PROPERTY OUTLINE
1) ESTATES
Estates are ownership interests in land. There are different ways to “own” land and these
are defined by the different types of estates. The person who sells or gives the estate is
called the grantor; the person who receives it is called the grantee.
A) PRESENT INTERESTS
This gives the interest holder a present right to the estate.
a) FEE SIMPLE: A fee simple is the right to use the entire parcel and to sell it. It
is of permanent duration. This is what most of us understand as “owning” a piece
of land.
b) DEFEASIBLE FEES are present estates. They are fees simple that can end, if a
certain event happens.
i. Fee Simple Determinable: These end when a stated event happens, and
ownership automatically reverts to the person who sold the land (the
“grantor.”) Example: “I grant you this land for as long as you operate a
church on it.” Look for words of duration such as: while, during, until.
ii. Fee Simple Subject to Condition Subsequent: The grantor reserves the
right to terminate the interest, but the termination does not happen
automatically. Example: “I grant you this land, provided that you do not
build a church on it.” Look for conditional words: upon condition that,
provided that.
iii. Life estate: This is an ownership interest in land that lasts as long as the
life of the person named in the grant. A life tenant is entitled to use the
land in the ordinary way, and should not commit waste on the land, as
someone else is going to own it after he or she dies. Example: “I grant you
this land until your husband dies, after which time the land belongs to my
son.”
B) FUTURE INTERESTS
This gives the interest holder a right to the estate at some point in the future.
a) POSSIBILITIES OF REVERTER AND RIGHTS OF ENTRY
These are the future interests that the grantor retains when he grants a fee
simple determinable or subject to condition subsequent.
b) REVERSION
Example: If a grantor grants a life estate, when the life tenant dies, the land
reverts to the grantor.
c) REMAINDERS. This is like a reversion, but goes to a third person. Example:
the grantor might say: “I grant this land to A for life, then to B.” B has the
remainder interest.
d) EXECUTORY INTERESTS
These interests cut off a prior interest. Example: The grant might say: “I give
this land to B for life, but if B dies, then to C.” C’s interest is an executory
interest because it can cut off B’s interest.
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C) TRUSTS
Trusts are an arrangement where the trustee holds legal title to the land for the benefit of
the beneficiary. The person who creates the trust is called the settlor.
D) RESTRAINTS ON ALIENATION
Alienation is the selling and transferring of land. In general, any restraint on alienation in
a deed is not allowed.
E) CONCURRENT ESTATES
These are estates that are held at the same time by more than one person.
a) JOINT TENANCY: Each tenant has a right to the whole property, and the
tenant who outlives the other tenant gets the whole property, which is called the
“right of survivorship."
b) TENANCY IN COMMON: Each tenant has a separate right to the property.
There is no right of survivorship.
c) TENANCY IN THE ENTIRETY: This is for husband and wife only. Each has
an undivided interest in the whole. There is a right of survivorship.
2) LANDLORD/TENANT
A) TYPES OF TENANCIES
a) Tenancy for Years
A tenant holds this tenancy for a fixed period of time. Example: a one year
lease. This tenancy ends automatically when the term is up.
b) Periodic Tenancies
This tenancy lasts for a certain period. Example: a month to month lease.
It can be ended at any time, but notice of termination must be given one
full period in advance. For example: in a month to month lease, either
party must give a month’s notice.
c) Tenancy at Will
Tenancies at will can be terminated at any time, without a period of notice.
These tenancies have to be created by express agreement between the
parties.
d) Tenancy at Sufferance
This is wrongful possession by the tenant. This tenancy lasts until steps
are taken to evict the tenant.
When a tenant stays past his lease, that is called a “hold-over.”
B) TENANT DUTIES AND LANDLORD REMEDIES
a) A tenant cannot commit waste while he is in possession. He is
responsible for damages, aside from ordinary wear and tear.
b) A tenant cannot use the premises for illegal purposes. If he does so, it
gives the landlord the right to terminate the lease. (This is different from a
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tenant doing something illegal that has nothing to do with the property,
which does not give the landlord the same right.)
c) A tenant has the duty to pay rent, at the time specified in the lease. If the
tenant doesn’t pay rent, the landlord can sue for the rent due, OR evict the
tenant.
d) If the tenant abandons the lease, in MOST jurisdictions the landlord has
a duty to mitigate damages by seeking to relet the premises. If the new rent
is less than the old rent, the tenant will be liable for the differences between
the two until his term was supposed to be up. In some jurisdictions, the
landlord does not have that duty and the tenant is liable for his rent for the
rest of the term of the lease.
C) LANDLORD DUTIES AND TENANT REMEDIES
a) A landlord has a duty to put the tenant in actual possession of the
property.
b) A landlord has the duty to fulfill the implied covenant of quiet
enjoyment and the implied warranty of habitability. In essence, this means
the landlord has to keep up with such standards as the local housing codes
and keep the property available for the tenant's reasonable use.
c) A landlord cannot evict someone for exercising their rights, like calling
to report a violation of the housing code. This is called retaliatory eviction.
D) ASSIGNMENTS AND SUBLEASES
A tenant or landlord can transfer their interest in the lease.
An assignment is a complete transfer of the entire remaining term of a
lease.
In a sublease, a tenant retains a part of the remaining term of the lease.
Example: In a 12 month lease, the tenant sublets for the middle six months
and then returns to possession.
Both assignments and subleases are allowed unless there is an express
restriction in the original lease.
3) FIXTURES
A fixture is a chattel (object/piece of personal property) that is affixed to the real
property. At some point, it ceases to be personal property and becomes part of the real
property. Fixtures pass with the ownership of the land because they are part of the
real property. Example: a furnace, plumbing, heating ducts.
Usually, chattel that a tenant brings onto property does not become fixtures because
the tenant is not intending to permanently add to property he does not own. This is
also true of a life tenant.
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4) EASEMENTS, PROFITS AND COVENANTS
Easements create rights in land that the holder of the easement is not in possession of.
Example: The right to pass through someone else’s land in order to access your land is an
easement. The holder of the easement is called the holder of the dominant estate. The
person whose land the easement affects owns the servient estate. In the example above,
the person who owns the land that is crossed holds the servient estate; the person who
crosses holds the dominant estate.
A) AFFIRMATIVE AND NEGATIVE EASEMENTS
Affirmative easements create the right to use the land. Negative easements are the
right to prevent someone else from using their land in a way that might prevent
your enjoyment of your land. Example of a negative easement: your neighbor
can’t build his house so high that it blocks your view.
B) APPURTENANT EASEMENTS AND EASEMENTS IN GROSS
Appurtenant easements benefit the holder in his physical use of his land.
Example: the right to cross one parcel to get to the parcel owned by the easement
holder.
Easements in gross benefit the holder of the easement individually. Example: the
right to swim in a pond on someone else’s property or put up billboards on their
property.
C) CREATION OF EASEMENTS
Easements can be created in a variety of ways, including by:
a) An express grant, in writing, from the holder of the servient estate.
b) An express reservation. The grantor conveys his land, but reserves the
right to use some portion of the land.
c) By implication: This easement is implied in the estate by the existing
use at the time the estate is conveyed. Example: a path across the land
accesses the local pond and has always been used for that purpose. If the
parcel of land on which the path lies is divided, an easement to use the
path may be created by implication.
d) By necessity: This easement arises if the selling of a parcel of land cuts
the land off from roads or utility lines. (These easements are terminated as
soon as the necessity is terminated.)
e) By prescription: This is like adverse possession. (See below.) In
summary, this is when someone uses the easement as if they have a right
to. If the owner knows or should know about it, and does not object over a
certain period prescribed in a statute, an easement by prescription is
created.
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D) TERMINATION OF EASEMENTS
Easements can be terminated by conditions in the grant that created the easement;
by unity of ownership (when the same party owns the dominant and servient
estate); by release; by abandonment; by estoppel; by prescription.
E) PROFITS
Profits entitle the holder of the profit to take some resources from the servient
estate (like soil, lumber, minerals). All of the rules described above for easements
apply to profits.
F) COVENANTS
Covenants are written promises to do or not do something to land. Example: “I
promise to keep the grass mown.” “I promise not to erect a six foot high fence.”
Covenants are usually found in deeds, and they “run with the land” so that
subsequent owners are bound by the covenants or can enforce them.
In order for covenants to apply, the parties to the covenant must have an intent
that the covenant apply to subsequent owners and the subsequent owners must
have some type of notice of the covenant before it can be enforced against them.
5) ADVERSE POSSESSION
Adverse possession results when someone who is not the owner of land uses the land in a
way that the owner would. If this goes on for long enough, without the objection of the
owner, the adverse possessor can claim title to the land and become the owner.
There are statutes in each state that prescribe how long the adverse possessor must
possess the land before he can make a claim for title.
A) REQUIREMENTS FOR ADVERSE POSSESSION
a) Fulfill the statutory period. It is often ten years.
b) Open and notorious possession. The adverse possessor must use the land in
a way that puts the true owner on notice of his use.
c) Actual and exclusive possession. This means the adverse possessor can only
acquire title to the portion of the land he actually uses, and he must use the
land exclusively—not share it with the owner or the public.
d) Continuous possession throughout the statutory period.
e) Hostility. The owner must not have given permission for the use.
**Land owned by the government cannot be adversely possessed.
6) CONVEYANCES
A) LAND SALE CONTRACTS
a) Conveying: Selling land is called "conveying" land. Contracts for the sale of
land must be in writing, per the Statute of Frauds. When the buyer and seller enter
into a land contract, they also choose a "closing date" on which the land will
actually change hands.
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b) Doctrine of Equitable Conversion: When a land sale contract is signed, the
buyer is considered the owner. But the seller is entitled to be in possession until
closing.
c) Marketable title: Every contract for the sale of land contains an implied
warranty that the title being transferred is "marketable." In essence, this means
that no one else owns the land and is going to sue or otherwise make problems for
the purchaser. This could include mortgages that will not be satisfied on closing,
liens, restrictive covenants, and easements.
d) Buyer's Remedy for Unmarketable title: The buyer must notify the seller and
give him a chance to fix the problems. If he does not, the buyer can rescind or sue
for damages, or ask for the contract to be fulfilled at a lower price that reflects the
problem.
e) Time is not of the essence: In general, time is not of the essence in contracts for
the sale of land. This means that the date chosen for the closing is not absolute. It
can move within a reasonable time and neither party will be in breach of the
contract. Of course, the parties can specifically contract that time be of the
essence.
f) Remedies for breach of sale: The non-breaching party can sue for damages, or,
because land is unique, can sue for specific performance and force the sale of the
land.
B) DEEDS
Deeds are the documents that transfer title to an interest in property.
a) Formalities: Deeds must be in writing, signed by the grantor, and make an
identification of the parties and include a description of the land. A deed does not
become effective until it is both delivered and accepted. (Delivery must include
the grantor's intent to pass title.)
b) Types of deeds:
i) General warranty deed: contains certain covenants/promises from the
grantor. For example, the promise that the grantor has the right to convey
the land and that the land is free from encumbrances.
ii) Special warranty deed: contains fewer covenants from the grantor. The
covenants from the grantor are that he has not already conveyed his
interest to anyone else, and that the land is free from any encumbrances he
may have made.
iii) Quitclaim deed: This releases whatever interest the grantor has in the
property and contains no covenants/promises.
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C) RECORDING ACTS
When a deed is transferred, that deed should be recorded in the recording index of
the local jurisdiction. These records are public.
Most jurisdictions have what is called a grantor/grantee index so that the person
searching the records looks under the name of the person who is selling the land
to see if he is listed as the current owner. Some have a tract index, where the
deeds are organized according to the parcel of land that they describe.
The recording system makes it easy to find out who owns a piece of property;
fraudulent sales of land by non-owners are meant to be avoided.
Problems arise when deeds are not entered into the record system properly. A
person who buys the land from someone who does not have an ownership interest,
but does so without knowledge of the fraud, is called a bona fide purchaser or an
innocent subsequent purchaser. Recording acts are put in place to protect these
people from losing the land, considering that they spent money on it and had no
knowledge of the fraud. This also furthers the free alienability of land; bona fide
purchasers can generally be confident that their ownership interest will be
considered valid despite any previous fraud, and can thus sell the land as they
choose.
a) Types of Recording Acts
There are three main types of recording acts:
i) Notice statutes
Under a notice statute, a subsequent bona fide purchaser who had no
notice that another person already had an interest in the property prevails
over that other person if the subsequent bona fide purchaser had no notice
of the previous person's interest, and if that previous person had not
recorded his interest in the records. (The recording of an interest in the
public records counts as giving constructive notice, because purchasers are
supposed to search the records before they purchase.)
ii) Race-notice statutes
Under a race-notice statute, the subsequent bona fide purchaser is
protected from someone else who has an interest in the property only if
she takes without notice and records her interest in the records before the
other person.
iii) Race statutes
Whoever records first wins, and notice of another person's interest is
irrelevant.
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7) SECURITY INTERESTS
A) TYPES OF SECURITY INTERESTS
a) Mortgage: The debtor/borrower is the mortgagor. The lender can obtain the
mortgaged property through judicial foreclosure if the mortgagor defaults on his
payments.
b) Deed of Trust: The debtor is the trustor. He entrusts the property to a third
party trustee. The lender is the beneficiary. If the trustor defaults, the lender
instructs the trustee to foreclose on the deed of trust by sale.
c) Installment Land Contract: This is where the purchaser pays for the land in
installments. He obtains title only when the full contract price has been paid.
B) TRANSFERRING SECURITY INTERESTS
a) All parties to a mortgage or deed of trust may transfer their interests.
b) A grantee of property subject to a mortgage (i.e. someone who has been given
or buys the property) takes the property subject to the mortgage. The mortgagee
can include a due-on-sale clause, however, which requires that the mortgage be
paid in full when the mortgagor transfers the interest.
C) FORECLOSURE
a) Foreclosure by sale: This occurs when the mortgagor defaults on the mortgage,
i.e. does not pay. Most states require that the foreclosure be done by sale. This is
usually an auction, where the mortgagee bids for the property.
b) Redemption in Equity: The mortgagor can always redeem the property by
paying the amount due at any time before the foreclosure sale.
c) Statutory Redemption: About half the states allow the mortgagor to redeem the
property by paying the full amount for some fixed period after the sale.
8) NATURAL RIGHTS
In general, the owner of real property has the right to use and possess the surface,
airspace and soil of the property.
A) TYPES OF NATURAL RIGHTS
a) Lateral Support: the landowner has the right to have his land laterally
supported by the adjoining land. Example: if your neighbor excavates or does
construction on his land and it causes a cave-in on your land, your neighbor is
strictly liable.
b) Water Rights: Water in a watercourse generally belongs to those who own the
land bordering the watercourse. This person or group of persons are called
riparian owners. They generally must engage in a “reasonable” use of the
watercourse. Surface water can be used by the owner for whatever reason he
chooses. Groundwater: In some states, the owners of land overlying the ground
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water can take all the water they want. In some, they are subject to reasonable use.
In some, its first come first serve.
c) Airspace: Owner has the right to be free from excessive noise but cannot
prevent, for example, planes from flying overhead.
9) CONSTITUTIONAL ISSUES
Eminent Domain and the Takings Clause
The government can take privately owned property through the use of its eminent domain
powers. The taken property is called condemned. The government must take the land for
public use, and must provide just compensation.
Public use can include railroads, schools, and other public utilities. The "public use"
requirement also has been construed very broadly, to include land taken for a private
development that will benefit the public through economic stimulation.
A zoning regulation can be so restrictive as to be considered a taking by the government.
In order for this to be the case, the zoning regulation must be so restrictive as to deprive
the owner of all or almost all of the property's economic value.
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