Holding: The Court said that property should serve human values and that ownership
of real property does not give the right to bar access to governmental services and
hence there was no trespass and no breach of the right to exclude.
The Court was trying to protect a marginalized group and therefore it limits the
powers of property owners in order to achieve an important social goal.
The Court remarked that not only public interest, but also private necessity may
justify entry on the land of another.
Adverse Possession:
- Probably the most startling means of acquiring ownership. Broadly speaking the
doctrine allows the trespasser to acquire title to someone else’s land if s/he holds it
for a certain term of years and satisfies the other requirements of the doctrine.
- Because A.P. both bars the owner from suing the occupier and vests title to the land
in him or her (occupier) the successful adverse possessor is not only immune from a
suit for ejection but may also transfer the land as he wishes.
- The doctrine of A.P. can be justified:
- In terms of economics it promotes active use of the land and prevents thorny
evidentiary problems.
- Psychologically, it permits people to keep land to which they have become
attached.
- Morally, it discourages slothful owners.
Requirements for A.P., Possession must be
(1) Actual
(2) Continuous for the statutory period
(3) Hostile with a claim of right
(4) Open and notorious
(5) Exclusive
Actual:
- The A.P. must first show that he actually possessed the land. The purpose of this
requirement is to ensure that the only productive occupiers will get title to the land.
To satisfy this requirement an A.P. has to show that he used or maintained the
property. Farming or any activity that improves the property will usually suffice. A
standard used by the courts to determine actuality is how the neighbors regarded the
occupier. If they recognize him as the owner then actuality has been fulfilled.
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Van Valkenberg v. Lutz:
14 Lutz 15
farming
22
21
20
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-
disputed lots (19 & 20)
cabin built by Lutz
19
Road
Facts: Van Valkenberg buys 19, 20, 21, 22 and demanded that the Lutz’s vacate the
property. They agreed to vacate the land, but wanted to keep the road. They sue for
prescriptive easement of the road.
Lutz’s won the suit, but by bringing the suit they implicitly admitted that the other
lots do not belong to them.
Later Mr. Van Valkenberg instituted a suit for ejectment. At that point the Lutz’s
claimed A.P. for the whole land.
Issue: Whether the requirements of actuality was satisfied?
The Lutz’s won at trial.
Holding: The court of appeals ruled under NY law that actual occupation requires the
occupier to enclose the land or cultivate or improve it. Here there was neither
enclosure, nor cultivation or improvement. The court ruled that the Lutz’s garden did
not cover the whole tract and that the encroachment as insufficient because Mr. Lutz
knew that it was put on someone else’s land. The Court classified the Lutzs’ actions
as acts of putting “junk and litter on the property. Therefore, no actual use.
Dissent: Disagreed with the majority. They believed there was sufficient cultivation
and also relied on the fact that the neighbors regarded Mr. Lutz as the true owner of
the property.
Continuous:
- A.P. use has to be continuous, without interruptions. A.P. does not have to be there
all the time. The exact scope of the continuous requirement depends on the nature of
the property.
Howard v. Kunto:
Kunto
Moyer
Howard
Disputed lot
-
Facts: The deed description and the actual occupancy of the parties on several tracts
of land did not coincide. Each party has a deed to a tract occupied by the adjacent
17
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party. In 1960 the Howard’s discovered that they were the record owner of the tract
of land owned by the Moyers and in return the Moyer’s gave them the land they
occupied. Howard’s instituted a suit for quiet title to the property occupied by Kunto.
Kunto claim A.P.
Issue: Whether summer occupancy satisfied the continuity requirment?
Determination of continuity depends on the circumstances. A court would look to the
usual conduct of owners of similar property.
At common law the statutory period was always 20 years
In most eastern states it is somewhere between 15 and 30
In most western states the period is  10 years, but the states that have the shorter
limitation period typically require A.P.’s to pay property taxes on the land during the
statutory period.
Hostile:
- Does not require proof of animosity between claimant and true owner, rather it
requires the occupier to claim the land as his own in defiance of the true owner’s title.
- NY and some other states require the A.P. to show a claim of title.
- In the Van Valkenberg case, the Lutz’s lost in part because they admitted they didn’t
own the land.
- The claim of title is essentially a masked “good faith” requirement
- Majority test is objective – no good faith required, mere action of occupying without
permission
- Minority has subjective test – requires good faith belief in possession – like NY
- NY requires “good faith” on behalf of the occupier and to prevail in NY the A.P. has
to state, “I truly thought I owned the land that I occupied.”
- Other states require the occupier to act in bad faith and to prevail the occupier must
state, “I knew the land wasn’t mine, but I intended to take it.”
- Most states didn’t care about “good faith” as long as the objective requirements are
fulfilled. They will simply ensure that occupation was without the permission of the
true owner.
Mannillo v. Gorski (NJ) p. 138 D&K.
- Facts: In this case, the  built steps and a concrete walk that extended 50” into the
’s property. The ’s were not aware of the encroachment believing that they built
on their own property. When sued by the  they claimed title by A.P.
- Issue: Can a claim of A.P. succeed when the occupant believed that he was occupying
his own land?
- Holding: Yes. The subjective state of mind of the possessor is irrelevant to the
success of his A.P. claim. The mistake has no bearing whatsoever.
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Permission: There cannot be A.P. if the true owner permits the possession or the use.
If possession began with the true owner’s permission as is the case in a
landlord/tenant relationship, it is presumed to continue permissively until the occupier
does something that suggests otherwise.
- E.g. If the possessor remains in possession after a judicial proceeding that
awarded possession to someone else, then it may be deemed hostile, but otherwise
18
the possession will be viewed as permissive and therefore there will be no A.P.
claim.
Open and Notorious:
- Required to give notice to the true owner to defend his rights.
- An owner may be aware of use, but may not have knowledge of encroachment.
- If statutory period is satisfied the person get the land by A.P. If it is before, then the
law of encroachment applies.
Exclusivity:
- The A.P.’s use of the land should be exclusive of the true owner throughout the
statutory period. If the true owner exercised his rights on the land during the statutory
period, the claim for the A.P. will be denied. Accordingly, if the owner occasionally
uses her land during the A.P.’s possession it will usually suffice to defeat the A.P.
claim.
- The ideal setting for an A.P. is when true owner is lazy, slothful, and the A.P. is very
productive.
Tacking:
- The statutory required possession does not need to be performed by a single occupier.
Successive occupiers may tack their periods of possession together as long as there
has been privity of estate between them.
-
Privity of Estate:
- Exists when the subsequent possessor enters with permission of the prior one.
There need not be a contract between the two; only consent.
- Same rule applied to owners. If statute begins to run against owner A who later
conveys to owner B, the conveyance to B does not stop the running of the
limitation period. B may be dispossessed of his title if he does not act before the
end of the statutory period measured from the time the first A.P. began his
occupation.
15 years
-
A
B
C
AP(1)
AP(2)
AP(3)
C will be dispossessed of his title if there is privity of owners and privity between the
AP’s.
99 yr. Lease
(1)
L.L. reversion
AP(2)
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If the A.P. occurred during the lease period, then the A.P. will have a claim against
the lessee and not the lessor.
In (2) the A.P. will have a claim against both.
-
What can an owner do to interrupt the A.P?
- Generally, a letter demanding an A.P. to leave will not suffice. Rather, an owner
should file and successfully prosecute suit to quiet title or ejection. Filing the suit
alone is insufficient. If the suit is successful the decision will relate back to the
date on which it was filed. It freezes the date of the statutory period.
-
What does the A.P. have to do when the statutory period runs out?
- A title by A.P. cannot be recorded independently. A.P. must file a suit against the
original owner and if s/he wins, he can record the title.
Color of Title:
- A situation where a possessor possesses the land based on a defective deed or will.
When the deed or will is defective, the possessor is thought to have a color of title. A
possessor with a color of title can gain title through A.P. to the entire property even if
he occupied only a part of it as long as the occupied part is contiguous with the rest of
the property.
Disabilities:
- Minority (under 18), imprisonment, and mental illness ordinarily add time to the
statutory period.
- **However, for this to happen the disability has to exist at the time the cause of
action accrued (at the time the A.P. started). A disability that appears afterwards is
irrelevant.
- RULE: Add 10 years after the disability ends.
- Problem on p. 152 D&K
- (1)(a) 2005
(b) 2005, disabilities cannot be added up
- (2) 1993, in 1972 no disability existed
- (3) 1995, in 1985 he was 18, plus 10
Government Land:
- Under common law no title to land can be acquired by A.P. A number of states have
deviated from that rule and do allow A.P. Some require a long period against the
state.
A.P. of Chattels:
- As is the case with land, title of chattels can be acquired by A.P. However, A.P. of
chattels raises the problem of determining when the S/L begins to runwhen the
cause of action accrues.
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An owner of stolen chattel usually does not know where the stolen chattel is located
or who possesses it. Therefore, he has no one to sue until they learn who possesses
the stolen goods.
O’Keefe v. Snyder
- Facts: 1946- 3 painting stolen; 1972- reported theft to Art Dealer Assoc.; 1975learned; 1976- brought suit.
- Issue: When does cause of action accrue to possessor of stolen goods?
- RULE: A.P. period begins to run at date of theft
- Exception: If owner exercised due diligence s/he will be entitled to Rule of
Discovery.
- S/L begins to run when you should have known about the possessor.
- NY adopted the rule that says you are not required to exercise due diligence and
S/L begins to run when owner finds out about the identity of the possessor.
(Based on Guggenheim case). The standard is more relaxed for thieves than
BFP’s.
Present Interest/ Estates- See p. 205 D&K for history of estate system.
1) Fee Simple
a) Absolute-no future interests
b) Defeasable
2) Life Estate
a) Regular
-absolute
b) Per autre vie -defeasable
3) Fee tail
4) Leaseholds
-
Basic distinction between present and future interest:
Present estates grant in their holder an immediate possessory interest (in land).
Future estates defer the vesting of the interest until some future point in time.
Gruen v. Gruen: Property interest went to the son, possessory interest was granted
after his father died.
Fee Simple Absolute (FSA):
- The most important state is FSA that creates the type of interest most people associate
with ownership. It also is the benchmark against which all other estates are being
compared and analyzed. The defining feature of the FSA is its infinite duration.
Therfore, the FSA is never followed by future interest. FSA was traditionally created
in conveying the land “to A and his heirs.” “To A” is considered “words of
purchase” that describe the recipient of the interest, and “and his heirs,” are words of
limitation that describe the right conveyed, FSA.
- “his heirs” give them NO right in the land. They may be excluded in the will of A.
They may die before A. A may have no heirs.
21
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-
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Question 3, p. 202. B has no interest in the land and creditors cannot satisfy their
claims in Greenacre. Nor can B prevent A from doing whatever he wants with the
land.
Modern courts, however, waved the “his heirs’ requirement and today a grant “to A”
without more will be interpreted as conveying an FSA. Moreover, because the legal
system favors FSA estates in cases of doubt courts will presume that the grantor
intended the grant an FSA.
Question 1, p. 202. The grant to “B forever” will give B a fee simple after A’s death.
White v. Brown
Facts: “I wish Evelyn White to live in and not to be sold.” Said “not to be sold”
twice.
Issue: Did the will create a life estate or a fee simple?
Holding: Court said there was a fee simple. Turned to a state statute to establish a fee
simple. This case was to demonstrate that fee simple was a default rule.
Inheritance:
- Important attribute of FSA is that they are inheritable.
- Rights in land can be transferred at death either by the decedent’s will in which case
those designated are called devisees, or if there is not will by the laws of intestacy of
the decedent’s state.
- RULE: If there is a valid will, it will control. If no valid will then state law will
control.
- A person who dies intestate is one who dies without a valid will.
- The people who are entitled to the property of such person are called heirs. However,
it is important to avoid a very common mistake that no living person has heirs!!
Upon a person’s death the issue of; 1) Who are the heirs and; 2) Their order of
priority are, are determined by state law.
- A special heir under modern law is the decedent’s spouse. Today, if almost all states
the spouse is designated as an intestate successor of some share of the decedent’s
land.
- You choose your devisees in a valid will, but if there is no valid will the State
determines your heirs.
- Order of Priority:
1) Issue
2) Ancestors
3) State
- 1) Issue: A decedent’s issue includes all his surviving descendants (i.e. children,
grandchildren, etc.). The distribution is made per stripe which means that if a child of
the decedent dies before him the child’s share will go to his children who are the
decedent’s grandchildren.
- 2) Ancestors: They take when the decedent leaves no issue. If issue, then nothing.
Include all the collaterals and blood relatives
- 3) State: If a person dies without issue or ancestors the property will escheat to the
state.
- Question 2, p. 204. W does not get anything because B only transferred what he had
in possessory interest. B, at the time he died, had no possessory interest in O.
22
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-
-
-
-
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Restraints on Alienation:
4 Objections to restraints on alienation:
- 1) Makes property unmarketable
- 2) Perpetuates the concentration of wealth because people cannot benefit from the
proceeds of sale.
- 3) Discourages improvements on land.
- 4) Prevents owner’s creditors from reaching the propety
Types of Restraints:
- 1) Disabling: Outright forbid the grantee from transferring interest.
- 2) Forfeiture: If grantee attempts to transfer house, his interest will be forfeited to
another person
- 3) Promissory: Force the grantee contractually to promise not to alienate the land.
R2 of Property (no binding force): Provides absolute restraints on FSA, regardless on
their type, are void and partial restraints will be upheld if they are reasonable in
purpose, effect, and duration.
Life Estate: Estate for life. Usually measuring life is the life of the grantee, but in
same situations we may encounter life estates per autre vie (for the life of someone
else). A life estate is normally created by granting land “to A for life”, but it can also
be grants such as “to A until he dies.” A’s life estate per autre vie is created by
granting the land “to A for the life of B.”
Life estates are followed by future interests
If the land is to return to the grantor the interest is called reversion.
If it returns to a third person then it is a remainder interest; anyone but the grantor
If conveyance does not specify a third party then the land always goes back to the
grantor.
Transferability: Life estates are transferable. Thus, if the granee, A, conveys his
interest “to B” the B will have life estate per autre vie. B would have life estate for as
long as A lives, but after A dies B has nothing.
Restatement puts a prohibition on absolute disabling estates, but permits absolute
forfeiture estates.
Life estates are transferable, but the limited duration impairs their marketability.
Very few people would be willing to purchase a life estate and hence a life estate
owner will have a very hard time selling his interest. The maintenance of the
property may be too costly for the life holder.
Baker v. Weedon
- Present interest holders needs money now. Future interest holders don’t need money
now.
- Have to allocate proceeds from sale between present and future interest holders.
- Wanted to sell the whole plot of land, but Court of Appeals said she could only sell a
piece of land.
- Present Value= $168,500
Inexplicable difference
- Future Value in 4 years= $336,000
- The buyer of the land would have bought the interest of the life estate holder and the
F/I holder. Subsequently, would have had an FSA.
23
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-
Courts can decide to sell the land as an equitable relief to the life estate holder
Anna received $1300/$168,500= .077%
6% * 168,500= $10,100 which would be the amount of the interest Anna would
receive if the property was sold and the proceeds invested.
The advanced stage of the life tenant and the honest failure of the remaindermen to
sell the land affected the outcome of the case. Furthermore, it is quite possible that
the Court denied Anna’s request because of the hard problem of allocating the
proceeds of the sale between the life tenant and the remaindermen.
V= $10,00
Life expectancy of the LT= 3 years
Interest Rate= 6%
10000* 6%=$600
$600 * 2.67%= $1600 (.84+.89+.94=2.67) This is the value of the PV of a 3 year
annuity discounted at 6%.
Value of Life Estate=$1600
$8400=10000-1600 is value of remainder
White v. Brown
- The trial court after having decided that given the houses poor condition it should be
sold with the proceeds divided by life tenant and remaindermen.
- How should the respective shares of the LT and remaindermen be shared?
- A: Rely on the table promulgated by the treasury for tax purposes. The tables show
the economic value the life interest and the remaindermen.
Duties of the Life Tenant:
- Because LE are always followed by F/I the LT and F/I holder are essentially coowners of the property the LT therefore owes 3 basic duties:
- 1). Not to commit waste; when 2 parties or more have the right to possess
property either concurrently or consecutively neither has the right to use the
property in a way that unreasonably interfere with the expectations of the other.
Generally, there are two kinds of waste:
- a). Affirmative waste: consists of voluntary and permissive
- b). Permissive: When you do nothing
- In case of affirmative waste liability arises from injurious acts that substantially
reduce the value of the property. However, there are some expectations. For
example, minerals can be extracted if they were extracted at the time the F/I was
created. The reason is that it will not interfere with F/I right; e.g. trees can be cut if
for example a tree got struck by lightening
- Changes that increase the value of the property are not considered waste.
- Permissive Waste consists of a failure to act when action was necessary to keep the
property in a state of despair.
Duty to Make Repairs
- Must make reasonable repairs. However, if for example, the house was struck by
lightening and burnt down the LT would not have to rebuild.
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Property Taxes & Mortgage Interest
- LT must pay all property taxes that come due when he is in possession. F/I holders
pay the mortgage and the LT only pays the interest on the mortgage.
Trusts
- Because of various problems with LE which are 1) limited marketability, and 2)
Divided ownership with its attended risks most modern grantors prefer to use trusts.
Trusts preserve the virtues of LE but eliminate the vice.
- A trust is a legal instrument that enables grantors to benefit whomever they wish to
benefit without giving them possessory interest. In the usual trust case the grantor
grants property to the trust and then appoints a trustee who is under a strict obligation
to manage the property solely for the benefit of the beneficiaries. That is the net
income from the trust is paid to the beneficiaries.
- Fiduciary duty is a higher standard of care. They are under strict duties and do what
is in the best interest of the beneficiaries.
Grantor
Property
Fiduciary duty
-
Trustee
beneficiaries
The trustee and beneficiary can be one in the same. In Weedon grantor could have
made Anna the trustee and beneficiary, then she has a fiduciary duty to the F/I
holders.
25
Fee Tail (FT):
- A legal estate designed to maintain in perpetuity family ownership in land
- Essentially the fee tail gives the land to a person and his descendants, generation after
generation. Thus, in theory, the fee tail is a series of life estates. Fee tail is created
by conveyance “to A and the heirs of his body.”
- “to A and his children” or “to A and his issue”
- The fee tail is designed to descend to the grantees lineal descendants until the
grantees blood line runs out and then reverts to the grantor and devisees unless it is
otherwise specified.
- Fee Tail is always followed by F/I which may be either a reversion or a remainder.
Alienation
- Like the life estate the owner of a fee tail can transfer his interest to others, but upon
his death the interest reverts to his heirs. That is the current owner cannot disentail
the FT by transferring it to a 3rd party.(This is common law rule)
- In the 19th century the law finally permitted the FT to disentail by conveying a F/S to
another person. In DE, ME, MA, and RI the FT tenant can convert his interest into a
F/S by executing a deed during his life. He cannot convey an F/S by will. Those
states still have FT.
- In all other states FT was abolished
- Example: “to my son A and the heirs of his body, and if A dies without issue, to my
daughter B and the heirs of her body.”
- 1) Minority: A gets life estate. A’s issues get FSA
- 2) Majority: I. A gets FSA; B gets nothing (even if A dies without issue)
Majority II. A gets FSA unless he dies without issue; B gets FSA if A has no issue
Defeasible Estates
1) Fee Simple Determinable (FSD)
2) Fee Simple Subject to Condition Subsequent (FSSCS)
- FSA cannot be divested or terminated by any future event except transfer. But an FS
may also be defeasible. A FSD is an FS estate that may last forever or may end upon
the occurrence of a particular future event specified in the creating instrument.
- Difference between FSD and FSSCS is how the respective estates terminate in the
case that the express event or limitation occurs.
FSD: Terminates immediately and automatically upon the occurrence of the specified
event or condition. Classic example of an FSD is, “to A and his heirs as long as alcohol
is not sold on the land.”
- If alcohol is sold the FS terminates and if no 3rd party is specified it reverts to the
grantor.
- “as/so long as” are the distinction words of an FSD and are always followed by a
restriction or limitation.
- Other phrases include “while no alcohol is sold on the land,” “during,” and “until.”
- Every FS is followed by a F/I. If F/I is retained by the grantor it will be called a
possibility of reverter.
- If it is given to a 3rd party it is called a “contigent remainder.”
26
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-
FSSCS: Different from the FSD in that it does not terminate automatically when the
specified condition occurs. Rather, upon the occurrence of the condition it gives the
grantor or a 3rd party the right to re-enter the property and claim possession. FSSCS
conveys an option. You do not have to exercise.
You can only re-enter before the S/L runs out. After it runs out the estate is
undefeasible.
FSSCS is created by conveyance of an FS “to A and his heirs, but if¸ alcohol is sold
on the land O has the right to re-enter or to terminate…”
Other phrases in “however if” or “provided that”
FSSCS will always be followed by F/I. If F/I is vested in grantor it is called right of
entry. If it goes to a 3rd party it is called an executory interest.
Mahrenholz v. County Board
- 1941- deed; for school purposes
- 1973- School ceases to hold classes in the building
- 05/77- Original conveyance to 
- 09/06/77- H.H. disclaimed and released the  (school). School now has an FSA
- 09/07/77- Conveyed to  filed
-  filed suit to quiet ’s title
- Issue: Whether the conveyance “this land to be used for school purposes only;
otherwise to revert to grantors herein” created an FSD or an FSSCS?
- If it was an FSD in 1973 it automatically reverted.
- In FSSCS the feel of the school terminates only upon re-entry and the purported
conveyance of the right of entry.
- H.H. held right of entry. This is void. The right of entry in that state is not
transferable inter vivos. It is transferable after death.
- Trial court said FSSCS
- Appellate Court said FSD.
Transferability of Right of Entry:
- Traditionally common law rule that right of entry was non-transferable during life is
still the law in some states. In most states, however, it is transferable.
- S/L : In theory in the case of an FSD the running of the statute occurs when condition
is breached. In case of FSSCS the S/L start when there is an attempt to enter. In
most states the S/L will begin to run even in the case of an FSSCS at the moment of
breach.
Interpretation:
- How much freedom does the recipient of a defeasible fee have?
- Note 2, p. 239. Raises the question of whether sales of dishes cooked with alcohol
violates not to sell alcohol.
- Matter of interpretation for the courts.
- See Davis v. Skipper; Note 3, p. 239.
- A church held an FSD for church purposes and then oil and gas were found on the
same land where the church was. Church executed an oil and gas lease on the land.
27
-
Holder of a possibility of reverter sued. The court ruled there was no violation as
long as church kept conduction business on the land.
Sometimes the restriction will take the form of a promise or a covenant. In case of
promise the grantee will undertake the obligation not to sell alcohol. Only a duty
imposed by the grantor creates a defeasible fee. A promise by the grantee is different
cases because the remedies are different because it would be breach. Remedy would
be forfeiture. The remedy of forfeiture is very rare in modern law.
Defeasible Fee and Restraints on Alienation:
- When a condition imposed by conveyance is too broad it may be struck down as an
impermissible restraint on alienation.
- See p. 245, Note 1. Fall City v. Missouri Pacific Railing.
- City conveyed “land to railway company as long as it was used as a site for the
company’s headquarters. When the company subsequently moved its headquarters t
the City instituted a suit to quiet title.
- The Court held that the possibility of reverter held by the City was invalid and that
accordingly the Railway Co. had an FSA.
- The Court struck down the restraining provision because it limited the alienation of
the property to an impermissibly small number of people.
Future Interests (F/I)
- Grantor:
- A. Reversion (LE, leaseholds, contingent remainders, executory interests)
- B. Possibility of reverter (FSD)
- C. Right of entry (FSSCS)
-
Transferee (3rd Party):
- A. Vested remainder
- 1). Indefeasible
- 2). Subject to open (VRSTO)
- 3). Subject to divestment (VRSTO)
- B. Contingent remainder
- C. Executory Interest
- 1). Shifting
- 2). Springing
Ink v. City of Canton:
- Grantor conveyed an FSD to the grantee that the land shall be used as a park.
- Facts: Land was condemned by state to be used for highway
- Issue: How to divide compensation award between the FSD and the F/I holder.
- Under majority: The FSD holder gets the whole amount and the F/I gets nothing. The
reason this is done is for administrative efficiency.
- Grantee= Present interest holder, FSD holder= City
- Value of structure goes to the City; $2875
- Value of severance goes to City; $31700
28
-
-
Of the amount for land that can be used for park goes to the City; the remainder goes
to the grantor (Ink Family)
What is the value of the land when not used as a park?
What is the value of the land when used as a park? Almost $0
Don’t know how to value land used as a park. Don’t know what probability to assign
to the probability that the land will not be used for a park.
The Court could have awarded the whole amount to the City and ordered it to use the
money to build another park. This would not have violated the rights of the grantor
and the duty of the grantee.
There is more than one way to achieve fairness and efficiency by using a different
route.
There are also defeasible LE. Example: A wife can “convey an apartment to her
husband for life as long as he doesn’t invite his friends to watch Monday Night
Football.”
Future Interest: As the name suggests F/I confer rights to possession and enjoyment of
property at a future time. An F/I is NOT a mere expectancy. It confers upon its holders a
legitimate legal right protected by the courts. F/I can be sold and give away an their
holders can institute actions against the present holder and 3rd parties.
- Distinguished from possessory interest in that they confer interest at a future date.
- F/I are important legal device that permits a testator to control the use of the land after
his death.
Reversion: Will always follow a finite estate as LE or leasehold. Can also follow
contingent remainders or executory interests.
- If an FSSCS is created and the F/I goes to a 3rd party it is called an Executory Interest.
- If an FSD goes to a 3rd party it is called a contingent remainder.
- A. Reversion: The interest left in the grantor who conveys a finite estate (LE,
leasehold) without providing who will take the property afterwards or when he
expressly reserves the F/I to himself. But, a reversion need not be certain.
- 1. O A for life, then to B and his heirs if B survives A.
- A= LE, B= contingent remainder, O=reversion
- The moment B outlives A, B divests O of reversion.
- RULE: Whenever it is unclear whether or not an FSA will follow the finite interest,
always look for the reversion.
- Problem 1(c). p. 259. A=life estate, B= F/I, O=reversion
- If B reaches 21 before A dies then B divests O of reversion
- B. Possibility of Reverter: Arises whenever a grantor creates a determinable fee
- C. Right of Entry: e.g. to Mr. B, but if Mr. B serves Bud Light to his guest, Mr. L has
the right to re-enter and take back the property. F/I right of entry.
29
Vested Interests: Must satisfy all 3 conditions:
- Holder of the remainder has to be:
- 1). ALIVE
- 2). Ascertainable
- 3). Not Be a condition precedent in the conveyance
- If one element is not satisfied you have a Contigent remainder.
- 2). O A for 10 years, then to whomever is the president of the United States
- A= leasehold, term of years, President in 10 years= Contingent remainder
- President in 10 years in unascertainable
- NO reversion
-
-
Condition Subsequent cuts a possessory estate short if it occurs. If, for example, I sell
alcohol on my premises I may lose my estate.
Condition Precedent must be satisfied before possession is taken. e.g “to B if B
reaches 30” or “to A for life, and then to B if B marries C.” It is an express statement
other than the termination of the preceding estate.
3) O A for life, but if A sells alcohol O can re-enter
A= LE, O= Right of Entry
4) O A for life, then to B and his heirs if she survives A
A= LE, B= Contingent remainder
Contingent Remainder: If not vested remainder then it must be contingent remainder
- They may fail to vest. e.g B may not outlive A. In such cases look for another
F/Ireversion, but there may also be executory interests, but mainly look for
reversion.
VRSTD: An indefeasible vested remainder is one which satisfies the basic 3 conditions
and is indefeasible.(i.e. subject to condition subsequent.)
- Example 3. p. 262. B has a vested remainder unless B was not born yet. B or B’s
successors in interest is certain to take possession upon A’s death.
- e.g. “to A for life and then to B for life.” B must outlive A to get LE. This is a
contingent remainder in LE.
- What if “to A for life, then to B and his heirs for life”?
VRSTO: A vested remainder granted to a group of at least one person who is alive and
ascertainable. It is subject to open because more persons can subsequently become
members of the class.
- Example 4. p. 262. “to A for life, then to A’s children and their heirs.” A’s future
children have contingent remainder because they are not alive. The heirs of A’s
children also have a contingent remainder.
30
-
O to A for life, then to B if she survives A
A= LE, B= CR
Oto A for life, then to B for life.
A= LE, B= VR (LE). In this case the condition is not in the legal instrument
ALL remainders NEVER follow a fee simple interest. Remainder ONLY follow Les
and terms of years.
Vested Remainder Subject to Divestment (VRSTD):
- Similar to FSSCS. A VRSTD is a vested remainder that may be divested. A VRSTD
may be followed by an executory interest.
- O to A for life, then to B (AHH), but if B doesn’t grow sunflowers on the land then
to C (AHH).
- A= LE, B= VR(IFS)STD, C= EI
- Condition comes after then it is a VRSTD. Look for the comma. Follow the
sequence
- O to A for life, then to B, but if, B doesn’t outlive A…
Contingent Remainders (CR): If the condition is part of the conveying “to A for life, then
to B if she outlives A,” then we have a CR. If the condition comes immediately after the
conveying phrase and is separated by a comma then you have a VRSTD.
- O to A for life, then to B (AHH), but if B does not survive A, then to C and her
heirs.
- A= LE, B= VR(IFSA)STD, C= EI
- O to A for life, then to B AHH if B survives A and if B doesn’t survive to C AHH.
- A= LE, B= CR(IFS), C= CR; Interest contingent on whether B survives A.
Contingent on a legal condition stipulated in the conveyance.
- If B had a VR(IFS)STD it is vested and may not become possessory. B’s interest
needs to get cut off for C to have an interest.
- O to A for life, then to B AHH, but if B fails to graduate Fordham Law School,
then to C AHH.
- A= LE, B= VR(IFS)STD, C= EI
- O to A for life, then to B AHH if she graduates from Fordham Law School, but if B
graduates from Fordham Business School, then to C AHH.
- A= LE, B= VR(IFSA)STD, C= EI, O= Reversion
- With a VRSTD you can divest after the person has taken possession. With a CR a
condition precedent must occur.
- The distinction between CR and VRSTD is important because a VR accelerates
automatically and immediately into possession upon the end of the preceding finite
estate.
- For a CR to vest, a condition must first be satisfied
- CRs are subject to the rule of perpetuities whereas indefeasible vested remainders and
VRSTDs are not. VRSTOs, however, are subject to the rule of perpetuities.
Executory Interests (EI): 2 types of Eis:
- 1) Shifting EI (SHEI)
- 2) Springing EI (SPEI)
31
-
The two interests are identical in effect, though not in name
A SHEI in order to vest has to cut short the interest preceding it.
A SPEI exists when there is a gap between the termination of the preceding estate and
the vesting.
O to A AHH, but if B returns from Florida then to B AHH.
A= FSSCS, B= EI(IFS)SH
O to A for life, then to his daughter B AHH one month after the funeral
O= LE, B= EI(IFS)SP
Present Interest
FSA
FSD
FSSCS
LE & Leaseholds
-
Grantor
------Possibility of Reverter
Right of Entry
Reversion
Future Interest
3rd Party
-------EI
EI
Remainder
(vested or contingent)
EI
Executory interests are also subject to the Rule of Perpetuities
Problems on p. 274:
- 1)(a) A= LE, B= CR(IFSA) because EI only follows a VRSTD, O= Reversion, A’s
children= CR
- 1)(b) A’s children= CR. The “but if” doesn’t add anything.
- A= LE, C&D= CR(IFS), B=CR
Review Question:
- O to A for life, but if A attends medical school, then to B AHH.
- A= LE(STD), B= EI (IFSA)
Rule for Furthering Marketability by Destroying Future Estates:
- 3 rules that further marketability:
- 1) The Rule of Shelley’s Case (Merger Rule): If (1) the same instrument (2) creates a
LE in a person (e.g A), (3) purports to create a remainder in persons described as A’s
heirs, then the remainder becomes a remainder in FSA in A. THIS HAS NO USE!
Abolished in most states. Only in AS, CO, DE, IN. (AL, AK, NH, OR still apply the
rule to inter vivos conveyances but not to transfers by will.)
- O to A for life, then A’s heirs.
- A= FSA, A’s heirs= No F/I
- 2) Doctrine of Worthier Title (Rule Forbidding Remainders to Grantor’s Heirs): If (1)
an inter vivos conveyance grants land to a person and (2) also creates an F/I whether a
remainder or EI in the grantor’s heirs, then no F/I is created in the heirs and instead a
reversion will be given to the grantor.
- O, while alive to A for life, then to O’s heirs
- A= LE, O= CR(IFSA), O= Reversion in LE, then if O has heirs upon his death it goes
to the heirs
32
-
The Doctrine of Worthier Title is still enforced in most states, but now it is a rule of
construction. It is a presumption, but now the heirs can bring evidence of the
presumption and therefore the doctrine should not apply.
-
3) Rule Against Perpetuities (RAP):
This rule was devised to defeat the control of the “dead hand.” Courts did not want to
grantors to control the future of land generations after their death.
The effect of the RAP is to strike down certain F/Is that don’t satisfy its requirements.
RULE: No interest is good, unless it must vest, if at all, not later than 21 years after
some life in the being at the creation of the interest.
RAP applies to four interests only:
- 1) CR
- 2) EI
- 3) VRSTO
- 4) Repurchase options
O to A for life, then to B AHH
A= LE, B= VR (IFSA)
“must vest, if at all,…”= must become possessory
“lifes in the being + 21 years”= People are considered “life in the being” are people
who are: (1) ALIVE, and (2) may affect the validity of the conveyance
O to A for life, then to A’s oldest surviving daughter (A has 2 daughters)
A= “life in being” because daughter may die before A, but A may have future
daughters
-
-
Lifes in the being + 21 years
X
Necessarily vests or necessarily
doesn’t vest (GOOD)
-
-
-
It might vest in “X”
then the “rule” applies
to “life in being + 21 years”
The RAP has the same affect as any S/L with two important differences:
- 1) The time limitation under the RAP is a formula not a set number of years
- 2) We measure the running of the time at the moment of the conveyance.
Under traditional common law there was no waiting and courts tested the validity
immediately and the examinations were purely hypothetical.
* Because the examination is hypothetical impossible occurrences must be taken into
account; e.g. people in their late 80’s could still have children for purposes of the
rule; anyone can die at any time.
Must bear impossible scenarios in mind.
O to A for life, then to his first child to reach 21 (AHH). A has no children.
A= LE, First child= CR
F/I is good because enough if A’s wife is pregnant. Don’t count gestation period. O
would get it until child reaches 21. Child will either reach 21 or not reach 21. In the
above scenario NO RAP!
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-
-
O to A for life, the to his first child to reach 25 (AHH). A has 2 children; B- 20, C24.5
A= LE, First child= CR, O= Reversion in FS. RAP applies
O to A for life, then to B (AHH) if B reaches 25. B is 23.
A= LE, B= CR
Will either vest or not vest. B is the only “life in being”
A good way to tackle RAP is to adopt the CREATE, KILL, COUNT approach:
- 1) Must create a person who is eligible to claim the property under the terms of
the conveyance
- 2) Kill all the people who are involved or related to the conveyance; then
- 3) Count 21 years from the moment of everyone’s death.
If the interest is sure to vest or not to vest the RAP will not strike down the F/I
O to A for life, then to O’s first grandchild. O has 3 children.
A= LE, O’s first grandchild= CR
1) Create another child (son to O= X)
2) Kill O and his three children
3) Count 21 years
The F/I will be struck down by RAP
O to A (AHH) as long as beer is not sold on the land then to B (AHH)
A= FSD, B= EI
F/I will be struck down by RAP
O to A for life, but if A attends medical school to B AHH.
A= LE (SCS), B= EI. NO RAP!
If condition is attached to one particular person RAP usually won’t strike it down.
Class Conveyance:
- Whenever a conveyance is made to a group of people (e.g. to A’s children) the RAP
requires that the FI’s of all the members of the class or group will vest within the time
period allowed by the rule.
- O to A for life, then to A’s children and their heirs.
- A= LE, If no children at time= CR, If children at time= VRSTO. NO RAP!
- When A dies the interest will either vest immediately or never.
- O to A for life, then to A’s grandchildren AHH.
- A= LE, A’s grand children= CR/VRSTO, O= reversion in FSA
- A and A’s children= “life in being”
- RAP will strike down FI
- O to A for life, then to A’s children for life, then to B if B is alive, and if not to B’s
heirs. A has one child.
- A= LE, A’s children= CR/VRSTO, B= CR, B’s children= CR
- NO RAP!
- Always go with the last generation alive.
- If the condition is just to be alive then create someone from the previous generation.
Repurchase Options: With time RAP was extended to options to repurchase land.
- A conveys land to B (AHH) but if (as long as) B holds dance parties A will have the
right to buy back the land for $1000 dollars.
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Central Delaware v. Greyhound p.300:
- Land was conveyed to be used for public purposes and a repurchase option was
reserved. The holder of the option wanted to buy the land back.
- Issue: Whether the RAP applies to repurchase options. Court held that it does.
- Today, most cases involving RAP involve repurchase options.
- 2 exception: (1) Options to the lessees of the property. (2) In condos, often boards
reserve the right of 1st refusal. 1st refusal options are also exempt.
Wait and See Approach:
- RAP common law was abandoned in most states. The common law approach ensured
certainty but often lead to inequitable or unfair results. Most states adopted the “Wait
and See Approach.”
- Wait for a certain period of time and see if FI vests. Run the test exposed.
- 2 approaches: (1) Wait the perpetuities period (life’s in the being + 21 years.) Don’t
run test at moment of conveyance was created, but wait out common law period and
then see if FI vests. (2) Wait 90 years. Uniform Statutory Rule Against Perpetuities
(USRAP). Adopts a mixed approach. Validates FI that are valid under the traditional
common law approach or if it vests within 90 years of creation.
- Example 1 Problem (b) p. 313: Under common law must wait until all children are
dead.
- Example 2 Problem (b) p. 315. Have to wait 90 years to see it if will vest. After 90
years church would get FSA if they are still using land for church purposes.
- NY introduces some mitigating assumptions:
- Women above 55 are presumed to be incapable of having children.
- Limit the period of contingencies to 21 years. “If convey to my first child to reach
25,” it is really 21.
35
Co-Ownership and Marital Property:
- 3 important types of concurrent interests:
- 1) Tenancy in Common (TIC)
- 2) Joint Tenancy (JT)
- 3) Tenancy by the Entirety (TBE)
- TIC: Have separate, but individual interests in the land, and thus, each co-tenant has
the right to possess and use the entire property subject to the rights of the co-tenant.
- Creation: Can be created either expressly in a grant or will or by operations of law
when several (e.g. O A and B) people inherit a piece of land.
- Termination and alienability: Can transfer such interests. Interest of TIC is
transferable and descendable; can be conveyed by deed or will. Death of TIC does
not terminate the TIC.
- e.g. If A and B are TIC. A dies. A heirs or devisees will become co-tenants of B.
- 2 ways to terminate TIC: (1) Transfer entire interest to one person; either to one cotenants or a 3rd party. (2) Partition in-kind or partition by sale.
-
-
-
Joint Tenancy: A JT is a tenancy in common with a “right of survivorship” meaning
that if “A” dies “B” would get the whole thing.
(1) When have a JT, the JT is transferred to the other party without the cost of
probate.
(2) This form of ownership protects the surviving JT from the creditors of the other
JT.
Creation of JT requires 4 unities:
- (1) Interest
- (2) Title
- (3) Time
- (4) Possession
For a JT to exist, the interest of JT must be created at the same time by same
instrument. Each JT must have an equal, undivided share of an equal duration. Each
must have a right to possession and use the property as a whole.
When JT ceases to exist it becomes a TIC.
Ways to terminate:
(1) Mutual agreement
(2) Unilateral conveyance: If “A” conveys his interest to “C” we sever the 4 unities
and “C” will be a TIC with “B.”
“A” can convey without “B” ever knowing. Law of NY requires JTs to record such
transactions. It is supposed to serve notice to the other tenant.
Other states require such transfers to be authorized by a notary public
Today, JTs are out of favor with the courts and if one wants to create a JT one has to
be very explicit about it.
“To A and B as JT, and not as TIC,” anything less explicit runs the risk of being
interpreted as a TIC. In many states a conveyance.
“To A and B jointly,” will not be good enough.
36
TBE: Only available to husbands and wives. Exactly like a JT and thus requires the 4
unities and features the right of survivorship. But, unlike other JT the husband and wife
are considered to hold as one person and neither of them acting alone can partition the
property or defeat the right of survivorship of the other spouse by conveying to a 3rd
party.
- Divorce, however, terminates the TBE and absent of an agreement to the contrary
transfers it into a TIC.
Unilateral Acts in JTs:
- (1) Conveyance to oneself (1/2 undivided)
- (2) Conveyance to a “strawman” (e.g. conveyance to C and then conveyance back to
A)
- (3) Create a trust: Convey your interest to trust with you as a beneficiary.
- Not all states use the Riddle v. Harmon rule. Some states adopted it and now permit a
JT to sever a JT by conveying to himself. Other jurisdictions allow joint tenants to
convey to themselves and another person, but not just to yourself.
- Other states still stick to traditional common law rules and prohibit such practices.
- (1) If you convey to yourself you eliminate risk
- (2) You also cut transaction costs
Harms v. Sprague:
- J and W were brothers in JT. J issued a mortgage on the property to C.
- Two issues: (1) severance, (2) the survival of the mortgage
- Lien theory: JT remains in tact
- Title theory: severs JT
- Execution of mortgage is not enough to destroy a JT. Illinois court used lien theory.
- Court ruled that a mortgage does not survive the death of the mortgagor. This is
because at the moment of John’s death his interest, because of right of survivorship, is
transferred to William.
- Most states follow the lien theory and therefore hold that the executor of a mortgage
does not sever JT.
- As to surviving of mortgages the authority is split. Half of the states hold that the
surviving JT takes the interest subject to the mortgage.
- Which view is better?
- For Harms: Protects better surviving JT. Charge a higher interest rate is the solution.
- Against Harms: Makes it harder and more expensive to get a mortgage.
- When a bank gives a loan on a mortgage on land worth $100000 the bank would give
you around $30000 in order to protect them.
Tehnet v. Boswell
- Issue 1: Did the lease sever the JT?
- Issue 2: Does the lease survive the death of the JT/lessor?
- Holding 1: The lease did not sever the JT
- Lessee did not know about the JT. It must be a good faith lease.
- If JT wants to sever a JT by leasing his interest they have to demonstrate a clear,
unambiguous intent to sever the JT.
- Holding 2: The lease does not survive the death of the JT/lessor.
37
If you answer “no” to the 1st question, you are almost bound to answer “no” to the
2nd.
- Court could have opted for a rule that leases “never” or “always” sever the JT, or
“short term” leases either sever or do not sever the JT.
- Why would you want to protect a short-term lease?
- A: It would be very burdensome to do a title search if you are only leasing for a
very short term.
- Court opted for the standard of “clear and unambiguous intent”
-  and lessee were innocent and therefore try to achieve as much as possible.
-
3 Main Views on this Issue:
- 1) A lease affect complete severance (England)
- 2) Rule in tenant: No severance due to a lease by one of the JTs (Most states)
- 3) Conditional severance: Lessor-JT retains reversion. (Some states). Once the lease
expires you go back to JT.
Rights and Obligations of Co-Tenants:
1) Partition
- The right to start a partition procedure that would terminate the co-tenancy (JT or
TIC). Does not apply to TBE.
- Two types of partitions: a) partition in-kind, b) partition by sale
Delfino v. Vealencis:
V 45/144
D 99/144 Garbage disposal business
-
-
Partition in-kind would be bad for Delfino’s development project
Court said that trial court did not weigh the interests of all the parties, especially
Vealencis
Holding: As a general rule when it is geographically feasible, partition should be inkind, unless the physical attributes of the land resist partition in-kind or if a partition
in sale was granted it would serve the interests of all parties and they agree.
Delfino decision reflects the majority view. In practice, however, courts opt for
partition by sale.
In kind
1) Attachment to land
2) Prevents abuse by strong
co-tenant (Initiate this when
there is a slump in the market)
3) Distributive effect
By sale
1) Increases value of land
- land too small for “in-kind”
2) Hold-outs: Prevents one party from
exploiting the other
3) No administrative costs
38
Third Solution: Go with either of the options, but in addition compensate on eof the
parties. (e.g. If you give Delfino partition by sale then you would give Vealencis 55/144
instead of 45/144).
Johnson v. Hendrickson p. 346. Note 1.
2) Possession
Spiller v. Mackereth
- TIC
/Spiller- in sole possession
&
/Mackereth
1) letter demanding rent
2) Spiller changed the locks
Trial court held for 
- Two things for tenant out-of-possession to get rent:
- A) agreement
- B) Ouster- Was the letter enough to establish ouster?
- Court said that for ouster you must come to the property and demand use and then the
other co-tenant rejects your demand. Then you have ouster.
- Changing the locks did not establish ouster, but simply protected the property inside.
- RULE: This case is representative of majority rule. You must come and demand use
of the land and if other co-tenant doesn’t let you in you can demand rent.
- Majority rule for ouster provides an incentive to use the property.
- In order to act on your right you have to confront the other party and this causes more
public nuisances and leads to more litigation.
3) Accounting:
Swartzbaugh v. Sampson
Mr. and Mrs. Swartz..
Mrs. Swartzbaugh wants to cancel the lease between Sampson and her husband
Boxing arena by Sampson
-
Issue: Can a JT cancel a lease executed without her knowledge by the other JT.
Holding: Cannot cancel the lease
Mrs. Swartzbaugh can get a pro-rated share of the rent.
Other remedies available to Mrs. Sw.:
- 1) She can ask for partition in-kind
- 2) She can demand to use the land. If she does that she can get half of the land.
- 3) She can institute an action against her husband and by doing so she can recover
half of the market value of the rent.
39
-
-
A) If leasing co-tenant purports to bind all of the parties:
- 1) Approve and get their pro-rated share of the rent.
- 2) Disapprove and sue for their share of the reasonable rent value
You take the choice depending on the market value
If K(p)< M(p) then choose M(p)
B) If leasing only his/her share of the interest:
- 1) Ouster: Force leasing co-tenant to take you into account and either negotiate a
deal or force the leasing co-tenant to pay you some rent.
Contribution:
-
-
-
-
A. Taxes and Mortgage Payments
- Every co-tenant has to pay his share and if one co-tenant pays more than their
share they have to get it back from other co-tenants.
B. Repairs
- Do not take into accounts, but when it comes to partition in-kind repairs will be
taken into account.
C. Improvements
- No reimbursement. If partitioned you get credit. This limits externalities and
internalization.
- When partitioned you either give improved part to the improver or if “by sale”
and everyone agrees that the market value of the land increases (objective
standard) only then are you entitled to credit.
2 duties of a co-tenant:
- 1) Pay taxes and mortgage payments
- 2) Duty not to commit waste
Extra Legal Perspective:
- Equality
- 1) Equality of input
- 2) Equality of output
- 3) Equalize input/output ratio
- 4) Total equality (50/50 throughout)
Marital Property
- 1) JT/TIC
- 2) TBE (exists in 19 states and D.C.). NY is included, but not for personal property
- 3) Separately
- 4) Community property
-
Even in community property states certain property can still be held separately.
Separate property: Originated in England. Under traditional English system each
spouse owned property he/she brought into the marriage. During marriage the
husband had full control of his wife’s property. He could dispose of it, alienate it, etc.
40
-
Community property: Treats husband and wife as a single unit that shares property
equally. Enacted in 8 states (AZ, CA, ID, LA, NV, NM, TX, WA). All 8 states allow
married couples to opt for JT or TIC should they wish to do so, but they can’t hold
property as TIC and JT. They must choose one.
The rights of 3rd Party Creditors:
Sawada v. Endo
- Mr. and Mrs. Endo held property in TBE. They conveyed the property to their son as
a gift.
- Issue: Whether the interest of the TBE can be reached by creditors?
- I. TBE and husband has right to convey subject to right of survivorship (This no
longer exists.)
- II. TBE and both parties (spouses) have right to dispose subject to ROS. This is NY
view.
- III. Majority- no unilateral conveyances.
- IV. Minority- You can alienate and if you are a creditor you can foreclose on ROS.
TBE
Present Interest
ROS
FI
-
How can creditors dealing with TBE protect themselves?
A: Contract with both spouses and ensure your interests
* Always distinguish between voluntary creditors and involuntary creditors
Tort claimants can not foreclose on property in TBE. Why?
- Creates a serious externality with respect to tort victims
- Counter-balancing effect is that TBE protects the innocent, passive spouse. It also
introduces quality into the marriage.
Rights of the State as a Creditor:
U.S. v. 1500 Lincoln Ave.
- This case dealt with the “innocent owner” defense element of the Comprehensive
Drug Abuse Prevention and Control Act of 1990.
- Mr. B was the owner of a pharmacy and was illegally distributing drugs
- Mrs. B, his wife, was an “innocent owner” and was trying to prevent Government
forfeiture of their property under the innocent owner defense to the Act.
41
Marital Property
Common Law
Marriage
TBE (in 20 states)
JT/TIC
Separate (title holder)
-
Traditional
TIC
TIC/JT
title holder
Divorce
Modern
TIC
TIC
equitable distribution
With respect to equitable distribution only marital property is distributed equitably.
All separate property remains separate.
Definition of Divorce: Under common law for a woman to get a divorce she needed
to show a wrong; (1) Adultery, (2) Extreme cruelty
- Distribution was equitable with respect to marital property
What is Marital Property?
- Whatever one of the spouses held before the marriage and brought with him to the
marriage remains separate.
- **Whatever was acquired during the marriage is considered marital property (e.g.
earnings).
- There are questions about gifts, inheritances, and bequests that one of the spouses
receives during the marriage
- Majority: Separate
- Minority: Marital property
Factors courts should consider in distributing property equitably:
1) Duration of marriage
2) Prior marriages
3) Age
4) Health
5) Education
6) Skills- Professional
7) Custody of children
8) Contributions to marriage
9) Fault (some courts)
In Re Marriage of Graham (Majority)
- The trial court held that the MBA is property. The courts awarded $33,134/82,836.
The court did not give half because distribution is equitable and not equal.
-
Holding: Court of Appeals said that MBA  marital property. The court held that an
MBA is not property under the literal definition of property.
-
ValueAssetMBA
The broadest definition of property does not exclude professional degrees
42
-
One must look at legislative intent and if intent was to provide more quality then you
should divide the property that way.
The underlying purpose of the act was to bring more equality into the relationship.
$33,134 is not nearly worth that much in 27.5 years. This was really a present value
problem.
O’Brien v. O’Brien (NY) (Exception)
- Holding: A professional degree is property
- In this day and age anything of value can be property
- There is an “in-between” view (NJ) that says reimbursement alimony. Non-working
spouse will be reimbursed to some extent, but not a piece of all future earnings.
Elkus v. Elkus
- Opera singing has value. It should be considered marital property.
- If one party can show that the other party did nothing and the working spouse did
everything?
- Goodwill- This is marital property: Name, clients, reputation.
Notes on Marital Property continued:
- Common law vested two property interests in surviving spouses. Following the death
of the wife the husband acquired a LE in all of the her real property if the wife gave
birth to live issue. If there was no live issue then the husband got nothing. This right
was called courtesy. The wife was given a LE in just 1/3 of the land the husband
owned during marriage. This right was called dowery.
- Today, these rights continue to exist in just 6 jurisdictions and all other jurisdictions
abandoned the common law system and enacted instead a system of elective shares.
- Under this new system, the surviving spouse can decline his/her interest in the will
(or if inheritance, then by statute) and take instead a statutorily defined statute which
is usually 1/3 or ½ of all of the property the decedent held at his/her death.
- Whether the spouse receives 1/3 or ½ usually depends on whether the couple had
children.
Community Property
- In contrast to common law which assumes that during marriage the property is owned
separately, community property is grounded in the presumption that each spouse
should own an equal share of the property acquired during marriage. 8 states that
opted for this regime (AL, CA, ID, LA, NV, TX, WA, NM).
Community Property
Earnings of spouses during
Marriage and whatever is bought
with those earnings.
-
Separate
If brought into marriage
it will remain separate.
Two views on matters of separate property: In ID, LA, TX profits and rents are
community property, but they are separate property in other states.
43
-
-
-
-
Personal injury damages: LA considers it community property. In other states they
distinguish between lost earnings (loss of capacity included) and pain and suffering
which are considered separate.
What happens upon divorce?
- The community property will be divided equally. Some states choose to do this
equitably.
What about separate property?
- In AZ, CA, ID, LA they award separate property to the title holder, but in CA and
ID consider that in determining how to award alimony.
What will happen upon the death of one of the spouses?
- No ROS so each spouse can devise his/her separate property by will plus ½ of the
community property.
- If there is no will then the spouse usually get ½.
Husband’s Property
Wife’s Property
Community Property
If there is no will the community property goes to
The surviving spouse (CA, ID, NV, NM, WA)
-
-
-
-
-
What happens if you mix funds?
- This occurs a lot when you take a mortgage
- If you took the mortgage before marriage and continued to pay then it will remain
separate. However, if you mix money after being married there are three views:
- (1) Inception of right rule (TX): For reasons of administrative efficiency the
classification of property is determined by 1st payment. If 1st payment is made
alone then it will be separate.
- (2) Time of vesting rule (LA): The last payment determines the status. If the
last payment came from the marital pool then it is community property.
- (3) Pro-Rata: Pro-rate payments and divide the property accordingly. If payed
70% with your money and 30% with community money, then you will get
85%.
What can you possibly override with contractual agreements?
- In most community property states parties can opt out of community property if
there is mutual agreement. Acting unilaterally, however, you cannot do that.
- Unilateral actions will not sever the community property.
What happens with migrating couples?
- The law of the state where the property was acquired will determine the status of
the property—Law of Domiciliary.
What about creditors rights?
- Creditors may have access to community property so, if one of the spouses took a
loan, a creditor may reach the community property.
What about contracts between the spouses?
44
-
Most states allow couples to determine property rights between spouses. In some
states you can now contract about spousal support.
Pre-nuptial agreements are not as common as they seem.
Contracts between Unmarried Couples
Marvin v. Marvin (CA)
- Trial court ruled for .
- Holding: (1) Explicit contract or (2) Implied contract
- NY, for example, does not recognize implied contracts between non-married parties,
but does enforce explicit contracts.
- Illinois, on the other hand, refused to follow Marvin altogether, reasoning that it is a
complicated issue that should be left to the legislature.
- WA went further then Marvin and awarded unmarried partners status rights by
equating their status to that of married couples.
- Contractual and equitable remedies were granted to same sex partners following the
Marvin decision.
Leaseholds
Buying
V.
(1) Builds equity(It’s yours, psychological)
(2) Mortgage interest is tax deductible
(3) Bankruptcy
- Autonomy on “It’s yours”
Property is much broader when
you own.
Renting
(1) No property tax
(2) Commercial entities can
deduct rent
(3) Don’t have to worry
about maintenance
(4) Lower risk and more
flexibility
(5) Don’t need capital
(6) Lower transaction costs
(7) Depreciation deductible
Four types of leases:
- (1) the term of years- express
- (2) periodic tenancy- express/implied
- (3) tenancy @ will
- (4) tenancy @ sufferances; holdovers
Term of years
- Tenancy for a DEFINITE period of time with an ascertainable beginning and end
dates. This type of lease is typically created by express agreement and while at
common law the span of this lease could be infinite, today most states impose
limitation on the duration of such leases.
45
-
It terminates automatically on the last day of the lease and thus no termination notice
is required. The death of the landlord or the tenant does not affect the validity or
duration of the lease.
- E.g. “to A from Oct. 1, 1998 to Sept. 30, 1999”
Periodic tenancy
- Last for a fixed or set period, but unlike the term of years it is renewed
AUTOMATICALLY at the end of each lease term.
- In a month-to-month tenancy the lease is renewed at the end of each month, thus the
periodic tenancy required one of the parties to give the other a timely written notice
of termination in order to end the lease.
- At common law notice had to be given one period prior to termination for periodic
leases of less than 1 year, and 6 months ahead of time for leases of 1 year or longer.
- The death of the landlord or tenant does not affect the duration of the lease. Most
periodic tenancies are created by agreement, but courts may imply a periodic tenancy
when no valid lease exists, but the tenant paid rent and the landlord excepted it. Or,
when a tenant held over and the landlord chose not to evict him.
- Estoppel by deed. Equitable estoppel.
See problems of p. 421 of D&K
- (1) “annual rental of $2400 payable $200 per month on the first of each month”
- This is a period tenancy and in a majority of states it is “year-to-year.” Thus, in
most states you would only need 6 months notice. In some jurisdictions, in
minority, they would find a “month-to-month” tenancy and you would still need
30 days notice.
- (2) Does a two-week notice terminate a periodic, month-to-month tenancy in a
common law jurisdiction?
- NO, since jurisdictions has no applicable statute then 30 day common law rule
applies.
Tenancy at will:
- A lease that is terminable at will by either of the parties. Thus, the lease endures for
as long as the landlord and tenant desire. Modern statutes require a timely notice. A
tenancy at will may be expressly provided for, but more often than not it will arise
when the parties fail to reach an agreement. Nevertheless, the tenant took possession
with permission of the landlord. (There is not even a payment structure).
-
What if the landlord reserves the right to terminate at will, but the tenant cannot?
- Tenant will automatically have a similar power
Landlords cannot circumvent the symmetry by providing differently in the lease.
Garner v. Gerrish
- Issue: Should the lease that reserves the right to terminate in the tenant construe the
same power to the landlord?
46
-
-
Holding: The court ruled that tit does not give the landlord the same power. They
reasoned that imposing such a right would violate the written agreement. It was
basically a judicial measure to put more equality between the landlord and tenant.
The underlying assumption is that landlords are less deserving of protection.
Tenancy at Sufferance (Holdovers):
- Created whenever a tenant remains in possession after the termination of the lease.
Common law give landlords 2 options in such situations:
- (1) Either evict and collect rent for the holdover period or;
- (2) Consent implicitly (keep accepting rent) or explicitly
-
What type of tenancy is created during holdover
- (1) periodic tenancy
- (2) tenancy at will (1 year)
- Because courts and legislatures don’t like holdovers they put limitations on
landlords to continue the tenancy.
- It has been limited to 1 year
- At common law landlords could choose between (1) & (2) and even alternate
them.
Crechale & Polles (lessors) v. Smith (lessee)
- There was a 5 year lease
- Facts: Smith was supposed to move to a new building that wasn’t ready at the end of
his 5-year lease. Smith believed that they agreed to a month-to-month contract and
Crechale believed they had a new 5-year lease. When Smith sent a check for the
March rent, Crechale cashed the check, but when Smith paid the April rent he cashed
it.
- Holding: The court ruled that by accepting the 1st check Crechale implicitly agreed
for a month-to-month tenancy and therefore cannot opt for eviction and try to collect
double rent. However, because he chose to cash the check he cannot change his mind
because the other party relies on that acceptance of month-to-month tenancy.
- RULE: Once they go month-to-month, the landlord can terminate the lease with 30
days notice. If after 30 days the tenant doesn’t leave he can begin to collect double
rent.
Delivery of Possession
- Two rules:
- (1) English rule: Requires a lessor to put the lessee in actual physical possession
of the premises.
- (2) American rule: Requires the lessor to give the lessee legal right of possession
but not to put him/her in actual possession. There will be no other person with a
better claim at the time the lease kicks in.
Hannan v. Dusch
- Facts: The new tenant wanted to enter the property as agreed in the lease, but the old
tenants were still there.
47
-
Issue: Whether there is a statute or common law rule that forces a lessor to give actual
delivery?
RULE: In the absence of an express contract term the landlord had no duty to deliver
actual possession.
The holdover tenant is the wrongdoer because he is retaining possession of the land
when he has no legal right.
*Authority is split about which rule to follow.
If you argue the English rule it is better that you argue the least-cost avoider rationale.
The landlord negotiates with his tenants and the second-in time tenant.
You can provide in a lease contract that you want one rule or the other to govern the
contract.
Lease notes:
- Leases combine property and contract law. Both contracts and conveyances.
Because of this, both property and contract doctrines apply to leases. Historically,
leases were governed more by property law because they tended to protect the tenant.
- Today, contract law dominates. For the most part, parties can devise their own
agreements. But certain aspects of the relationships cannot be contracted away.
- Contracts now protect tenant in disparities of bargaining power.
- Because lease are also contracts they are subjected to various Statutes of Frauds.
- As a general rule, every lease for over 1 year has to be in writing. If it is for less than
1 year an oral agreement is acceptable.
- 99% of leases are pre-printed leases which gives power to the landlord.
- Posner believes that the more landlords there are, the more power the tenant will
have. However, this is illusory; e.g NYC.
Status=Pro (L)
Time
Status=Pro-tenant
Contract
(1) Mandatory arrangements
(2) Implied terms
Selection of Tenants and Unlawful Discrimination
-
At common law landlords were free to exclude tenants they didn’t like without
having to give reason. At common law landlords could discriminate at will.
Everything changed with the Federal Housing Act of 1988 which significantly
restrained the power of landlords to discriminate against tenants
SEE PAGE 436 IN D&K
§3601 states that the purpose of the act which is to provide fair housing throughout
the U.S.
§3603(a) exempts religious organizations, private clubs, and also states that housing
for the elderly is exempted from the familial status regulations.
§3603(b)(1) exempts (1) the sale and rental of a single family house by an owner
provided that the owner owns or has interest in no more then 3 such houses at the
same time; that the owner uses the exemption only once in every 24 months; that s/he
48
-
-
-
doesn’t use a broker or an agent; and that s/he does not advertise, publish, post, or
mail requirements that violate §3604(c).
§3603(b)(2) exempts groups or units of a unit dwelling where the owner actually lives
in one of them
§3604 which provides what is unlawful to do
§3604(a) provides that it is unlawful to refuse to sell, rent, or negotiate or otherwise
deny a dwelling to any person because of race, color, sex, religion, familial status or
national origin.
§3604(b) states that it is unlawful to discriminate in the provision of services or
conditions based on the above categories.
§3604(c) declares it unlawful to make, print, or publish any notice, statements, or
advertisements, that indicates a preference, limitation, or discrimination based on the
above categories as well as handicaps.
§3604(f) makes it unlawful to discriminate based on handicap of buyer or renter or
anyone associated with the buyer or renter. This subsection covers many of the
requirements.
Remedies for violations
- Includes injunctive relief, damages, and punitive damages
- Punitive damages are important for deterrence
Question 3 p. 438
- This was a violation of the Act because of the ad in the newspaper.
- The FHA illustrates the trend in landlord/tenant law which is becoming more status
based and less contractual. The most salient is racial discrimination.
- Recent settlements for suits in the neighborhood of the FHA are in the neighborhood
of $1,000,000
- FHA never adds poverty because they don’t want to adversely impact the financial
security of property owner, but if there is correlation between income in separate
groups it is the same problem.
U.S. v. Starrett City
-  set racial quotas
- Largest housing project in the world
- In 1979 a group of black applicants were denied housing. The first law suit was filed.
- Starrett City maintains that they have to keep quotas to maintain integration and
prevent “white flight.” They claimed that they needed to maintain racial integration
and prevent the % from reaching the “tipping point.”
- Issue: Does a private owner can establish a quota system to maintain racial
integration?
- Holding: It was illegal as long as effect was discriminatory.
- Dissent: You have to look to the purpose of the act which was to eliminate
segregation in the rental and housing market.
Schilling Article
- When people are faced with extreme choices they are bound to choose one extreme.
49
Doctrines that Protect Tenants
(1) Quiet enjoyment (constructive eviction)
(2) Illegal lease
(3) Implied warranty of habitability (IWH)
(4) Retaliatory evictions
(5) Tort
-
Traditional common law was very biased against tenants. Tenants took the premises
“as is” and landlords were under no obligation to guaranty their fitness. In the
1960’s, however, there began a period of sweeping reform that transformed this area.
It main effect was to riddle the common law rule with various exceptions.
Reste Realty v. Cooper
= lessor, = Cooper (lessee)
-  was suing for unlawful abandonment
-  claimed that there were serious problems of seepage.
- Issue: Can a tenant abandon when the leased premises does not satisfy the covenant
of quiet enjoyment?
- Holding: A covenant of quiet enjoyment is ordinarily implied in a lease. However,
the specific lease did have an express provision.
- Constructive eviction is a remedy when the covenant of quiet enjoyment is breached.
- Court said that the driveway was not part of the premises and even if the landlord had
inspected the driveway they would not have discovered the problem because it only
occurred when it rained.
3 elements of Constructive Eviction (C.E.)
(1) Failure to perform a duty (repairs heat and other utilities; other nuisances)
(2) Substantial interference with use or enjoyment
(3) Timely notice and reasonable time to repair.
-
-
Covenant of quiet enjoyment protects tenants against interference with their use or
enjoyment by the landlord and third parties with a paramount title (right of
possession), but not trespassers.
Covenant of quiet enjoyment is invoked as a defense (constructive eviction)
-
Partial eviction (actual or constructive):
- If there is an actual eviction from part of the premises the tenant is relieved from
the duty to pay rent even if she remains in occupancy.
- If, on the other hand, there is a C.E. from part of the premises the tenant must
continue to pay rent if she chooses to stay in the apartment.
-
Remedies
- In a case of actual eviction the tenant can either (1) affirm the lease, stop paying
rent, and sue for consequential damages (damages caused by eviction) or; (2)
terminate the lease and sue for general damages equal to the difference between
the ongoing market value and the reserved rent.
50
-
When it comes to C.E. the tenant is not entitled to stop paying rent unless she
vacates (abandons) the premises. If she stays she is only entitled to damages.
Reserved rent
e.g $600
- Actual value
$400
=Damages
-
$200 damages x 12 mos. = $2400
If the government takes the entire premises, the lease is terminated, but when only a
portion of the premises is taken the lease does not terminate and the tenant is obliged
to pay his rent in full. The condemnation award will be divided between the landlord
and tenant in proportion to the damages suffered by each of them.
The Illegal Lease Doctrine
- Applies when the conditions of the leased premises violate the relevant housing code
because they are unsafe or unsanitary @ the time the lease is made. Minor technical
violations do not render the lease illegal, nor do violations of which the landlord had
neither actual nor constructive knowledge.
- Remedies: The doctrine entitles tenants to withhold rent without risking eviction.
Habitability of Premises
- At common law tenants took premises as is and landlord neither warranted
habitability of premises nor was he obliged to make repairs
Hidler v. St. Peter
- Facts: Oral agreement to pay $140/mo. plus a $50 damage deposit.  waived the
damage deposit if the tenant agreed to clean the place. The apartment was in horrible
condition. The landlord promised to fix everything and never did.
- Issue: Did an implied warranty of habitability exist in the oral agreement?
- Landlord said  should not get damages because she stayed in the apartment.
- Holding: The court said she didn’t have to leave because every lease, oral or written,
contains an IWH. The court added that tenants obligation to pay rent is contingent on
the landlords obligation to maintain the premises in a habitable form.
- The court held that the IWH covers both latent and patent defects. IWH cannot be
waived.
Notes on IWH
- How do you prove breach?
- Violations of the relevant housing codes create a prima facie case of a breach.
- Indication of damages ($3445 for rent paid plus $1500) which is the difference
between a perfect apartment and one in the state of the apartment now.
- *This doctrine does not extend to commercial leases.
- 4 standards for proving a breach:
- (1) Any non-compliance with the Housing Code
- (2) Substantial non-compliance that affects habitability
- (3) Non-compliance creates a presumption that  can rebut
- (4) The standard is independent of the housing code
51
-
Remedies
- For a breach of IWH a tenant can:
- (1) Seek damages
- (2) Injunctive relief (rare)
- (3) Recission (termination of K)
- (4) Can repair the problem and deduct the costs for the rent
- (5) Can withhold rent completely until the problem is fixed and then abate the rent
proportionally.
-
Majority rule on damages
Reserved rent
- -The rent value of the defective premises
- = damages
Retaliatory Eviction:
- Common law allowed landlord to evict their tenants at will. Modern law, however,
forbids retaliatory evictions by landlords. A fairly common approach to protect
against retaliatory eviction is to create a rebuttable presumption of retaliatory purpose
if the landlord seeks to terminate decreased rent or services within reasonable
proximity (usually 90 to 180 days) to a complaint or legal action by a tenant.
- Does not apply to commercial leases.
Tort Liability
- At common law there was no liability.
- Today, several states impose liability in negligence on landlords for injuries to tenants
resulting from breaches of explicit contractual provisions or implied warranties. This
is especially true when a landlord knew of a problem and did nothing about it.
- In almost all states, when a landlord takes it upon himself and does so in a negligent
way, he is liable to the tenants.
- In multi-unit buildings the landlord has a duty to keep common areas safe.
Duties of Tenants
- (1) Fulfill the express obligation of the lease.
- Most importantly is the obligation to pay rent
- Tenant may be relieved of this duty if the landlord substantially breaches his
contract.
- (2) Duty not to commit waste or nuisance
- (a) One form of waste are acts affecting vital or substantial portions of the
premises
- (b) Acts changing the characteristic appearance- both the exterior and interior
- (c) Acts changing the very realty. Acts of extraordinary scope or effect; e.g
changing the plumbing or heating system may be considered waste. Only need to
show one.
52
Duty to Repair Defects:
- Duty to repair is on the landlord. A lease often imposes on the tenant a duty to repair
minor problems.
- Tenant has a duty to use the leased premises reasonably. Most leases exempt regular
wear and tear.
- (3) Duty to vacate the premises at the end of the lease term
-
*REMEMBER that a lease is a CONTRACT. A lot of things can be taken care of in
the contract.
Landlords Rights
- (1) Collect rent and even back rent for breaches. Need to sue to collect back rent
- (2) Security deposit- Landlords can compensate himself for damages caused by
tenants. Most states put limits on the amount of the deposit (statutory limits). In
theory, landlords are supposed to pay interest on the deposit. Can’t put security
deposits into the same account as rent (no co-mingling)
- In some states they call a security deposit “advanced rent” so they can collect as
must as they want.
- When a tenants lease terminates the landlord judges the amount of damage; selfassessing mechanism.
- (3) Self-help. In most states the landlords are not allowed to force tenants out of the
premises. Landlords cannot change the locks, cut-off utilities, or seize the tenants
possessions. SEE Berg v. Wiley p. 484 in D&K
- (4) Summary proceeding. A special legal process that was devised to help landlords
evict tenants.
- 3 Stages:
1) Provide tenant with a notice demanding performance (if the problem is
holdover then no notice is required)
2) Bring a lawsuit (Unlawful Detainer Action). The remedy sought is possession.
- Once you file this action, it usually takes between 3 and 8 weeks for trial to
begin.
- If the landlord prevails he can get the sheriff to evict the tenant.
- (5) Holdovers: If a tenant holds over after the expiration of the lease the landlord has
2 remedies- (1) terminate and regain possession through summary proceedings; (2)
Hold tenant over for another term (same conditions as original lease)
- At common law the landlord could choose between either. Today, they have to
choose one or the other.
- (6) Abandonement: At common law if the tenant abandoned the premises
prematurely, the landlord could either (1) sue the tenant for rent as it became due or;
(2) retake possession and re-let the premises at the tenants expense.
- The landlord would want to take the second option if the market goes up.
- Today, however, the trend is to eliminate the landlord’s choice and treat the lease
as any other contract by imposing on the landlord a duty to mitigate damages.
53
Sommer v. Kridel p. 495 D&K
- Facts:  signed a lease. There was a 6 week rent concession.
- Issue: Does a landlord have a duty to mitigate damages when a tenant abandons the
premises?
- The majority view at the time was that the landlord had no duty.
- Holding: Court chose a contractual view. Under contract law you have a duty to take
reasonable measures to mitigate the damages. Court based its decision on notions of
fairness. Landlord has a duty to exercise reasonable diligence
- In Sommer it was not satisfied. If you have more than one apartment it becomes
problematic. The burden of showing reasonable diligence is always on the landlord.
- Sommer is illustrative of the trend from property principles to contract principles in
order to give more protection to the tenant.
- ** Rule is Sommer is now the rule in 42 states plus D.C. and NY stayed with the
common law rule
Notes on Landlords and Tenants:
T(1)
-
-
T(2)
T(3)
At T(1) both the landlord and the tenant are trying to please one another. Landlord
may lose income and the tenant is searching for place to live and incurs moving costs.
At T(2) both sides make an effort to get along
At T(3) things are nasty. Tenant may withhold rent because the risk that the landlord
may not give back the security deposit
Because landlords can no longer resort to self-help and cannot require deposits in
excess of certain amounts, there are certain professionals who investigate tenants.
Irving Welfeld article:
- Most landlords are not evil. They don’t make that much money renting.
- Welfeld says that landlords have a negative view in the eyes of tenants. However, he
says this is a result of a misconception as a result of popular psychology. The reason
for this is because people with low incomes.
Law and Economics (Posner)
- Against interference in rental markets. Intervention only leads to higher rents
because landlords can pass cost over to tenants.
- This disadvantages the poorest tenants.
- The middle class benefits the most from control mechanisms
Akerman (in re to Posner)
- People will double-up with higher rents.
54
Chicago Board of Realtors v. City of Chicago
- Facts: In 1986 City of Chicago codified an ordinance of the IWH which extended the
responsibility of landlords and gave more power to tenants.
- Judge Posner said that any regulation has 3 bad effects:
- (1) reduces the quality of housing
- (2) increase in rents
- (3) diminishes the supply of apartments
Posner- Negative Effects of Rent Control
(1) decreased quality of housing
(2) increased cost of rent
(3) decreased amount of available housing
(4) increase in condos and co-ops
(5) decrease in new building rental housing
- Rent control hurts the poor and benefits the middle class
Erving Goffman article
- Stripping inmates of their property strips them of their identity. Therefore, Goffman
is saying that property give identity.
- If inmates misbehave they take away whatever property they have
- Inmates carry around all of their personal property in makeshift satchels which they
place on their person.
Rent Control
- First introduced during WWI
- Originally rent control was “rent freeze.” This guaranteed people would have the
same rent for many years.
- New term is “rent stabalization.” There is a baseline rent that is usually set by the
market. New units are leased without restriction for the first time. Based on the first
price they get a price scheme established.
- NYC has an elaborate price scheme
- Old buildings are subject to rent control under the old scheme, while new
buildings are subject to rent stabilization.
- Stabilization allows more and higher rent increases and some ordinances allow
property owners to change the base rent with every change in tenant.
- Many rent stabilization schemes allow landlords to increase rents by a higher %
than the inflation rate at the moment in order to avoid financial hardships.
- Provisions requiring a good cause for termination always accompany rent
controls.
- In NY, for example, when a tenant dies, the surviving occupant is entitled to the
same provisions if she is a family member or a life partner.
- Rent controls are associated with urban areas where they are not only the most
needed, but also where the populace is most receptive to them.
- Distinction between control and stabilization is important because most economic
studies are based solely on freezes.
55
Re Radin Article
- (1) Rent stabilization helps preserve community and make a better community
- (2) Spares people the burden of reestablishing themselves in a new social context.
Re Weicher Article
- “Filtering”
- Economic growth has 2 effects:
- (1) Construction cost reduction
- (2) Increases in the living standard of the rich
- He thinks economic is more important than stabilization and rent subsidy
Subleases and Assignments
- A tenant can transfer his interest by sublease or assignment
Assignment
Transfer entire remaining period
Leasehold
-
-
**One day less then the entire period makes it a sublease
Landlord has a reversion
If a tenant has a 3 year lease and transfers his interest for the middle year it is a
sublease.
If a tenant transfers part of the property it is a partial assignemnt
If a tenant part of the interest, but retains the right to re-enter if the transferee
breaches, it is a sub-lease because the original tenant retained an interest in the
property.
Landlords reversion is important because it maintains a privity of estate and privity of
contract. This affects the rights of the parties.
Landlord
Tenant
assignee
Tenant(1)
It depends
sublessee
56
LL
Assignment did not
Negate privity of K
Privity of estate
T
T(1)
Privity of K
full responsibility
-
(assignee)
T(2)
Tenant is always liable for breach unless he got a release for the landlord
T(1) is responsible for all covenants running with the land (e.g. paying rent, pay
taxes)
T can force T(1) to assume all of the obligations of the K
If T(1) assigns to T(2) he has the responsibility to T and no longer to the LL
LL
Sublease
-LL cannot collect from T(1)
Privity of K and
Privity of estate
No privity at all
T
T(1) (sublessee)
Privity of K & Privity of Estate
Kendall v. Pestana
- Facts: The commercial lease at issue provided that the lessee may not assign or sublet
without the landlords written permission. In almost all states (majority rule) you can
include an outright prohibition of transfers.
- In 90% of leases there is no outright prohibition, but restrictions on transfers
- Courts will construe restrictions very narrowly.
- Issue: Whether a LL can deny permission at will of a transfer?
- Holding: Law said NO. Refusal has to be reasonable. There are legitimate and
illegitimate reasons.
- Legitimate: Financial responsibility, suitability of premises for purposes of which
they were thought to be used, legality, nature of occupancy, etc. If not the same
use, the LL can refuse.
- Illegitimate: Personal taste, convenience, sensibility, desire to charge rent
57
Title Assurances
- What is title assurance?
- The system that protects purchasers against the risk of defective title. Does not
protect against any other risks.
-
-
At the heart of the system is the public records office where all instruments that affect
land titles (e.g deeds, wills, mortgages, liens, etc) are recorded
This system is designed to permit professionals to determine who the fee simple
holder is and what is the state of the title.
Problems arise because public records are never perfect. As a result, buyers often
turn to title insurance companies. They create a market for hedging against risk and
in return you get some security of your title.
In many places, specifically in big urban areas, title insurance companies maintain
computerized record systems that mimic the public records
Today, land title records are mandated by law in all American states. They are
recorded by the county recorder in each county.
Land record title records consist of copies of documents of land transactions and
indexes that organize them in chronological order.
Recording does affect the validity of the deed.
**Between the two immediate parties the deed is always valid.
Recording affects the rights of 3rd parties.
-
Recording serves 2 important functions:
- (1) Protects the interest of 3rd parties. In particular, future purchasers or
mortgages or lien creditors by allowing them to ascertain the state of the title. In
context of BPFV.
- (2) Evidentiary- Creates a storage where all important documents that affect land
titles are stored.
-
What instruments may be recorded?
- Deeds, mortgages, wills, liens, and judgements
Any judgement that may affect a title in land may be recorded.
What interests may not be recorded?
- (1) Leases for a period of less than 1 year
- (2) Easements by implication and by necessity.
-
-
All interest external to the recording system usually prevail over someone trying to
claim perfect title.
Indexes
- In the U.S. there are 2 types:
- (1) Tract
- (2) Grantor-grantee indexes
-
Public tract indexes document by parcel identification numbers that are assigned to
each particular tract. Unfortunately, such indexes are not available in most states.
58
This is due to the fact that in most Eastern states land was measured by “meet and
bounds.”
-
Grantor index lists in alphabetical and chronological order all instruments affecting
title to land by grantor’s surname for each calendar year.
Grantee index does exactly the same by reference to the grantee’s surname.
Example:
Grantor index
- G. Steinbrenner is buying land.
- Start with the seller’s name in grantee index.
- (1) DJ is present owner since 1992-present
- (2) Look MM up in grantee index; 1960-1992
- (3) JD look up in the grantee index; 1940-1960 (recorded in 1950)
- (4) Babe Ruth look up in the grantee index; 1920-1940
- Babe Ruth was the root of the title
Grantee index
- (1) Start with “Babe” in 1920 to make sure that between 1920-1940, Babe engaged in
no transactions. Look at 1920-1950* because JD did not record until 1950.
- (2) JD 1940-1960
- (3) MM 1960-1992
- (4) DJ 1992-present
-
“Root” of title is person who owned title at least 60 years ago.
3 Different Systems of Rules:
(1) Race Statutes
(2) Notice statutes
(3) Race-notice statutes
-
Under race jurisdiction the 1st to record wins. Don’t have to record in good faith.
Knowledge of prior transactions is irrelevant. This system encourages prompt
recording because if you don’t record you create a systemic risk on subsequent
purchasers, and increased litigation costs. Downside is that it may lead to an
inequitable result.
- 1st in time- must record first
- 2nd in time- must record before 1st
-
Under notice jurisdiction a “2nd in time” purchaser would prevail over prior buyers if
s/he purchased without notice even if s/he didn’t record. Rationale is that this system
is more fair and “1st in time” has burden of recording first. “2nd in time” in order to
win must buy without notice. More “good faith” based system.
- **Last person to buy without notice prevails.
59
Under race-notice, the “1st in time” would generally prevail over subsequent
purchasers, but if the “2nd in time” bought without knowledge and recorded first then
the “2nd in time” would prevail.
- 1st- record first
- 2nd- record first and must not know of 1st’s transactions.
-
Problems on p. 677
Problem 1:
(2)
O
H (heir)
(1)
(3)
A(nr)
B (r) Prevails!!
Problem 2:
O
(1)
(2)
(nr)
A
(r, 1st)
(nr, no notice)
B (r, 2nd)
C (r, 3rd)
Under race-notice statute C would prevail
Under notice statute C would prevail
-
Problem 3:
A
-
O
B
Between A/B, A>B
B/C, B>C
A/C, C>A
Use expectation rule which would 1st satisfy the expectations of those who recorded.
- C’s expectation was to get his money after B gets his share. B would get 14K, C
would get 5K. B’s expectation would be to recover after A. So B gets 2010=10K. A gets 5K.
-
nd
2 to win
Notice
BPFV
Race-Notice
BPFV and record 1st
60
Conditions to be a BPFV:
- (1) Purchase from (or transact with) the record holder (or with heirs or devisees)
- (2) Have no actual or constructive knowledge of prior transactions
- (3) Give value
- (4) (record first) (not really a condition, but it is still necessary)
-
Three types of notices:
- (1) Actual notice- actual knowledge
- (2) Constructive notice
- (3) Inquiry notice- requires that you should have suspected
-
When do you need to have notice?
When you record your transaction
-
In principle the recordation of any instrument should suffice to give at least
constructive notice. However, often failures to specify the tracts in specific detail and
failures to comply with various formalities and even misspelled names give rise to
many legal problems.
-
Problems with recording that would prevent notice:
- A. General Conveyances
- B. Incorrect indexing
- C. Delayed indexing
- D. Formalities
- E. Misspelled names
- F. Commercial leases
- G. Possession
Luthi v. Evans
- Facts: 2/10/71- Owens assigns to Int’l Tours her interest in oil and gas leases. The
agreement specifies seven tracts of land plus contains a Mother Hubbard clause that
conveys to Tours (assignee) all interests in Coffey County. However, the conveyance
did not include Kufhel. Burris and a professional service conducted a title search and
could not find the Kufhel assignment. There is reasonable effort required, but don’t
2/16/71- Tours records
1/30/75- Owens assigns to Burris her interest in Kufhel.
- Issue: Does the Mother Hubbard clause serve notice of the Kufhel lease?
- Holding: No, it did not give notice to Burris because it did not specify the tracts
included in it in enough detail. The court says the Mother Hubbard is effective
between the two immediate parties to the transactions, but it is not binding on third
parties because the tracts were not defined in sufficient detail.
- Least cost avoider principle: Who could have avoided the risk at the least cost.
Tours could have done so by specifying the tracts when he recorded.
- Rule: Such general conveyances do not impose
61
-
Exceptions: Judgement liens and tax liens. They attach a lien to all the land
owned by the debtor. The tracts are not specified.
Incorrect indexing:
- The conveyance between the two parties is good
- What about the interest of third parties?
- In some states the recorder is liable
- In most states the original grantee would prevail over any third party
- In terms of the least cost avoider both of them are innocent and the second
grantee could not do anything, but neither could the first. However, the first
grantee could check after indexing occurred. This is not the rule.
- * The first grantee will prevail.
Lewis v. Superior Court (case of Delayed indexing)
-
-
-
Facts: 1/1991- Lewis’ contracts Shipley to buy a house
2/24/91- Fontana records a lis pendens (law suit in progress) against Shipley
2/28/91- After paying most of the money, Lewis acquires title plus record
2/29/91- Fontana indexed
Issue: What is the decisive time, the time of recording or the time of indexing?
Holding: Court held that the important date is the date of indexing for the 1st in time
and for the subsequent BFPV it is recording. The 2nd in time that is a BFPV will win
if s/he records first.
Lewis is not the law everywhere. In half the states, the courts would give title to
Fontanta.
Formalities:
- There are certain formalities preceding the recordation. For example, in many
states the grantee has to appear before a notary public and get the instrument
authorized prior to its recording.
Messersmith v. Smith
- Facts: Grantee did not comply with the necessary formalities and though it was
authorized by a notary public it was not granted because he did not appear for the
hearing.
- Why such strict measures? When dealing with two innocent parties any fault
prescribed to the other may tip the balance.
Misspelled Names:
Orr v. Byers
- Facts: James Orr obtained the judgement against Mr. Elliott. However, when it was
recorded it was recorded as “Elliot” with only one “t.” Mr. Elliott transferred land to
Byers. Judgement holder wants to get the land from Byers.
- Holding: Court held that Byers should get the land because the judgement holder
should have checked the judgement record for the proper spelling.
62
Commerical Leases:
- Often times the record of the transaction contains references to commercial leases. In
most states there is no requirement to examine commercial leases and you can be a
BFPV without examining them. The antidote is to put a no competition clause in the
record.
Possession:
- What happens when a person, other than the grantor, is in possession of the property?
- Does possession give constructive notice?
- Short terms leases whose term is less than 1 year does not have to be recorded?
- With longer leases the case is different.
Waldorf Ins. and Bonding Inc.v. Elgin Nat’l Bank
- Facts: Involved a conflict between a prior in time lessee whose interest was not
recorded and the subsequent mortgage holder who wished to foreclose on the
property.
- Issue: Does possession put you on an inquiry notice?
- Bank claimed possession was meaningless because the lessee invited a lot of people
to stay over and there was no way to find out who the rightful holder was.
- Holding: The District Court of Appeal of Florida rejected the Bank’s claim and ruled
that possession does serve an inquiry notice. (this rule was heavily criticized).
-
Often leases come with an option to purchase and what would happen to this option?
What happens if it is a one year lease that you don’t even have to record but it has a
purchase option?
What happens if there is an adverse possessor?
If an AP’s interest ripened then he has priority over a bank. However, if
the interest has not ripened the bank has priority.
Gates Rubber Co. v. Ulman
- Facts: Lease was recorded but the separate purchase option was not. Ulman, , and
subsequent purchaser purchased the property without inquiring into the rights of the
lessee. The possessor instituted a law suit?
- Issue: Who wins, the lessee who had an unrecorded option or the subsequent
purchaser?
- Holding: Subsequent purchaser won. Court held that he didn’t have to inquire.
-
The purchaser of an apartment building had to inquire into rights of tenants who had
oral agreements.
-
To protect himself it is better for a subsequent purchaser to inquire into the rights of
tenants and in addition you should reserve an option to rescind the contract if you find
something in the inquiry.
63
Value:
A. Donees
B. Inadequate consideration
C. Installments and part payments
D. Judgement and attachment creditors
E. Purchasers at execution sales
-
These are all instances when the person is 2nd in time:
To qualify as a BFPV you need to give some value.
Donees cannot qualify as a BFPV because they don’t give value. However, if they
are 1st in time and record first then they are the right holder
Inadequate consideration- Courts will not look at sufficiency of consideration.
However, the exception is that nominal consideration will not suffice.
A promise to pay is not enough. The crucial time is the time of recording.
Preemptive option
Daniels v. Anderson p. 695.
- Facts: 1977- Jacula contracts with Daniels. Sells land to Daniels and gives him an
unrecorded preemptive option (right of 1st refusal) on a contiguous lot.
1985- Jacula sells the contiguous lot to Zografos. After Zogs payed $30K he
learned about Daniels’ option. Nevertheless he chose to go forward with the
transaction, get the deed, and retain the right.
- Issue: Is Zogs a BFPV?
- Holding: In some jurisdictions the 2nd in time who is not a BFPV will not receive any
protection whatsoever. But, in the majority of the states there is a pro tanto rule.
- Pro tanto rule: Up to paying $30K he was a BFPV. He paid about half the
contractual amount at that point.
- Three options under pro tanto rule:
- (1) Award land to option holder (1st in time) and have him to reimburse
second in time for payments made.
- (2) Divide the property “in-kind”
- (3) Award title to subsequent purchaser and have him reimburse the 1st in time
Judgement and Attachment Creditors:
- In states that extend protection to purchasers beyond value. Judgement and
attachment creditors that record in good faith are protected. The value is not a
problem because they gave value in a previous transaction.
Purchasers at Execution Sales:
- Always get the highest degree of protection because we want people to go there and
buy.
64
Chain of Title Problems
Example 7 (p. 685) (race-notice jurisdiction)
O
3
C (R2)
1
Who prevails, B or C? C wins
A (NR)
2
B (R1)
B’s title is called wild title because when C does a title search (1st in grantee index,
then in grantor index) for O he will never be able to find out about B because B is in
no way related to O.
Classic case of least cost avoider. Why should B bear the burden?
- If B had conducted a proper title search he should have found out that A did not
record. B had superior information than C.
- What should you advise B to do?
- Force A to record or at least try.
-
-
-
To qualify as a BPFV, a purchaser must record the entire chain of transactions
leading to his title.
Therefore, for B to prevail he would need to record his title and A’s title.
-
Example
O
1
A
2
C (NR)
Who prevails, B or C? C wins
(NR)
3
B (R)
-
Raises the issue of who is the “first in time” if C records first.
If none had perfected their interest then 1st in time wins
However, if there are imperfect interests, B would have to record the entire chain to
be a BPFV.
Since B did not do that he will not prevail.
1st in time prevails over subsequent purchasers.
Marketable Titles
- About 20 states enacted marketable titles acts in order to limit a search to between 2040 years.
- The underlying idea is to protect the rights of people who held title for a reasonably
long period of time.
- Marketable title acts accomplish this by defining the “root of the title” as the most
recent conveyance of the property in question that predates the search date by 20-40
65
years and cutting off interest before the root that is not recorded subsequent to this
root.
Example:
- Investigating a title to Blackacre in a state whose marketable title act provides that the
root predates the search date by 30 years.
- Land transfers: 1940. 1952, *1960, 1972
- If you search today, 1960 is the key transaction.
- Assume, for example, however, that the 1940 recordation is one of a 99 year lease
and it is not mentioned after that.
- The lease would be invalid unless every 30 years you introduce a new notice into
the record. Otherwise all claims prior to 1960 would be cut-off.
Torrens System
- At one time or another 20 states experimented with a different system of land
registration. Today, about 11 states including NY offer Torrens registration as an
alternative to conventional title recordation. Even in those states Torrens is hardly
used because initial cost of registration is too high. The Torrens system only has real
significance in 5 states.
- Under the Torrens registration, the respective rights of the claimant to a particular
tract are being determined in a judicial procedure. At the end of the proceeding
registration will take place. A conclusive certification of title is issued.
- When the land is being transferred a new certificate is issued by the registrar after
a formal review of what happened to the title after the previous certification.
-
Why did this system fail?
- (1) Very high set-up costs
- (2) Despite the aspiration for conclusiveness, exceptions were made in various
states for tax liens, short-term leases, and successory claims to easements.
- (3) Inadequately trained employees in the registrar
- (4) Financial interest of title insurance companies and lawyers.
Title Insurance
- Gives protection to people against faults in the recording system
- It has no ending date
- Does not run with the land
- E.g. If A has insurance, and sold the land to B, B is not covered
-
Title insurance guarantees that the insurance company has searched the public record
and that there are no defects, but the one, if any, that had been revealed.
-
Exclusions
- Standard policy excludes losses arising from government auctions and regulation.
Thus, setbacks resulting from housing code and zoning violations are not covered.
66
-
In addition, the standard policy does not cover interests that are not included in
the record: easements, short-term leases, and adverse possession. In essence, it
does not obviate the need to go inspect the property.
Walker Rogge v. Chelsea Title and Guaranty
- Facts: Aiello
Kosa (land survey performed; 12.486 acres) (Schilling)
Kosa
-
-
Rogge (19 acres) (Price-Walker survey)
Title insurance company insured the last two transactions and they had a copy of the
first survey in their records. However, they did not spot the acreage discrepancy.
Issue: Was the acreage shortage an insurable loss under the policy?
Holding: NO. Title insurer is no substitute for a land survey and every home owner
should know as much. , however, raised another issue, negligence. The
relationship, according to the , created a duty to act diligently. The court rejected
this argument. The court held that what is in the K is that there is. However, if there
were additional circumstances that gave a heightened duty to do their job, then there
may have been such a duty.
Why wouldn’t title insurance companies cover physical defects?
- Clients don’t know and insurance companies don’t know.
- If the insurance companies conducted land surveys it would reduce costs.
Covenants Running with the Land
- Some covenants insure you against certain defects and some future covenants have
clear advantages over title insurance. Some run with the land and go to future
assignees. Others don’t make exceptions for adverse possession, leases, etc.
- But insurance companies are willing to go court and they have money too.
Lick Mill Creek Apartments v. Chicago Title Insurance
- Deals with the problem of hazardous waste; biggest problem to deal with). Not only
do you lose money for the house, but nothing compares to the clean-up costs.
- Facts: Lick Mill (insured) bought property that was contaminated with hazardous
waste. At the time of the purchase the State Department of Health held records
exposing knowledge of hazardous materials on the property.
- A survey-inspection commission by Title Insurance company found waste pieces.
- When hazardous substances were found on the property he sued Title Insurance
company.
- Issue: Is the Title Insurance Company liable for the failure to disclose the presence of
hazardous substances on the property?
- Holding: NO. Differentiated between the validity of the land and status of the title
itself. Only goes to the marketability of title and not the value of the land.
- Title insured, but not physical condition of the land.
-  argued that according to the environmental Act the government can impose a
lien to cover the clean-up costs.
67
-
Because there was a potential for a lien, the title wasn’t perfect. There was no
real lien, but implied in a sense. The Court rejected this argument. The
possibility of a lien is not a lien
-
Contrast with Lohmeyer case p. 568
- Court ruled that a violation of a zoning ordinance rendered the title unmarketable.
The Court thus permitted the buyer to rescind the sale K. Even though the City
made no attempt to enforce the zoning ordinance.
-
How can you explain the difference in rationale:
- 2 possible ways:
- (1) In Lohmeyer the violation of law was already present, but in Lick Mill it
was a step before a violation if the home-owner hadn’t cleaned up.
- (2) What marketable title means can be more than one thing. For purpose of
recission a zoning violation render the title unmarketable. As for the liability
of the insurance company it is not good enough and did not effect the
marketability of the title.
LAND USE CONTROL
Land use controls have been established to deal with the problem of externalities.
- Under the old Blackstonian system, a property owner could use their land in a way
detrimental to their neighbors thereby harming their interests and decreasing the value
of their property overall.
- Land use controls can be done either privately or publicly through zoning ordinances,
housing codes, and in extreme instances, takings.
Private and Public Nuisance
- The judiciary has played an important role by developing the law of nuisance. This
cause of action enabled the courts to establish on a case-by-case basis an elaborate set
of rules as to what one can and cannot do on one’s land.
- Various scholars have argued that judges try to resolve nuisance disputes that
promote fairness and efficiency by striking a balance between the interests of the
individual landowner and the larger community.
Morgan v. High Penn Oil Co.
- Facts: 5 years after the  moved into their new house, the defendant began operating
an oil refinery 1000 feet away from their house. The refinery emitted nauseating
gases and odors that came onto the ’s property and made them sick.  brought suit
to recover damages and injunction, but in the end they opted only for injunction. The
 asserted in response to the suit that when one carries on an activity on his own
property in a non-negligent manner he cannot possibly be committing nuisance. 
argued under the common law that for their to be a nuisance an activity must be either
(1) illegal per se (nuisance at law) or (2) conducting in a negligent manner (nuisance
per accident).  won at trial court. That decision was appealed.
- Nuisance=negligence
68
-
-
-
Nuisance is a “catch-all” law.
Issue: Can an otherwise lawful activity carried on upon one’s own land, in a nonnegligent manner, constitute a nuisance?
Holding: Yes. The scope of private nuisance goes beyond negligence. Any
substantial non-tresspassery invasion of another’s interest in the private use and
enjoyment of land by any type of conduct constitutes a private nuisance. In this
context intentional means acting for the purpose of causing the invasion or knowing
that such invasion is substantially certain to result from the conduct in question.
Refinery’s conduct knew that it would result in some harm to the  because it was so
close to their house. Since the conduct was intentional the  had a strong duty to
exercise great care in an effort to avoid the nuisance and since it did not it is liable to
the .
There is a difficult problem of dealing with social utility of a business versus the
property owner’s right to quiet enjoyment when dealing with nuisance.
nuisance
negligence
Distinction between Private and Public Nuisances
-
-
-
A private nuisance arises from unreasonable interference with the use and enjoyment
of land. Interference may occur in a variety of ways. Examples: Physical effect of
the land as in the case of vibration, destruction of crops, flooding, or pollution of the
soil. Or there may be a disturbance of the comfort, convenience or health of the
occupant. Interference must be substantial and unreasonable.
A public nuisance interferes with general community interests or the comfort of the
public at large. Examples: Air pollution, excessive noise, storage of harmful
substances, the keeping of diseased animals, etc.
Very important to distinguish between negligence and nuisance. Both require
unreasonable something, but the unreasonableness is not same. In negligence, the
unreasonableness goes to the conduct or behavior. The unreasonableness in nuisance
does not go to the conduct, but goes to the interference.
History
- Law of private nuisance was developed in England as a means for redressing the
problem of activities conducted on one’s land that interfered with the use or
enjoyment of other people of their land. Originally in medieval England the law of
nuisance was used to preserve the status quo. It served a zoning function in that
enabled courts to direct businesses to the outskirts of town because out there it did not
affect anybody’s interest. The industrial revolution changed everything. It created
such a strong need for change that nuisance law was replaced in major part by zoning
law. Nuisance law contributed to the law of zoning by giving content to the standard
of reasonableness. Based somewhat on the common law decisions. Now, it is the
other way around. We use regulatory standards to determine reasonableness.
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Standard of Unreasonableness:
- “Nuisance means something different to everybody” because the standard of
unreasonableness is ill defined.
- Distinction between unintentional nuisances and intentional nuisances:
- In the case of unintentional nuisance liability may be based on negligence,
recklessness, or abnormally dangerous activities all of which embody to some
degree the concept of unreasonableness. Unintentional nuisance implies that you
don’t know your activity causes harm to your neighbors. You not only didn’t
mean it to happen, but you couldn’t foresee it.
- In the case of intentional nuisance some courts believe that the test of
unreasonableness is whether the interference crossed the point that marks the
threshold of liability.
Draw in diagram
Joste v. Dairy Land Power Co-Op
- Court refused to consider the utility of the ’s activity.
-
-
-
If you pass the threshold of liability it is a nuisance and you will pay. It is not a
balancing test. It is not a legitimate defense in those courts.
R2 of Torts takes a different approach. Under the Restatement even if you pass this
threshold the court must consider the social utility of your activity and balance the
interest. Very similar to a negligence test.
Under balancing test of the Restatement you have to look to a number of factors:
- (1) Utility of ’s operation
- (2) Magnitude of harm
- (3) Cost of avoidance
Nuisance v. Trespass
- As a general rule in torts, if the tort is intentional the  will always be liable
regardless of the magnitude of the harm and the utility of the ’s activity. See
Jacques v. Steamberg Homes. Case where they dragged the trailer across ’s
land.
- With intentional nuisance the situation is totally different. Need to balance the
interests of , , and the public at large. There is no automatic liability.
- Intention means one of two things: (1) malice or (2) knowledge, with respect to
the harm, that a certain result is going to occur because of your activity.
- Prah v. Maretti, where the court found that the construction of an absolutely
ordinary two story home constitutes a nuisance. In that particular case the house
was surrounded by single-family houses and it blocked the sun from reaching one
of the neighbors houses.
- If you want to decide whether something constitutes a nuisance
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-
You can make a prima facie case of nuisance if it has negative effects on the
community.
Damages and Remedies:
Coase’s Observations:
- Nuisance law has become the darling of law and economics scholars. In this context
Coase made his point of reciprocity of harm. The traditional way of looking at torts
cases where there is a tortfeasor is wrong according to Coase. This is wrong because
the refinery and the property owner cause harm to each other. It is not just the
refinery that imposes a cost on the individual but the individual also causes harms to
the refinery. Before this they thought the only thing was to look at the tortfeasor. No
one looked at the victim. Need to look at not only what  could do to avoid harm but
also what  could do. The cost goes both ways. Following Coase’s insight,
Calabresi came up with his least-cost avoider idea, the party that can eliminate the
harm more cost effectively.
- According to law and economics school of thought the outcome of Morgan is good if
the cost of avoiding the harm would be lower for the .
Example:
Pollution situation.
Polluter
Cost
Victim
(1) Shut Polluter down$1 million
(2) Relocate victim$100000
(3) Filters$1K
- Law and economics scholars would say the best way is to install filters. Always
choose the most cost-effective measures.
- Who should pay for the filters?
- Because of fairness, impose the liability, on the polluter.
-
-
Elasticity of demand curve: The polluter may be able to pass some of the cost on to
the consumer depending on the elasticity of the demand curve. If the curve was
inelastic the polluter would be able to pass the entire cost onto the consumer and
therefore they would not be so concerned with the costs of pollution.
Constitutional rights prevent a completely efficient result. If the victim has a right to
an injunction they can actually get more than the $100000 moving costs because you
can negotiate with the polluter to try to get more. The modern approach is that if you
want an injunction that is all you get.
Lateral and Subjacent Support:
- At common law every landowner had a right to lateral and subjacent support.
- Lateral support refers to the support a tract gets from tracts surrounding it.
- Subjacent support refers to support underneath.
- The common law right of lateral support imposes a duty on neighboring tract holders
to provide the necessary natural support the subject tract would need and receive
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-
-
under natural conditions. Under the common law this right did not cover the support
for structures and buildings on the tract. Under modern law, however, most states
have statutes that provide additional support for structures and buildings.
Typically the right for lateral support is violated when the  excavates his land to
close to the property line or without taking the necessary precautionary measures.
The general remedy for violations of this right is damages. An injunction will be
issued only when damages are hard to assess.
The right of subjacent support protects landowners against the digging of minerals
from underneath their land. Problems involving lateral and subjacent rights arise
when someone other than the surface holders seeks to extract minerals or water from
the lot.
To succeed on a cause of action for lateral or subjacent support the  has to show that
the conduct of the  was unreasonable.
ditch
subjacent-
’s lot
 digs ditch too close to property line
some extracting
of minerals or water
under the ’s land
Remedies:
Estancias Dallas Corp. v. Schultz (case about noise)
- Facts:  brought an action to enjoin the  from operating an air-conditioning unit
from next to the ’s land.  owned an apartment building. At trial there was an
injunction.
- Issue: Did the trial court improperly balance equities and thus was an injunction
properly granted.
- Holding: “Balancing the equities” Court considered injury to  and public and found
that air conditioner was little use to the public. Therefore, Court awarded damages to
the  and an injunction.
- What was the cost to the ?
- $150K to change the current system.
- The initial cost of a better system was $40K.
- What was damage to ?
- Past damages and devaluation in land.
- Value of land went from $25K to $10K=$15K
- Past damages were $10K
- Total=$25K for 
- How come there was an injunction if it was on $25K to compensate the  versus
$150K to correct the problem?
- The court looked at the “balancing test” Don’t look at impact on the parties but
rather the public at large. An injunction should be withheld only if the impact on
the general public would be harmful.
RULE #1: Give an injunction unless it has an adverse effect on the public.
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-
-
-
Why does it matter about the interest of the public?
- Court said that there were enough apartments in Dallas.
Why was there an injunction?
Law and economic school of thought thinks that a dollar to  is just as valuable as a
dollar to the . However, this is a false assumption because of the law of diminishing
returns.
Court can assume because there are only two parties, following the injunction, the 
will buy the  out. The  would want to negotiate a deal with the . Pay the 
$50000 just to get them to leave you alone. Post-trial negotiations will correct
inefficiencies. The trial is not the end of the story. On an injunction, the  can now
lose a lot more. If the  wants more money s/he can just sell the injunction back to
the .
Post-trial negotiations do not always work, however, and therefore Coasce’s theory
that there will always be an efficient result is not always true.
Boomer v. Atlantic Cement Company
- Facts:  has a cement plant and s are complaining about vibrations, dirt, and smoke
coming from the plant. Initial cost to correct the problem was $45 million and there
were 300 employees. There are multiple victims in this case.
- Holding: Court of appeals was concerned with issuing an injunction because if they
did not it would change the rule in NY. Typically in NY if a  could prove nuisance
they were granted an injunction. However, the court decided not to issue an
injunction because the interest of the  is not important enough to warrant an
injunction because it would be bad for the community. Court granted injunction, but
if  paid damages the injunction would disappear. The balance of the equities favors
the .
- RULE #2: Damages when the ’s operation is more valuable than ’s interest
- Dissent: There were dangers in overruling the old rule. Basically, just gave the  a
license to hurt or harm other people in exchange for the payment of a fee (damages).
Also, dissent said that following this rule the  (cement factory) will have no
incentive to invest in new technologies that may help abate nuisances. s were
outrageously under-compensated.
- Following this case the cement factory increased its output because it had a license.
- Damages are not always a good solution because you don’t always know who the
victims are and most people are under-compensated. However, damages are not
always under-compensatory. Sometimes they are over-compensatory.
- Try to avoid permanent damages because the victims only get the set amount of
money. A better approach would be to reevaluate damages every 5-10 years. Better
able to assess the real harm to the . This type of reassessment gives the companies
an incentive to invest in new technologies.
- If you give an injunction the  will have an incentive to develop or use a new
technology to eliminate the nuisance.
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Copart Industries p. 763. Note2.
- Court found no nuisance and no liability at all. The operation of the company was so
valuable that the court did not want to impose any costs on the company.
Distinguished Boomer on the ground that it involved an intentional and unreasonable
invasion.
- RULE #3: No nuisance, no liability.
Spur Industries v. Webb Development Co.
- Facts: Spur operated a cattle feed lot in AZ that began expanding. Spur was 1st in
time. Webb was a developer who developed two apartment complexes, Sun City
being one of them. Sun City grows so big that it ends up 500 feet away. The odors
were nauseating and no one would move into Sun City. Webb sued. Spur claimed he
was 1st in time.
- Holding: Court enjoined feed lot because the Sun City development was of greater
value to public than the feed lot. However, because Sun City “came to the nuisance”
Webb was required to pay for the full cost of relocating the feed lot.
- RULE #4: Coming to the nuisance. Enjoin nuisancer but have  pay him damages.
Calabrese-Melamed
- Property and Liability rules
- (1) injunction to  (property rule protection to ). Allows  to determine the
terms of the interaction. If you want to pollute you have to buy out . Estancias.
- (2) damages to  (liability rule protection to ). Court, not property owner, will
determine to the terms of the action. Boomer.
- (3) no remedy at all (Copart Industries) (property rule protection to ).
- (4) Injunction plus damages to  (liability rule protection to )
-
Pollution is too big a problem to be tackled by nuisance law. It is too complex, too
harmful. Not the kind of stuff nuisance law was designed to deal with. For those
purposes we have regulations that controls the amount of emissions. The problem
with regulation, however, is imperfect information. There are basically two ways to
regulate pollution:
- (1) outright regulation (e.g. only allowed “x” amount of pollution units)
- (2) Incentive system (define overall amount of pollution you want there to be and
you allocate to the existing factories. If a new factory wants to move in it has to
buy some portion of the amount of pollution from another factory. It creates a
market for pollution in which polluters interact. Provides an incentive to reduce
pollution. Can’t increase output without increasing pollution. However, it is very
costly to buy pollution rights or it is costly to develop technology to reduce
pollution. This system has a built-in regulator.
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SERVITUDES
Easments
Covenants
Servient
Tenement
dominant
tenement
Covenant- doesn’t give the right to anyone else
-
Servitudes are interests in land created by private agreements between two or more
parties. Involve at least two or more parcels of land. Purpose of those agreements is
to increase the total value of the land involved.
Easements
- An easement gives a third party a right to use the burdened land. In a typical
easement a landowner says, “I give you the right to use my land as follows...”
- The owner of the servient tenement gives the right (easement) to use the dominant
tenement.
- Four different ways to classify easements. Either affirmative or negative
- Either appurtenant or in gross
- An affirmative easement entitles its holder to do a physical act on the burdened land.
For example, it could the right to pave a road. Dominant tenement can pave a road on
the servient land.
- A negative easement entitles its holder to prevent the owner of the servient tenement
from doing something. For example, not to build another floor on his house or not to
plant redwood trees. E.g. “I promise not to block the sunlight on your tract,” as
opposed to a covenant which would read, “I promise not to build a third floor.”
- An easement appurtenant attaches to a particular tract of land and benefits all its
owners. Anybody who owns the servient tenement will be subjected to the benefits
of the dominant tenement. This easements “runs with the land” and benefits all of the
owners and future owners of the dominant tenement because they all have the title to
the dominant tenement. It attaches to a parcel and not to a person.
- An easement “in gross” attaches to a certain person. An example, is an easement for
utility lines held by a utility company. The easement goes to the utility company. It
is a personal easement. It does not really “run with the land.”
- *The dominant tenement does not have to be adjacent to the servient tenement.
- ** Easements don’t confer the right of possession. It is an interest to use not possess.
- Profit aprendre: A special case of an affirmative easement. It gives you the right to
sever plus remove something from the servient tenement. Usually minerals, timber,
or something else. It may attach to individual, but it also may “run with the land.”
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Affirmative
Easements
Negative
Appurtenant Yes, (e.g. a road)
Yes, (e.g. sunlight
air, view)
?
In gross
Yes, (e.g. profit
Apprendre or a road Right of sunlight to
present owner of a lot
Easements and Licenses
- A license is permission given by an occupant of land to do some act on the land that
would otherwise be considered trespass. In that sense a license is exactly like an
easement. The only difference however is that a license is revocable at any time;
terminable at the will of the landowner. An easement is not revocable, a license is.
- However, a license can develop into an easement in two specific cases:
- (1) when a license is coupled with an interest in land. For example, I have the
right to chop trees on your land, but to do so I have to enter your land. You may
give me a license to enter your land, but it is revocable. In such a case, however,
the license is irrevocable.
- (2) a license may also become irrevocable is in cases where there is negative
reliance. In reliance on your promise I spend some money. There would be an
estoppel to revoke your license.
- In NY the law of estoppel does not apply to licenses and is therefore revocable at any
time. Crossdale v. Lanigan p.794.
How Are Easements Created?
- (a) express grant-must generally be in writing. Part of the deed.
- (b) by implication- must be part of the land transfer
- (c) by strict necessity- prevent land from being land-locked
- (d) prescription- adverse possession
- (e) estoppel- usually develops from a revocable license
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Willard v. First Church of Christ Scientist. P.784
(1) 1st in time
McGuigan sold to;
19
(2) Peterson
sold 20+ easement to;
20
parking lot
(3) Willard
church
-
Facts: McGuigan owned to adjacent lots 19 & 20. This case involved an easement
“in gross.” The scope of the easement in gross may vary.
Issue: Whether a grantor (McGuigan) can reserve in a deed an easement to a third
party (church)?
Holding: Court said yes you can reserve an easement to a party external. McGuigan
charged Peterson less because the easement was part of the deal.
This changed the law, except in NY.
Easement by Implication
Van Sandt v. Royster
19
20
4
-
Sewer pipe running under all three houses
-
Facts: Owner of lot 4 once owned all three lots. She subsequently sold 19 and 20 to
different people. She built a house on lot 4. Problem with the sewer pipe that ran
through the land. The sewer line trespasses on lots 19 and 20 and the owners of those
lots can restrict her use of the sewer line. Owner of lot 19 now has a problem.
Owner of lot 4 claims that there is an easement by implied reservation. It is important
to know that the pipe also runs under lot 20.
Issue:
Holding: There are four conditions for an implied easements:
- (1) The two disputed parcels were once under single ownership
- (2) There was a pre-division use that extended to the servient tenement. This
means that when the two lots were one, there was still the sewer pipe. It existed
before the division of the larger lot.
- (3) Use was apparent on reasonable inspection (this was the big problem in this
case)
- (4) Easement must be reasonably necessary
The court said that the  did have a constructive notice of the drain because he
observed that the house was equipped with modern plumbing and it had to drain
somewhere. Thus, the drain was an apparent easement. The court felt a reasonable
-
-
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-
effort would have discovered the easement. “If land may be used without an
easement, but cannot be used without disproportionate effort and expense an
easement may still be implied.”
In this case the court found an implied easement and allowed the sewer pipe to
remain.
Easement by Strict Necessity
- Would be found where two parcels of land were situated in a way in that an easement
over one of them is absolutely necessary for the enjoyment of the other. Condition #2
is not required. It becomes a three step test.
- See case p.802. Othen v. Rosier
-
-
Othen claimed easement by strict necessity; that he was land-locked.
Holding: Court said the two parcels had to have been once been under single
ownership. The second condition was the alleged use was a necessity when
the land was divided. Third, the use was absolutely necessary. There was a
problem with condition #2.
* Court decided no easement by strict necessity. The necessity had to exist at
the time of partition. Othen’s use of the road was merely a license.
Easements
(1) By grant
(2) By implication
(3) By strict necessity
(4) By prescription
(5) By estoppel
By implication:
(a) the 2 parcels were under single ownership
(b) there existed a pre-division use that extended to servient tenement
(c) use was apparent upon reasonable inspection
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(d) reasonable necessity
By strict necessity:
(a) 2 parcels were once under single ownership
(b) absolute necessity
(c) absolute necessity existed at the time of the serverance (of the servient tenement)
By prescription
- Similar to requirement of adverse possession. Easements do not confer possessory
interest.
(a) open and notorious
(b) hostile
(c) adverse with a claim of right
(d) continuos and uninterrupted
(e) exclusive (use it as if it is your right)
- There is a legal presumption that the use is adverse. Failed attempts to terminate the
use do not stop the running of time. Self-help measures such as “no trespass” signs
and gates do not in most states interrupt the use that gives rise to the easement.
- Only affirmative easements can be gained by prescription.
Matthews v. Bay Head Improvement Ass’n
- Deals with the right of the public to access the waterfront
- The wet sand areas of a beach front are owned by the public
- Facts: Bay Head bought a strip of the beach and erected gates and barriers that
prevented the public from accessing the wet sand. The public demanded access to the
beach.
- Issue: How do you accomplish the problem of preventing public access.
- Holding: Court granted public access relying on the doctrine of public trust (the
private owner (Bay Head) is a trustee of the public and therefore Bay Head had to
allow the public access to the wet sand.) Forced a private owner to admit the public
on its property.
- What other ways could have the court achieved the same goal?
- (1)Custom or;
- (2) Easement by prescription. This would be an affirmative easement in gross
by way of prescription. The problem with prescription is that you have to
show that the public had access to that area for a significant period of time.
The court chose public trust because it does not require a long, continuos use.
Easement by estoppel
Holbrook v. Taylor
- Facts: Taylors invested money in improving the road and maintaining it. Holbrook
erected a cable and blocked the road. Taylor sues and claims easement by
prescription and easement by estoppel.
- Holding: No easement by prescription because the use was neither adverse, nor
continuos, nor interrupted. Court found easement by estoppel because in reliance on
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the license by Holbrook, Taylor expended some money to fix and maintain the road
in reliance on the license. In TX and NY a license can never be maintained by
estopppel.
Scope of easements:
- In the case of express easements the terms of the conveyance control. There was a
grant. We have a written instrument. To determine the scope of the easement we
look to the written instrument. Make sure to clearly articulate the terms of the
easement and bare in mind the future interest of your clients.
- In the case of implied easements the scope depends on prior use or on any similar use
the parties might have expected.
- In the case of prescriptive easements the scope must remain consistent with an
underlying use that gave rise to them. So if the servient tenement was used as a
pedestrian path, no motor vehicles would be allowed to use it.
Brown v. Voss
- Facts: In 1952 the owner of parcel A gave the owner of parcel B an easement. Voss
is the servient owner and Brown is the dominent owner. Originally the Browns house
was on parcel B. At a later point in time the Browns bought adjacent lot C and
moved their house from parcel B. The new house straddled parcel B and C. Voss
then sued saying that the Browns changed the scope of the easement, and therefore he
sought an injunction.
- Issue: Can the owner of a dominant tenement extend the easement to a contiguous
tract?
- Holding: Court did not grant the injunction. Is there liability and what are the damage
measures? The court did find trespass because the changed the scope of the
easement. The court vindicated. The court did not award an injunction and awarded
Mr. Voss $1 in damages, but a cross claim damages of $1, so the Voss’ got nothing.
The Browns received a property rule entitlement (Calabrese-Melamed). He could
continue to trespass on the ’s land without having to pay. There was no additional
burden on the servient owner.
- Court characteristically permit changes that are necessary for the normal development
of the dominant estate. R3 Property §4.10.
- Can the owner of the servient tenement relocate the easement?
- In most states he cannot, however, the Restatement adopts a more permissive
approach and allows the servient owner to relocate the easement if doing so does
not significantly lessen the utility of the easement to the dominant owner or
frustrates its purpose. R3 § 4.8
- Often times easements by prescription can broaden the scope of easements by
grant.
Miller v. Lutheran Conference & Camp Ass’n
- The original grant allowed the easement holder to fish and boat on a certain lake.
However, the easement holder allowed people to bath in the lake for an extended
period of time and by doing so he gained a prescriptive easement to bath in the
lake.
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Covenants
- A covenant is a restriction on a landowner’s own use of his land. In a typical
covenant a land owner says, “I hereby promise you that my use of the land would be
restricted as follows…”
- A promise a property owner takes upon herself whose goal is to have her do or not do
something on the property.
- In covenants the owner take upon herself to do or not to do something with respect to
her land.
- Doesn’t give the right to someone else
- A private way to introduce land use control. However, for private bargaining to be an
effective means of land use control it has to be binding on future owners. This
brought about the legal conception of covenants.
- Real covenant: A contractual promise that was traditionally enforceable only in a
court of law and the remedy for its breach was damages.
- Covenants may be binding on future owners, but four conditions must be met for
that to happen:
- (1) the promisor and promisee must intend the burden and the benefit to bind
their successors. (INTENT)
- (2) Successors in interest must have either actual or constructive notice of the
covenant. (Covenants can be recorded). (ACTUAL OR CONSTRUCTIVE
NOTICE; INQUIRY NOTICE IS ALSO POSSIBLE)
- (3) The covenant must TOUCH AND CONCERN the burdened land. It has
to effect the covenantor as a landowner.
- (4) Privity between all the parties on which the covenant is binding. Privity
exists whenever a title to land is acquired by devise, intestacy, grant, or
judicial conveyance. In short, by all means but adverse possession.
(HORIZONTAL AND VERTICAL PRIVITY).
- When requirement (3) is satisfied 99% of courts will find intent.
- Horizontal privity requires some mutual or successive interest between the
parties. Would always exist in the case of landlord and tenant or if the
covenant was achieved simultaneously in interest in land.
- E.g. if A conveys part of his land to B and B and his assignees want to prune
the trees on the lot, A must include this in the deed.
- In recent years the horizontal privity has diminished in value. Horizontal
privity prevents covenants in gross from occurring. Today, however, we do
not want that.
-
Vertical privity: Requires “succession in estate. If A had a fee simple and conveys it
to C, and C to E, there would be succession. Traditionally, for the burden to run the
same estate must be transferred. For benefit to run, however, you can convey a lesser
estate.
-
Touch and Concern: Under the traditional view this requirement is satisfied if it can
be shown that the covenant is so related to the land as to enhance its value and confer
a benefit upon it or conversely to lower its value and impose a burden upon it.
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-
Example 1: Convenants affecting the physical condtion of the land or a structure
on it is a “T & C”
Example 2: Convenant restricting competing business activity also “T & C” with
the land.
Eagle Enterprise v. Gross
- NY Court of Appeals held that an obligation to buy water from a neighbor’s land did
not touch and concern with the land.
Longly Jone Ass’n
Covenant requiring a lessor to pay a real estate brokers commission on any renewal or
extension of the lease does not touch and concern the land.
-
Covenants to pay property taxes touch and concern the land.
Unclear whether an obligation of condo tenants to pay yearly fees for use of social
activities touch and concern with the land.
Equitable covenant: May arise even in the absence of a contract and the traditional
remedy for its breach was injunction.
Covenants may be useful in a wide array of setting. An historic preservation society
may covenant with the person of a historic building not to destroy the building. A
city may covenant with an owner to leave an open space for historic or recreational
purposes. An environmental group can covenant with a farm to preserve wetlands on
his farmland because there are endangered species on his wetland.
-
Restatement 3rd of Property, Servitudes §3.2, replaces the touch and concern
requirement with other tests of enforceability against successors. Introduced idea of
reasonableness. According to Restatement, courts should consider three factors.
- (1) Purpose or goal
- (2) Fairness of the arrangement
- (3) Degree of interference with personal autonomy.
-
Restatement suggests that covenants imposing unreasonable or unjustifiable restraints
on alienation or trade, or unconscionable covenants should not be enforced.
Covenants enforceable at law, legal covenants, must be in writing and can be
recorded.
-
Equitable Servitudes
- Def.: A covenant that fails to satisfy the privity requirement, but would nevertheless
run with the land on equitable grounds.
Tulk v. Moxhay (English case)
-
Facts: Tulk owned Leicester Square and some neighboring houses around the square.
In 1808 Tulk conveyed the square to the Elms. Elm covenanted to maintain a garden
in the square. There were several other conveyances and in the end the land was
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-
conveyed to Moxhay. Moxhay knew of the covenant but it was not enforceable at
law because in England there is no horizontal privity between a grantor and a grantee.
Moxhay, although he knew of the covenant, was not bound by it because the
horizontal privity requirement was not satisfied.
Holding: Binding on Moxhay on equity grounds. Court explicitly said it would be
inequitable not to enforce the covenant on Moxhay because he knew about it and
because he paid less for the land because of the covenant.
RULE: Horizontal privity is between the two original parties to the deal.
- Everyone but the two original parties are on the vertical side.
-
An equitable servitude is a covenant regarding the use of land that is enforceable at
equity. Equity requires three things:
- (1) Parties intended the promise to run
- (2) A subsequent purchaser had actual, constructive, or inquiry notice
- (3) Touch and concern the land
- (4) However, no privity is required.
-
Today, in the U.S. there is a trend to abandon the touch and concern requirement.
Courts often invoke public policy considerations to decide whether servitudes or
covenants are binding on third parties.
Sanborn v. McLean (subdivision case)
- Facts: An original developer, the McLauglins, bought the large lot, and divided them
into 91 individual lots. In December 1892 they sold the first ten lots and included in
the deed a covenant restricting the use of the lots for residential purposes. First ten
deeds were recorded. In July 1893 they sold another eleven lots and repeated the
previous transaction. In September 1893, lot 86 was sold unrestricted and there were
several transactions and it was purchased finally by McLean. McLean wanted to
build a gas station on lot 86. Of all of the lots, 53 were restricted and 38 were not.
- Issue 1: Should an equitable servitude be implied on every lot in the subdivision?
- Issue 2: Did McLean have actual or constructive notice of the covenant?
- Holding: Court answered the first question affirmatively. The court said the common
grantor, the McLauglins, had a scheme to develop a residential area on the entire
land. The court inferred the existence of such a scheme from restrictions in later
deeds plus the uniform size of the lots. Plus no restrictions were written on the
development map (“the plat”). Nevertheless, the court said based these factors there
was a general scheme.
- The court held on Issue 2, that when the McLeans bought “lot 86,” they knew that all
of the other lots were residential, and therefore they were put on inquiry notice. The
fact that the person that sold the lot to them promised that there was no covenant was
not enough.
-
Covenants are different from easements because there can be many parties involved
in a covenant.
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The difference between real covenants and equitable servitudes the remedy for breach
of a real covenant is usually damages. For breach of an equitable servitude the
remedy is usually an injunction.
-
In order avoid McLauglins problem:
(1)Introduce a restriction into each and every deed and record.
(2) DECLARATION: Prepare and record a declaration of covenants and restrictions.
- Next, record the “PLAT”
- Next, as individual lots are sold, into each sale deed, you incorporate by
reference, the declaration and by so doing you make it part of the deed.
(3) Defeasible fees: E.g. I convey this lot to you so long as you use for residential
purposes. Problem, is that remedy for defeasible fees is forfeiture.
-
Restrictive Covenants
(1) Group homes
(2) Discriminatory racial covenants
Hill v. Community of Damien
- Facts: The community of Damien leased a house and used it as home for four AIDS
patients. The neighbors are unhappy and bring a lawsuit against the community for
violating a covenant of single-family residential purpose.
- Issue: Is operating a group home for four unrelated individuals a residential use?
- Holding: Court said yes, the use was residential
- Issue: Was the use a family use?
- Holding: Yes. Court shied away from traditional definition of family and found a
broadened definition in the Albuquerque zoning ordinance that defined a family as no
more than five unrelated people living together.
- Court also found a violation of the Fair Housing Act. Found that the covenant did not
have a discriminatory intent but it did have a discriminatory impact. AIDS patients
are considered disabled and that is why it violated the Fair Housing Act. This rule is
becoming the majority rule in most states. This shifted from covenants to zoning
measures to keep group homes away from their neighborhoods.
- Similar case in NY, and the NY court found that group homes do not come within the
meaning of a single family residence, but nevertheless, refused to enforce the
covenant on public policy grounds.
Shelley v. Kramer (S.Ct.)
- Facts: Involved two African-American couples, one from MO, and one from MI, who
bought property in neighborhoods where the deeds contained covenants restricting
sales to white people. After they brought the property the neighbors brought a suit to
evict them because they violated a restrictive covenant in those two neighborhoods.
- Issue: Does judicial enforcement of the covenants violate the Equal Protection Clause
of the 14th Amendment?
- Holding: Court held the covenants themselves did not violate the 14th Amendment
because they were private transactions, but for the courts to enforce them would
violate the 14th Amendment because the courts are state organs they cannot enforce a
discriminatory covenant.
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EASEMENTS
TERMINATION
COVENANTS
(1) Expiration
(2) Release
(3) Abandonment
(4) Estoppel
(5) Excessive use
(6) Merger
(7) Prescription
(8) Condemnation
(1) Expiration
(2) Express waiver or release
(3) Changed conditions
(4) Abandonment
(5) Merger
(6) Condemnation
Termination for easements:
- (1) Expiration: Easement created for the life of the holder or a term of years expires at
the end of the designated term. Also, an easement by necessity expires when the
necessity ends.
- (2) Release: The easement holder (dominant owner) can willingly terminate his
privilege by giving the servient owner a document of release. Have to comply with
the relevant Statute of Fraud.
- (3) Abandonment: An easement is terminated when its holder stops using it and
independently manifests intent to abandon the easement.
- (4) Estoppel: Can be terminated by estoppel if the easement holder abandons the
easement and the servient owner materially changes her position in reasonable
reliance on the representation.
- (5) Excessive use: In some states, an easement may terminate if the holder over-uses
it. E.g. easement designed for a pedestrian path is being used by a semi.
- (6) Merger: All easements are extinguished when the servient and dominant
tenements come under the same ownership. If the same person buys the two
tenements, all easements cease to exist.
- (7) Prescription: Because easements need not be exclusive the servient owner can
negate an existing easement if he prevents the easement holder from using it for the
statutory period.
- (8) Condemnation: If the servient lot is being condemned (taking by gov’t or state) all
easements would cease to exist and the easement holder will receive compensation
because an easement is an interest in land and therefore compensable in the interest of
taking.
Termination for Covenants:
(1) Expiration
(2) Express waiver or release: Must be in writing
(3) Changed conditions: Because it is very difficult to change covenants consensually,
courts sometimes invoke the doctrine of changed circumstances to get rid of cumbersome
covenants.
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Western Land v. Truskolaski (development case) p. 907
Desired plot
for shopping
mall
-
-
Facts: Western Land subdivided 40 acres of land in Nevada restricting all lots to
single-family dwellings. With time, Reno, Nevada was beginning to expand and
suddenly Western Land wants to open a shopping mall in the development.
Issue: Do the changed circumstances (expansion of Reno) justify the abolition of the
covenant?
Holding: No. This is still a residential area and nothing happened inside the
development. The change was external (Reno’s growth).
Issue: Whether zoning may override the restrictive covenant?
Holding: No. The covenant overrides the new zoning. Private arrangement is more
important than the change in the zoning ordinance. Since the development was still
residential efficiency will not override this.
Rick v. West p.912
West’s lot (house)
-
-
-
Facts: The developer sold only a few lot with the same restrictive covenant as above.
Something changed and Rick wanted to change the remaining lots into an industrial
area, and West said he did not want that.
Holding: Court said West could restrict Rick from developing the rest of the lots into
an industrial park.
Two possible solutions:
- Pay damages, but let the area change
- Apply a time restriction on covenants.
(4) Abandonment: All parties start to ignore the covenants
(5) Merger
(6) Condemnation
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Common Interest Communities
(1) Condominiums
(2) Co-ops
- About 30 million people in such communities.
- Why live in common interest communities?
- (a) Shared amenities (for the most part, but some rental buildings offer the same
things).
- (b) Condos cost less (generally)
- (c) Decreased maintenance costs
- (d) More young couples with kids
- (f) Fear of rent control
Condominiums:
- (1) An individual owner owns each unit in fee simple. Thus, each owner can obtain
financing by mortgaging his/her unit.
- (2) Common areas as well as exterior walls, land, and hallways are owned in tenancy
in common
- (3) Owners association has maintenance responsibility for common areas but owns
not interest in them.
- (4) Each condo has a declaration that states all of those rules and by-laws of the
condo. The declaration is filed before the first sale.
- Each person, when they accept the deed, becomes a member of the Homeowner’s
Association. They become somewhat of a “shareholder” in a corporation. Also,
each unit owner subjects himself to the by-laws and must pay his share of the
maintenance fees on a pro-rated basis (i.e. larger unit owners pay more).
- (5) To perform its responsibility the Homeowner’s Association has the power to
collect dues from the individual owners. Have covenants or servitudes that permit
Association to make new or changed by-laws.
- Courts usually approve such amendments to the declaration so long as they are
reasonable.
- (1) Amendments cannot diminish the size of the common areas
- (2) Amendments cannot be retroactive.
- (6) Homeowner’s association is a legal entity that can sue defiant owners. E.g. if you
are going to sell your unit, the Homeowner’s association has the right to purchase it
first.
Pocono Springs Civic Assoc. v. MacKenzie
- Facts: MacKenzie owned a lot and they tried to abandon it. When they purchased the
lot they were subject to all of the by-laws of the Homeowner’s Association. Because
the land was discovered to be bad they were unable to comply with the by-laws
rendering the land worthless (they couldn’t sell it to anyone). They wanted to get rid
of the land because they had to pay taxes on it every year. They tried to sell it back to
the Association, but they wouldn’t. They also tried to grant it as a gift, but the
Association wouldn’t accept it. At trial summary judgment was granted to the
Association.
- Issue: How could they get out of paying the Association fees and property taxes?
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Best solution would be to create a small corporation, let the corporation default on the
taxes, and then the corporation would go under.
Nahrstedt v. Lakeside Village Condominium Assoc., Inc.
- Facts:  owned three cats and she agreed to join Homeowner’s Association even
though she knew about the pet restriction. She brought her cats in anyway. She
claimed that the restriction was unreasonable because her cats were well mannered,
and she kept them in the house, thus not creating a nuisance to anyone.
- Holding: Court of Appeals said that they have to see whether they are a nuisance to
anyone (case-by-case basis). Supreme Court, however, rejected Court of Appeals.
Restriction applies across the board. If it is reasonable, it’s reasonable. Mrs. N. was
forced to move out.
-
-
Richard Epstein: Courts should give a great deal of deference to covenants because
they are a low-cost, efficient for people to create the lifestyle that they want so long
as they are available for public viewing.
Sometimes a distinction between covenants in the declaration and subsequently
adopted covenants. Courts generally treat the former with more respect. Usually,
they will show deference to the original covenants. Courts in MA and FL uphold
original covenants without any examination of the reasonableness of the covenant.
O’Back v Cottonwood (1998)(Alaska)
- Court upheld Associations decision to switch from antenna to cable TV despite the
opposition of some members
Trustees of the Prince Condo v. Prosser (MA)(1992)
- Court held that a unit owner cannot refuse to pay association fees even if she has a
meritorious claim against the association. The  had been deprived of her parking
space.
Co-Ops
- Cooperative housing is only common in NYC and a few large urban areas. Different
from condos in several ways:
- (1) Building owned by a non-profit corporation
- (2) Residents owns shares in the corporation and vote for the board of directors. No
property right in the property itself. No fee simple. In many cases the entire building
is mortgaged and if one tenants defaults the others have to pay his or her share.
Therefore, there is a strong incentive to screen applicants very closely. Absolutely
okay for co-ops to reject actors, democrats, Barbara Streisand. Can not, however,
violate the Fair Housing Act (discrimination on race, gender, or visible disability). It
may be very difficult for individual dwellers to secure financing because you have no
real estate mortgage. You need independent assets. Residents receive long-term
renewable leases.
- One similarity between co-ops and condos is that they are both typically maintained
by a management firm hired by the Board.
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ZONING (see hand out for introduction)
- Very political process.
The Village of Euclid v. Ambler Realty (1926)(United State S.Ct.) p. 950
- Facts: Village adopted a comprehensive zoning ordinance dividing the city into
various use districts. Ambler’s sixty-acre lot was zoned into 3 different zoning areas.
As such, the land was only worth one-fourth of its value because it could not use the
land for industrial purposes. Ambler claimed the ordinance was unconstitutional
because it deprived the company of property without due process and denied it equal
protection. Ambler sought a declaratory judgment that would prevent enforcement of
the ordinance.
- This case shows the difference between zoning and takings. Ambler did not raise of
5th Amendment claim because there was no eminent domain. Thus, Ambler raised
the 14th Amendment due process clause requiring equal protection.
- Issue: Was the ordinance in violation of the 14th Amendment?
- Holding: J. Sutherland said the ordinance was constitutional. “Complexity of urban
life calls for land use controls. Zoning is a legitimate exercise of police power.”
Although the line between legitimate and illegitimate interests a vague, the village
could zone to prevent nuisances. Separating industrial areas from residential ones
would improve public safety for both industry and residential. Ambler had not even
applied for a building permit. They were really trying a test case, but it was a very
bad case. Court was trying to protect quality of life of single-family house owners of
which the justices belonged to that socio-economic group.
- After they lost the case Ambler applied for a variance that was granted. They then
sold the lot to GM which constructed a plant.
- This case introduced the concept of Euclidian or Communitive Zoning which allows
higher uses in lower uses areas.
- This means that one can build a house in an industrial area, but a company cannot
build a factory in a residential area.
Residential
Commercial
Industrial
-
Non-conforming use: Problem arises when a use conforms in the past, but because the
law changes your use no longer conforms.
PA Northwester Distributors, Inc. v. Zoning Hearing Board (1991)(PA)
- Facts: Shortly after  opened an adult bookstore in Moon Township the ordinance
was amended that prevented the operation of the adult bookstore.
Amortization clause: A clause that gives the affected property owner time to comply
with the change. The city’s clause gave the bookstore owners 90 days to move.
- Issue: Was the zoning ordinance constitutional?
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Holding: PA court held that it was not. Held that no rezoning could occur without
compensation. Amortization is not good enough. Rezoning was almost like an
eminent domain taking. Must pay compensation.
Concurrence: Amortization clauses are fine so long as they are reasonable. 90 days
however, was not a reasonable term. (Parchomovsky agrees with this because
compensation comes out of the public fund).
Buzzetti v. City of New York (1998)(2nd Cir.)
- 2nd Cir. Upheld a zoning ordinance regulating the permissible location of adult
entertainment establishments. Based its opinion on various empirical studies that
adult entertainment businesses have negative impacts including higher crime rates,
etc.
- Court said the amortization clause was okay.
(1)Aesthetic Zoning
(2)First Amendment considerations
(3)Growth Control
- Originally zoning was perceived as a means of nuisance control. Way of providing
adaquate light and air, and prevent such things as fires.
- Over the years the aim gradually expanded. One of the new frontiers was
AESTHETIC REGULATION (ZONING)
State ex rel. Stoyanoff v. Berkley
-
Facts: Stoyanoffs applied for a permit to build an unusual house. The application was
denied because the cities architectural board disapproved of the design. The
Stoyanoffs wanted to challenge the aesthetic regulation because it was outside the
scope of legitimate zoning or outside the scope of police power. They won at the trial
level. Reversed on appeal.
-
Issue: Does enabling legislation authorize aesthetic and architectural control?
-
Holding: Yes. Neighborhood character and property values are legitimate interests.
These grounds were legitimate grounds for zoning. Purpose of architectural control
was not merely aesthetic.
This case established that aesthetic zoning was permissible. Authority of local
municipalities to control appearance and architectural design.
Why not permit them to build an ugly house as opposed to allowing them to build the
house and pay damages to their neighbors for resulting devaluation in their property?
- Does it matter that the ugly house was their first?
- Not really. In Spur v. Del Webb the farmer was forced to move his feed lot
because of the stench, but the development had to pay relocation costs.
- Solution to such zoning problems is similar to the law of nuisance.
-
- Who gets to decide what is ugly?
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Tastes and opinions change over time. E.g. Eiffel tower was thought of as an atrocity
when it was first built.
The argument is that what is ugly now may not be considered ugly at some point in
the future.
Anderson v. City of Issaquah
- Facts: Anderson owned a commercially zoned property in the Issaquah and sought to
develop it. The problem is that they wanted to build a modern building with white
stucco and a blue roof. Various members of the development committee were
displeased with the design and rejected their application. Then Anderson modified
the design but failed to win favor of the Committee, who told him to look at the other
buildings in the neighborhood as a basis for what is acceptable. Anderson then asked
the Committee for more specific guidelines but his request failed to yield a response.
Having spent $250,000 Anderson and his partners appealed to the city council and
lost. They appealed the council’s decision.
- Issue: May an administrative committee deny a building permit because the aesthetic
design is not to their liking? What is the scope of their authority over aesthetic
regulation?
- Holding: No. Aesthetic criteria must be clear. Requirements were too vague and the
Committee members made little effort to clarify them. The court concedes that
aesthetic zoning is legitimate but the criteria cannot be arbitrary, and the Committee
must give the developer guidelines for compliance.
FIRST AMENDMENT CONSIDERATIONS
City of Ladue v. Gilleo (U.S. S.Ct.)
- Facts: A sign case. An ordinance prohibited all homeowners to place signs other than
those to identify the address, a sale, and signs warning of hazards. Gilleo put up a
sign protesting the Gulf War. It was knocked down twice. When Gilleo went to the
police they referred her to the sign ordinance. Ms. Gilleo applied for a variance that
was denied. Ms. Gilleo challenged the constitutionality of the ordinance.
- Issue: Can a municipality regulate the content of signs?
- Holding: No. Signs are protected speech. The physical aspects of signs may be
regulated but not their content. The ordinance closes off a cheap and expressive
means of expression.
Content of signs is subject to strict scrutiny test, and government almost always loses.
Members of City Council of Los Angeles v. Tax Payers for Vincent (US Sup. Ct.)
Court upheld an ordinance prohibiting the posting of signs on public property. Court
found that ordinance was content-neutral and that it promoted an important independent
interest without unduly restricting free speech.
City managed to prove a weighty aesthetic interest in enacting the regulation. The
measure is not overly broad and other expressive activities were not prohibited.
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Other S. Ct. cases:
- Linmark (1977) 431 U.S. 385
Prohibition was enacted on “For Sale” and “Sold” signs. The purpose of this was to
arrest dynamic resegregation – to prevent white flight – feared domino effect.
Supreme Court struck down this regulation as unconstitutional – that these signs serve
an important purpose and alternatives are not as effective. Problem: it is content-based
regulation, no time and place and manner – therefore strict scrutiny applies.
-
Metro Media 453 U.S. 490
Court struck down a San Diego ordinance that allowed on-site commercial signs but
prohibited all other signs in other areas whether commercial or not.
Court held that the city failed to show a substantial interest and aesthetic interest is
not sufficiently substantial.
Trademarks
- There is now a conflict between trademarks and zoning. Many communities are now
involved into regulating trademarks on businesses to increase aesthetic value. Split in
the circuits. Trademark owners’ rights vs. aesthetic zoning.
EXCLUSIONARY ZONING:
Zoning that purports to keep certain groups, most commonly low-income residents,
outside the limits of the zoning municipality.
Rationale is that low-income residents contribute less in taxes and require more in
entitlements.
Village of Belle Terre v. Boraas (S.Ct.) (ordinance that limit household composition)
- Facts: Belle Terre enacted an ordinance limiting residences to one-family dwellings,
meaning related persons or no more than two unrelated persons. Six unrelated
students challenged the constitutionality of the ordinance.
- Issue: Does the definition of family in the ordinance violate the Equal Protection
Clause?
- Holding: No. Court said it will not strike down reasonable economic and social
legislation. Only arbitrary laws will be struck down. Boarding houses and fraternity
houses increase traffic and decrease parking available, and increase the noise level,
hence the restrictions imposed by the ordinance was reasonable. Majority used the
reasonableness standard.
- Dissent: Thought that the ordinance burdens the fundamental rights of association and
privacy. Justice Marshall wanted the court to apply strict scrutiny. Analyzing the
ordinance under strict scrutiny J. Marshall said that Belle Terre failed to show a
compelling governmental interest and the goal of the ordinance could not be attained
by less restrictive means.
Moore v. City of East Cleveland
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Court invalidated a single-family restriction which defined family to include no more
than one set of grandchildren. Moore was sentenced to jail because she lived with
two sets of unrelated grandchildren. Distinguished from Belle Terre in that the
restriction limited family members, whereas in Belle Terre the restriction was for
unrelated individuals.
-
Some state courts limited the restriction on municipalities to put any restrictions on
household composition.
- In McMinn v. City of Oyster Bay the NY Court of Appeals the court invalidated
an ordinance controlling household composition on the ground that it violated the
NY constitution. The court found that the restrictions had no reasonable tie to the
ordinance objectives.
- In Baer v. Town of Brookhaven the court struck down an ordinance that limited
single family housing to family relatives and not more than four unrelated people
living and cooking together.
- While NJ and CA have followed the lead of NY and invalidated restrictions on
the word family the holding of Belle Terre still represents the majority view.
City of Edmonds v. Oxford House
- Facts: City sought to close down Oxford House, a group home for 10-12 adult
persons recovering from substance abuse problems on the ground that it violated the
definition of family under the local zoning code. Oxford House challenged the City’s
action relying on the Fair Housing Acts’ restriction against discrimination of the
handicapped.
- Issue: Can zoning be employed to override the Fair Housing Act? Are family
restrictions flexible?
- Holding: Zoning cannot circumvent the FHA. Court explain the FHA exempts from
its strictures municipal code or zoning rules imposing reasonable limitations on the
maximum occupancy of residential premises. This is not to say, however, that the
FHA attempts to exempts rule purporting to preserve the family character of the
neighborhood. The family definition rules of the City are not concerned with family
living or personal space and safety. Sometimes there is a limit on the number of
persons who can live in a unit for safety reasons. Can’t use the term family from
preventing people from living in a certain area.
- FHA was enacted to protect people with handicaps.
Oxford House v. City of St. Louis
- Holding: Upheld a zoning ordinance defining “family” dwelling as including group
homes with no more than eight persons. Eight-person rule was reasonable and thus
valid.
-
Seemingly denying restrictions often mask a prejudice against group homes.
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Exclusionary Zoning
- Zoning that purports to keep certain groups, most commonly low income residents,
outside the limits of the zoning municipality.
Why? Property value decreases, don’t get as many taxes
- Low-income residents typically require more services and pay less in municipal taxes
- Low-income housing tends to reduce land values throughout the community thereby
diminishing the local tax basis.
- Low-income housing will decrease the available space for luxurious houses and
increases taxes for those living in luxury homes.
Growth Control
- Difference between exclusionary zoning and growth control is that the former seeks
to keep out poor people and the latter seeks to keep out everybody. Towns enact
growth control in order to keep out everybody.
- Effects of growth control has same effect as exclusionary zoning, but the underlying
motives are different.
Southern Burlington County NAACP v. Township of Mount Laurel p. 1061
- Facts: Faced with a rapid growth rate that would increase its tax base and demand for
services, Mt. Laurel enacted a number of ordinances to control the problem. They
designated 1/3 of all of the land to industrial uses. They rezoned the rest of the land
for PUD’s and cluster zones, but ensured that only middle and high class residents
would be able to live in those areas. In order to ensure that poor people would not
live there they (1) limited the number of bedrooms (wanted more bedrooms); (2)
limited the overall density (leads to higher prices for land); (3) limited the number of
schools (had a limit on the number). They rezoned the rest of the community for
planned adult retirement.
PUD’s
Cluster
zone
Industrial
Old people
-
Issue: Were the measures constitutional?
Holding: NO! A municipality must ensure supply of all sorts of housing and
especially low and moderate income housing unless, the municipality can sustain the
heavy burden of demonstrating particular circumstances that justify not doing so. As
an exercise of police power land use regulation must satisfy the constitutional
requirements of substantive due process and equal protection. Local zoning measures
must serve not only local welfare but the welfare of all state residents. (The reason
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the state does this is because these zoning regulations may impose externalities on
others).
This case seems to be at odds with most S.Ct. decisions where the Court did not
consider poverty a suspect classification.
What about the market?
- What Mt. Laurel did is erect barriers to entry. Even if builders wanted to build
low-income housing they could not do so because no land was designated for
low-income housing.
“Fair-Share” Rule – municipality must take original planning into account, and they must
be burdened with their “fair share” of low income housing.
Two concerns of the city:
1. Fiscal considerations (taxes) do not justify deviation from the fair share rule
2. Environmental concerns (only real and substantial concerns may justify
deviation).
Court struck down the zoning ordinance to open the market to competition – now the
determination of whether there is low income housing in Mt. Laurel is up to the market.
The city must allocate some land for low income housing. Whether or not it is actually
built is up to private developers.
Municipalities want to maximize tax/service ratio and developers want to maximize
profits.
Mount Laurel II
- Supreme Court of NJ did three things to remedy the ineffectiveness of the original
ruling:
- (1) extend the ruling to all municipalities not just developing ones;
- (2) the court required all municipalities to take affirmative measures to guarantee
housing for low and moderate income residents (letting the market take care of
the problem did not work. Move from not allowing low income housing to
forcing low-income housing);
- (3) devise a builders remedy which empowered courts to allow developers to go
forward with low income projects even if the municipality denied building permit
(allows courts to overrule decisions by various municipalities and allow
developers to go forward with projects. Substitutes Municipality’s discretion with
Court’s discretion).
- Land developers to not want to upset the local municipalities because they may
not be able to get approval for another project in the future.
Mt. Laurel III
- Several years later the NJ legislature enacted the Fair Housing Act of 1985. It limited
the availability and scope of the builder’s remedy and allowed bargaining between
municipalities as to where the low-income housing would be. It allowed suburbs to
pay cities for absorbing their low-income housing. Keep the poor separated from the
middle class and the rich. This is a separating equilibrium.
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Many states did not both to tackle this problem and believe that exclusionary zoning
is constitutional and analyze it under a rational basis test.
In most states exclusionary zoning is presumed to be constitutional and is being reviewed
under the rational basis test like all other zoning.
Measures for exclusionary zoning:
(1) Minimum housing cost- excluded by almost all courts
(2) Minimum housing size- some upheld and some struck down
(3) Minimum lot size- best choice
Tiebout Hypothesis:
- Maintains that municipalities compete among themselves to attract residents and
suggests that this competition creates a wide array of communities that cater to the
diverse preferences of a heterogeneous society. Individual “vote with their feet,”
meaning that if they are unhappy with what a community offers them they can move
out. Requires that four conditions are present:
- (1) Infinite supply of jurisdictions (communities)
- (2) Perfect mobility
- (3) Perfect information
- (4) No externalities
Growth Control
- Resembles exclusionary zoning in some instances.
- Seeks to restrict or stop all residential or commercial developers. May be adopted to
preserve certain attributes of the local community such as open space, air or water
quality, or to prevent over-taxing.
- Growth controls may also be applied to extract exactions from developers.
Golden v. Planning Board of Ramapo: Town conditioned residential development on the
existence of adequate public facility and infrastructure and at the same time the town
adopted an 18 year plan to provide these facilities, but permitted private developers to
provide these facilities and incur the cost of doing so. The New York Court of Appeals
upheld Ramapo’s growth plan finding it reasonable under the circumstances. Court
wrote that inadequate resources constitute a rational basis for requiring sequential
development and timed growth. The court made it clear though that if the restriction
were absolute or permanent they would be struck down.
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Court in CA went even further and upheld ordinances that imposed temporary
moratoriums on the issue of building permits.
Growth control generally happens in small towns and thus control the decisions.
Less common in big cities
Growth control presents a real problem for most people because on the one hand we
are sympathetic for the community desire to preserve its characters, but it also
prevents poor people from coming in.
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IS ZONING NECESSARY?
- Scholars from law and economics are opposed to zoning. They believe that
covenants and nuisance litigation can take care of it without government intervention.
- Zoning, on the other hand, always comes at a cost.
EMINENT DOMAIN AND REGULATORY TAKINGS
General: When private land use controls fail to achieve satisfactory outcomes the
government does intervene to improve on the workings of the market. Government
regulation of land is desirable when it can help,
- (1) prevent harmful 3rd party effects or;
- (2) coordinate development (e.g. infrastructure).
When the government intervenes it can do it 2 ways:
- (1) Zoning regulation
- (2) Government can use its eminent domain power to physically take the land.
- Two ways are interchangeable. Can go either way. How? Can zone the property
for whatever use the government wants (e.g a road). If rezone all relevant lots
such that they can only be used a road, property owners will rush to sell the land
to the local government and then the government can use the land in any way that
they want. This, however, does not happen in reality. Physical takings are easy
and more common because it is obvious that compensation must be paid, but it is
unclear as to what kind and how much compensation should be paid with
regulations.
- 14th A. Due Process provision. Provides “no shall the government deprive any
person of life, liberty, or property without due process.” Historically, due process
cause was seen as having two aspects: (1) Procedural and; (2) Substantive
- Procedurally, the due process clause has been interpreted to require that “life,
liberty or property,” be taken without giving the individuals a fair opportunity to
defend themselves.
- Substantively, the due process clause was thought of as
- (1) any government regulation affecting “life, liberty, or property” would
advance some public interest;
- (2) the means chosen to advance the public interest would be reasonably
necessary or in other words, not unduly burdensome.
- In state court this doctrine is used a lot in the courts to strike down regulation.
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5th A. Takings clause. Focal point of takings jurisprudence.
What is the justification for government taking? Police Power. If the state acts
within the limits of its police power it can take private property. But the power of the
government has limits. There are two qualifying principles:
- (1) Public use-equality
- (2) Just compensation
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If the use is not public the government can not take even if it is compensated. The
government can try to buy the land.
Public use guarantees that the government does not use its power to favor one citizen
or another. Implies the notion of equality before the law.
Second requirement is to ensure that the government uses its power efficiently.
EMINENT DOMAIN is the power of the Government to involuntarily transfter title to
private property from the private owners to itself.
- Prior to resorting to eminent domain the government will try to strike a voluntary
agreement.
- If negotiations fail the Government will initiate a condemnation proceeding. The
presiding court will evaluate the governments request and if it decides to approve it, it
will also decide a compensation amount to be paid to the owner.
- REMEMBER: Property is a bundle of rights and the government does not have to
take all of those rights. The government, for example, may ask for an easement to
build a road across the land.
- Inverse condemnation proceeding: Proceeding instituted by the property owner when
the Government physically or regulatorily makes use of a property or strips it of its
economic value without initiating a condemnation proceeding.
Public Issue
Hawaii Housing Authority v. Midkiff p.1106
- Facts: Concentration of landowners. All land was owned by very few people. 22
landowners owned 72% of the land. To remedy this the Hawaii legislature enacted
the ? Act and condemned the large tracts and redistributed them to individual owners.
- Holding: In relying on Burman v. Parker which upheld the constitutionality of a slum
redevelopment act for the sale and lease to private parties, the Supreme Court held
that the public use requirement is coterminous with the sovereigns police power. The
court rejected the view that public use necessitates temporary possession or use by the
government. Court said that there is no need for public access is necessary. As long
as the legislation is reasonable the Supreme Court said that courts should not
interfere.
- This case established the standard that a public use= public purpose. In this case the
public purpose was to allow the Hawaiian people to free themselves of the oligopoly
traceable to their monarchs.
- Under substantive due process there was the requirement of reasonably necessary
means.
Poletown Neighborhood Council v. City of Detroit p. 1116
- Facts: In an effort to keep General Motors in the area Detroit used its eminent domain
power to assemble land for a large General Motors plant.
- Issue: Is it a public use?
- May preserve jobs in the area. Also, may boost the economy.
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Holding: Standard set by court was whether the taking conferred a public benefit.
Court held that it DID?
City of Oakland v. Oakland Raiders p.1120.
Issue: May a city condemn a sports franchise to keep it from relocating.
Holding: Maybe. Not enough facts for the court to decide. The court said that anything
that promotes recreation, education, or public enjoyment is included in the legitimate
domain of public purposes. Remanded.
Just Compensation: Been interpreted to mean payment of market value. Includes
recovery not only for the part taken but also for any foreseeable damage to the remainder.
If, for example, the government takes half of your tract to operate a garbage dump, it will
have to compensate you for the depreciation of the remaining land.
- NEVER get compensation, however, for personal value.
- Something is being forcefully taken away from you through taking. In Canada
presently and England in the past, homeowners were given market value plus 10%.
- Courts employ a somewhat different standard of compensation when the Federal
government condemns state or city property. The standard is substitute facility cost.
- In case of U.S. 50 Acre of Land the court held that if fair market value is easily
determinable it should also be the compensation measure in Federal government
versus state takings.
A. Physical Takings (except dedications)
Lorrento v. Teleprompter Manhattan CATV Corp. p.1124
- Facts: New York passed a law providing that land owners must allow cable television
companies to install their cable facilities on the owner’s property in exchange for a $1
payment.  purchased a house and finds cable facilities on the property, and then
they bring a law suit that the New York statute constituted a taking which was
compensable under the 5th A. Trial court and Court of Appeals ruled for the cable
company. No taking given the relatively small impact. U.S. Supreme Court reversed.
- Issue: Does a permanent physical taking or physical occupation authorized by the
government give rise to an obligation to compensate?
- Holding: Yes. Any permanent physical occupation is a taking. Majority said that
regulation of property might be carried out without compensation if it promotes the
public interest, but permanent physical intrusions constitute takings.
RULE: If physical occupation is permanent = always a taking (per se rule)
- If temporary physical occupation = balancing test
- Court justifies differential treatment on the grounds that permanent occupation
constitute an especially sever intrusion on the prerogatives of ownership,
specifically the right to exclude. The degree of intrusion need not be considered.
Degree will be considered in awarding damages.
- Why did the majority not use the balancing test?
- They were trying to diminish adjudication costs. Administrative efficiency.
- J. Blackmun DISSENT. He said that the majority opinion makes no sense on policy
grounds because there are certain regulatory measures that are much more intrusive
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than this and are not compensable under the 5th A. Certain regulatory measures
much more harmful to property owners. Sees an anomaly. Although majoriity is
trying to establish a clear rule, but the terms permanent and physical are problematic
terms because occupation is never permanent because once the building is destroyed
you will no longer have occupation. Majority decision also does not economize
adjudication costs because once you decide on a taking you need to decided damages
on a case-by-case basis. Just shifted the burden of adjudication from stage 1 to stage
2.
Dissent objects on the basis that what makes this law so different from other
regulations (e.g. mailboxes; smoke detectors). So now, are we going to compensate
for all of those occupations. In this day we regulate a lot of things. Property
ownership is no longer absolute. So Blackmun asks, why is this case in court?
Yee Case
- Dealt with exclusion of mobile homes from a certain municipality.
- S.Ct. says that this community could not exclude mobile homes. This case, in
contrast to Lorretta, was a major intrusion on the right to exclude.
B. Regulatory Takings
Hadacheck v. Sebastian p.1140
- Facts: L.A. passed an ordinance prohibiting the manufacturing of bricks in certain
areas of the city. The petitioner had property and had a valuable bed of clay on his
land that couldn’t be transported anywhere else and of course he was a brick
manufacturer. Claimed ordinance effected a taking because the value as a brick yard
was $800K and the value as a regular lot was $60K.
- Issue: Whether the ordinance effected a taking?
- Holding: No, it was within the police power of the city.
- RULE: Never a taking if the regulation (ordinance) is a nuisance control
measure. (per se rule)
- Notice difference between Hadacheck and Spur v. Del Webb. Brick company was
there first and the city expanded. The Spur court looked at whether or not theere was
a nuisance that should be eliminated and who should bear the cost. In Spur the court
said that it is not always the wrongdoer that should bear the use.
Consildated Rock v. L.A.
- Facts:  had a gravel pit on his property and a very similar ordinance to Hadacheck
forbade him from continuing to operate his gravel business.
- Holding: Court used exact same rhetoric as Hadacheck.
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Distinction between Curbing a Public Bad v. Conferring a Public Benefit
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What about an ordinance regulating the development of wetlands?
Just v. Marientte County
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Court thought that regulating development of wetland controls public harm because
the ordinance restricted uses that were not natural or indigenous.
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** Meaning of the term nuisance in the taking context is different from nuisance in
torts context. Nuisance has a much broader meaning in the context of takings. An
activity that could possibly perceived as harmful can be perceived as nuisance for
takings purposes.
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What is harmful?
Miller v. Schoene
- Court held that a decision to uproot cedar trees in order to preserve apple trees was
not a taking. It didn’t matter that the cedar trees were not a common law nuisance.
Empire Kosher
- Relying on Miller Court upheld a poultry quaratine to stop the spread of the flu and
thereby protect the industry.
Mid Florida Growers
- Court ignored Miller and held that there was a taking. Infected plants could be
destroyed without compensation but no healthy plants.
Causby (WA)
- Issue: Who is entitled to compensation for the noise and nuisance created by
overflights?
- Only property owners whose land is directly underneath the flight routes are entitled
to compensation. The court reasoned that there needs to be a limiting principle.
PA Coal Co. v. Mahon p.1147
- Facts: PA Coal sold the surface land to private owners but reserved the right to mine
coal under the surface. Slowly the houses began to sink. All of this was provided for
in the deeds. PA, subsequently, passed the Kohler Act that forbade mining in a way
that forbade subsidence. The Kohler Act took away the right to mine. Property
owners claimed that the Kohler Act should supersede the private interest. PA Coal
argued it was taking.
- Issue: Whether the Kohler Act was a legitimate exercise of police power or a taking?
When does regulation go too far?
- State prohibited intended use by the mining company.
- Holding: When regulation effects a diminution of value of considerable magnitude in
most, if not in all cases, it must be construed as exercise of eminent domain, and
therefore a taking.
- Considerable diminution in value is test proposed by majority.
- Why was this a curbing of a public bad? There was no nuisance in this case. Kohler
Act was not a nuisance control measure. In Holmes opinion the measure was not
necessary to control public nuisance.
- Holmes mentions case of Plymouth Coal v. PA.
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In this case the regulation required the mining company to leave pillars of coal so
that the surface does not fall. In that case the court decided that the regulation did
not effect a taking. Why was this different:
- (1) insufficient loss
- (2) controlled potential risk
- (3) regulation established an average reciprocity of advantage. This means
that at the same time they took something away from the mining company and
gave something back. Built in offsetting benefit.
- The court said the measure was necessary to protect the employees of the
mining company, and thus the compensation is built in.
Dissent: The act curbed a public bad and should not have been considered a taking at
all. Brandeis then said that there was no considerable diminution in the value of the
property because overall the value of the property increased. Decrease in value to
mining company, but overall increase in value of the land because of the houses that
were built.
Why did Holmes decide the way he did?
- Holmes saw the coal rights as a separate estate that was taken in its entirety. An
entire right was taken. There are various rights in the bundle of property rights.
Secondly, Holmes thought that there was no nuisance because the situation was
essentially private not public. Private because it was controlled by a contractual
agreement and there were no 3rd party effects. Furthermore, at time of decision
the sanctity of contract was the most important.
- Doctrine of conceptual severance: If you can show that a right was taken in its
entirety you are more likely to get a taking finding.
Penn Central Transportation Co. v. City of New York (regulatory takings case)
- Facts: New York passed a Landmark Preservation Law that designated the Grand
Central station as a historic landmark requiring the owner (Penn Central) of the
terminal to keep the exterior of the terminal in good repair and seek commission
approval for any changes. Penn Central sought to build a sky scraper on top of the
station. Having failed to secure approval from the commission they sued saying that
the landmark preservation law constituted a taking. Trial court ruled for Penn
awarding it declaratory and injunctive relief, but not damages for temporary taking.
Wanted to temporary damages. City appealed and won. NY Court of Appeals
affirmed. Cert granted by S.Ct.
- Issue: Did the NYC historic landmarks preservation act work a taking of Penn
Central’s property interest in the Grand Central terminal?
- Holding: Majority said NO! Does not craft a new taking test. Whenever talking
about taking you are talking about a balancing test. The taking issues always turn on
ad hoc factual inquiries. However, two factors are of particular importance: (1)
Economic impact of the regulation (especially its impact on distinct investmentbacked expectation); (2) whether a physical taking occurred. Court starts with
conceptual severance. Penn would argue that the Landmark Preservation Act takes
away there air rights. Penn tried to do this by showing a physical taking. Court said a
taking does not arise merely on a showing by Penn Central that it has lost its ability to
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exploit the air space above the terminal, nor can Penn Central divide its property into
segments and show that a particular segment was completely taken. They said that
Penn Central’s approach was not the right test. Court said there are no conceptual
merits. A claim of conceptual severance does not carry. Even if you show
conceptual severance it is just another factor that must be considered. It is not
dispositive. Court said one must look at the overall effect of the regulation. Move
away from rules and towards standards.
Penn Central also argued that there was substantial diminution in value. Court said
four things:
- (1) Penn Central can still operate profitably and receive a reasonably rate of return
(not like situation in Penn Coal where the court thought Penn Coal could not
operate profitable; This regulation did not affect the railroad operation);
- (2) No distinct investment-backed expectations were upset in this case. Court
thought plans Penn Central made were not substantial enough;
- (3) Average reciprocity of advantage. Court said the Landmark Preservation Law
benefits all New Yorkers, so they benefit;
- (4) Penn Central received Transfer Development Rights (TDRs). Because of new
legislation they were given rights to develop land elsewhere. Like Lorretto case.
They also claimed disparate impact: Legislation was not arbitrary. It was designed to
promote the general welfare of New Yorkers, and that it did not single out certain
property owners.
Dissent: (Rehnquist, Berger,and Stevens) believed the preservation law imposed a
very significant burden on a small number of property owners without offering them
a meaningful offsetting benefit. Test is not whether the law is arbitrary. They said
valuable air right were destroyed in this case. As for compensation for TDR, the
dissent does not reject that method of compensation, however, it can not be
considered adequate compensation. Wanted to remand to lower courts for them to
decide.
What other claim could Penn Central claim and did not?
- Harm restricting, benefit-conferring restriction is within police power but you
must give some compensation. However, the Court realized that this test could
easily be manipulated.
Distinct, investment-backed expectation: Not a separate test, but goes to a
diminution in value. They are the same question. (THIS IS WHAT BOOK SAYS).
Parchomovsky says this is WRONG. It is a question of UNFAIR SURPRISE.
TDRs: Unique means of compensation owners of restricted land. Relatively new and
underused way of compensation. Similar to pollution laws (you can sell whatever
you don’t use). Can not always be sold. It depends on the state. In certain places
TDRs can only be used on neighboring property and other it does not matter. Also, it
shifts the development from one area of the city to another. On the one hand it saves
tax payers money because they don’t have to pay for the compensation, but on the
other hand it still gives people compensation. Usually restrict TDRs from adjacent
lots. Usually impose a burden from other municipalities.
First English Evangelical Lutheran Church of Glendale v. County of Los Angeles
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Supports view that conceptual severance was still valid.
Dedication (Exaction) Cases:
Nollan v. California Coastal Commission p. 1181
- Facts: Nollan buys property between two public beaches and he wants to demolish
and replace a bungalow that stands on the property and build a building instead. He
requests a building permit. The Coastal Commission conditions it on Nollan granting
the public an easement on the beach in front of his land. Nollans sue to have the
condition invalidated claiming that their request had no impact on the publics access
to the beaches. Cases gets granted cert.
- Issue: Does the exaction of easement for public access to a beach constitute a taking?
- Holding: YES! Scalia wrote for majority. He starts with a hypothetical: What would
have happened if the Commission would have required an easement to the public
regardless of the building permit? This would have been a taking. The public wanted
a physical right of access. This would have been a taking if an easement had been
granted regardless of the permit. Is it okay to condition the easement on the grant of
the permit. Even assuming the easement was necessary to effect the public ability to
use the beaches and promote an important public interest, there is no ESSENTIAL
NEXUS between the goal and the means. It is okay to require a house to be no
bigger than a certain size, but there is no connection between what they trying to do
and how they are trying to do it. The condition must also be essentially related to an
end which may be legitimately furthered by the police power of the state and that the
regulation must substantially advance to trump private property rights. A tenuous
possibility of such advancement of public interest does not suffice. It is fine if you
want an easement, but you have to pay for it.
- Infringement on the RIGHT TO EXCLUDE. Court tends to award compensation if
the right to exclude is restricted.
Dolan v. City of Tigard p. 1186. (OR)
- Facts: Dolan applied for a permit to substantially expand the size of her retail store
and to pave a parking lot. Store was situated in an area that was susceptible to
flooding. The city conditioned the permit on the dedication of adjacent land as open
space and the pavement of a bicycle path and Dolan should pay for it. All of Dolans
attempts to secure variances had been denied. Lost in all Oregon courts.
- Issues: Is there an essential nexus between the goal and the means?
- Are the permit conditions sufficiently related?
- Holding: Rehnquist. The Court had no problem finding an essential nexus between
the required measures and a legitimate state interest in public health and safety. In
examining the second question the Court requires rough proportionality between the
dedications and the nature of the proposed development. Court held that while the
City could restrict development in the flood zone the dedication of an FSA in the
open space was disproportionate to the City’s in preventing damage from flooding.
The City could have required Dolan to build a wall or not restricted the size of the
store. Court felt that the same about the bike path. There was no rough
proportionality between the end and the means.
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Difference between rough proportionality and essential nexus.
- Nexus is between the proposed dedication and state goal (Nollan= visual
accessibility). If alleged goal is enough to justify use of state police power?
- Rough proportionality look at means and ends. Could we accomplish same goal
with less far reaching means? Did the government go too far?
Lucas v. South Carolina Coastal Council p.1198
- Facts: In 1986 Lucas bought two beachfront lots in South Carolina. Two years later
S. Carolina enacted a law barring all development of beachfront property. Lucas
bought a suit claiming a regulatory taking. The trial court agreed. State supreme
court reversed holding that the act was akin to a nuisance control measures. The U.S.
S. Ct. reversed and remanded.
- Holding: S. Ct. said it was a taking. Scalia, writing for the majority, began his
opinion by stating a third per se rule. When regulation essentially wipes out the
value of a property a taking has occurred. No average reciprocal advantage and
compensation should be paid. However, still had to overcome noxious use exception.
If regulation was necessary as a nuisance control measure it arguably does not matter
whether the government went too far or whether the property was rendered valueless.
If the government did it to prevent noxious use, the “wipe-out” rule cannot stand.
Scalia wanted to bring nuisance back to the common law definition. If the purported
use is something you could be sued for in a nuisance case you can not do that, but
beyond that there are no noxious uses. Only if a use is illegal and therefore not part
of the title the government can justifiably intervene. Otherwise, if it is a wipe-out
case it is a taking. In this case, the regulation was a wipe-out. Applying his test to
this case, that it seems unlikely that common law principles would have prevented the
erection of habitable or productive improvements on petitioner’s land.
- RULE: Regulation that deprives an owner of all beneficial uses can go
uncompensated only if the restrictions it imposes are inherent in the title.
- If there was a wipeout, but the land could not be used without a nuisance anyway,
then NO compensation.
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