Chapter 44
Real Property
Learning Objectives
 What can a person who holds property in fee
simple do with the property? Can a person who
holds property as a life estate do the same?
 What are the requirements for acquiring property
by adverse possession?
 What limitations may be placed on the rights of
property owners?
 What is a leasehold estate and how is it created?
 What are the respective duties of the landlord and
tenant?
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Nature of Real Property
 Real property is immovable and
includes:
 Land.
 Buildings.
 Plant Life and Vegetation.
 Airspace.
 Subsurface (mineral) rights.
 Fixtures .
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Fixtures
A fixture is personal property that
becomes permanently affixed to real
property.
Intent that it become a fixture is necessary.
Intent is determined by:
• The fact that the property cannot be removed
without causing damage to the realty.
• The fact that the property is so adapted to the realty
that it has become part of the realty.
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Fixtures
Trade fixtures: installed for commercial
purposes by a tenant.
They remain the property of the tenant
and can be removed when tenant leaves,
repairing any damage caused by removal.
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Ownership of Real Property
Ownership interests are classified as
either Possessory or Non-Possessory:
•A Possessory interest such as a fee simple, life
or leasehold estate, gives the owner a right to
possess the land.
•A Nonpossessory interest such as an easement,
profit or license, does not give the owner a right
to possess the land.
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Ownership in Fee Simple
 The Fee Simple (sometimes called fee simple
absolute) gives the owner the greatest aggregation
of rights, powers and privileges possible under
American law and can assigned to heirs.
 A “conveyance” (transfer of real estate) “from A to B”
creates a fee simple. A is the Grantor and B is the
Grantee.
 Fee Simple Defeasible: grants conditional
ownership to Grantee as long as he complies with
condition. “A to B as long as ….”
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Life Estates
Estate that lasts for the life of some specified
individual. “A grants Blackacre to B for B’s
life” grants B a life estate in Blackacre.
When B dies, Blackacre returns to A or his heirs
or assigns, or a third party in the same
condition, normal wear and tear excepted.
Grantor A retains a “future interest” in the
property.
During B’s life, she can possess, use, and take
the fruits of the estate, but not take from the
property itself.
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Future Interests
Reversionary Interest: Grantor retains
ownership interest in land. Land reverts back
to Grantor if condition fails or when life
tenant dies.
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Future Interest
Remainder Interest: Grantor
assigns/transfers/sells her future interest
to a 3P who now has a remainder. When
Grantee dies, interest passes to 3rd Party.
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Non-Possessory Interests
An easement is a right of a person to make
limited use of another person's real property
without taking anything from the property.
A profit is the right to go onto land in
possession of another and take away some part
of the land itself or some product of the land.
Property that is benefited by easement/profit
carries the the interest with the sale of land.
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Non-Possessory Interests
If the owner of the easement (A) or profit has
the right to go onto another’s land (B) that is
adjacent to A’s own, it is said to be
appurtenant. If A’s property is physically
separated from B’s, it is said to be in gross.
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Non-Possessory Interests
Easements or profits can be created by:
Deed (physical delivery is sufficient).
Will (at Grantor’s death).
Contract between Grantor and Grantee.
Implication: circumstances surrounding
creation of easement imply its creation.
Necessity.
Prescription: easement by adverse possession.
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Termination of an
Easement or Profit
By deed back to owner of the land
burdened by it.
Owner of easement or profit becomes
owner of the land burdened with it.
Abandonment by the owner of the right.
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Licenses
Revocable right of a person to come unto
another’s land without removing
anything from the land.
Personal privilege that arises from the
consent of the owner of the land that can
be revoked.
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Transfer of Ownership
 Ownership in real property can be
transferred by:
 A written Deed.
 A Gift.
 A Sale.
 An Inheritance.
 Adverse Possession.
 Eminent Domain.
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Deeds
 A Deed is the instrument setting forth the
interests in real property being transferred.
 Necessary components of a Deed:





Names of Grantor and Grantee.
Words evidencing intent to convey.
Legally sufficient description of the land.
Grantor’s signature.
Delivery of the Deed.
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Types of Deeds
Warranty Deed.
Special Warranty Deed.
Quitclaim Deed.
Grant Deed.
Sheriff’s Deed.
Period of redemption.
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Recording Statutes
Recording a deed (or any interest in real
property) puts the public on notice of the
new owner’s interest in the land and
prevents the previous owner from
fraudulently conveying the same interest
to another buyer.
Race statute.
Pure notice statute.
Notice-race statute.
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Transfer By Inheritance
Owner of real property dies, his property
is transferred by:
Will (testate).
Without Will (intestate).
Title is transferred at the time state law
so provides in its testate and intestate
laws.
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Transfer By Adverse Possession
One person possesses the property of another
for a certain statutory period of time, that
person automatically acquires title to the land,
just as if there had been a conveyance by deed.
Must be:
•
•
•
•
Actual and exclusive.
Open, visible and notorious.
Continuous and peaceable.
Hostile and adverse.
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Eminent Domain
Rights in property are not absolute.
They are constrained by federal and state
laws, e.g., nuisance, tax and
environmental.
A “Taking” By Eminent Domain: The 5th
amendment gives the government the
right to “take” private land for public use
with just compensation.
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Leasehold Estates
Anyone who rents housing to the public
for commercial purposes subjects herself
to various state and federal LandlordTenant laws.
Owner of the property is the LESSOR
and Tenant is LESSEE; the contract is
called the LEASE. The property interest
is called a leasehold estate.
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Leasehold Estates
 A real property owner or lessor agrees to
convey the right to possess and use the
property to a lessee for a certain period
of time.
 Tenancy for Years:
 Periodic Tenancy.
 Tenancy at Will.
 Tenancy at Sufferance.
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Tenancy Interests
 Tenancy for Years
 Created by an express contract
 Property is leased for a specified period of time
 Periodic Tenancy
 Does not specify how long lease lasts
 But rent paid at certain intervals
 Tenancy at Will
 For as long as both agree.
 Tenancy at Sufferance
 Wrongful possession without the right to possess
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Landlord-Tenant Relationships
Lease Agreement can be oral or written (oral
may not be enforceable). Lease gives Tenant the
temporary right to exclusively possess the
property.
Sources of Law:
 Common Law.
 State and Local Statutes, and
 The Uniform Residential Landlord and Tenant Act
(URLTA) which has been adopted by 1/4 of the states.
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Lease Agreement
 Form of the Lease:
 Must express intent to establish the lease.
 Provide for transfer of possession to the Tenant.
 Provide for the Landlord’s “reversionary”
interest.
 Describe the property.
 Indicate length of the term, amount of rent,
when and where rent paid.
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Rights and Duties
Trend in the law is to curtail, by contract
and real estate law, the immense freedom
that Landlords had in the past.
Possession.
Using the Premises.
Maintaining the Premises.
Rent.
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Rights and Duties
Landlord has a duty to deliver actual physical
possession under URLTA or legal right to
possession (“American” rule).
Tenant’s right to exclusive possession is only
subject to Landlord’s limited right to come
unto the property.
Tenant has a “covenant of quiet enjoyment” by
which Landlord promises Tenant’s peace and
enjoyment of the property.
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Rights and Duties
Eviction occurs when Landlord:
Deprives Tenant of possession of the leased
property; or
Interferes with this use or enjoyment of the property
to the extent that Tenant cannot use or enjoy.
Constructive eviction occurs when Landlord:
 Breaches lease or covenant or quiet enjoyment; and
Makes it impossible for the Tenant to use and enjoy
the property.
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Rights and Duties
Tenant’s Duty Not To Commit Waste:
 Tenant is liable for destruction or abuse of the property.
 Tenant not liable for normal wear and tear or
depreciation in value over time.
Altering the Premises:
 Tenant needs Landlord’s consent to make material
alterations.
 Installation of fixtures become the property of the
Landlord. Whether Tenant can remove depends on
state law and consent of Landlord.
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Rights and Duties
Residential property -- Landlord must
furnish premises in habitable condition.
Landlord is responsible for maintaining
common areas such as stairs, parking
lots, elevators and swimming pools.
Commercial property -- may still require
Tenant to maintain depending on the
lease.
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Rights and Duties
Implied Warranty of Habitability applies to
major (substantial) defects if Landlord knew or
should have known about & he had a
reasonable time to repair.
 To determine breach, Courts consider:
 Whether Tenant caused damage.
 How long defect existed and age of building.
 Defects impact on Tenant’s safety and health.
 Whether defect contravenes relevant statutes.
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Rent
 Rent is Tenant’s payment to the
Landlord for the Tenant’s occupancy or
use of the Landlord’s real property.
 Payment based on agreement, custom, state
statute, waiver.
 Security Deposits.
 A deposit by Tenant which Landlord may
retain for non-payment of rent or damage to
premises.
 URLTA has specific provisions as to when it
may be kept and when it must be returned.
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Tenant’s Remedies
If Landlord breaches the warranty of
habitability, depending on state law, Tenant
may:
 Withhold rent -- put in escrow.
 Repair and Deduct -- notify, repair, and deduct repair
from rent.
 Cancel the Lease -- must be constructive eviction or
breach of habitability.
 Sue for Damages -- difference between what paid for
and what received.
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Landlord’s Remedies
Landlord’s Lien on all Tenant’s personal
property.
Lawsuit to Recover Possession -ejectment or unlawful detainer.
Landlord’s Duty to Mitigate Damages.
Must make reasonable efforts to re-rent the
premises.
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Rights and Duties: Liability
Landlord is liable to Tenants and Licensees
(Tenant’s guests) based on who has the right
to controls the area where the injury
occurred.
Landlord is liable for injuries caused by
defects in common areas. “Attractive
nuisance” doctrine for children and an
unfenced swimming pool.
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Rights and Duties: Liability
 If Landlord makes any repairs, they
must be done with reasonable care.
 LL may be liable for injuries caused by
crimes or third persons when reasonably
foreseeable.
 Exculpatory clauses may be
unenforceable if injury results from
violation of statutory duty.
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Rights and Duties: Liability
Tenant’s Liability?
Tenant has a duty to maintain safe conditions in
those areas under her control.
In commercial leases, both Landlord and Tenant
may be responsible and liable for same area.
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Transferring Rights
to Leased Property
 Transferring Landlord's Interest.
 Landlord may sell any and all of his rights in
the real property.
 New owner buys “subject to the lease,” if
lease is recorded.
 Transferring Tenant’s Interest.
 Landlord’s consent may or may not be
required by statute or the lease itself.
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Transferring Rights
 Transferring the Tenant’s Interest (cont’d)
 Assignments: Tenant transfers his entire interest in the
lease to a third person. Original Tenant is not released
from liability under the lease.
 Subleases: Tenant transfers all or part of his interest in
the lease for a shorter period of time than the lease.
Original Tenant is not relieved of liability under the
lease.
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