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Principle
Property Rights
Policy
Considerations
Bona Fide
Purchaser
Riparian Rights
Void vs.
Voidable
Authority
PROPERTY PRINCIPLES
Application/Interpretation
GENERAL PRINCIPLES
1) Right to possession
2) Right to use it, and determine how it can be used
3) Right to sell/convey the property
4) Right to modify
5) Right to destroy
6) Right to lend/lease
7) Right to exclude
1) Certainty: reduce complexity in determining rights with respect to land
2) Fairness : is the assertion of rights commensurate w/our sense of justice (Locke’s labor theory)
3) Economic Efficiency: highest and best use. What is the best and most efficient use?
4) Custom: Considerations of practices in place before rule of law is imposed
5) Control: who is in control of the property
One who purchases
1) For valuable consideration.
2) In good faith.
3) Without notice of fraud.
Rights one has when living near a body of water.
Void: Void title cannot be legally conveyed. There can never be a BFP.
Voidable: Voidable title is subject to the superior right of the true owner but subsequent conveyance to BFP (not a donee)
results in good title.
ACQUITISION
Johnson v.
Mc’Intosh (US)
John Locke’s
Labor Theory
Pierson v. Post
(NY)
Ghen v. Rich
(MA)
Keeble v.
Hickeringill
(UK)
Ferae Naturae
Discovery
Marshall introduced idea of legal positivism approach to property rights.
 There is no natural law of property – the law is what the conqueror says it is.
 Property rights only exist when the gov’t decides to protect them.
 Native Americans were subject to that property law of the conquerors.
Also introduced ideas regarding how property may be acquired:
Discovery – 2 Parts
1) A rule of first possession – whoever grabs the land first gets it
 Planting the flag
2) To perfect or solidify possession one must also occupy
 First on the scene is a simple easy principle to administer
Conquest
1) The taking of possession of enemy territory through force. The conqueror might respect the property rights of the society they
conquered if convenient, but Native Americans had foreign property views not conducive to assimilation.
2) In a nutshell Native Americans were savages who did not deserve their homeland b/c they did not establish a right to it
according to European rules. (racist bullshit)
When a man removes something from nature and mixes his labor with it, it becomes his property.
Acquisition by Capture
Facts: Post was in pursuit of a fox when Pierson popped up and killed it.
Analysis: Control is the key to possession – Post had no control according to the court.
Policy considerations may determine the outcome:
 Requiring mortal wounding is preferable because it furthers the policy of certainty
 Difficulty in drawing the line btw who is in pursuit and who is not
Holding: Mere pursuit is not enough to give someone possession of a wild animal.
Facts: Whaler kills a whale with a colored bomb-lance to signify his identity. Regional custom is finder of the dead whale
returns it to the whaler and receives a finder’s fee. Instead finder sells the whale.
Analysis: Custom outweighs the considerations of discovery from Post – whaling system would not work survive if control was
applied to rigidly. The custom reinforces the policies of economic efficiency and fairness
Holding: Custom and usage must be upheld in the whaling industry.
Facts: Keeble (P) had a duck decoy set up on his property, Hickeringill (D) stood beyond Keeble’s property and fired shots in
order to scare away the ducks (did not actually shoot any ducks).
Analysis
1) Malicious interference w/ trade: D actively disturbed ducks on P’s land and caused damages to P’s commercial enterprise.
P spent money, time, and labor and D disturbed the profitable use of the land. Pro-market: society is better off with dead ducks
on the table. D has a right to lure the ducks away to kill them but can’t scare them away.
2) Constructive possession
Holding: Cause of action accrues when another hinders another’s use of profitable land
Animals that are wild by nature.
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Ratione Sole
Res Nullius
Rules of
Capture in
Fugitive
Resources
Rule of
Increase
Intellectual
Property
International
News Service v.
Associated Press
(US)
Cheney
Brothers v.
Doris Silk Corp.
(2d Cir)
Doctrine of
Accession
American Rule
English Rule
Agency
One has constructive possession over animals on his property. Constructive possession will create a superior property right to
that of a trespasser who finds/captures.
Constructive Possession: sufficient possession for the law to construe actual possession
That which is not yet owned.
1) Oil and gas industry: people have constructive possession over oil that is on their property, but if neighbor drills and it
migrates over to neighbor’s property it is now their oil. This rule gives an incentive to invest in technology to capture oil and gas.
* Now the gov’t regulates this because it was depleting resources.
2) Water: rule of acquisition was who gets to the water first gets it, but then water was depleted in the West, so now there are
riparian rights, that water belongs to whosever property runs along the water, and no one can dam it up.
3) Domain names: use to be first in time, but now Congress has enacted anti-cybersquatting legislation.
Owner of the mother of a species is entitled to her offspring forever.
This rule promotes certainty (easy to tell who mother is), rewards investment and is fair and simple.
Acquisition by Creation (stems from Locke Labor Theory)
1) Traditional property rights do not protect intellectual property.
 competition brings innovation and improvement
 competition makes prices lower for the consumer
2) Reason to protect IP.
 New policy consideration: balance between property interests and the public’s interest in competition and innovation
 Fairness: Locke Labor theory
 Efficiency: encourages people to invest and create goods important for society
Congressional acts to protect IP interests:
1) Patents-protect for 20 years
 protects productions and processes; i.e. drugs
 must be novel, useful, and non-obvious
 allow creator to monopolize for a state period in order to recoup investment
2) Copyright- life of the creator plus 70 years
 an idea expressed in tangible forms, i.e. Novel
 patents can be copied earlier to promote competition
3) Trademarks names, symbols
 Protect company and the consumer (disallow confusion regarding the purchase of products that go by a similar name)
 Can lose it if you fail to protect it
 Trademark can become generic – Kleenex
Issue: can you ‘create’ and thus ‘own’ the news?
Analysis: Reaffirms relational nature of property rights: as regards the public, nobody owns the news because it is merely out
there; however, as regards other news agencies, AP does ‘own’ the news that they produce
 Economic efficiency guides this decision in order to keep the news industry profitable
 Fairness also dictates – AP put in the work of gathering the news
Facts: P designed silk and D copied it. D won. (there was no copyright law to cover this at the time)
Rule: Under property rules, imitation and copying are allowed unless there is a congressional act which states otherwise.
-under property law once produced it’s in the mainstream domain and anyone can copy it
-congressional acts must balance between lower prices for consumers and protecting creators to encourage creativity
When chattels are incorporated into chattels owned by another, the contributor of the principle component becomes owner of the
whole irrespective of fault in accession.
Acquisition by Find
Typically favors the finder.
Typically favors the owner of the locus in quo.
If employee finds property while acting within the scope of his employment it might be retained by
Corliss v. Wenner (ID)
(holding that laborers must
the employer.
deliver treasure trove to
employer)
An intention to possess. Typically required for constructive possession
Animus
Possidendi
Hanna v. Peel (UK)
General
Principle
Hoel v. Powell (OK)
(holding that finders right
is superior to that of police
department)
Prior Possessor
Armory v. Delamirie
(UK)
Bailments
Voluntary Bailment: Purposely giving property to someone for a limited purpose with the intent that it be returned. Ex. Giving
a jewel to a jeweler for appraisal
Involuntary Bailment: Finder of property may be under a duty to act as a bailee until owner is ascertained.
(holding that intention to
possess is required for
constructive possession)
When a person finds another’s property, their title is superior against the whole world,
except the true owner or a previous finder.
1) fairness: time and effort put into finding something
2) certainty: allows finder to retain possession until someone proves better title
3) efficiency: gets things back into stream of commerce
A prior possessor of found property will have superior rights over a subsequent possessor.
**Typically only invoked if the prior possessor is an honest claimant.
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Jus Tertii
Premises
Owner
Abandoned
Property
Bailor: gives up a possession to another
Bailee: intentionally receives the property (a bailee is liable for fair market value of property lost due to failure to take
reasonable precautions) (under the UCC a bailee who deals in goods of the kind can convey title but will still be liable to the
bailor)
A legal argument by the defendant that a third party has a superior claim to both the plaintiff. An argument in jus tertii is
typically unsustainable unless made by a bailee.
Premises owner (owner of locus in quo) has superior title to mislaid property found on the
McAvoy v. Medina (MA)
premises. Premises owner will be deemed to have constructive possession. However, lost
property will typically go to the finder unless they are a trespasser.
In re Seizure (MO) (holding
Owner has intentionally abandoned the property. In this case the finder is entitled to keep it as
that money found in gas tank
the owner is not coming back for it. Determination between lost and abandoned property is fact
of car bought at govt. repo
intensive.
sale is abandoned)
Lost Property
Mislaid
Property
Treasure Trove
Hanna v. Peel
Adverse
Possession
AP Theories
Elements of
Adverse
Possession
Owner has inadvertently or accidentally lost the property. The finder will have superior right to
the property against everybody except the true owner.
American Rule: Property found on the floor is lost.
Owner has intentionally placed personal property somewhere and forgotten where it is.
Finder is required to deliver the property to the owner of the premises in order to allow the owner to retrieve it.
McAvoy v. Medina (MA) (holding that shop-owners right to mislaid property is superior to all but true owner.)
Benjamin v. Lindner Aviation (IA) (holding that $18,000 found in wing of airplane is mislaid property.
Terry v. Lock Hospitality (AK) (holding that $38,000 in old currency found in motel ceiling is mislaid property)
Under English common law treasure trove must be buried and antiquated. Treasure trove was
Terry v. Lock Hospitality
awarded to the king.
(AK)
Under American law treasure trove does not have to be buried and must typically be classified as
mislaid, lost, or abandoned.
Where someone finds something on another’s property, but the owner had no knowledge of the thing being there, and has never
been in possession of the property before, the finder has title to the property against all but the true owner.
*constructive possession would beat trespasser but Hanna had rightful possession of the property
Acquisition by Adverse Possession
Van Valkenburgh v. Lutz,
Essentially a statute of limitations on an action in ejectment provided certain conditions have been
(NY)
met. This will determine the amount of time that it takes for an adverse possessor to acquire title.
Manillo v. Gorski (NJ)
A long period will reward people for sitting on property. A short period causes concern over
possible loss of property to squatters.
*Cannot adverse possess against the govt.
*Property once acquired by adverse possession or otherwise cannot be conveyed by abandonment
Sleeper theory: if you sleep on your rights, you lose those rights. (Oliver Wendall Holmes)
Earnings theory: property should be put to its highest and best use. If property sits around it is not being used at all.
Van Valkenburgh v. Lutz,
1) Actual Possession
(NY) (holding that adverse
 Typically only entitled to land which is used and possessed. In (IA) entitled to entire lot.
possessor under a claim of
2) Exclusive possession/occupancy:
title must substantially
 Possession with exclusion of others
improve the land to acquire
 Entitled only to property occupied/used/entered.
title)
 May be require to improve the land in some way (NY)
Manillo v. Gorski (NJ)
(holding that minor boundary
 Must essentially, occupy the land the way a true owner would
encroachment by mutual
3) Open and Notorious:
mistake does not constitute
 Owner must have notice or they are not actually sleeping on their rights
notice to titleholder)
 Possession cannot be achieved by secrecy
 Majority of jurisdictions require only inquiry notice
 Some jurisdictions require actual notice (NJ)
4) Hostile/Adverse to a Titleholders Claim
 Possession must be adverse to the true owner.
 Cannot be permissive
 occupancy/use is inconsistent w/ownership of someone else
 some jurisdictions require an actual intent to invade the rights of another and so mistake
cannot constitute this element (ME)
 Jurisdictions are equally split between requiring a claim of title (IA) and color of title
 In claim of title jurisdictions color of title may give possessor constructive possession of
entire lot when only part is used
 States of Mind
 Objective Standard: state of mind irrelevant (English Rule, MA, PA, WA)
 Good Faith Standard: I thought I owned it (GA)
 Aggressive Trespasser Standard: I knew I didn’t own it but I intended to make it
mine
5) Continuous for Statutory Period
 Usually not literal. Continuous use consistent with the prevailing use of similar properties
Hanna v. Peel (UK)
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Boundaries
Tacking
Disability
Adverse
Possession of
Chattels
(i.e. summer home)
 Statutory period restarts every time ejectment is sought
 Does not begin to run until owner is aware of his own property interest
 10 years in IA
Agreed Boundaries: Oral agreements resolving boundary disputes are enforceable if accepted for
Manillo v. Gorski (NJ)
a long time.
Boundaries by Acquiescence: Long acquiescence is evidence of agreement fixing property line
(may be less than statutory period)
Estoppel: Actions that induce another party to rely on a boundary line may prevent actor from
challenging validity of boundary.
Allows an adverse possessor to use a previous occupants time to meet SOL, requires privity
Howard v. Kunto (WA)
(holding that privity
between them (same legal interest in the property)
allows tacking in adverse
 Privity-occurs if there is a voluntary transfer of the property in possession, must be
possession of a summer
evidenced in writing (i.e. deed)
home)
English Rule: Commerce Theory (tacking w/ out privity)
American Rule: Sleeper Theory (privity required for tacking)
Time added to SOL for Disabilities:
 Statutes defines the amount of time that will be added from the time the disability is removed. Disabilities include under
age of majority, mental, incarceration, at war (IA only get a year added)
 The only disability that matters is the one the O has when the adverse possession started. So you cannot have more than
one disability, and you cannot tack disabilities
O’Keefe v. Snyder (NJ)
Discovery Rule: Statute of limitations does not start running until the owner
(holding that the statute of
1) Knows or reasonably should know that the chattel is gone.
limitation on an action for
2) knows who is asserting possession over it
replevin begins to run when
Unlike land chattel are easily concealed but the burden will be on the owner to show they exercised
the owner knows or
due diligence in seeking the chattel. (IA only requires ordinary diligence).
reasonably should know of
Most states have statutes preventing transfer of title of stolen chattels. However, under the UCC
his cause of action and the
title can be transferred to BFP.
identity of the possessor of
the chattel)
Elements of a
Gift
Types of
Delivery
Inter Vivos Gift
Gift Causa
Mortis
Checks
Two Act Rule
Engagement
Gifts
Acquisition by Gift
Donative Intent: present intent to make a gift
 As long as the evidence shows the intent to make a present and irrevocable transfer of title
or the right of ownership, there is a present transfer of some interest and the gift is effective
immediately
 Question of fact
2) Delivery
 By requiring the transfer, we have an objective manifestation of the intent to give
 In other words, it reinforces or proves your intent
 Also, once the other person has possession, you have prima facie evidence that the thing
has been transferred
 There are situations where delivery can occur w/o intent to give (bailment
relationships)
 Question of Law
 Delivery to a bailee with instructions to deliver to a donor is unlikely unless the bailee is an
agent of the donor.
3) Acceptance
 Presumed if item is of value
Manual: Actually handing it however. Generally required when possible.
Constructive: Giving someone access to or control over the thing (i.e. – keys, combinations)
Symbolic: handing over something that represents the chattel (warranty, owner’s manual, writing)
Irrevocable gift between living people.
 Gift given upon the expectation that one party will die soon
 Revocable b/c person may not die and that was the reason for the gift
 Harder to revoke through a general bequest (testator bequests “all my property”) then a specific one.
Newman v. Bost (NC) (holding gift causa mortis requires actual delivery if it can be had and evidence of intent to deliver the
contents of a bureau)
Suicide Case (following
The general rule is that a check is not delivered until it is presented to the drawer bank.
the minority rule)
Traditionally the check was no good if not cashed before the death of the donor b/c it could be
revoked and so there is no delivery.
-UCC says unless you are on notice that the person will die, the check is good
Where intent and delivery are in two different places in time, in order to make a gift the grantor must takes it back, and then
redeliver it with intent to make a gift. This is a minority rule.
Some jurisdictions allow litigant to recover gift in contemplation of marriage especially if the donee is at fault. i.e. engagement
ring
Gruen v. Gruen (NY)
(holding that Father can
make a present gift of a
future interest in a
painting to his son but
retain possession until he
dies This is a not a gift
causa mortis and does not
have to pass statute of
wills)
1)
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THE SYSTEM OF ESTATES
Administrator/
Adminstratix
Alienable
Estates Vocab
Named by the court to carry out the property obligations of the intestate.
Ability to transfer/convey the property
Bequest
Convey
Cy Pres
Deceased
Devisable
Devise
Escheats
Equitable
Intervention
Personal Property given by will.
To sell or give.
Court ability to rewrite a conveyance to legally conform with the intent of the grantor.
The dead person.
Property that may be willed to another.
Real property that is given via will to devisees
Property goes to the state. Occurs when intestate dies without issue.
Equity may require sale of property but court’s use this tool sparingly since it is presumed that the
Baker v. Weedon (MS)
(when life tenant cannot
grantor wants the land and not its economic value passed on the remaindermen.
afford property equity
may intervene and sell
property to promote
interests of all parties)
Executor/
Executrix
Filius Nullius
Person who the testator names in the will to carry out the property obligations of the deceased.
Heirs
Inheritable
Intestate
Issues
Legatees
Per Capita
Per Stripes
Primogeniture
Sell
Testator
Trust
Waste
Wills
Words of
Limitation
Numerus
Clauses
A child born out of wedlock. Under modern view you would inherit under your mother, and if your father had proven paternity
you can also inherit from him. Adopted kids inherit from both adopted and original parents.
Those that inherit at death according to intestacy statutes.
*only dead people have heirs!!!
Heir apparent: prospective heirs.
Transfer to descendants after death (intestacy)
To die without a will. If one dies with a will they die testate.
Children and grandchildren
Personal property that is given goes to legatees
Inheritance by head. Inheritance is equally divided by those in the same general/class.
*Presumptive type of inheritace.*
Inheritance by representation. Ones inheritance is determined by the share their ancestor would have received.
Oldest son is heir, daughter gets nothing unless they are the only surviving heir.
To transfer for valuable consideration.
Drafter of will
Creates a separation of title. Trustee owns legal title for the benefit of the beneficiary of the trust, the beneficiary has equitable
title. The trustee is a fiduciary. A trust really just separates the legal and equitable title.
Life tenant can be liable for taking actions that harm the title holder’s interest or another’s future
Baker v. Weedon (MS)
interest (i.e. remainderman).
1) Presumption is that it was the grantor’s intent to give the property intact to the remainderman.
2) Fairness
*under common law present possessor was not allowed to do anything to property without the
consent of those with contingent interests.
Affirmative Waste: life tenant actively cause permanent damage.
Permissive (involuntary waste): life tenant allows the land to fall disrepair. *however unlike
trustee life tenant has no duty to insure property.
Ameliorative Waste: suit against life estate holder for unwanted improvements on property by
holder of remainder interest.
* remainderman can as possessor to eject, sue possessor for waste, buy right to eject, or buy
possessor’s estate and eject
Order of Inheritance (Property transfer to heirs in intestacy)
1) Spouse
2) Issue (kids, grandkids, etc)
3) Ancestors (parents, grandparents)
4) Collaterals (blood relatives: brothers, sisters, cousins, aunts etc.)
5) Escheats to the State
Words of Limitation: Part of the conveyance that indicates what type of interest the grantee is receiving.
Words of Purchase: The part of a conveyance that indicates who is receiving.
Possessory Estates
Def: The “foreign language” that must be used to describe a transfer of property.
White vs. Brown (TN)
(holding that “Home for
Modern view: in the absence of numerus clauses the court’s number one priority is satisfying the
W to live in. House not to
intent of the testator. Once the intent is determined the transfer must be given a classified as one of
be sold” creates a fee
the numerus clauses as new classifications are prohibited.
simple. majority view).
*problems often arise with holographic wills.
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Canons of
Construction
Restraints on
Alienation
Fee Simple
Fee Tail
Life Estate
Fee Simple
Determinable
Fee Simple
Subject to
Condition
Subsequent
1) Presumption of intent to convey ALL of your estate unless you indicate otherwise in clear and
precise manner
2) Rule against partial intestacy: presumption exists that you are trying to get rid of entire estate in
the will
 If only a life estate is provided for and no indication of what happens afterwards this leaves
partial intestacy after the life of grantee
Absolute restraint: any absolute restraint on a fee simple is void (i.e. the house can’t be sold)
Mountain Brow Lodge v.
Toscano (CA) (upholding Partial restraint: partial restraint on a fee simple is valid if it is reasonable in purpose, effect, and
restraint that property can
duration under the given circumstances (i.e. limiting conveyance to certain people, or imposing
only be used by grantee.
time limit)
Reasonable restraints on
Forfeiture restraint: if the grantee attempts to transfer his interest, it is forfeited to another person
alienation will be upheld.) (valid in a life estate).
Promissory restraint: the grantee promises not to transfer his interest (rare except in life estate)
Right of first refusal: you can sell the land, but if so, my heirs and I get first chance to buy it
** IL is the only jurisdiction where one cannot convey right of reentry or possibility of reverter but
can only inherit them.**
Magic words: “To A and his heirs”
Def: Closest thing to absolute ownership. Includes the right to exclude, right to waste, right to alienate, and no future interest in
grantor.
Magic Words: “To A and the heirs of his body”
Def: Designed to keep land in the family. When A’s bloodline run out it reverts back to O or O’s heirs forever. Essentially
creates a series of life estates. Always followed by a reversion or a remainder.
Majority Rule: most state have abolished the fee tail and it only remains in DE, ME, MA, and RI.
Disentail: A could convey the fee tail by deed to B, and B would get it as fee simple. If A just wants a fee simple, she can get a
strawman, convey it to them, and then have them convey it back to her in fee simple.
Reasons for Abolition
 Anti-democratic and feudal in nature
 Imposes restraints on alienation
Fee Simple Conditional (faux fee tail): In IA and SC, one can create fsc.
 I.e. Estate is transferred to granddaughter on the condition she has children in order to prevent the estate from going to a
husband/daughter in law.
Magic Words: “To A for life”
Def: Grantee takes possession in the property until they die. Creates a reversionary interest in grantor. A remainder interest can
be given i.e. “To A for life then to B.”
Life Estate for a term of years: Possession for a specified term
Life Estate Per Autre Vie (for the life of another): when a grantee conveys their life estate to another, that person gets the life
estate until the person that conveyed it to them dies (or the term of years ends)
Rule in Shelley’s Case: A legal life estate conveyed to A with a legal remainder in A’s heirs or the heir’s of A’s body creates a
fee simple absolute in A. Prevents destructibility due to intestacy. *Abolished in most states.
Defeasible Estates
Definition: Estate will end automatically when a stated event happens, Event must be specifically
Mahrenholz v County Bd
stated. i.e. To school “so long as premises are used for school purposes.”
of School Trustee (IL)
Magic words: until, while, during, unless, so long as
Always followed by a possibility of reverter in the transferor.
Estate that does not automatically terminate but may be cut short, or divested at the transferor’s
Mahrenholz v County Bd
election when a stated condition occurs.
of School Trustee (IL)
Ex. “but if the premises are not used for school purposes, the grantor has a right to re-enter and
retake the premises.
Magic words: “but if”, however, provided that, on the condition that
*right to retake would have to be exercised within statutory period.
White vs. Brown (TN)
*right of entry: the future interest retained by the transferor, means they have the right to re-enter.
but they have to do something, if you don’t take action it stays with the possessor, right must be
exercised.
Mahrenholz v
County Bd of
School Trustee
(IL)
*The modern presumption favors the fee simple subject to condition subsequent over fee
simple determinable in the case of ambiguity*
Facts: In IL possibility of reverter and rights of re-entry may not be conveyed or devised. In 1941 Hutton’s convey to School
board “this land to be used for school purpose only; otherwise to revert to grantors herein.” By 1969 both have died intestate
leaving Harry as only heir. In 1973 property is no longer used by School Bd. as a classroom but as a storage unit. In 1977 Harry
conveys his interest to Mahrenholz.
Procedure: Mahrenholz bring action to quiet title.
Issue: Whether the language in the initial grant to the School Bd. created a fee simple determinable or a fee simple subject to a
condition subsequent.
 If the language created a fee simple determinable and storage is not a school purpose as a matter of law then the property
reverted to Harry after 1973 and could be conveyed
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 If it was a fee simple subject to a condition subsequent then Harry would have to retake before conveying and the deed to
the Mahrenholz would be void.
Holding: Construction indicates that land was granted to School Bd. “only” as long as it was needed. This suggests a limited
grant rather than a full grant subject to a condition. This is a fee simple determinable.
FUTURE INTERESTS
Reversion
(grantor)
Possibility of
Reverter
Right of
Reentry
Remainder
Future Estates in Transferor
There is a reversion in the grantor, or his successors or assigns, when he conveys an estate of lesser quantum than what he owns.
 Alienable and devisable
 May become possessory in the future or may not be if divested.
 No such thing as a possibility of reversion
Created when the grantor creates a fee simple determinable.
 Ex: O conveys Blackacre “to Town Library Board so long as used for library purposes.” O has a possibility of reverter.
 Not a reversion b/c there is a possibility reverter will never occur.
 Common Law: Inalienable Modern Law: Freely alienable in most jurisdictions.
**Cannot be conveyed in IL**
When an owner transfers a fee simple subject to condition subsequent and retains the power to cut short or terminate the
estate, the transferor has a right of entry.
 Ex: O conveys Whiteacre “to Town Library Board, but if it ceases to use the land for library purposes O has the right to reenter and retake the premises.”
 Follows a fee simple subject to condition subsequent, you get a right of entry. That’s the only time you get a right of entry.
Alienability
Common Law: Historically not alienable under the common law (IL)
Modern Trend: States are split on whether it can be conveyed
Minority Rule: An attempt to convey a right of reentry destroys it
Future Estates in Transferee
A future interest in someone other than the grantor that follows immediately after the natural expiration of a particular estate.
Grantee takes upon the natural expiration of the previous estate
The Three Nevers
1) never follows a fee simple 2) never divests a prior estate 3) never directly follows possession by the grantor
Vested Remainder (alienable)
1) Must go to an ascertained person
 Person must exist at the point it is created
 Do you know for sure who will take?
2) Not subject to condition precedent
 Grantor does not have to perform any act in order to receive the property.
 Does something have to happen first?
Ex1: O conveys “to A for life, then to B and her heirs.” B has an indefeasibly vested remainder certain to become
possessory upon termination of A’s life estate. If B dies during A’s life, on B’s death B’s remainder passes to B’s heirs. B
or B’s successor’s interest is certain to become possessory upon A’s death. B has a vested remainder in fee simple
absolute.
Vested Remainder Subject to Divestment
1) Condition subsequent: If some later event occurs that will either partially or entirely divest the remainder interest even if it
has become possessory.
Ex2: O conveys to A for life, then to B, but if some later event happens, to d. B has a vested remainder subject to
divestment. In this case a remainder in fee simple on an executory limitation.
Vested Remainder Subject to Partial Divestment/Open
Here the condition subsequent is the addition to the class of people that have a remainder interest. As a result the remainder
interest will not be entirely divested but may be partially divested.
Ex1: To A for life then to B’s heirs. If a child is born as one of B’s “heirs apparent” and is the only one, his interest is a
vested remainder subject to open: meaning that his share will be reduced if B has subsequent children.
Contingent Remainder
1) Interest in an unascertained person
2) Subject to condition precedent: Possession is made contingent upon some event occurring other than natural termination of
preceding estates
 “O to A for life, then to the heirs of B” ** Contingent b/c heirs of B cannot be ascertained until B dies**
3) If we don’t know who the takers are, it’s a contingent remainder. The law always assumes you could have more children.
There are no heirs until B dies.
 Subject to condition precedent.
Ex1: O conveys “to A for life, then to B and her heirs if B survives A.” The language “if B survives A” subjects B’s
remainder to a condition precedent. B can take possession only if B survives A.
Ex2: O conveys to A for life, then to B’s heirs, but if…, to C. B’s heirs have a contingent remainder subject to
divestment. In this case a contingent remainder in fee simple on an executory limitation.
 Alternate Contingent Remainders: A remainder in a second grantee subject to the non-occurrence of the condition
precedent.
 Ex2: “To A for life, then to B if living, but if B is not then living, then to C.”
8
Executory
Interests
Doctrine of
Worthier Title
Trust
Rule of
Perpetuities
Avoiding RAP
Problems
**contingent remainder is not reachable by creditors and typically cannot be alienated**
Destructibility of Contingent Remainders
Traditional Rule: contingent remainder is destroyed if contingency does not occur before the end of the preceding estate. Will
not be enforced as an executory interest.
Majority Rule: contingent remainder may vest whenever contingency occurs.
1) Interest that requires an act of divestment to become possessory. Grantee must cuts off or cuts short the possessory interests
of another upon the happening of some event.
Typically found in FSD and FSSCS
 Shifting: cuts short another transferee : to A, but if A marries, then to B
 Springing: cuts short the transferor: to A, when he marries B
Future interests in someone other than the grantor that Must Either: i) follow a fee simple ii) divest a prior estate iii)
directly follow possession by the grantor.
2) Examples
(i) “To A for life, then to B if he reaches 21, if B does not reach 21, then to C.” B has a contingent remainder, and C has a
contingent remainder, O has a reversion. If B is 15, it will revert to O until B is 21.
 If the first interest is a contingent remainder, the second also has to be a contingent remainder. If the first interest
is vested, then the second interest will be an executory interest.
(ii) Ex2: “To A for life, then to B, but if B dies before he’s 21, then to C.” B has a vested remainder in FSSCS. It can be
taken away from him if he dies before 21. C has an executory interest.
When the grantor conveys a future interest to the heirs of the grantor the future interest is void and the grantor has a reversion
(which the heirs will take by descent)
Creates a separation of legal and equitable title. Trustee holds legal title for the benefit of the beneficiary. The beneficiary holds
equitable title. The trustee is a fiduciary.
Symphony Space v.
No interest is good unless it must vest, or fail, not later than 21 years after some life in being at
Pergola Properties (NY)
the creation of the interest.
(holding that against RAP
 21 years so that youngest grandchild of grantor has met the age of majority
applies to both
 Rule does not apply to the interests of Grantor.
commercial and non If there is a mere possibility it will not vest or fail it does not pass
commercial options. An
Five Step Test
option to buyback within
1) Identify future interests in a grantee subject to conditions
24 years violates RAP)
 Look for future interest subject to conditions: contingent remainders, vested
remainders subject to partial divestment/open or executory interests
 Doesn’t apply to interests retained by grantor
 Doesn’t apply to vested remainders
 Ex – to A for life, then to B’s heirs (remainder is contingent b/c unknown)
 If mentions specific people then it is vested
 For class gifts, interest is not vested until all members are determined
2) When does the instrument creating the future interest take effect?
 Wills take effect upon death of testator
3) Determine all lives in being/validating lives?
 Anybody named in the fact pattern that can affect vesting.
4) Determine when would be 21 years after the last life in being?
a) Determine whether it is at all possible it may take longer than that time for the interest
to vest or for vesting to become impossible.
 Tip: Kill off everybody in the fact pattern except the baby maker that can create an
additional baby with a future interest, make a baby then kill the baby maker. See what
happens
5) Determine what becomes of the future interest invalidated by the rule.
Danger Signs
 Be wary of widows, class gifts, unborn children, contingencies involving people not described in
the grant, unfixed time periods and specific purposes
 Be wary of identified events with any possibility of taking more than 21 years to occur
 Are there any remaining contingent interests after perpetuities period expires?
**RAP also applies to power of attorney, preemptive rights, and option contracts**
The Two Instruments Solution
*use two pieces of paper instead of one
Charities
If both the possessory estate and the future interest are charitable organizations the rule does not apply
Cy Pres/ Reforming Invalid Interests
Some states have common law that allow court to reform an interest that does not conform to the rule, but the court can refuse to
exercise this. Don’t want to count on this, but it’s nice to know you can try if seeking relief.
Statutory Modification
Many states have modified the rule.
 Wait and See: Iowa uses this approach of waiting to see if the transfer violates RAP.
 Uniform Act: USRAP: Provides for a 90 year period that property can be tied up. Any interest that the grantor creates will
9
have 90 years to see if the gift vests or fails. If the interest doesn’t vest within 90 years, it is invalid. Inconsistent with the
intent of the RAP since it allows some dead hand control.
Savings Clause: a clause that states that the conveyance is to terminate or close an open contingency 21 years after the life in
being.
CO-OWNERSHIP AND MARITAL ESTATES
Tenancy in
Common
Joint Tenancy
Severance of a
Joint Tenancy
Common Law Concurrent Interests
Default concurring tenancy when intent is vague
 Each co-tenant has an undivided interest in the whole
 Each cotenant has the right to occupy the whole thing
 Can creates practical issues, i.e. co-ownership of a condo
 Ex: O to H & W and their heirs and assigns forever (denotes fee simple)
 This creates tenancy in common when not qualified by anything else
 Each cotenant can sell or will interest in property to anybody
 In the presence of ambiguity the modern presumption is in favor of Tenancy in Common in all states (except a few where
conveyance is to husband and wife)
**Known as the hardest to make and the easiest to break!**
Magic Words: O to A & B in joint tenancy with the right of survivorship.
 Each joint tenant has an undivided interest in the whole
 Primary feature of joint tenancy is the right of survivorship
 A nano-second before one party’s death, their interest is extinguished and commuted to other joint tenant
4 Unities of Joint Tenancy
1) Time
 Must be acquired or vested at the same time
2) Title
 Must be acquired by the same deed
3) Interest
 Must have the same interest (50/50) at common law
 Statutes have allowed for unequal interests
4) Possession
 Must have equal right to possession of the whole
Riddle v. Harmon (CA)
Severance
(holding that a party can
 Conversion of joint tenancy to a tenancy in common.
unilaterally sever a joint
 Destruction of the right of survivorship – sever of relationship
tenancy by conveying their
 Can be destroyed by conveying interest to a 3rd party
interest as a joint tenant to
 If A sells rights to X, A & B are no longer JT and X & B are now TIC
themselves as a tenant in
common)
 Only requires one person acting alone
Swartzbaugh v. Sampson
 If interest in joint tenancy is sold (in event of 3 parties to tenancy) then the joint tenancy is only
(CA) (holding that husband’s
severed as to regards to the interest conveyed. The other two parties still maintain joint tenancy.
leasing of part of the property
Minority
Rule: lease to third party severs the joint tenancy
for boxing pavilion did not
sever joint tenancy)
Joint Tenancy
Bank Accounts
Mortgages and
Joint Tenancies
Partition
Ouster
Allen v. Gordon (FL)
(intent of joint account
must be considered)
Types
True Joint Bank Account: both have access to it, like joint tenants
Payable on Death Account: both names on account to trigger rights of survivorship and avoid
probate. However, this is considered gift income by the IRS.
Burden of proving joint tenancy is on the party trying to get the money.
Creditors: If a creditor comes against a joint bank account, the presumption is that it is all
available to them, the depositor has the burden of showing by clear and convincing evidence that
it’s not (i.e. A is just on the account for convenience, not joint tenancy)
If one joint tenant puts a mortgage on their interest does that action sever the joint tenancy?
Harms v. Sprague (IL)
(holding that a mortgage
States are split.
on an estate in joint
Lien Theory (Majority Rule): leaves the joint tenancy undisturbed, mortgage just places a lien on
tenancy does not sever the the property. If a creditor sued before the joint tenant died they could collect, but once that joint
j.t. but creates a lien that
tenant dies, there is no interest in the property left to collect against.
can only be satisfied
Title Theory (Minority Rule): that a mortgage actually conveys title to the mortgagee until the
during the life of owing
mortgage is paid, thus the taking of a mortgage breaks the joint tenancy and the bank is a tenant in
party)
common with the other tenant, once the debt is paid, the former joint tenancy becomes a tenant in
common.
*Chose remedy for party that has been ousted
Partition in kind: Actual splitting of the property into portions and distributed among tenants.
Partition by sale: split proceeds from the sale of property. Not favored by courts so the burden is on the party seeking sale to
show to conditions are met.
 The physical attributes of the land make partition in kind impractical or inequitable, and
 The interests of the owners would be better promoted by a partition in sale.
Spiller v. Mackereth (AL) Physical denial of a co-tenants right to possession.
10
Rent
Contribution
Accounting
Tenancy by the
Entirety
Marital
Property
Insurance
Proceeds
Prenuptial
Agreements
Equitable
Division
(holding that oustered
Upon Ouster possession b/c hostile and adverse possession may take effect.
party can collect rent from Minority Rule: ouster by co-tenant not necessary to collect rent
co-tenant but a letter
cannot constitute ouster)
One cotenant may receive rent from another upon ouster. A co-tenant has a right to lease part of their interest to a third party and
typically, absent ouster, the other co-tenant cannot collect rent. However, the other cotenant would have the right to undivided
possession with the lessee.
Improvements
Court generally will not make one co-tenant contribute for improvements unless they agreed to. Probably will be taken into
account in the event of sale or partition of the property. Improver will typically receive improved portion in a partition, receive
value of improvement in sale, or receive owelty if partition is impractical.
Repairs
In most jurisdictions co-tenant is not entitled to contribution for necessary repairs. But may be entitled to credit for reasonable
repairs in a partition or accounting action.
Carrying Charges
Cotenant paying more than their share in carrying charges (taxes, mortgage payments) is entitled to contribution
Claim against another who is receiving funds to which one may have a claim.
1) How much are you getting 2) and where is it.
Marital Interests
Sawada v. Endo (HI)
 Same four elements as tenancy in common with a fifth: marriage between husband and wife
(majority rule: holding
 Married women prop act
that since tenancy by the
 Majority Rule: right of survivorship that cannot be unilaterally diminished
entirety cannot be
 Minority Rule: creditors of one spouse can reach that spouses share
unilaterally conveyed it
 terminated by divorce which creates a tenancy in common
cannot be subject to the
 less than ½ the states recognize Tenancy by the Entirety
creditors of one spouse)
 In these jurisdictions any conveyance to husband and wife is presumptively a tenancy by the
entirety
 Usually tenancy by the entirety only applies to real property
 States are split as to whether personalty is inluded
 Insurance proceeds are typically personalty
*must be married at time of conveyance
312-318
Creditors 313-320
Forfeiture for drug dealing on 319
In most states property brought into the marriage or inherited during the marriage does not qualify as marital property. In most
states only property acquired during the marriage is considered marital property.
Migrating Couples: all property acquired during the marriage will be classified according to the laws of that jurisdiction and
will not change upon migration.
In most states insurance proceeds on property held in tenancy by the entirety are personalty creating a tenancy in common which
is inheritable. Proceeds will be split between husband and wife.
Contracts that determine division of property upon termination of the marriage.
 Must be in writing and signed by both.
 Enforceable w/o consideration other than marriage.
 Contract can deal with everything (will, divorce, life insurance, anything someone can bring into the marriage and doesn’t
want the other to get).
 Effective on day of marriage.
 To revoke must be signed by both parties.
Termination of Marriage by Divorce
In re Marriage of Graham
Marriage is a partnership and upon dissolution there must be equitable dissolution.
(CO) (holding that a graduate
Court takes considers certain factors for deciding who gets what:
degree is not marital property
 Length of marriage
In re Marriage of Francis
 Property brought into the marriage by each party
(IA) (awarding
 Contribution of each party to marriage – money, housekeeping, etc.
reimbursement alimony)
Mahoney v. Mahoney (NJ)
 Contribution of one party to the education, advancement, professional goodwill, increased
(holding that reimbursement
earning power of the other
alimony should cover all
 Earning capacity for both parties
financial contributions to
 Infidelity
former spouse’s education)
Three Views
Elkus v. Elkus (NY) (holding
1) Some states (CO) hold that marital property must fit within the traditional definition of property
that spouse contributed to
(inheritable, exchange value, transferability). Degrees are not divisible and cannot be considered
wife’s opera career and was
entitled to equitable division
marital property.
of increased earning power)
2) Some states (IA, NJ) hold that property and increased earning power acquired during marriage
Obrien v. Obrien (NY)
is subject to equitable division. Reimbursement Alimony is restitution paid to compensate
(holding that increased
spouse for investment in spouse’s degree.
earning power is marital
3) Some states (NY) hold that anything of value acquired during marriage is subject to division
property)
11
Alimony
Jure Uxoris
Dower and
Curtesy
Elective share
Antenuptial
Transfer
Community
Property
Common law
marriage
whether it fits into the traditional property concepts or not. It is the contribution of the spouse
seeking equitable distribution that determines the status of the martial property. Degree is
divisible property.
1) Traditional: payable for life, time of divorce till death
2) Rehabilitative (Modern): support for a limited time, until spouse is self-sufficient. Gives
incentive to go obtain education and work.
Termination of Marriage by Death
Common law doctrine that husbands is entitled to all of wife’s real property upon marriage.
Wife’s property becomes saleable and alienable by husband.
*abolished in all but 4 states 3 of which have abolished curtesy and extended dower to husbands
(AK, KY, OH, MI only has dower.)
Dower: widows get a life estate in 1/3 of all land which her husband seised in fee simple during
marriage provided it is inheritable by issue of the marriage. Attaches at the moment of marriage if
the land is then owned or later acquired and is inchoate until the husband dies, if she dies first or
they divorce her inchoate interest is extinguished. Once dower attaches, all creditors or purchasers
take subject to it unless the wife releases dower. (In IA dower has been replaced by 1/3rd fractional
fee simple interest in decedent’s land owned during marriage).
Curtesy-widower is entitled to a life estate to all of his wife’s real property, does not attach unless
there was issue born alive capable of inheriting the estate.
*these do not exist with joint tenants, community property or tenants in the entirety because there
is already protection
Instead of the surviving spouse taking what is devised by will, she can elect to take elective share provided by statue. Has
replaced dower in many states. Originally a 1/3 or 1/2 interest in all probate estate. In many states elective share is often
augmented by property not passing through probate (i.e. life insurance proceeds).
Secret transfers made before marriage may be deemed fraudulent and subject to surviving spouses
Strong v. Wood (IA)
elective share.
 Came from Spain. Applies in 8 US states. ( see ID, WS, LA, FL, CA, AR, TX)
 Marriage is a 50/50 partnership, all property and income from property acquired during the marriage is owned 50/50 by
each. Both parties have equal rights to the assets.
 Can only be conveyed as an undivided whole.
 Managerial doctrine: allows one party acting alone, as manager, to alienate the property creditors can reach community
property that one individual has the ability to manage.
 Real property (ie land) may requires consent of both spouses prior to alienation
 Law imposes a fiduciary duty on owner of community property to maintain property for the benefit of the “community”.
 Transmutation: Community property can be turned into separate property only by agreement.
 Separate property is that which was brought into the marriage, or acquired by gift or inheritance.
 Split Authorities: Income from separate property may or may not be classified as community property
 Value of community labor used to enhance separate property is classified as community property
 Property rights of each spouse are determined upon divorce. Some states require equal division (CA) and others equitable
division (TX)
 No survivorship: Upon death either spouse may will their share of the community property. In case of intestacy typically
goes to surviving spouse.
Commingling of community property w/ separate property (when does comm. attach):
Ex. H puts 1/3 down on a house, then gets married and H & W use community funds to make payments.
Three rules used by states:
1) Time of vesting (majority rule): looks at the character of the property when the title passes, so the house would be
community property.
2) Inception of right rule: character of property is determined at the time H signed the contract…so H owns the house and W is
entitled to return ½ of community payments.
3) Pro Rata Rule: Community payments buy a pro-rata share of property
Goodridge v. Department
Two things must exist:
1) co-habitation/present intent to be married
of Public Health (MA)
2) holding out to the public as husband and wife (i.e. change name, introduce as husband and wife)
 No time period required, can occur immediately upon meeting the two conditions.
 A divorce from a common law marriage requires two proceedings: proof of a common law
marriage and then a divorce proceeding.
 exists because it was historically more difficult and expensive to get to the county seat to record
marriage
LANDLORD/TENANT
Lease
Leasehold Estate
 A contract (contains promises) and a conveyance (it transfers possessory rights to land). Recently been a shift to seeing it more
as a contract.
 Difference btw. lease and license is that a lease gives rise to the landlord and tenant relationship, which carries with it rights,
duties, liabilities and remedies. (billboard usually a license)
 If a lease is for greater than a year it must be in writing according to the statute of frauds
12
Terms of years
Periodic
Tenancy
Tenancy at will
Tenancy at
Sufferance/Hol
dover
Caveat Lessee
14th A Equal
Protection
Clause
Civil Rights Act
of 1866





Given for specific period of time, automatically terminates at the end of period.
No notice of termination required b/c term is already specified – end is automatic
At common law (most states) any term of a specified period (can be less than a year)
Does not terminate upon death of one party
A lease for some fixed period of time that automatically renews at the end of each period until either the landlord or tenant
gives notice of termination.
 At common law notice of termination was required one period prior to termination, unless it was a year or more which only
required 6 months notice. (if period was a week, had to give a weeks notice), if no notice was given then tenant must pay for
another period.
 Does not terminate upon death of one party
 Can be implied from a tenancy at will
Garner v. Gerrish (NY)
 No period of time given, continues indefinitely until tenant or landlord terminate, no notice
(holding that lease for “so
required (modern statues do require notice).
long as tenant should
 Notice is usually the time equal to the interval between payments (usually a month).
wish” creates a life estate
 Terminates upon death of one party.
not a tenancy at will)
 If there is a lease both parties must be expressly given the right to terminate.
 If an oral lease is not in compliance w/ the SOF a tenancy at will is created once the lessee takes
possession
Crechale v. Smith (MS) a
When a tenant remains in possession after termination of the tenancy a landlord can do two things:
landlord can either evict or 1) treat the tenant as a trespasser and evict or
treat as a holdover, but not 2) treat him as a tenant, and let them “holdover”
both, and once they do one  common law remedy for landlord: hold tenant to another period of the lease
they are bound to that
 Most states have statutory remedies for landlord: i.e. double rent
decision)
 In most states holdover results in a periodic tenancy in others a term of years
Common law doctrine controlling the landlord tenant relationship. Under this doctrine the landlord’s only covenant was to
deliver possession of the property. Duty to pay rent was an obligation existing independently from landlord’s duty to deliver
possession so that as long as the tenant remained in possession the tenant was liable for the full rental amount irrespective of the
premises’ state of disrepair.
Housing Discrimination
Narrow, requires state action
Shelley v. Kraemer (US)
Jones v. Mayer (US) (holding
there are no exceptions to
CRA of 1866)
Federal Fair
Housing Act
(FHA)
U.S. v. Starrett (2d Cir)
(motive irrelevant)
Assignment
Sublease and
Novation
Ernst v. Conditt (TN)
(holding that the intent of
the parties determines
whether a transfer is a
sublease or assignment.)
Only applies to race
Broader than FHA in that there are no exceptions
Narrower than FHA in that it does not address services and facilities, advertising.
Cannot refuse dwelling (sell or rent) on the basis of race, color, religion, sex, familial status
or national origin.
 proof of motive unnecessary, just have to show that discrimination occurred, don’t need intent
(ex. of Sterit case where they had good motive to integrate race)
 act provides an award of attorney’s fees to winning tenants, winning LL gets awards if the
claims are frivolous or in bad faith
Exceptions: these people are excluded and can discriminate…
1) single family dwelling sold/rented by the owner
* if they don’t own more than 3, and
*don’t use a broker (real estate agent), and
*can only discriminate once every 24 months
*they can’t advertise a discriminatory intent, discrimination or limitation (can’t say only will rent
to white people)
2) owner-occupied exemption
*renting a place in building where owner lives
*owner can’t occupy more than 4 units
*can’t advertise discriminatory intent
Sublease and Assignment
Assignment: Conveyance of all remaining rights and obligations under the lease. There is no
reversionary interest left. New tenant is in privity of estate with landlord.
Sublease: Only a portion of rights and obligations under the lease are transferred. Original tenant
retains a right to re-enter or a reversion. New tenant is not privity of estate or contract with
landlord.
Novation: Landlord approves new agreement in which privity of contract and privity of estate btw
original lessor and original lessee is transferred to new lessee. Releases original lessee of all
liability.
Two tests for distinguishing between a sublease and assignment:
1) Modern Approach: intentions of the parties and the language used.
2)Formalistic Approach: language and length of term
13
Consent to
sublease or
assign
Consent to
sublease or
assign
Abandonment
& Surrender
Self-Help
Retaking
Mitigation of
Damages
Delivery of
Possession
Constructive
Eviction (Based
on the Implied
Warranty of
Quiet
Enjoyment)
In residential leases if the contract requires consent, consent may be arbitrarily withheld. However, all restrains on alienation
will be strictly construed.
Commercial Leases
1) look to lease, see if consent was required
2) If consent was required, courts are split as to whether or not that consent can be withheld arbitrarily.
Majority view: that a refusal to allow an assignment or sublease can be arbitrary
Minority view: a landlord cannot arbitrarily refuse and may only refuse on reasonable grounds (subjective). Some states hold
that refusal must be on commercially reasonable grounds (objective).
The Rule in Dumpors case: once a landlord consents to an assignment, the right to require consent is gone. Most jurisdictions
and restatement don’t’ agree with this rule.
*Common law favored leasehold interests that are freely alienable.
* All restrains on alienation will be strictly construed.
Tenant in Default
Abandonment: Tenant leaves with no intent to come back. Landlord can generally hold the
Lennon v. U.S. Theatre
Corp (DC) (holding tenant tenant liable for rent.
liable for damages minus
Surrender: Tenant affirmatively tells landlord he is leaving, offers to terminate lease. If landlord
landlord mitigation despite accepts, tenant is free from future rent (but in some states may remain liable for damages minus
surrender)
landlords mitigation)
* In many states may accept a surrender and still hold tenant liable especially if the lease contains a
survival clause
Berg v. Wiley (MN) (any
At common law a landlord could retake leased property, in which a tenant was still in possession
self-help reentry against a
without incurring liability as long as
tenant in possession is
1) Landlord was legally entitled to possession/right to evict (such as a T in holdover after a lease
wrongful - landlord must
expired, or a breach in a lease with a re-entry clause).
resort to the judicial
2) The landlord’s means for retaking were peaceable.
process)
A T can recover for wrongful eviction if either of these elements is missing.
There is a long standing policy against self-help and the modern rule is that most states have
departed from allowing this all together, recognizing the potential disruption that can occur.
Common Law: landlord has no duty to mitigate damages. The landlord is protected by the lease.
Sommer v. Kridel (NJ)
(requiring a landlord to
However if they do find a new tenant this will be considered mitigation and the tenant will be
show that they have used
entitle to any profits. (smart lawyer would terminate the tenant’s lease on the basis of abandonment
reasonable diligence in
and avoid giving up the profits)
attempting to re-let)
Modern Trend (IA): the landlord has a duty to mitigate the damages. The landlord must make
reasonable efforts to relet leased premises
*under either view if the landlord leases at fair market value, but it is less than what the original
tenant would have paid the landlord is entitled to the benefit of his bargain from the original tenant.
Duties Rights and Remedies
American Rule (minority rule): Landlord has no duty to deliver actual possession to the tenant.
Hannan v. Dusch (VA)
(upholding American
English Rule (majority rule): Landlord has the duty to deliver actual possession to the tenant.
Rule)
(IA)
When a landlord renders the premises:
Reste Realty Corp. v.
Cooper (NJ) (implying a
1) substantially unsuitable for the purposes for which it was leased, or
covenant to keep
2) which seriously interferes with the beneficial enjoyment of the premises,
basement waterproof in
It is a breach of the covenant of quiet enjoyment and constitutes a constructive eviction of the
the absence of an express
tenant.
covenant)
Requirements:
1) Substantial Interference (objective standard)
2) Tenant MUST abandon the premises within a reasonable amount of time or this right is lost.
*(reasonable time depends on circumstances, favor shown to tenants)
3) the defects must be latent, that which the tenant did not accept (could not have seen)
4) Interference with quiet enjoyment must be as a result of some act or failure by the landlord
5) Modern trend is to hold landlord liable for acts of other tenants if the he has a legal ability to
correct them and fails to do so.
Illegal lease
theory
Brown v. Southall Realty
(DC) (holding that unsanitary
conditions of premises may
render the lease illegal)
The Implied
Warranty of
Habitability
Hilder v. St. Peter (VT)
(implementing the loss of
bargain rule and awarding
punitive damages for
This is a defense used when the landlord brings suit to recover rent. In order to avoid being held
liable for rent after abandonment tenant may bring an action against the landlord for equitable
relief or a declaration sanctioning abandonment.
 Defense that the rent was not due under the lease because the conditions were so unsanitary and
unsafe that it violated the housing code, thus making it an illegal contract made in violation of a
statutory prohibition.
 Substantial violations occurring after the making of the lease, of which landlord has notice.
Implied warranty is that the landlord will deliver and maintain the premises in a manner safe, clean
and fit for human habitation.
Requirements:
1) must affect health and safety,
14
discomfort and
annoyance/emotional
distress)
Rent
Withholding
Retaliatory
Eviction
Permissive
Waste by
Tenant
Uniform
LandlordTenant Acts
2) and be more than a minor problem, so substantial (factual argument)
Loss of Bargain Rule: some jurisdictions allow the tenant to receive a rent abatement for the
difference between the cost of the premises as warranted and the cost as is.
 expert testimony not required
 this applies to BOTH latent and apparent/obvious defects
 unwaivable in most jurisdictions
 Landlord is not responsible for those defects the tenant caused
 Tenant must give landlord notice and time to repair defects
 Most jurisdictions allow the tenant to be compensated if they make the repairs
 the tenant does NOT have to abandon the premises (no need for constructively evicted)
 if a tenant stays and withholds rent, most court require that the rent be paid into the court
(landlord must be notified), so it’s not being withheld, just diverted
 In most jurisdictions only applies to residential leases (minority jurisdictions apply it to small
commercial establishments)
Foisy v. Wyman (WA)
 Under the common law doctrine of caveat lessee the landlord’s only duty was to deliver
(following minority rule)
possession to the tenant. Obligation to pay rent was an independent contractual duty and rent
could not be withheld.
 Most courts allow the tenant to use implied warranty of habitability as a defense when the
landlord brings suit for back rent subsequent to rent holding. The tenant may withhold rent,
retain possession, and have the agreed rent reduced by the value of the landlord’s breach.
 Typically the rent is cannot actually be withheld and must be “diverted to the court”
 Minority Rule: tenant cannot defend an action for nonpayment on the grounds of the warranty
unless landlord’s breach is so substantial as to have totally abated the rent. In the case of partial
abatement the tenant must have already calculated the damage and paid the landlord the balance
in order to use the defense.
Most states now have statutes that stop landlords from evicting or raising rents after a good faith complaint has been made (at
common law L could end lease whenever they wanted). IA says the L would have to wait a year; otherwise there is a
presumption of retaliation. (this is longer than most states)
 Landlord should gets the premises back in the same condition
 Intentional or permissive waste damages the future interest after a tenancy.
 Improvements can also be waste
 Although a fixture might not be waste, the landlord may retain it (i.e. new carpet)
 States obligations of both landlords and tenants in order to simplify, and clarify, mostly adopting common law
 The court may refuse to uphold unconsciousable provisions, those which were forced upon an unwilling tenant b/c of the
nature of the relationship.
 Insures that the right to the receipt of rent is inseparable from the duty to maintain the premises (common law said they were
independent – statutes have overruled that)
 Exemptions: hotels, motels, fraternities, farmhouses (primarily for agricultural purposes) are NOT subject to LTA
 Time limits for rental deposits. Punitive damages of $200 if they are not returned
 The duty to repair might be allocated to the tenant when it’s a single-family home, or an apartment if there is a separate
agreement supported by consideration
Security Deposits (adopted in most states including IA)
 Landlord cannot require more than two months rent, must hold it in an insured bank account, and it cannot be combined with
their money. The landlord for a tenancy of up to five years can make interest on that deposit.
 If it is withheld, the landlord must write up the specific damages and reasons for withholding but the tenant has the
responsibility of giving a forwarding address to get this report or receive deposit.
TRANSFERS OF LAND
Real Estate
Basics
Interim
Financing
Liens
The Real Estate Transactions
 Always physically check the property before buying
 Contract should have a legal description of the property
 Presumption that all fixtures will go any fixtures to stay should be listed
 Earnest money just shows commitment, no mandatory amount required
 IA requires a lead paint inspection
 Usually going to be pro-rate items, such as property taxes and condo fees
 Property taxes are paid in escrow because the closing is on a certain date and there is a balance for the year
 List deed, and type of warranty it is
 “Time is of the essence” means closing date in contract must be met, if not there is a reasonable time period
 Now allow for facsimile signatures
Bridge loan: Short term financing until permanent or the next stage of financing can be obtained. Money from the new financing
is generally used to pay back the bridge loan. Typically have a very high rate of interest and/or require a balloon payment.
An outstanding interest in the property (may constitute an encumbrance if seller pay it off upon closing)
Affidavit of Lien
Makes the seller disclose all liens on the property or sign off that there are no liens on the property. Not required in IA.
Mechanic’s lien: lien for the benefit of those that have improved the property
15
Brokers
Licari v. Blackwelder
(CT) (holding broker to a
fiduciary duty of good
faith and due diligence)
Statute of
Frauds
Hickey v. Green (MA)
(holding that when seller
expected buyers rapid sale
of home in order to
purchase seller would be
estopped from denying the
existence of an oral
agreement)
The Contract
Equitable
Conversion
Paine v. Meller (UK)
(allocating risk of loss to
buyer b/c legal title holder
only has security interest)
Bryant v. Willison (WV)
(following the minority
rule and allocating risk of
Contact a broker to help sell property
 Connect to MLS – ticket into system whereby people find property
 Modern rule: commissions are paid at closing; however
 Traditional Rule: At common law, a broker that finds someone who is ready, willing, and
able to purchase the property is entitled to the commission on the sale of the home
 Not much litigation on this – bad biz for broker
 Three Types of Arrangements
i) Exclusive Right to Sell
 Regardless of who sells the house (even owner), the broker still gets commission
ii) Exclusive Agency
 Exclusive to the extent that no other agent will be permitted to sell property, but if
owner sells, then the broker doesn’t get the money
iii) Open Listing
 Least protective: broker can get permission to sell house, but ultimately no exclusivity,
whoever sells the property first gets the commission
 Flip: when brokers buy property and then resell it for more
Real Estate Contract
Real estate transactions must be in writing.
 At a minimum should be a memo signed by the party to be bound, describing the real
estate and the price (not a requirement to list price, but must at least be a way to fix the
price, such as fair market value).
Two exceptions to the Statute of Frauds
*both are very hard to prove
*Only allows specific performance
1) Part performance (looks at the buyers conduct): allows the enforcement of an oral agreement
when particular acts have been performed in furtherance of the contract.
 There must be exceptional, extraordinary part performance on the contract, that was in
furtherance of the contract.
 Look for an action by the party that doesn’t make sense unless there was a contract
 Evidentiary issues i.e. went out and got a loan, wrote a check
 Payment of earnest money is not part performance
2) Estoppel/Injurious Reliance
 detrimental reliance on the oral agreement *went out and changed position relying on the
contract, e.g. selling house
 reliance was reasonable under the circumstances
 injustice can only be avoided by enforcement of the oral agreement *unjust enrichment
Offer to purchase
When accepted becomes a contract for sale
Executory contract: takes time before the deal is actually consummated
 “I promise to sell/buy to/from you , IF…these contingencies are met”
Executory Period: Ironing out Contingencies
i) Inspection: provides professional assurances that the property is void of major defects in
structure, plumbing, etc. – has to be a major defect
 Any discovery of such defects result in negotiations
 Cannot make the seller do something, but gives buyer ground to rescind the K
offer if seller won’t assent to changes
ii) Financing: most real estate Ks require financing in addition to earnest money
 “I agree to pay $200k contingent upon my ability to obtain financing”
 Must list:
 Type of loan
 Amount of loan
 Minimum APR willing to accept through financing
 Best efforts
 Buyer also has contract with lender via mortgage to repay the amount secured through
financing
 Mortgage grants security interest to the lender
**Contract should request marital status in order to determine the type of tenancy (in case one
spouse dies and contract is breached. Also to determine inheritance.
Lasts for duration of executory period: At signing of the contract equitable conversion occurs
and lasts until closing.
During this period legal title remains with the seller and the buyer has equitable title.
 The buyer has the legal right to the property once the contingencies are fulfilled
 In most jurisdiction the equitable owner bears the risk of loss during the executory period
Majority Rule: Unless otherwise explicitly stated in the contract buyer bears the risk of loss
during executory period.
16
 If seller has insurance and loss occurs he holds proceeds as constructive trustee for buyer in
order to credit buyer for loss. If buyer insurance he gets the proceeds from both policies
(think of seller as trustee and buyer as beneficiary)
Massachusetts Rule (Minority Rule): Seller bears the risk of loss as buyer may rescind contract
for substantial loss.
Remedies to loss during the executory period.
 Making sure that one party maintains an insurance policy on the property in question
 Insert a contract provision that the seller maintains legal/equitable ownership until the
actual transfer of title
 Lenders on original mortgage of sellers will release lien upon payment from sellers (typically from check from new mortgage
issued to buyers)
 Buyers will get the deed and sellers will get the money obtained from the new financing that was agreed upon in the contract
for sale
 Contract merges into the deed, which ultimately is the consummation of the contract
 Formal closing rarely held now, usually broker and banker there, title passes at closing not at time of contract (thus the
contract is an executory contract)
** seller typically has the right to satisfy a mortgage or lien with the funds obtained at closing
3rd party acting in a similar manner to Power of Attorney on behalf of buyer or seller of the property
Title: Sum total of all documents ever made that have to do with that particular piece of property – a ‘state of being’ if you will
No such thing as one piece of paper that is the title to a house (unlike cars).
 Buyer gets the Deed to the home, which is not a title
 It is a piece of the title – an instrument of transfer, which moves the property interest from A  B
Lohmeyer v. Bower (KA)
Marketable title:
(holding that seller has a
 The title (usually not the contract) comes with an implied warranty of marketability
duty to disclose
 A marketable title is a title a reasonable buyer would accept
encumbrances. A waiver
 A title it not marketable if it’ subject to encumbrances or other burdens:
of encumbrance in the
1) something that buyer wouldn’t expect and it affect the value of the property
contract is not a waiver of
2) anything that exposes owner to a hazard of litigation
violation of the
3) there is a restrictive covenant, or violated ordinance (majority)
encumbrance. Also if the
Majority rule: A restrictive covenant by itself is an encumbrance thus making the title
property is in violation of
unmarketable. Waiver of the encumbrance does not constitute waiver of a present violation of the
zoning ordinance and
encumbrance the buyer is unaware of. A zoning ordinance by itself is not an encumbrance unless
lawsuit may be filed by
there is a violation of the ordinance that is likely to result in injury to the buyer (ie lawsuit)
the govt. the title is
Minority rule: The property must be in violation of the covenant to constitute an encumbrance.
unmarketable) (minority
*A restrictive covenant is created by the seller, every time you convey the property, the restriction
rule)
runs with the land. E.G. house has to be two stories tall (if one said you couldn’t sell to African
Americans it would just disappear b/c it’s unenforceable due to the equal enforcement clause).
*most property has some defect if you go all the way back, so states have statutes that have SOL,
for instance in IA you only have to find a marketable title up to 40 years back, more than that is
barred.
In Iowa: abstract of title, opinion by attorney from which a malpractice suit may arise
Everywhere else: title insurance
Duty to Disclose Defects
Strambvsky v. Ackley
Common law rule is no duty to disclose (Minority Rule)
(NY) (Exception to caveat Under the common law doctrine of caveat emptor a seller does not have duty to disclose defects.
emptor. Where seller’s
Sellers should be advised to not discuss defects because they may still be liable for affirmative
house is haunted as a
misrepresentations. The buyer has the duty to inspect (doctrine based on this opportunity).
matter of law this latent
Most states including IA have developed exceptions and require that the defect must be one that
defect must be disclosed)
could be discovered by the buyer with due diligence.
Johnson v. Davis (FL)
(holding that affirmative
misrepresentations/
misfeasance will result in
seller liability)
Haberstick v. Gordon
In jurisdictions that require disclosures of defects:
(MO) (reaching outer
The defect must be material. Disclosure statutes vary between an objective or subjective test.
limits of duty to disclose
1) Objective test of whether reasonable person would attach importance in deciding to buy
requiring broker to
2) Subjective test as to whether the defect affects the value or desirability of the property
disclose toxic waste in
“As is” clause: generally upheld if the defect is reasonably discoverable and there is no fraud, if
nearby landfill.)
there is fraud or concealment the buyer is not bound to the clause.
 The doctrine of merger essentially states that the contract for sale merges into the deed at closing
 Contract provisions (i.e. marketable title, quantity of land) can no longer be sued upon once the deed has been transferred, but
rather, any suit must be on the basis of the warranties implied or expressed within the deed itself
 Some contracts come with provisions stating warranties that will survive the closing
 Exceptions include fraud, misrepresentation of material fact, and contractual promises collateral to the deed.
loss to legal title holder)
Closing
Escrow Agent
Title
Marketable
Title
Caveat Emptor
Disclosure of
Defects
Merger
17
The Implied
Warranty of
Quality
Damages
Liquidated
Damages
Specific
Performance
Parts of the
Deed
Tract
Description
Forgery and
Fraud
Indenture
Tax Stamps
Types of Deeds
 Suits may only be brought after a closing has taken place and the deed has been accepted
 Only latent defects must be disclosed.
 No privity of contract requirement: however recovery will be limited to how much grantor
received.
 Where a buyer buys a house and there are problems due to faulty work the prior owners have
done, the buyer can bring a suit against that contractor for a breach of an the implied warranty of
quality, it is not based on privity of contract but rather public policy. (must be latent defects
and suit must be brought in reasonable amount of time)
Remedies for Breach of the Sales Contract
*winner usually can elect remedy
*loss of bargain rule: damages are difference between purchase price (what they were going to
Jones v. Lee (NM)
(awarding punitive
pay) and the market value at the time of breach—awards seller the benefit of the bargain that they
damages for buyer’s
lost because of buyers breach
wanton disregard of
*special damages: result from the natural and probable consequence of the breach (e.g. mortgage
contractual obligations)
payment, solar system inspection that was requested)
*punitive damages: actions are reckless and in utter disregard for contractual obligation (e.g. lied
to get out of contract)
Kutzin v. Pirnie (NJ)
Retention of the deposit or restitution of the deposit
(holding that party in
Common law (Majority Rule): The seller gets to keep the deposit when the buyer fails to fulfill
breach is entitled to
contract
restitution for any benefit
*some states have caps usually a 10% deposit
conferred by way of part
Minority rule: whenever a breaching buyer can prove that the deposit exceeds the seller’s actual
performance)
damages suffered as a result of the breach, the buyer may recover that difference in order to avoid
unjust enrichment.
Typically difficult to obtain, however, favored in real estate contracts.
Lempke v. Dagenais (NH)
(holding that privity of
contract is not required in
order to bring suit for
latent defects under the
implied warranty of
habitability)
The Deed
1) Words of Conveyance
2) Description of Property
i) Metes and Bounds: landmarks that indicate boundaries
ii) Reference to plat: survey/subdivision of land broken into pieces
iii) Gov’t Survey: lengthy geographic/legal descriptions
3) Warranties of Title
4) Signature of grantor
5) Notarial Acknowledgment
 Not required for conveyance, but required for recording with the state, thus protecting grantee in the future from grantor
6) Consideration: only in sales in order to indicate bona fide purchaser. Doesn’t have to be the actual sale amount
Seal: used to be required, abolished in many states
*a deed is effective upon delivery. Delivery may consist of word and/or acts. A subsequent conveyance requires redelivery.
Canons of Construction (highest to lowest)
Natural Monuments → over artificial monuments → over references to adjacent boundaries → over directions → over distances
→ over area → over place names.
Water Boundaries
Accretion: A gradual shift in a body of water causing the adjacent land to advance or recede. This will permanently change
property line.
Avulsion: A sudden change in the course of the river (i.e. flood) does not change property boundaries.
Forgery: Void ab initio (void from the beginning). Void title cannot be conveyed therefore no
McCoy v. Love (FL)
bona fide purchaser can exist
Sheffiel v. Andrews (AL)
(holding that a signature
Fraud: Deed is voidable except in the case of a bona fide purchaser. (favors bona fide purchaser
procured by deception
since defrauded seller is more at fault for putting property in the stream of commerce)
constituted a forgery)
Before copy machines two copies of the deep were scribed (typically on sheepskin), signed by both parties, and ripped apart.
Then they could be fit together to determine if the deed was genuine. Indentures were rarely used in the U.S. because we have a
recording system in place at the county clerk’s office.
Tax paid according to the amount of deed reflected by stamps on deed. Exact price not required opens the door for
manipulation.
1) General Warranty Deed: warrants title against ALL defects in the title, doesn’t matter if defects arose before or after the
grantor took title. Most selling agreements contain this.
2) Special Warranty Deed: contains warranties ONLY against the grantor’s own acts, not the acts of others or prior owners.
Only protects against the defects which the grantor created.
3) Quitclaim deed: contains no warranties, just conveys whatever title the grantor has. I he has a warranty deed the future
warranties will be transferred to.
* If there is a breach of warranty the buyer seeks damages (money) for the purchase price they paid. (v. unmarketable title where
they are seeking to rescind the contract)
18
6 Expressed
Warranties of a
General
Warranty Deed
Brown v. Lober (IL)
(holding that the mere
existence of a superior
title does not constitute a
breach of covenant of
quiet enjoyment. Some
disturbance is required)
Present
Covenants v.
Future
Covenants
Rockafellor v. Gray (IA)
(following minority rule
and assigning the chose of
action for breach of a
present covenant from
original grantee to a
subsequent grantee)
Breach of
Covenant
Against
Encumbrances
Frimberger v. Anzellotti
(CT) (holding that mere
existence of a public
encumbrance i.e. tidal
wetlands violation does
not constitute a breach
until some action is taken)
Types of
Delivery
Sweeney v. Sweeney (CT)
(finding a delivery
conditioned upon
survivorship to be a legal
delivery voiding the oral
condition)
Delivery and
Death
Rosengrant v. Rosengrant
(OK) (holding that a deed
held in a envelope with
grantor’s and grantee’s
names held in escrow is
revocable and cannot
Warranties of Title
Present Covenants: may only be breached at time of transfer. Therefore, the statute of
limitations begins to run at time of transfer
1) Covenant of Seisin: promises that the grantor owns the property, that they have title
*is breached if the grantor doesn’t have title when the deed is conveyed
2) Covenant of a Right to Convey: promises that the grantor has the right to convey the property
3) Covenant Against Encumbrances: promises that there are no private encumbrances: i.e.
mortgages, liens, easements, or covenants on the deed.
Future covenants: breached at a time in the future upon occurrence of a defect at which time the
statute of limitations begins to run.
4) Covenant of General Warranty: grantor promises to defend against claims of superior title,
and will compensate the grantee for any loss that the grantee may sustain by assertion of superior
title (grantor only liable if grantee’s title does not prevail). Majority Rule: maximum recovery is
purchase price plus incidental damages.
5) Covenant of Quiet Enjoyment: grantor promises grantee that he won’t be disturbed in his
possession by someone with superior title (Mere existence of a reserved interest does not trigger
liability. There must be an actual interference i.e. constructive eviction)
6) Covenant of Further Assurances: grantor will execute any other documents required to
perfect the title conveyed, so promises to do anything necessary to clear up any defects in title.
*Damages for breach or limited by the amount the warrantor was paid
1) Damages are always calculated at time of breach
 Present Covenant: when a present covenant is breached, the grantee is generally entitled to
the purchase price.
 Future Covenant: damages are basically the price upon disturbance. (i.e. cost of buying up
the paramount claim)
2) Statute of Limitations begins to run when breached
 present covenants, are breached at time of transfer so that’s when it starts running, have to
be careful to catch before the claims are barred by SOL
 future covenants, breached at some time in the future when someone with superior title
interferes, so that’s when it starts running
Majority view: common law
(i) future covenants run with the land (always do)
(ii) present covenants don’t run with the land
*subsequent purchaser will not be able to bring a cause of action against initial grantor in breach.
The chose of action is not assignable.
Minority view:
Both present and future covenants run with the land.
*the chose of action is assigned to subsequent purchasers
*damages: subsequent buyer is entitled to the purchase price grantor1 paid when it was breached.
Zoning Regulations
A zoning violation is not a breach of the covenant of no encumbrances, if the grantee has yet to be
encumbered, meaning no action has been taken on that violation.
*remember that a zoning regulation that is violated, is an encumbrance before closing
(unmarketable title) and the contract is rescindable, here it is different b/c the parties are seeking
damages), so the same activity that would allow you to rescind a contract before closing, will not
allow collection of damages after closing
Minority Rule: open and visible encumbrance does not constitute a breach.
Delivery of the Deed
*To be effective a deed must be delivered. These strict rules are to force people to go to lawyers,
and also the courts not wanting people to avoid probate (trying to give gifts)
*There must be an intent to pass title for the delivery to be effective
1) Hand the deed over to the grantee after payment-it’s an immediate transfer
*where a deed is formally handed over, there is a presumption of delivery unless it can be
overcome by evidence that delivery was not intended
2) Hand the deed over to an escrow agent (3rd party), which means that certain conditions must be
met before the transfer takes place
*if someone died, the court may relate time of transfer back to when they handed it to agent
3) Oral delivery. (Almost certainly will not be upheld in a transfer at death)
Majority Rule/Sweeney Rule: Oral conditions contradicting the written instrument offend the
statute of frauds and will not be honored.
Alternatives to making a revocable deed that will be considered void:
1) make a JT, from A and B to A and B…problem is one of them could destroy it by conveying
their interest to another
2) deed from A to B, then B conveys a life estate to A
3) put a written condition of survivorship in the deed
4) A and B deliver deed to escrow agent, with instructions to deliver it to A if B dies
19
*only put the grantee’s name on the envelope!
5) Revocable trust if A dies to B
6) Devise from A to B in the will.
*so funny b/c wills are revocable
The Mortgage
A mortgage is an instrument that transfers a security interest in the property. A lien is placed on the property, so that in case of
default the mortgagee can foreclose on that security interest, this includes the power to sale.
 Warrants that mortgagor own the property and will defend all claims.
 Acceleration clause: if borrower defaults, the lender can seek all remaining debt at once, selling the home without the
lenders consent is typically considered such a default.
 A due on sale clause: means if the mortgagor sells the property the entire mortgage is due.
 In case of a second mortgage lenders are prioritized depending on who made first loan: Senior vs. junior lienholders.
Promissory Note: promise to pay
By itself does not establish any security interest in the lender
Amortized Payment Mortgage
Typical type of mortgage with monthly payments for the duration of a term.
Balloon Payment Mortgage
Calls for periodic interest payments until the due date of the debt when the whole principal sum is due.
Equitable Mortgage: Legal fiction in which the court will deem devious contracts to be a mortgage. Occurs when the lender is
attempting to avoid the buyer’s equity protection but the land was intended to be a security for a debt. (I.e. Lender requires that
the land is deeded to them in fee simple with an option to repurchase or a promise to return the deed once the debt is satisfied.
Arrangement in which borrower transfers title to 3rd party as trustee for the lender to secure the debt. If the debt is not paid the
trustee sells the land under power of sale.
The mortgagor’s interest in the property. It is the difference between the fair market value of the home and the amount left on
the mortgage.
A second mortgage on the equity. The first mortgage gets paid back before the second mortgage, so there is higher risk and thus
a higher interest rate on your second.
Renegotiation of mortgage can be used to lower ultimate interest payments. If mortgagor needs money then when interest rates
are low they can find a new lender and extract the equity (cash out).
Similar to a mortgage, but instead the seller plays the part of the lender. The buyer takes possession
Bean v. Walker (NY)
(holding installment land
and pays installments but the seller retains the title. Once it’s paid for the seller passes the title. If
contract should be treated
there is a default on the payments, there is a breach of the contract and the seller retains the title to
like a mortgage)
the detriment of the buyer.
Courts are split on how to treat a buyer default
Traditional Rule: Treat liked a contract, and the buyer if they breach
Modern Trend: treat like a mortgage, seller must either judicially foreclose on the buyer’s
equitable title or bring an action for the purchase price. Forfeiture of payments is limited to
situations where equitable.
Foreclosure
Lenders remedy for borrower default. Sale of the security property in order to obtain outstanding
Murphy v. Fin. Dev.
Corp. (NH) (imposing a
mortgage debt.
duty of due diligence and
Notice of intent to foreclose
good faith on a lender and
Statutes that require a notice to cure the default, notice of what the default is and a reasonable time
requiring commercially
to cure it
reasonable methods for
Lender Duties in Case of Foreclosure
producing a fair price at a
1) Good faith (cannot discourage other buyers in order to buy property them self)
foreclosure sale)
*if they do not show good faith, the damages to borrower will be difference btw. Fair market
price and selling price.
2) Due diligence (commercially reasonable effort (objective) to obtain a fair & reasonable price)
*if an error is made here, the damages are the difference between the sale price and the “fair
market value” of the property
Factors indicating lack of due diligence
 Selling far below fair market value
 Failure to adequately advertise the sale
Upsetting a foreclosure sale:
Insufficiency of price alone will not allow a borrower to upset a foreclosure, unless it
(a) shocks the conscious or (b) is grossly inadequate
But these are difficult standards, courts have held that sales as low as 1/20th of the market price is
reasonable.
Judicial foreclosure: lender goes to court seeking a foreclosure, and borrower can come into court at any time before the court
rules and try to redeem their property.
Statutory foreclosure period: this is a short period of time where a borrower can once again try to redeem their property from
the purchaser, after this there is no way to get it back. This was enacted by the legislature to protect a borrower.
Non-judicial foreclosure. A mortgagor can elect to have a non-judicial foreclosure, and instead just give the lender the deed. In
exchange for this, most lenders agree to waive the borrower’s deficiency, meaning if the property sells for less than what is
owed, they won’t come after the borrowers for balance. However, the borrower loses the right of redemption. In this way the
transfer an interest when
grantor has died)
Mortgage
Types of
Mortgages
Deed of Trust
Equity
Equity
Stripping
Refinancing
Installment
Land Contracts
Foreclosure
Judicial
Foreclosure
Deed in Lieu of
Foreclosure/
Non-Judicial
20
Foreclosure
Redemption
Power of Sale
Deficiency
Judgment
borrower can avoid the expense of foreclosure and move on debt free.
Two kinds of redemption.
Equity of Redemption: created by court of chancery. Until mortgage is foreclosed by a court mortgage can be redeemed by
paying arrears plus costs.
Statutory Right of Redemption: Gives foreclosed party the right to purchase from purchaser at sheriffs sale for statutory period
of time.
Allows the mortgagee (must be in terms of mortgage) to sell the property to account for any default.
A judgment for the deficiency collectible out of the general assets of the borrower when the foreclosure sale does not bring
enough to pay the remaining debt.
Anti-deficiency Statutes: Some states prohibit deficiency when the loan is used to purchase a residence. Others prohibit
deficiency judgments only in certain types of foreclosures most commonly power of sale foreclosures. Some states limit the
amount of the judgment and how it may be obtained.
TITLE ASSURANCE
Types of
Indexes
Notice
Mother
Hubbard
Clause
Government
Survey System
(Jefferson
System)
Idem Sonans
and Notice
Recording Acts
Pure Race
Statute
Pure-Notice
Statute
Race-Notice
Statute
1) Tract Index: by parcel number, very few have it, solves the wild deed problem
2) Grantor-grantee index: Name of seller and buyer are recorded. Listed in alphabetical order according to grantor in Grantor
Index and grantee in the Grantee Index. Both must be checked going backwards to root of title in Grantee Index (40 yrs in IA)
then back up to present in Grantor index.
3) Judgment lien index: all judgments to which the property is subject to in the form of a lien. Judgments in IA are good for 20
years and renewable for another 20.
4) Lis Pendens: all pending lawsuits potentially creating lien on property
*all indexes are county sensitive, for constructive notice you only have to look in yours
Three Types of Notice
1) Actual Notice: One is personally aware of a conflicting interest in a real property i.e. the person is shown a prior deed
Two Types of Constructive Notice
2) Record Notice: Legal fiction in which property records are held to constitute notice of a conflicting property interest
irrespective of actual notice.
3) Inquiry Notice: Based on facts that would cause a reasonable person to make inquiry into possible existence of another’s
interest in real property.
Minority Rule: quitclaim deed constitutes inquiry notice (not IA)
Clause in which grantor conveys “all that I own” or “all my property in X county” without giving a
Luthi v. Evans (KA)
(holding that a MH clause
legal description of the property
does not give constructive
This is a valid transfer, but problems arise when a subsequent purchaser does a title search and
notice to subsequent bfp)
these lands don’t show up due to lack of legal description.
In the states that used this, all land was surveyed into rectangular tracts by running parallel lines north and south, to make 6 mile
squares.
Prime meridian: the first north and south lines established
Range lines: parallel to the principal meridian, running north and south; parallel, at six mile intervals are township lines
Each township is divided into 36 sections, §16 reserved for a school
Divide each § into quarters, then those are divided into quarters of 40 acres, why they are in squares
Doctrine that says that even if a person’s name is misspelled if it is pronounced as spelled, the
Orr v. Byers (CA)
(holding that an
identity of the person shall be presumed
instrument does not give
Majority Opinion (IA): Idem sonan applies to the recording of instruments, therefore, a
notice unless it identifies
misspelled name still gives notice to a subsequent purchaser.
the party by the correct
Minority Opinion: idem sonan does not apply to the recording of instruments and does not give
name and encouraging
subsequent owners notice, this would place an undue burden on the title searcher
judgment creditors to spell Remedy: a buyer can ask the seller for an affidavit of identity, seller signs an affidavit and records
the name of the judgment
it at the recorder’s office, it states “my name is Jenny” but if you see it spelled “Jenni” that is me.
debtor correctly)
This clears the title and makes it marketable. (In IA such an affidavit lasts for three years).
Recordation and Recording Acts
Are designed to protect subsequent purchasers who comply with the recording act.
Overwhelmingly are not written to protect donees.
About half of the states recording acts are applied to protect judgment creditors. About half do not.
Typically operate only on written instruments of conveyance. Thus an adverse possessor who has not recorded will typically
prevail over subsequent a BFP.
1) check to see if the subsequent purchase is protected 2) Check for wild deeds 3) check if subsequent purchaser prevails (if both
are protected, go to first in time) 4) check for the shelter rule (would grantor of subsequent purchaser prevail over the prior
interest)
Subsequent purchase is protected under the statute if they 1) acquire the land for value 2) and record w/ in the chain of title
before the prior claim is recorded.
*Only two states have pure-race recording acts (NC)
*However, if the recorded deed is not within the chain of title it will fail against subsequent recorded deeds.
Subsequent purchaser is protected from the prior interest if they take 1) for value 2) in good faith 3) w/out notice of the prior
title claim.
*About half the states have pure-notice recording acts.
A subsequent purchaser will get title provided that 1) for value 2) in good faith 3) w/out notice of the prior title claim.
4) and they record the deed before the prior title holder
21
Shelter Rule
Defective
Acknowledgem
ent/
Notarization
Estoppel by
Deed
* Subsequent BFP will not qualify for protection until they record!
*About half the states have race-notice recording acts.
Any person that takes from BFP (even by gift) will prevail over any interest over which the BFP would prevail. This is
necessary to give the BFP the right to convey the property.
Ex: O to J (j is a BFP doesn’t record) then O to B (b is a BFP doesn’t record) then J records. Then B records. Then J to C. C
records. C wins in every jurisdiction even if he had notice.
When proper recordation requires notarization and defective notarization is not apparent on its face
Messersmith v. Smith
(ND) (holding that under a the better rule is that the recordation imparts constructive notice.
race notice statute if
Minority Rule: If an instrument is defectively acknowledged it is not entitled to be recorded and
notarization has a latent
therefore cannot impart constructive notice
defect no subsequent
instrument can be properly
recorded)
One who conveys property by warranty deed without possessing title and subsequently acquires title will be estopped from
claiming the initial conveyance was invalid. The law will automatically transfer the newly acquired title to the purchaser.
Deeds Recorded Before Grantor Obtained Title
1) A to B recorded 2) O to A recorded (goes to B by estoppel) 3) A to C (no notice of A to B and recorded)
Majority Rule: A subsequent BFP prevails over a prior BFP who obtained the deed by estoppel.
Minority Rule: A subsequent BFP loses to a prior BFP who obtained the deed by estoppel because grantor has already
automatically transferred title to prior BFP and has no more interest to convey.
A recorded deed conveyed outside the chain of title is a wild deed and cannot constitute notice. A
grantee records a deed when his grantor has not recorded the prior deed conveyed to him. Ex: If a
deed is conveyed O to A and is not recorded and a subsequent deed is conveyed from A to B and is
recorded the latter will be a wild deed. A subsequent conveyance from O to C will not put C on
notice of B’s interest.
A wild deed cannot be properly recorded. Footnote on 588
Does a deed recorded after the grantor is shown by the record to have parted with title give
constructive notice?
Limited Search Required (Majority Rule): It places an undue burden on the title searcher to
require them to search the indexes under the name of each grantor in the chain of title to the
present date.
Extended Search Required (Minority Rule) (CA, NY): The title searcher must search to the
present date under the name of each person who ever owned the property to pick up deeds recorded
late.
Chain of Title Problems
Majority Rule: If a grantee’s name is left blank the intended grantee is the agent of the grantor
with implied authority to fill in his own or another name. The deed is null when executed, but
when the name is filled in, the instrument becomes operative as a deed.
Wild Deed
Bd. of Education of
Minneapolis v. Hughes
(MN)
Zimmer Rule
Deed Recorded
Late
Zimmer v. Sundell (WI)
Morse v. Curtis (MA)
(requiring limited search)
Woods v. Garnett (MS)
(holding that a deed
recorded late, after another
deed from the same owner
gives constructive notice)
Deed in Blank
and Implied
Authority
Bd. of Education of
Minneapolis v. Hughes
(MN) (holding that if at
the time the grantee fills in
his name he has no notice
Death of Grantor
of another’s interest he
Although the death of a principal usually terminates the power of the agent to act, if the grantor
becomes a bfp prevailing
dies before the agent fills in the grantee’s name, the agent can fill in the grantee’s name after the
over prior unrecorded
grantor’s death even in the case of a gratuitous transfer.
deeds. Here BOE could
have protected themselves
by requiring deed to be
recorded prior to
purchase)
Guillette v. Daly Dry Wall Implied Reciprocal Servitudes
(MA) (holding that a deed Courts are Split
by a subdivider to another
Massachusetts Rule: An easement or restrictive covenant in a deed from a common grantor that is
lot in a subdivision gives
not in a subsequent deed is in a subsequent purchaser’s chain of title and thus provides constructive
constructive notice of any
notice of the easement.
covenants or easement
Diverging Rule: An easement or restrictive covenant in a deed from a common grantor that is not
reserved over neighboring in a subsequent deed is in not in a subsequent purchaser’s chain of title and thus does not provide
lots)
constructive notice of the easement. (NY, IL, OH)
Krueger v. Oberto (IL)
(does not follow the MA
rule)
Pro-Tanto Rule (majority): When a purchaser has made partial payment most courts protect the purchaser to the extent of the
payments made.
1) Majority Rule: Award the land to the holder of outstanding interest and award the buyer the payment he has made.
2) Award the buyer a fractional interest in property: A lien for the amount paid prior to notice.
3) Allow the buyer to complete the purchase but to pay remaining installments to the holder of the outstanding interest: a lien to
the outstanding interest holder for amount remaining to be paid.
Implied
Reciprocal
Servitudes
Deeds From a
Common
Grantor
Partial
Payment
22
Contractual
Provisions
Types of
Inquiry Notice
Inquiry Into
Unrecorded
Instruments
Two part test
Daniels v. Anderson (IL) (applying the pro-tanto rule but holding that purchaser who continues to pay on contract in face of
actual notice of a another’s right is not a BFP)
Lewis v. Superior Court (CA) (holding that a purchaser who gives cash and notes in payment of the purchase price is a BFP who
is fully protected from lis pendens filed during the executory period)
Alexander v. Andrews (WV) (holding that payments made after indexing of prior interest are made in the face of constructive
notice and cannot be recovered)
1) Option to Purchase: seller cannot sell to someone else for a period of time.
Daniels v. Anderson (IL)
2) Right of First Refusal: if seller gets an offer he must give holder right to match offer.
Inquiry Notice
Waldorf Insurance v.
Under certain circumstances a purchaser is required to make reasonable inquiries. He is
Eglin National Bank
charged with notice of whatever the inquiry would reveal.
(FL) (charging inquiry
1) Notice from possession: Notice due to the physical surroundings/circumstances of the property.
notice as a result of
 Lesser Standards (Minority Rules)
possession of a condo
 A minority of jurisdiction only require an inquiry if purchaser has actual knowledge
despite lack of actual
of possession.
knowledge)
 Even in the face of actual possession a purchaser will not be charged with inquiry
Miller v. Green (WI)
notice if a search of recorded instruments does not reveal an interest blatantly
(fresh manure on the farm
inconsistent with the rights of the record owner. Whatever.
is inquiry notice)
2) References in the record to unrecorded instruments. When a recorded instrument expressly
Grose v. Sauvageau
refers to an unrecorded instrument a subsequent purchaser will be charged with constructive
(WY) (holding that a
knowledge of the contents of the unrecorded instrument.
purchaser is not charged
 Restatement only charges constructive notice if the reference is to another document that is
with inquiry notice in the
recorded somewhere
face of possession when
3) In a minority of jurisdiction not including IA a quitclaim deed is a form of inquiry notice.
possession is consistent
with record title)
Harper v. Paradise (GA) (holding that when a deed to a purchaser refers to another deed the purchaser is on inquiry notice as to
the contents of the deed referred to)
1) Was the person placed on Inquiry Notice?
2) If yes, did they exercise due diligence to inquire into that property interest?
* If the answer is yes they are still a BFP.
JUDICIAL LAND USE CONTROLS: THE LAW OF NUISANCE
Judicial
Control
(Nuisance)
Private
Nuisance
Public Nuisance
Two theories of
Nuisance Law
Remedies
Sic utere tuo ut alienum non laedas: one should use one’s property in such a way as not to injure the property of another.
Nuisance Law: restriction on ability to use property as we see fit. Only can use property as one sees fit to the extent it does not
unreasonably interfere with another’s ability to use property as they see fit. Moving to a nuisance is not an absolute defense but
may reduce damages
Morgan v. High Penn Oil 1) A non-trespassory interference w/use & enjoyment of land that gives rise to liability
(NC) (holding that the
2) Must be substantial, cannot be purely aesthetic (show harm); and
standard of unreasonable
3) (a) is intentional (had reason to know it would occur) and unreasonable
interference will be
or
measured by the
(b) an unintentional result of negligent, reckless or abnormally dangerous activity
sensibilities of the average
person)
Unreasonable interference with the public’s right to property, that significantly interferences with
Spur Industries v. Del E.
public health, safety, peace or convenience.
Webb Development (AZ)
(cattle feed lot)
*must affect a whole community
*The unreasonableness may be evidenced by statute or by the nature of the act, including how long
and how bad the effects of the activity.
Estancias v. Schultz (TX) Threshold Theory (NY): If claimant meets the threshold requirement they are entitled to relief.
(balancing the equities in
Any action that amounts to a nuisance should be enjoined.
favor of plaintiff’s and
Balance of the Equities (Restatement): process of weighing gravity of the harm against the utility
enjoining apartment
of the conduct (e.g. smell in the air v. all the jobs the feedlot provides)
complex from operating
noisy AC)
Boomer v. Atlantic
No Remedy
The court may refuse to grant a remedy perhaps reasoning that the claimants will fix the problem
Cement Co. (NY)
(awarding permanent
themselves by buying the property of the imposing party.
damages for air pollution
Abate the Nuisance (Injunction)
nuisance and denying an
 Makes the party stop whatever they were doing.
injunction)
 Basically gives the plaintiff a right that can be sold
Spur Industries v. Del E.
 Court may grant the injunction and require plaintiff to pay defendant damages. Essentially
Webb Development (AZ)
making the plaintiff pay for the right. In this way the court can effectively force a sale, by
(granting injunction but
granting the injunction but requiring the claimants to buy the property of the imposing party
awarding damages in
(i.e. feedlot)
order to move its feed lot)
 Imposing party will typically buy out injunction or buy property of claimants
23
Damages
Awarding damages to plaintiff basically awards him the right but requires him to sell it to the
defendant. The defendant is compensated for their damage but the defendant may continue. Some
courts will allow the defendant to force the plaintiff to choose one remedy, so either injunction or
damages (not in IA).
Permanent Damages: Basically creates subservient estate. Acknowledges that the plaintiff will
experience a significant interference with their quiet enjoyment for a long time. The court awards
prospective damages.
PRIVATE LAND USE CONTROLS
Easements
Right to take something off another’s land
Profit-aprendre
Two Types of
Easements
Types of
Tenements
Two types of
Affirmative
Easements
Creating an
Easement
Express
Easements
Willard v. First Church
(CA) (following the
minority rule holding that
an easement may be
reserved in favor of a third
party)
Shephard v. Purvine
(OR) (diverging from
majority rule and allowing
a easement by express
grant without a writing)
Easement by
Implication
Holbrook v. Taylor (KY)
Rules
1) A license can never
become a prescriptive
easement since it is not
hostile.
1) Affirmative easements: one’s option to use another’s property for their benefit. Requires
hostile use.
*I can use your driveway
2) Negative Easements: forbid someone from doing something on another’s land (covenant or
encumbrance)
*cannot open feedlot
Dominant Tenement: parcel of land that the easement attaches to and benefits when it’s an
appurtenant easement
i.e. I have a house (dominant tenement); my neighbors give me an easement to their driveway, my
neighbor’s house is the servient estate. Upon subdivision of my property each division will
probably have an easement.
Servient Tenement: This is the parcel of land that bears the burden of the easement
*easements are covered by the statute of frauds
1) Appurtenant Easements
 Easement that runs with the land.
 it requires a dominant tenement and servient tenement, the easement attaches to and benefits
the dominant tenement
 usually transferable, transferring with the dominant estate to successive owners
 upon ambiguity the law will presume the easement is appurtenant
2) In Gross: transfers with the person.
 only involves a servient tenement, there is no dominant tenement
 an easement to anyone who wants to use it is an easement in gross b/c it has no dominant
estate
 it stays with the person, not the land
Creating an Easement
Can create an easement in a number of ways:
1) Express Grant
2) Reservation
i. Exception
3) Implication Easement Implied from Existing Use
i. Easement by Necessity
ii. Estoppel
4) Prescription
Express Grant: Transfer the entire interest in the property, but then create an interest in the
grantor. Cannot reserve an easement in a deed in favor of a third party
i. Reservation: a two step process where first grantor transfers the entire interest in the
property, but then create an interest in the grantor
ii. Exception: give everything BUT the pre-existing easement. Exception may be granted in
favor of a third party (i.e.. you can have everything but the parking lot)
 Statute of Frauds applies b/c it’s an interest in land
 Requires a written instrument signed by the party to be bound
 must be explicit about the scope of the easement
Common Law Rule: a grantor cannot reserve an easement in a deed in favor of a third party, only
in themselves (lots still follow this)
*get around by: using two instruments. i.e. convey w/ reservation to himself, then turn around and
convey an easement to the church.
Modern View (minority rule): grantor can reserve an easement for a third party. Give effect to
the grantor’s intent.
Created by an operation of law as an exception to the statute of frauds.
Easement Implied from Existing Use *will not be implied in gross.
1) Implied only over land grantor reserved when the tract is divided
2) Existing use at time of tract division
3) Apparent
24
2) However, when the owner
of the servient parcel gives
a license for use and has
notice of reliance the
license may become
irrevocable and an
easement created.
3) The owner of the dominant
estate may be able to
collect damages for
reduction in his property
value.
Van Stadt v. Royster (KA)
(finding an implied sewer
easement b/c a sewer is
apparent)
Othen v. Rosier (easement by
necessity only implied over
landlocked parcels once
owned by a common grantor)
Easement by
Prescription
Scope of the
Easement
Destroying an
Easement
Dowley v. Morency (MA)
(implementing the Maine
rule)
4) Continuous
4) Reasonable necessity
Easement by Necessity
Common grantor divides property into two lots and in order for one parcel to have value it is
necessary for one land owner to have easement across property of other land owner.
1) Implied only over landlocked parcel
2) No existing use required
3) Easement location is determined by owner of the servient estate
4) Seldom implied for other purpose than road access. i.e. electricity and sewage
5) Terminates upon termination of necessity
Easement by Estoppel
License: a revocable written or oral permission to that which would normally be a trespass
3 Elements:
1) permission for use
2) revocable at any time
3) some degree of control is maintained by the landowner
A revocable license can turn into an easement by estoppel:
Requirements:
1) owner had notice (actual or inquiry)
2) substantial improvements have been made/substantial amount of money have been
expended in reliance on the license
Similar to adverse possession for an easement. If certain property is used for the statutory period a
prescriptive easement but not title will be granted. In most jurisdictions the statutory period can
only be interrupted by injunction. Public prescriptive easements are allowed in most jurisdictions.
 Generally is to determine the intent of the parties.
 Location of the easement cannot be unilaterally changed.
 Servient owner has the right to use the land in ways that do not unreasonable interfere with the
easement
court will allow for a natural evolution of the easement, but to reform an easement, typically it
must be found that it was reasonably foreseeable at the time of the creation of the easement that it
would be used for this
1) expiration: easement for a purpose, terminates when it is no longer used for that purpose
2) automatically: if it’s granted for a specific event (e.g. can park in my driveway at drake relays)
3) Easement by necessity will terminate when the necessity ends
4) Abandonment: (remember different than non-use, must have the intent to not return)
5) Condemn: if servient estate is condemned the easement is also condemned
6) By prescription: (hostile retaking)
Maine Rule: easement/adverse possession can be interrupted by a letter
P698 Restatement on Servitudes:
1) Effectively stop adverse us 2) comply with a statutory procedure 3) bring an action
IA rule: must write a letter and have it served on the individual. Then file it in the attorney
general’s office.
LEGISLATIVE LAND USE CONTROLS: ZONING
Limitations
Euclidian
Zoning
The Zoning
Commission
and The City
Council
Comprehensive
Plan
Village of Euclid v.
Amber Realty Co (SCT)
(upholding zoning from
constitutional attack)
1) Substantive Due Process
Zoning has to be related to a substantial state interest to promote health, safety and welfare.
2) 5th Amendment Taking Clause
can’t take property w/o just compensation, so must allow for variances when there is an undue
burden
1) Segregating conflicting uses is good
2) Open space is good
3) The highest and best use is sought.
Buffer zones
Areas in between Euclidian areas where there are buffers, so the mansions stay separate from the
trailers i.e. town homes, retail zones.
Helps prevent wealth from “creeping” and curb suburban sprawl.
Zoning Commission
Appointed by the city council to make the comprehensive plan
They only make recommendations, so they CANNOT be sued.
The City Council
The Zoning commission makes their recommendations to the city council, who approves the plan
and enters zones by ordinances. The city council can be sued b/c they are the legislative body that
made the zoning ordinances, people sue for injunctions (to get them to stop the ordinance)
Districts
This comprehensive plan is usually made up of squares, these are districts that have assigned
uses (R1, single family, industry, retail, etc.) and that type of zoning scheme is called Euclidian
25
Spot Zoning
State v. City of Rochester
(MN)
Nonconforming Use
PA NW Dist, Inc v. Zoning
Hearing Board (PA) (holding
that amortization is an
unconstitutional taking)
Parkview Assocs. v. City of
NY (false advice from
building inspector will not
estopp the city from denying
a non-conforming use)
Stone v. City of Wilson (IA)
(allowing a vested right for a
nonconforming use upon
substantial reliance on a
building permit)
Board of
Adjustment
Special use
permits
Variance
Commons v. Westwood
Zoning Bd. Of Adj (NJ)
(threshold req’s must be
met even when property is
surrounded by
nonconforming uses)
Court Forced
Sale
zoning.
Rezoning
The comprehensive plan can be reassessed and changed. However, notice must be given. If no
variance is granted and the proposed use is not included in the special use exception request for
rezoning can be made. Rezoning should be consistent with the comp plan.
Strong presumption that zoning is valid
IA follows this general rule: if a zoning is facially valid and reasonable it must stand.
Majority view: comp plan describes zoning, if you want to change zoning you have to change
comp plan first, if the zoning is inconsistent w/comp plan it can be challenged
Minority view: comp plan can be changed after zoning changes
*half the states do not have comp plans
*31 states allow rezoning for aesthetic reasons
Not per se illegal. To be valid must be reasonable and consistent with comp plan. Illegal if it
constitutes piecemeal zoning inconsistent with the comp plan created for the good of the owner not
for general welfare. Number of lots rezoned is not controlling, rather level of deviation from the
plan.
Two approaches states take to uses made non-forming by subsequent zoning ordinances
1) Wait for the use to terminate on its own
 abandoned (can’t just be non-use, has to be an intent to abandon)
 Destruction (so deterioration, fire, etc.)
2) Amortization (about 20 states follow): give the non-conforming a set period of time to leave or
conform. Time period MUST be reasonable, otherwise it is an unconstitutional taking and just
compensation is required.
3) Buy the property
Expansion
If business is in fact expanding and this can be shown a nonconforming use can be expanded.
Cannot be expanded in order to generate more business.
Vested Right: allows a pre-existing operation started on reliance on existing zoning law to
proceed as a non-conforming use.
Board of Adjustment
A person with a non-conforming use goes to this board to seek either a special permit or a
variance, if either is granted they are conforming uses.
Must go to board of adjustment before appealing to the district court.
 Legislative decision that has already been made at the time zoning district and comp plan
were created
 Lists permissible nonconforming uses within the district that promote general welfare i.e.
hospitals and churches within an R1.
 Must be in compliance w/ previously listed special uses.
 Must be granted if it is in compliance with a listed special use and does not hurt general welfare
 Often be granted with conditions imposed
Variance: Waiver of an existing rule or regulation within zoning district i.e. area, size, setback
etc.
Two requirements:
1) Without this exception there would be an undue hardship that is not self-imposed
 Not an inconvenience, lack of variance must render property almost useless
 Loss of economic profit is not hardship.
2) The grant would not be detrimental to general welfare
Administrative decision: First go t building inspector who can grant variance.
Adjudicatory decision: Fact based inquiry
City may agree to variance but may impose conditions like req developer to build streets, lights,
and sewers.
Variance runs with the property. Can only be destroyed by abandonment, destruction or eminent
domain.
Court may deny variance or special permit, on the condition that the neighbors do not buy that
piece of property. If the neighbors will not they must not care too much and variance will be
granted.
EMINENT DOMAIN AND REGULATORY TAKINGS
Rules of a
Taking
Lochner (taking is
occupying)
Midkif (benefit of the
community as a whole is a
public use)
Kelo v. City of New
London (SCT) (economic
development is a public
purpose which constitutes
1) Must be a possession or an occupancy to constitute a taking
a)Remains or becomes permanent
b)Temporary use is not a taking (may be an easement)
2) Regulation of a Nuisance generally not a taking
a) Must promote health or safety or general welfare.
3) Regulations
a) Benefit of regulation must be proportional to diminution in value.
b) If not it is a regulatory taking.
4) Public Use
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a public use)
a) Typically cannot take from one private party and give to another private party
b) benefit of the community and public purpose are a public use
c) Factory to Farm Statute: Kelo response. 29 states have forbidden the state to take
agricultural land except for possession, occupation, or use as a public entity.
5) What is Just Compensation
a) Diminution in value: Fair-market value prior to taking minus fair-market value after the
taking = just compensation
b) Generally done by Bd. Of Compensation
i) Can appeal to Compensation Commission then to the district court.