Property
Chapter 48
Property
• Capable of being acquired, owned, used
• A legally protected right or interest over
which the owner has the ability to exercise
dominion.
• A bundle of rights - that are recognized and
enforced by law, and protected under the
Constitution.
– Property has a unique status, second in
importance only to liberty.
– No person shall be deprived of life, liberty or
property, without due process of law ...and just
compensation.
• The earth’s crust and
all things firmly
attached.
• Immovable
• Includes subsurface
rights, i.e., minerals
• Includes rights above
land, i.e., radio towers
• Trees, shrubs,
perennial vegetation
• Fixtures - Can it be
removed w/o material
damage? What is the
party’s intent; the
purpose of the item?
Real Property
Personal Property (chattels)
• Acquired and transferred easily.
• Intangible - Intellectual property (patents,
copyrights);stock; commercial paper (notes)
• Tangible - Anything that has a physical
existence, generally moveable, cars,
computers, books, animals, severed trees,
crops that must be planted each year, i.e.,
corn, oats, potatoes
Ten ways to acquire personal property
•
•
•
•
•
•
•
•
•
•
Buy it (Sale of Goods)
Create it (knit a sweater)
Take it (capture a deer)
Trade it
Inherit it
Receive it as a gift
Find it (abandoned or lost property)
By accession
By divorce
By Confusion
• Voluntary transfer
without consideration
• 3 elements needed:
– Donor’s present intent
to give a gift
– Donor must make
delivery of the gift
• constructive delivery
– Acceptance
• Inter vivos
– Irrevocable
• Causa mortis
– Contingent upon death
– Must die as anticipated
– Revocable
By Gift
Lost, Mislaid or Abandoned Property
• Lost - unintentionally left. Finder is entitled to the
property against everyone except the true owner.
– Exception for lost property found in the ground.
– Estray statutes
• Mislaid - Intentionally placed somewhere and
accidentally left with no intent to relinquish
ownership. Finder acquires no rights. Owner of
premises, not finder, has first claim.
• Abandoned - Intentionally left. Intent to
relinquish ownership. First finder entitled to the
property.
– Unclaimed Property escheats to the state
By Accession
• The right of the owner to any
increase/improvement of the property,
whether natural or human made
– Owner of cow acquires title by accession to any
calves born to the cow
• Improvements
– by thief
– by someone in good faith who believed he was
an owner
By Confusion
• The mixing or putting together of property
so that it becomes difficult to distinguish
who is the owner of their own individual
property
– Co-mingling of fungible goods (oil, grain)
– Accident, Mistake, Agreement, each owner
will bear the loss in proportion to his share
– By willful or wrongful act, he may lose his
interest.
Property Insurance: Insurable
Interest
• Insurable interest - A person has an
insurable interest if the insured will derive
an economic benefit or advantage from its
preservation, or will suffer economic loss or
damage from destruction.
– Must exist when the loss occurs but not
necessarily at the time the policy is issued
– Acquired when goods are identified.
• Persons other than owners can have an
insurable interest, i.e, lessees, secured
creditors, grantors liable for a mortgage
Subrogation
• Entitles the insurer, to the extent it has paid
for a loss, to any rights of its policy holder
to recover from any third party.
• If a loss is covered by the insured’s own
negligence, subrogation does not apply.
• Not applicable to life insurance and rarely
to health insurance
• Subrogation precludes double recovery for
the same loss
Cancellation
• Exercising the right to rescind, abandon,
abrogate or otherwise terminate a contract
of insurance.
• The form and the notice of proper
cancellation are determined by provisions in
the policy.
• Both the insurer and insured can cancel.
• Restrictions on cancellation may apply
(statutes, administrative regulations) may
require that insurers give proper reasons for
cancellation or nonrenewal.
Fire and Casualty Insurance
• Covers direct fire damage, and damage
from smoke chemicals, water
• Also, policies usually cover wind, hail, and
other forces of nature (not hurricanes)
• Pays insured a specified amount for
property loss. Does not indemnify for lost
profits, business interruption or other
special matters unless there is a rider
attached.
• Friendly Fire/Hostile Fire
Co-Insurance
• Insured can be fully protected up to a
percentage (usually 80%) of the value of the
property.
• Encourages policy holders to insure
property for an amount that is near to its full
replacement cost.
• The coinsurance requirement applies only to
partial losses. Total losses result in
recovery of the face amount of the policy.
• Recovery = Face Value of Policy
X Loss
•
FMV of Property X Co-insurance %
Book Example, p. 1045
• $60,000 (Policy)
• $100,000 X 80%
X $50,000 = 37,500
• Insurer pays $37,500
Book, Problem #13
• Graham is entitled to collect $36,600.
Graham should have carried $96,000 fire
insurance if the building was valued at
$120,000 and the policy contained an 80%
co-insurance clause. Since the property is
under insured, the amount recoverable is
computed by multiplying the amount of loss
($48,000) by a fraction, the numerator of
which is the amount of the policy and the
denominator of which is the amount the
policy should have been
($72,000/$96,000)
Insurance Defenses
• Misrepresentation
– Must be material
• Breach of Warranty - a statement,
undertaking that appears in policy
– Affirmative warranty
– Promissory Warranty
• Nondisclosure
Types of Policies
• Valued - Policy where the parties
specifically agree upon the full value of the
property at the time it is issued
• Open - No agreement as to specific value.
Insurer pays FMV.
Binder
• Agents have authority to make the
insurance effective immediately
• Answer to Problem # 12 - Offer and
Acceptance. Yes. Adler is protected by
public liability insurance in these
circumstances because agents of casualty
insurance companies are normally
authorized to issue a temporary binder and
to cover an insured immediately upon
request, without notice to or acceptance by
the insurance company of the risk.