Property I Outline

I. PROPERTY: GENERAL INFORMATION a. Property: a bundle of rights to things; rights among people with respect to both tangible and intangible things i. Right to use; right in transfer in life by deed or gift; right to have control and dominion backed by authoritative power of the state ii. Real property refers to land and improvements attached to land iii. Personal property is all property other than real property 1. Property essentially answers two questions: Who is entitled to use the property and how are they entitled to use the property 2. Property rights are created by nature and man and enforced by the state b. Possession i. Controlling or holding of personal property with or without a claim of ownership 1. Two elements: a. Intent to possess on part of the possessor b. His actual controlling or holding the property (dominion and control is key) i. Sometimes referred to as occupancy 2. Constructive possession is possession that has the same effect in law as actual possession, although it is not actual possession in fact a. Setting a trap or net, one will have constructive possession of animals that get caught ii. Relativity of title is the idea that one person may have a superior title to one person as well as an inferior title to another 1. T captures a wild animal on Os land and takes it to his property where he puts it in his cage. Z trespasses on to Ts land and steals the animal. T sues Z for the return of the animal. Z points out that T had no right to the animal in the first place. What is the result? T has relativity of title. He has superior claim as he retained possession of the animal first. Both T and Z are trespassers, but T had the animal first. What if O goes on to Ts land to take back the animal and T sues O? It is not okay for him to trespass so it would be better for him to take it up in court even though he has a better claim. c. First in Time i. A way of establishing a priority of rights based on the time acquiring the right in question 1. This is rule-based and policies governing these concepts change over time d. Law of Accession i. Locke states that a person has a right in his own person 1

ii. Once a person adds to the value of the property of another by labor alone, he thereby claims a right to ownership over the new thing or value 1. An artist paints on the wall of another and an art dealer offers to pay money for the painting. The artist received the money because of this law, but has to restore the apartments owner to the original state. II. ACQUISITION BY CAPTURE a. Private property eventually came to because of avarice which ultimately led to scarcity of the earths riches and private ownership developed to protect and preserve the peace i. Common and civil law adopted proposition that taking possession of unowned things is the only way to acquire ownership of them (original possession) b. Rule of Capture: to gain possession of a ferae naturae, actually killing or physically catching or mortally wounding the animal while not abandoning pursuit so as to deprive the animal of its natural liberty gives a person a superior right over a passerby. i. Intent to possess and actual control are necessary for possession 1. Pierson v. Post (fox hunter/ fox seizer on public land) a. Court used this case of first impression to state that pursuit alone does not constitute dominion and control over a wild animal, but actual seizing or killing does. i. Public policy reason: for the sake of certainty and maintain peace and order 2. Mere pursuit does not constitute the exercise of dominion and control to give a person a superior right. a. Ferae naturae are wild animals who resist capture and seeks their own freedom i. Opposite: dominae naturae 3. EXCEPTION: Rationale soli (owner of soil owns things on, under and above including animals that run across land: right of first possession) a. A trespasser who captures animal on anothers land forfeits title to owner unless he is in hot pursuit b. This is a form of constructive possession c. Keeber v. Hickeringill (duck decoy pond) i. Plaintiff had constructive possession of ducks when he lawfully lured them into the decoy pond on his land. 1. Competition is good when done lawfully and with good intentions d. Hypo: P imports two silver foxes (female and male) on MS ranch. Natural habitat is north central us and Canada. Foxes are ferae naturae. P keeps them secure with 5 ft. high walls. One fox gnaws way out and escapes. P sets 2

traps to trap animal with no luck. D finds fox and skins it and keeps. P learns of this and sues for the fox skin return. What result and why? i. P argues that he is true owner and D should have known that the animal belonged to someone because the animal was native to areas. He has no control over the animal at the time, but has constructive possession (unreasonable to assume animal wandered down) e. Suppose D has a herd of deer that roam about government land during the day. The herd is relatively domesticated and returns to Ds land at night. H hunts and kills one of the deer. D sues to recover skin? i. Deer is native to area; Owner does not lose property rights of animals while the animals are away, but loses possession (Animus Reverndi) 1. Policy- to encourage domestication of animals 2. What does the hunter say? No one had possession of deer: a reasonable person would have done same thing in this situation because there is nothing to indicate that animals were owned (perhaps brand them) c. Custom sometimes controls a superior right over an animal when it is accepted by the industry and does so on an objective basis i. Ghen v. Rich (whaling industry) 1. Court reasoned that custom should prevail because if it failed, the industry could collapse because fruits of labor would not be recognized a. Still caused mortal wound that would inevitable bring whale into actual possession (do what can reasonably be done) b. This is an extremely limited application of the rule of capture ii. Hypos: 1. When a whale was found with a bomb lance with more than one bomb lance, would gets it? a. It should be awarded to who shot it first, impossible to know who shot it first 2. Suppose we have a bear, it was shot through the heart, a mortal wound. But it kept running and was shot by another hunter and the second hunter mortally wounded the bear again. Who gets the bear? a. First in time, first in right 3. What if we have conflicting customs: Greenpeace trying to prevent fisherman from taking fish. If it is a well-known and wellestablished custom, what should be done in the case of conflicting? Who has the right? 3

a. The one that goes along with public policy the court wants to encourage: court supports the one that we want people to be encouraged to do so d. Fugitive Resources i. First in time applies to ground water in a water course 1. Can use all of the water, but should adhere to reasonable use doctrine a. In prior appropriation states (WESTERN), the first in time has a vested right to continue to use the water as he pleases b. Cannot unreasonably divert water from water course and deprive others downstream of water (riparian rights or eastern states) ii. Percolating waters follows rule of capture (absolute right to withdraw water) 1. Diversion of water for personal use 2. Reasonable use doctrine must use water for overlying land (American Rule) iii. Oil and gas 1. These fugitive minerals belong to the owner of the land so long as they are a part of the land; once they escape, the owner of the land no longer owns the resources III.ACQUISITION BY CREATION a. Creation of something either tangible or intangible through the expenditure of mental effort vests into person who brought it into being and gives proprietary right to ownership and commercial exploitation. i. INS. v. AP (news sources taking others news information) 1. News is quasi-property because plaintiff invested time, money and effort to gather news information. a. Misappropriation occurs when P invests time, money and effort; D does not invest similar means; and Ps suffers competitive injury because of Ds action ii. Cheney v. Silk Brothers (knock-off silk scarves) 1. Material that is not copyrighted is mass produced for the common good, increases competition and a better market for the public, no action lies for infringement iii. Idea behind patents, trademarks and copyrights is to create a limited monopoly to promote creative activity, but limited in order to advance competition. 1. Patents - Protection for novel, nonobvious processes or products. a. valid for 20 years and are not renewable and products are available to all after patent expires. b. Ex. a process to make flowers, a machine used to make the flowers, the new hybrid flower 4

2. Copyrights protect the expression of independent ideas in books, music, etc. (not ideas, but expression) a. Protection occurs right away and lasts for a long time for 70 years after death of creator. b. Subject to fair use, subject to critique by satire and may be sold or assigned or inherited. 3. Trademarks words or symbols identifying source of product/service which help aid consumers and last only so long as used in trade a. Xerox, rollerblades iv. Copyrighting of Intellectual Property requires concrete form; novel work; and fixed in a tangible medium of expression. 1. Nichols v. Universal Pictures (novel stealing) a. Court found that the idea was not stolen because it was not new and novel, but a popular topic 2. White v. Samsung (stealing a persona) a. Paradigms of persona are permitted unless there is an intent to deceive or done for a profit (commercial exploitation) 3. Diamond v. Chakrabarty (creating new bacteria) a. Bacteria is patentable because it would not be naturally created

IV. ACQUISITION BY ADVERSE POSSESSION a. Adverse possession (AP) functions as a method of transferring interests in and without the consent of the land owner when the running of a statute of limitations expires. i. The passage of a reasonable amount of time should assure security to the person claiming to be the owner 1. AKA Title by theft 2. AP of surface property does not affect mineral rights that have already been severed ii. The goal: to quiet all titles, which are openly and consistently asserted, to provide proof of good/valid titles, and correct errors in conveyancing; punish sleeping owners; and reward diligent trespassers

1. Default rule- mere possession is not deemed to be absolute with land subject to title holder (must prove your case through evidence), but mere possession is absolute for chattels (personal- moveable) a. Burden of proof rests on deseizer b. AP is an evidentiary tool which, due to laches, decays as time passes 2. AP creates a new title which begins at the date of the event that started the statute of limitations running (the AP becomes the owner at that date) a. AP is a deseizer, one who takes land from owner who has seisin (ownership of a freehold estate) b. If successful, title is perfect as if conveyed by deed and no document is required unless desiezer wants to sell property 3. Color of title allows for constructive possession (allowed to lay claim on entire premise) a. Claim of title a claim of right by a deseiser i. Claiming land as if it was theirs ii. Not subordinate to owner, but HOSTILE b. Color of title refers to AP holding the land believing he is the owner, but due to a defective written judgment it is actually defective i. By virtue of this document, I have the color of this claim ii. Usually a deed, but does not have to be one: it could be a will, judicial decree or declaratory judgment (quieting title) iii. Nothing on its face will show a defect, but it could be faulted 1. Grantor may not be true owner 2. Grantor is incompetent to convey (too young or crazy) 3. Improperly executed (forgery) 4. Defect could be in meets and bounds (inaccurately describes property) c. Constructive possession if AP does hold a color of title, then his presence on a mere portion of the land is constructive for the entire premise as long it is unoccupied, contiguous and related and AP is not a conscious wrongdoer (forger) i. Without color of title, then AP only gets what he is occupying ii. If true owner occupies a portion of the land, then AP can only get what he is using 4. Statute of limitations presume 21 years in common law period and 10 years in statutory law period 6

a. Cannot run against government 5. Once the title is achieved and statutory period is won, it is not lost by subsequent abandonment or relinquishment. Title to land can only be conveyed by deeds, wills or adverse possession. 6. AP can be established between cotenants but it is very difficult b. ELEMENTS REQUIRED: i. Actual entry 1. Color of title allows for constructive possession of whole tract of land 2. AP does not have to actually live on land (he can rent, sell or mortgage) 3. Constructive notice or inquiry notice (from surveys or other persons) are sufficient to show actual entry ii. Exclusive Possession 1. Exclusivity does not mean you are the only one (can have an AP who occupies seasonal home during winter while owner occupies in summer) a. It is exclusive because they are occupying land exclusively at different times iii. Open and notorious 1. Use must be highly visible so as to give notice to owner that someone is asserting an adverse claim to the land (putting up fences, erecting structures, paying taxes) 2. AP is not required to give actual notice iv. Hostile or adverse under claim of right (most controversial) 1. Hostile/adverse: without owners permission; not acting subordinate, but like you own it a. You can be mistaken, but must act like true owner b. Mere occupants do not make improvements 2. Must show a state of mind: either objective or subjective state of mind (minority view) a. Bad Faith (ME Doctrine) i. ME Doctrine must know the land is not yours, but still take it b. Good Faith View (believe land to be his) i. Mannillo v. Gorski (steps onto neighbors land) 1. To claim title by adverse possession, the possessor need not have been aware that the land in question was in fact owned by another ii. CT Doctrine think the land is yours, but you are mistaken v. Continuous for statutory period (appropriate period) 1. Uninterrupted 2. Continuous as to the extent that a true owner would 3. Must show 1-4 then for the appropriate time period c. Remedies i. If AP wins, he does not have to compensate the true owner 7

ii. If owner prevails and AP is really a trespasser, owner is not required to sell 1. However, if an innocent improver improves the land, some jurisdictions have innocent improver or betterment statutes or may place an equitable lien on the property (when it is sold, the improver gets some $) d. Theories of AP i. Objective: holds property under a claim of right actions matter, not intent (majority view) 1. Van Valkenburgh v. Lutz (New York land dispute: class issue) a. Although D made land improvements, he stated that property belong to P: lost claim of right, but furthermore, court decided this case based on class issue. ii. Subjective: action must be done in good faith (believe property to be yours) e. Hypo: i. O owns Greenacre. It is raw land. He acts like a diligent owner and checks on it periodically, On an objective standard and see that no one is occupying land. One day, he sees people in a small tent on the property. He thinks it is no big deal. He comes back next year and the tent is now larger. He doesnt care and doesnt say anything. He comes back the next and the tent has wooden floors. He doesnt say anything. The next, there is an RV where the tent used to be. He does not say anything. He comes back the next year and see a cabin in the place of the RV. When, objectively, did adversity begin? 1. Moment when adversity starts- what a reasonable owner would view the person there was taking the land from him (when AP was acting like a true owner would) a. Standard mattersit depends what standard is being used b. Matters what is done (objective theory) c. Certainly when the cabin is built (Permanence of structure matters): go beyond permission and start doing hostile things (start acting adversely) ii. Suppose O doesnt now that B is encroaching, but A tells you so. Do you have notice? 1. Yes, you have inquiry knowledge that you should check. If neighbor had some reason to know, then you would have actual notice. 2. Notice must be by reliable, objective person or obvious iii. Suppose that B knows that there is an encroachment, which is actually 3 ft, but they think it is 1ft. They dont care about 1 foot. Statutory period runs. Is there actual possession of 1 foot or 3 ft? And what happens if actual occupation, not notorious, but is actually known? 1. Mistaken belief on original owner of the additional 2 feet. He should get the three feet b/c he was on notice for the 1ft. He should check it out 8

f. Doctrine of agreed boundaries- if there is an (mutual) uncertainty between neighbors regarding the boundaries, an oral agreement to settle the matter is enforceable if they have used the boundary for a long time (is not as long as statutory period). g. Doctrine of acquiescence- provides that for a long time is evidence about an agreement of the boundary h. Doctrine of estoppel- when one neighbor describes the property in a certain way and the other neighbor changes position in reliance on that conduct, then the first neighbor is estopped to deny the validity of statements or acts. i. Making statements or conduct that tends to indicate where boundaries are and the neighbor changes position and it is reasonable foreseeable that he changes his position to his detriment then the first person is estopped from denying his statements. ii. One can be estopped if he sits by idly and does not say anything at the time of the mistake (SERVITUDES) 1. Called Quasi contracts iii. Promissory estoppel (contracts) 1. Reliance does not have to reasonable, just reasonable foreseeable.

i. Accruing of Claim i. Tacking: successive possessors may tack or combine their respective periods of possession as long as they are in privity (property is voluntarily sold, given or bequeathed to subsequent possessor) 1. Privity of estate (successive or mutual ownership in same property) can come from deed, intestacy, oral or written contract, oral permission, or devise a. Oral permission is valid only if color of title IS NOT involved b. Privity estate is not required under the English Law i. The statute keeps running even if transfer is not voluntary 1. Wants to punish the sleeping owner c. Earning theory you have earned the land by using it (if you are forced out, you can go back and reestablish your claim) i. The statute stops running ii. This is the American view 2. Howard v. Kunto (erroneous description of land in deed) a. Tacking is permitted when owners, who in good faith, believed they were the rightful owners to the land, but acquired a faulty deed, and occupied the land continuously b. Tacking must be mutual, voluntarily and successive 3. If AP enters after title changes hand, then a new clock starts for AP. However, if AP enters before the title changes hands then the new owner receives the title and the AP (is this a majority view or minority view?). a. If A occupies the land with B as a remainderman and AP enters after the conveyance, then the statute of limitations must run against both A and then a new period for B before AP can successfully gain property b. Or another way to say it: periods of AP under two different true owners can be tacked together to satisfy the statutory period UNLESS there is a second true owner (vested future interest) when the AP begins. In the latter case, the statutory period must begin again when the future interest becomes possessory j. Disability i. Every state has a disability statute that extends a normal time that extends the statute limitations for AP (usually 10 years) and disability must be present at the beginning of the adverse possession claim (qualified) 1. Minority status 2. Imprisonment 10

3. Unsound mind ii. If the true owner has a disability at the time of the adverse possession, the statute will not run until that disability is removed (tolling) iii. There is no tacking of disabilities iv. A person taking from or through the true owner under a disability generally can take advantage of the tolling statute to the same extent as the person with the disability, except the disability is deemed to end on the day of the sale or gift k. Waste i. Hypothetical- In 1985, A enters adversely upon O. In 1986 O dies leaving a will that devises B for life remainder to C. In 2001, B dies without ever having gone on property? Who owns Blackacre in 2001? 1. C doesnt have an interest and is not a sleeping owner; only B can oust A. 2. A owns property because once A enters while O is still alive, the AP claim begins and is not defeated or interrupted by subsequent transfers in ownership. B gets what O has (including AP) a. C could buy As life estate from B (when life estate combines with remainder = Fee simple absolute): gain present possessory right 3. C could sue B for waste: a. Affirmative waste (hurting land intentionally; actively changing propertys use or condition so as to decrease the propertys value) i. There is a right to make slight changes (repair a fence, etc.) b. Negative waste/permissive waste (hurting land by neglect or omission; failing to prevent waste) c. Ameliorative waste (significant change in use) V. ACQUISITION BY GIFT a. Gift: a noncontractual, voluntary gratuitous transfer of property made without legal consideration. 1. Gifts must be present transfer of present interest a. Vested future transfers are invalid 2. Key to gifts: dominion (title to property) and control (physical possession) ii. Inter vivos gift 1. Irrevocable gift between living persons made during the donors life a. It can be a gift of real or personal property b. However, a grantor can reserve the power to revoke c. Checks are usually never valid gifts (donor has power to revoke) 11

d. Transfer to a mutual agents is a valid delivery (immediately) i. If only agent of donor, the delivery occurs when donee receives gift 2. Three elements are required a. Donative intent i. Donee has burden of proof to establish gift ii. Oral condition on gift is invalid! iii. A gift cannot be subject to a condition precedent b. Delivery i. Wrench of delivery: significance of what one is doing is irrevocable and a person cannot continue to believe that he stills owns that gift 1. A promise to make a gift is unenforceable 2. It must be as good as it could be under the circumstances ii. Actual iii. Symbolic (thing symbolizes gift) 1. Usually written iv. Constructive (gives access or control over gift) v. Written instrument 1. Newman v. Bost (fianc received keys of decedent) a. Doctrine of Dessert - in absence of evidence of specific intent and if there is a close relationship between the parties, that we ask ourselves the question, what does she deserve? What would a reasonable person in a similar circumstance think the party deserves? 2. Gruen v. Gruen (artwork) a. Reserving a life estate in a gift is possible if the donor intends to give gift and irrevocable transfer of title and there is a present transfer of title and gift is effective immediately. b. Written documents must manifest intent, describe gift and be signed by the donor and delivered. i. If document is lost, does not matter as long as donee can prove that document did exist c. Acceptance i. All gifts of value are considered accepted unless express evidence of rejection iii. Gift causa mortis 12

1. Gifts made when donor has apprehension or expectation of his impending death of specific cause and delivers the chattel with the intention that control over the subject of the gift takes effect immediately, but becomes absolute only upon death. a. Expectation for death is subjective b. If donor recovers from illness, or likely death, donor can revoke gift and it automatically revoked if donor does not die i. Gift is not revived in relapse or another grave illness c. Gifts causa mortis are subject to creditors d. Real estate cannot be subject of GCM e. Functions similarly to devise (such as a will) f. Key is Dominion and control i. Title and control pass simultaneously iv. Hypos 1. Giving gift, keeping it and then dying, A still gets ring. It was a completed gift because she intended and delivered gift. This is a bailment (rightful possession of the goods of another) a. Baliee has responsibility to protect and care for such a gift. 2. O writes check to B on her checking account and hands it to B. Before B can cash it, O dies. What result? a. Not a gift: you can always stop payment on check which means it is revocable and therefore may be a present intent to give gift, but can it is still irrevocable (Majority rule) i. This possible revocation also applies when one uses an agent UNLESS agent is mutual agent for both parties b. What if you could ask decedent? (Minority position) the intent absent evidence of revocation is to pay it, so it is not automatically revoked at death. 3. Suppose O calls A and wants to give A item X. And will have his agent run it over. Valid gift? a. It is revocable up until the minute it is delivered, so not valid gift i. Unless the agent is the agent for both parties! ii. Suppose grantor dies before agent delivers? Minority rule: intent is present, so death should not revoke the gift VI. System of Estates a. Possessory Estates i. Basic terms: 1. Heir a person who under laws on intestacy, is entitled to receive an intestate decedents property a. Only dead persons have heirs 13

2. Issue lineal descendents (children) 3. Collaterals all persons related by blood to the decedent who are neither descendants nor ancestors are collateral kin a. Include brothers, sisters, nephews, nieces, uncles, aunts and cousins 4. Escheat when someone dies intestate without any heirs a. Property is forfeited to state 5. Interest ownership in relation to another in the same land a. Present possessory right and future interests are present rights i. Future interests is a postponement of the right ii. Seisin is the possession of a freehold estate 6. Purchaser/grantee terms of art, not those who buy, but one who takes interest in land by inter vivos transfer ii. Freehold Estate (have seisin) 1. FSA; LE and FT 2. Nonfreehold estate (do not have seisin) a. Leaseholds, term of years, tenancy at will and periodic tenancy iii. In possessory estates, modern view focuses on intent, while common law focuses on express language 1. Possessory estates include FSA and Fee Simple Defeasibles 2. Fee Simple Absolute (FSA) complete ownership, lasting until the end of time a. It can be transferred, sold or inheritable b. Language used: to A and his heirs i. Words of purchase: who takes ii. Words of limitation/duration: what is taken c. There is no future interest d. No restrictions on the alienation in FSA; partial restraint can be valid if i. it is reasonable in purpose, reasonable in effect and reasonable in duration iv. Finite Estates 1. Life Estate owner owns property for life a. to A for life b. It is alienable for only the designated persons life c. It is not inheritable or deviseable i. Pur Autre Vie measured by anothers life ii. Property ends with original tenants life iii. Life tenants keep all income, rents and profits from use of land during LE 1. Must pay all taxes and mortgage principal and make repairs a. Special assessments are divided between LE tenant and remainderperson (proportionate to each persons interest) 14

2. Cannot seek partial payments for improvements 3. Cannot commit waste d. Sale of property i. Baker v. Weedon: (Farm left to wife in LE with remainder to grandkids) Judicial sale is necessary only when it is in the best interest of all of the parties involved; when the property is in a state of deterioration; or when life tenants income from property is insufficient and places a sever burden upon her ability live with reasonable comfort 1. Usually try to preserve estate through rules of waste HYPOS: 1) O conveys Blackacre to A for life remainder to B and her heirs. B dies intestate without any heirs. B predeceases A. Then A dies. Who owns Blackacre? ANSWER: B has an indefeasible vested remainder in FS and upon Bs death intestate, remainder escheats to state and states remainder in FSA. 2) In England in 1800, O conveys Blackacre to A and his heirs male What estate does A have? ANSWER: FSA because you can put no limit on inheritable: you cannot create new limitations. DOCTRINE OF CY PRES: try to get as close as possible to what O was trying to achieve (Under this doctrine, it would be a FT male.) 3) O conveys Blackacre which in located in MA to A and heirs of her body. A dies and leaves B as sole heir. B dies without any issue devising all property to C. What is the state of the title? Reversion to O because FT ends C gets nothing How should B have arranged for C to get it? o B should have disentailed during life and deed it to a straw person and then that person conveys it back to her in FSA, leaving it fully inheritable by C (creates a FSA) 2. Fee Tail and Fee Simple Conditional a. to A and heirs of his body i. FT is a series of LE, which are not devisable or inheritable 1. There is a fixed succession limited to the heirs of the body of a grantee ii. FT are now abolished by most states 1. Instead it is converted to a LE in the first devisee, and surviving descendants inherit a FSA 2. Still present in DE, ME, MA, RI 15

a. They can disentail by conveying to a strawperson b. To A and his issue is not sufficient to create a FT 3. Term of years a. To end, date must be capable of being determined on the first day the interest becomes possessory v. Waste occurs when life tenant permanently impairs propertys condition or value 1. It is an actionable injury for remainderpersons or reversioner a. Damages are usually the remedy b. Tenants are allowed to remove minerals only from open mines! 2. Affirmative waste changes propertys use or value so as to decrease the propertys value a. Amerliorating waste changing use and condition i. Today, such waste is permitted (allow for reasonable change in use and condition) if done in good faith, need for change and the life tenants remaining life 3. Permissive waste life tenant fails to prevent some harm to the property 4. Economic waste if income from property is not sufficient to pay expenses, then a life tenant can bring an action to sell 5. Today, law of Waste is largely superseded by law of trust where there are separate legal interest (trustee has fiduciary to balance the interest and can be liable in law if failure) and those who benefit from the property (beneficiaries) a. Today, creation of LE are probably a mistake and it should have been a trust vi. Layperson 1. When a layperson constructs will or deed, must employ Doctrine of Cy Pres or Rules of Construction to get close to the intent of the layperson a. Holographic will made by hand and without benefit of counsel b. Doctrine of Equitable Deviation if there is one place in the will that there is evidence that they knew how to give an absolute gift and in another place in the will they use different language, that suggests a different intent, so a different estate i. Depends on the same property 2. Rules of construction are rebuttable a. When termination of LE is outside control of tenant, then it can be construed as a FSA vii. Defeasible Estates may last forever or may come to end upon the happening (or not happening) of an event in the future 1. FSD: fee simple determinable a. Possibility of Revertor 16

i. Automatic when the condition is breached 1. AP statute begins to run the say the condition happens ii. so long as; during, while, until 2. FSSCS: fee simple subject to a condition subsequent a. Right of Re-entry i. It is elective after the breach of the condition 1. AP statute does not begin to run until holder of right of reentry exercises that right ii. If then, provided, but if, on the condition that iii. Courts will likely construe the conveyance to be a FSCS 3. Condemnation of Defeasible Fees a. Majority view: If the government takes land that is owned in FSD with future interest in grantors heirs, city must pay fair market value for the land 4. Marriage Restraint a. If land if held in FSD for wife, the claim is enforceable and valid (purpose is support until marriage) b. If land is held in FSSCS, then claim in invalid (thought to coerce remarriage) VII. FUTURE INTERESTS a. Future interests confer rights of enjoyment of the property at a future time b. Future interest in the transforer i. Reversion interest left in the grantor when he carves out a lesser estate and does not provide who takes the property when the lesser estate expires 1. It is a vested interest 2. It is transferable during life and descendible and devisable at death a. It still retains its name when it is transferred or devised ii. Possibility of Reverter (FSD) iii. Right of Reenty (FSSCS) 1. It is not alienable under ML c. Future interests in transferee i. Remainder 1. Future interest that waits until preceding possessory estate terminates and can move in if vested (created in same instrument of transfer) a. It can be possessory at the termination of prior estate b. A remainder created in a class of persons (As children) is vested if one member of the class is meets the three requirements i. It is said to be vested remainder subject to partial divestment or subject to open 17

1. The class can close naturally 2. The class can close by the rule of convenience a. The class closes when one member can demand possession i. Those have not satisfied the condition but are in the class can still share in the property if they do satisfy the condition later b. When O makes a will of an outright gift to a class, it will close if any members are alive when the testator dies. c. If no members are alive, then it will remain open until the class closes 2. Vested a. Requires: i. Born ii. Must be ascertainable iii. No express condition precedent in same or proceeding clause b. A second future interest in a transferee is a divesting executory interest 3. Vested Remainder Subject to Divestment a. Requires: i. Vested remainder ii. Express condition in subsequent clause that will shift possession before the vested remainder ever becomes possessory iii. Almost always follows a LE b. If the express condition precedent is in the same or proceeding clause of the remainder, it is a contingent remainder. If the express condition in a subsequent clause, it is a vested remainder subject to divestment. c. Condition Precedent a condition which affects grantees right to take possession before the grantee has taken possession of the property d. Condition Subsequent a condition which affects a grantees right to retain possession of the property after the grantee has taken possession e. Two way an interest can vest: i. In possession: condition is fulfilled and remainder person takes present possessory right ii. In interest: there is no present possessory right, but a future right to possession after natural expiration of prior LE and not subject to RAP 4. Contingent (if) a. A failure in any of the three listed above 18

b. It must vest prior or at the moment the proceeding finite estate ends, or it will be destroyed under ML c. If it is destroyed and no express party is name, the default taker is the original grantor 5. Alternative Contingent Remainder (otherwise) a. If there are 2 contingent remainders, then the second is alternative contingent remainder b. Default is reversion ii. Executory Interest 1. Future interest that can only take effect by divesting another interest a. Creates Fee Simple Subject to Executory Limitation when the FS determinable is held by a third party i. Treated as a contingent remainder because it is subject to a condition precedent and does not vest until it becomes possessory b. and her heirs as long/but if 2. Shifting a. Right to possession is taken from a third party b. Divests or cuts short some interest in another transferee 3. Springing a. Right to possession is taken from the grantor b. Divests the transferor in the future c. Two situations: i. Future interest only conveyance 1. Express condition precedent must be satisfied before he can claim the right to actual possession 2. Appears to convey a possessory interest, but actually conveys a future interest ii. Gap scenario 1. Appears to be a contingent remainder, but the express condition is one which by its nature cannot be satisfied before the end of the preceding estate 2. O conveys to A for life, then one day after As death, to As heirs and their heirs A has LE, O has reversion in FSSEL. As heirs hold a springing executory interest in FSA. d. Trust i. There is an inherent fiduciary relationship where trustee holds legal title to trust property and manages it for the beneficiaries who have the right of beneficial enjoyment of the property who hold equitable title 1. No self-dealing: cant co-mingle funds 2. Trustee is usually a real person (family member, lawyer) or it can it an entity (bank, investment company, etc.) 19

HYPOS: To A for life, then to B forever Life estate in A with remainder in B for life (meaning a remainder in life estate)- In 1600 the property reverts back to O if O is still alive or Os heirs if he dies w/out a will or Os devisees if he has a will [O maintains a reversion; having maintained a piece in each one, it reverts back to O, who never gave it all away] when A and B die; In 2002, A would have a life estate w/ remainder in FSA in B O conveys to A for life, then A conveys to B B has a life estate pur autre vie B predeceases A Bs heirs or devisees would get the land as long as A is still alive If B dies w/out heirs, it escheats to the state for As life When a dies, O or his heirs or devisees say they have the reversion and therefore the present possession transfers to them O conveys to A and the heirs of her body, and if A dies w/out issue to B and his heirs. A marries D and they have a son E. A conveys to C and his heirs. A dies intestate. A is survived by O, B, C, D, and E. Who owns in MA? If recognizes fee tail, fee tail in A, contingent remainder in B; A can disentail by conveying to another during her lifetime, which she does; C therefore has a FSA If in a state where FT is abolished, then A has FSA and E (if he survives) has a FSA O convey to A for life then to B and her heirs, but if B does not survive A, then to C and her heirs B has a vested remainder; then B dies and A is still aliveB did not survive A, Bs vested remainder is divested by the executory interest in C (C takes it when B dies)shifting executory interest If B has a vested remainder subject to divestment and C has an alternate contingent remainder, but the more proper answer is that C has a shifting executory interest O has no reversion b/c there is a vested remainder; Since there is a vested remainder, O gave up everything O convey to A for life then to B and her heirs and if B does not survive A, then to C and her heirs Alternative contingent remainders O convey to A for life then to the last to die between B and C Property goes to survivor: B and C have alternative contingent remainders Upon the death of the first, the survivors contingent remainder vests, becoming a vested remainder 20

When A dies and B and C are still alive; O owns the land in reversion until B or C dies Under c/l it would be destroyed by not vesting immediately, but under modern law, we will wait to see who dies first If B dies, Cs contingent remainder now vests

O conveys to A for life then to B and her heirs if B dies w/out issue then to C and her heirs Successive set of remainders: Bs interest vests; A dies so Bs remainder vests in possession; Cs interest is still alive successive contingent remainders: when one vests, the other is still alive b/c the condition has not been met B and C have successive contingent remainders in fee simple absolute Always look for the contingency- law doesnt like contingencies b/c we have to wait for something to happen (focus on what is the contingency, what has to happen?) Children of the womb are issue; w/in 9 mo of the mans death, that child was the presumptive child of the man; Life begins at conception O conveys to A for life, then to B if B gives A a proper funeral B has a springing executory interest b/c cant become possessory immediately upon As death b/c a funeral takes place after death so therefore there has to be time in between. O is seized of the property while B plans funeral. B is divesting O O has a reversion subject to executory limitation O conveys to A for life, then to As children and their heirs, but if at As death he is not survived by any children, then to B and her heirs. At time of conveyance, A is alive and has no children. A has a life estate; B has contingent remainder in fee simple; contingent remainder in As children subject to A dying; O has a reversion Twins C and D are born to A The remainders are now vested (began as conditioned b/c C and D didnt exist yet, now they are born- the condition of being has been met--ascertained) Vested remainder in fee simple subject to partial divestment by after born children (subject to open) and complete divestment by failing to survive only one needs to survive to save all their interest to pass on to their heirs O conveys to A for life, then to such of As children which survive him, but if none of As children survives him, to B and her heirs Particularized focus on each of As children; if we survive, we take, it we dont B takes A has life estate, C& D have contingent remainders, B has an alternative contingent remainder 21

O conveys to A for life, then to B and her heirs, but if A is survived at his death by any children, then to such surviving children and their heirs If one makes it, they preserve the class, but only the ones still alive take B has a vested remainder in fee simple subject to complete divestment by an executory interest in C and D; C and D therefore, have shifting executory interests Suchmeans each (only the ones who survive can take) Any- means class (if any survive, all will take) to the children (class), but to any such children survives (if any predecease, that one loses out) e. Rules Regulating Conveyances i. Covenants 1. When there is a covenant on the condition and a breach, then remedies are a breach of contract a. If there is a breach of the remainder, then there is a forfeiture ii. Destructibility of Contingent Remainders 1. A remainder is destroyed if it does not vest at or before the termination of the proceeding freehold estate (to promote alienation) a. Applies to only contingent remainders in real property and does not apply to equitable interests b. ALMOST UNIVERSALLY ABOLISHED: still recognized in FL, OR, PA, TN 2. Doctrine of Merger provides that if the LE and next vested interest in FS come into the hands of one person, the lesser estate mergers into the larger estate UNLESS they were created simultaneously in the same person a. If same party holds successive interest, the interests should be merged and re-identified based on largest estate b. Moreover, if two vested estates are held by the same person (and created by two separate documents) and a contingent remainder is in the middle, that contingent remainder is destroyed 3. Forfeiture a. A CR is destroyed if the preceding estates was forfeited iii. Rule in Shelleys Case 1. If a LE is given to a grantee and in the same instrument a remainder is given to the life tenants heirs, the remainder goes to the life tenant a. Be sure to check for merger i. There must be vested remainders for merger 22

b. O conveys to B for life and then to Bs heirs. B takes both the LE and remainder, which merges into FSA c. Must state heirs, not issue or next of kin 2. Applies to legal and equitable estates (must be the same estate though!) 3. Only applies to vested and contingent remainders 4. Applies only to real property (not usually personal property) 5. Applies only to freehold estates 6. It is a rule of law iv. Doctrine of Worthier Title 1. If an instrument conveys a possessory interest to a 3rd party and the same instrument purports to give a remainder or executory interest to the grantors heirs, give the future interest to the grantor a. Be sure to check for merger b. O conveys to A for life, then to the heirs of O and their heirs. A has a LE and O has a reversion i. Can use terms such as next of kin or issue c. Only valid in inter vivos conveyances d. Today, it is a rule of construction and is almost abolished everywhere i. However, it may still be in effect retroactively e. Applies to executory interests, contingent remainders, real, personal, legal and equitable property f. To A for life then to Os heirs in equal shares DOW does not apply b/c heirs take PER STRIPES (representational shares and do not take their own interest, but the share of the deceased) v. Rule Against Perpetuities (RAP) 1. No interest is good interest unless it must vest or fail not later than 21 years after some life in being at the creation of the interest a. Create, Kill, Count b. Applies to: i. Contingent Remainder when CR are stacked one after the other, the second remainder will be void unless it vests upon the first CR becoming possessory ii. Executory Interest when shifting EI following a FSSEL, if the limiting condition is not tied to a life in being, the EI will almost always violate the RAP. 1. O conveys to A and his heirs as long as A does not sell alcohol on the premise, then to B and his heirs. A, a life in being, has FSEL, so the limitation is valid because it is tied directly to A. 23

iii. Vested Remainders Subject to Open (class gifts) 1. Everyone must be vested by the end of the period of perpetuity, or else the conveyance is not valid a. Measured by the death of the last person i. If you create one scenario where one member of the class vests, but after the lives in being plus 21 years, then interest in void 2. If the class remainder skips a generation, it will most likely violated the RAP a. O conveys to A for life, then to As grandchildren and their heirs. A has LE. As grandkids have CR in FS. O has reversion. This conveyance violated the RAP 3. When there is no express condition precedent, but stacked contingent or vested subject to partial divestment remainders, the RAP problem is with the second contingent or vested subject to partial divestment remainder 4. Likewise, whenever there is no express condition precedent but there are contingent or vested subject to partial divestment conveyances which are stacked, the second contingent or vested subject to partial divestment invariably will be void. iv. Options 1. Under CL, options are subject to the RAP because a purchase option is treated like a future interest, contingent upon exercise of the option 2. Lease with option to purchase may not make interest subject to the RAP v. Future interests retained by the transferor (reversion, possibilities of reverter and rights of reentry) are not subject to the RAP c. Measuring Life i. Must be life in being and able to affect the vesting ii. Includes unborn child iii. Anyone in the world can be a measuring life d. 21 years i. measure from the point of death of the measuring life or validating life 24

1. Conveyance must be alive at the passage of the deed 2. Will when the decedent passes away 3. Trust point the trust becomes irrevocable; must affect vesting e. If cannot prove CR, then it is void from outset (beginning) and cross a line through continent interest i. A good trust can avoid the RAP HYPOS: (and refer to bible) O conveys to A for life, then to As children for their lives, then to B if B is then alive, and if B is not then alive, then to Bs heirs. Assume A has no children at the time of conveyance. This is valid. A has life estate As kids have a contingent remainder in LE (measuring life is A, therefore this is valid because it will vest or fail at the time of As death and we can determine if A has children or not) B has contingent remainder in LE (with Bs heirs) B is the measuring life because it depends if B is alive so it is valid Bs kids have alt. contingent remainder in LE B is the measuring life because B must die and at death, ascertain if B has heirs (valid) O has reversion in FS O declares that she holds in trust $1,000 for all members of present class who are admitted to the bar. This is valid. Measuring life is the members of the class They will either die admitted or unadmitted, and we will not have to wait 21 years after the last member: you will know immediately after death of last class member. There is no possibility to vest beyond the 21 years pert. period. Suppose that O had said for the first child of A who is admitted to the bar. This is invalid/void ab initio Measuring life is A and A could have a child who would be admitted to the bar after 21 years. As death cant determine who passes the bar; it would fail remotely O conveys to A for life and then As children who reach 25. A has a child, B, age 26, living at the time of the conveyance. This is invalid/void ab initio B has a vested remained subject to open Measuring life is A because contingent remainder is As children New child would not reach 25 in 21 years: vests remotely When there is a class gift, the gift must be valid for all members of the class or it is void for all. 25

O conveys to A for life then to As widow if any for life then to A issue then living. Is gift to As issue valid? VOID ab initio Widow has a contingent remainder in life estate. This is valid because it will vest upon As death Contingent remainder to As issue (on widows death) is VOID because the widow could live for 21 years beyond As death nor do we know if widow is not alive at time of creation of interest and therefore cannot be the measuring life (A could marry an afterborn person), thus vest remotely. This is a case of an unborn widow ***contingency is at the death of A and As children To A for life, and on As death to As children for their lives, and upon the death of A and As children, to B if A dies childless A has life estate A children have cont remainder in LE subject to open B has contingent remainder (contingent on A dying childless) Measuring life is B: so this is VALID because we will know at As death if A died childless (Bs interest will vest) or died with children (Bs interest will fail) Just because it fails, doesnt mean the RAP is void To A for life, and on As death to As children for their lives, and upon the death of A and As children, to B if A has no grandchildren then living A is measuring life VOID: will not vest until it has possession and it will not happen until the death of all of A children. A might have grandchild that will live after 21 years of As death. To A for life, and on As death to As children for their lives, and upon the death of A and As children, to Bs children Bs children have contingent remainder (contingent on being children of B) Measuring life is B At Bs death, we will know if B has children: VALID (same as A) To A for life, and on As death to As children for their lives, and upon the death of A and As children, to Bs children then living Bs children have contingent remainder subject to open Measuring life is B VOID because it is a class issue: case of the afterborn child who is not alive yet comes into being

26

To A for life, and on As death to As children for their lives, and upon the death of A and As children, to As grandchildren VOID because takers will not be ascertained until the death of As children, so last child could be an afterborn child and thus produce grandchildren more than 21 years after As death To A for life, and on As death to As children for their lives, and upon the death of A and As children, to Ts grandchildren VALID because T is already dead and all of Ts children would be ascertained at that time, so the interest will vest. EXEMPTIONS: Future interest retained by grantor are not subject to RAP treat them as vested interest Measuring life: Create, Kill, Count 1) Create someone who will potentially vest It could not be the measuring life, but could vest 2) Kill everyone is that group (no longer have to worry about finding measuring life) 3) Count 21 years. If it is possible that one of the created lives extends beyond 21 years, then transfer is void ab initio. Hypo: O conveys to A for life then to B and his heirs. Is Bs interest is valid under RAP? Yes, because it is a vested remainder in FSA and RAP does not apply. O conveys to A for life then to B and his heirs if B reaches the age of 25. At point of conveyance B is 23 years old. A has life estate B has contingent remainder in FSA O has a reversion B is measuring life: therefore VALID under RAP because it is expressly tied to a specific person who is alive at creation at the time of the interest, the interest will not violate the RAP O transfers to A for life then to Os first grandkid and his heirs. Presume at time of creation O has three children and no grandchildren. A has life estate O has a contingent remainder in FSA (because not yet born and unascertained) O has reversion in FS If this conveyance is by inter vivos deed, is CR valid under RAP? Create X, child of O and then kill everyone. YES, so transfer is VOID under RAP. If this transfer was not by inter vivos deed, but by testamentary will (on death of O), A has life estate O grandkid has CR, but it is valid under RAP because O is dead and you cannot create a new child for O. A new grandchild would immediately vest, so it is valid. 27

***Consider conveyance an inter vivos conveyance*** vi. Modifications of the RAP 1. Uniform Statutory Rule Against Perpetuities a. Uses a flat rate of permissible vesting period of 90 years 2. RAP is slowing being abolished 3. Perpetual Trust trusts can last forever if trustee has power of sale a. However, most trusts terminate within 60 years of their creation and therefore are not considered perpetual trusts 4. Wait and See Approach a. A modification of the RAP, under which a court may determine the validity of a contingent future interest based on whether it actually vests with the perpetuities period, rather than on whether it possibly could have vested outside the period ALWAYS LOOK TO WHAT KIND OF LEASE (RESIDENTIAL V. COMMERCIAL) TO WHAT KIND OF BARGAINING POWER VIII. Leaseholds a. Lease is an agreement whereby the owner of the property (LL or lessor) contracts to grant a tenant or lessee possession of the specified real or personal property i. Details: 1. Tenant holds possessory estate in the property for a determinant period of time or at the will or permission of another 2. LL retains reversion 3. If statute requires that a lease be in writing, so must any agreement modifying it or terminating it 4. Leases are nonfreehold estates a. Leasehold estate in land, future interest in LL 5. Rightful tenants can keep what they find on the property ii. Four types of leases: 1. Term for Years a. When lease agreement expires at the end of a definite period (day, week, month, year) i. If no date is given for commencement, then it is assumed to begin on the date the lease was executed by the parties or upon delivery by LL or tenant ii. Must have length of term and automatically terminates 1. However, it can terminate prior to stated time 28

a. To A for 5 years unless he graduates from law school b. It is voluntary c. It is inheritable, unless lease requires tenant to perform personal services d. It is alienable e. No notice of expiration is required: the expiration of the term is automatic 2. Periodic Tenancy a. Transfer by which the tenant possesses the premises for an indefinite term and in which a periodic rent has been reserved to the LL i. If no specified length of the lease term, then the term will conform to the frequency of rent payments b. Automatically renews for same length of original period c. Notice is required for terminations by either party i. Usually notice is equal to length of tenancy 1. Now, 6 months for a year to year lease ii. Notice is only effective at the date of renewal d. It is either explicit or implicit e. If a PT has annual rental of $X but can be paid monthly, courts will may see this as a PT on a year to year OR on a month to month 3. Tenancy at Will a. A LL tenant relationship that endures only as long as the parties agree it shall b. It is voluntary c. It is NOT inheritable, nor transferable or assignable i. If LL died, tenant must move out (death of either terminates) d. It may be either express or implied i. Implied when lease is not executed by all cotenants ii. However, today these leases are construed more as defeasible life tenants (to A for as long as he wants) iii. During negotiations, the week to week is a tenancy at will and not a periodic tenancy e. It is rare in commercial leases f. TAW is terminated without notice under CL; now require 30 days notice i. A TAW that conforms to the parties intent, unilaterally giving the lessee the right to terminate, a new LL does not have the same right 4. Tenancy at Sufferance

29

a. Not a true lease a wrongful occupancy and occurs when tenant enters into a valid lease and then holds over past the end of the lease term i. Can either treat holdover as trespasser (no notice required and can oust tenant at any time) 1. Once any action commences, LL cannot change his mind and extend the lease ii. Or as a renewal of the lease (on same terms and conditions and covenants) 1. Usually gives rise to a periodic tenancy (based on when rental payment is received) b. Holdover tenant a tenant who entered rightfully, remains in possession after term expires without claiming to be there rightfully i. Holdover tenant is a tenant at sufferance ii. Holdover must be voluntary for ejectment 1. Since he technically not a trespasser, ejectment is the proper action c. Two options: holding over for one month or more, gives rise to another term OR LL may treat him as a trespasser (LL can bring ejectment action to evict or summary proceedings for possession) i. A defense of a LL for cashing a check from holdover is claim that it is partial payment and more is due and he is not treating him as renewing his lease (mark check under protest) ii. Exceptions for holding over 1. Involuntary 2. Holding over for short time (de minimis) or leaving personal property on premise 3. Negotiations with LL that spill over past the expiration of the term iii. Caveat Lessee (CONVEYANCE THEORY) 1. Take the lease as it is: no liabilities, no implied covenant from LL (except title and possession) a. Tenant usually had duty to repair. b. EXCEPTIONS: i. Short term furnished dwelling renting a room or hotel 1. Implied covenants no time to inspect because it is immediate occupancy ii. Latent defects 1. A defect which cannot be observed by a careful and reasonable person a. Opposite: Patent observable, what a reasonable person would know 30

iii.

iv.

v.

vi.

2. Once LL tells tenant before, at or after delivery, LLs responsibility ends Common areas areas in building everyone uses (hallways, lobbies) 1. Duty to take notice of known and foreseeable dangers and LL should take action to repair these dangers (including parking lots and driveways) i. It is beyond tenants control; LL is responsible b. LL must take reasonable precautions; not an insurer against all problems Undertaking Repairs if LL begins to repair, it creates an obligation/duty to finish the task with reasonable care in a reasonable time 1. Doctrine of estoppel Public Use Exception LL has duty to know the latent defects of the property and therefore tenant is not responsible, but LL is 1. Even if LL discloses, still may be held jointly liable Negligent repairs LL is responsible for any negligence in any repairs he makes

iv. Lease 1. License - permission usually revocable to commit to some act that otherwise would be unlawful 2. Lease gives rise to a LL-tenant relationship a. They are in privity of contract (relationship b/c of contract, the lease) b. They are in privity of estate (successive relationship in the premise) 3. It transfer a possessory interest in the land, creating property rights and it is a contract with contractual rights a. Covenants are mutually dependent v. Selection of Tenants 1. CL unlimited right to select or refuse any tenant 2. Under Modern law, there are restrictions on LL right to select and refuse tenants a. US policy provides constitutional limitations to prevent discrimination in sale or rental of property i. There are exceptions!!! 1. Single family homes 2. 4 families or less if owner resides there 3. If owner lives there at time of sale 4. Applies to only 1 sale ever 24 months 5. If you dont advertise, you can still discriminate 31

a. Cant use public means 3. Federal Fair Housing Act a. No discrimination based on color, race, religion, sex, familial status or national origin, or handicap i. Exceptions: private clubs, religious organizations ii. Discriminating against a person with AIDS is a violation (considered a handicap) iii. Discrimination against non-married couples and same-sex couples is not a violation of the FHA b. What if the ad doesnt state white ? Still discrimination? i. Depends on the actions of LL: use pair testing to see if discrimination exists ii. What if ad said a single white female? Yes, violation of FHA iii. What about rented to only those who spoke Polish? YES, shows preference for a national origin 1. Exemption for small business or private homes 4. Civil Rights Act of 1866: Section 1982 USC a. Provides that every citizen has the same rights as a white person in every state b. It is broader because it does not contain exemptions found in the FHA 5. Tipping Point a. Currently, 20% is the tipping point for whites to leave the area i. This is because of racism ii. There must be intentional discrimination to integrate (Oak Park) HYPO: Regular exclusion of black models. It would violate the FHA. It is not an intent test, but a barrier test (does an ordinary person believe it would bar certain classes?) One instance would be an undue burden on the advertiser FREQUENCY MATTERS vi. Delivery 1. LL has duty to convey the legal right to take possession of the premise a. Majority rule (English rule): LL must deliver legal and actual possession i. LL has ability to evict, monitor and get assurances that potential holdover will leave ii. Doctrine of Last Clear Chance person who most easily bear avoidance of the accident and has the last clear change to avoid the harm has the duty to avoid the harm 32

1. Burden is placed on the one (LL) who is in a better position to fix it and remedy it 2. LL can give this up in commercial leases, but NOT residential leases 3. If there a breach, tenant has no obligation to pay b. Minority rule (American rule): LL may only deliver legal possession i. Presumes that both LL and tenant have equal bargaining power 1. NOT in RESIDENTIAL leases 2. There is equal bargaining power in COMMERCIAL leases 3. Since only legal title, then tenant has obligation to pay c. If tenancy is not disturbed, it does not matter if the property is lease to more than one person i. It doesnt matter if there is a superior right (no breach of right to quiet enjoyment), unless there is a claim 2. Every lease has implied covenant for a right to quiet enjoyment and a covenant of good faith and fair dealing! a. Covenant of quiet enjoyment implied promise that no one will interfere with tenants lawful possession i. Implied in all leases, written and oral ii. It is an independent covenant vii. Sublease and Assignment (look at problems on page 393-394) 1. Assignment conveys the whole term a. Cannot capture rent increase: LL takes the risk of increase of value and tenant takes the risk of a decrease in value (can contract for it in commercial leases) i. Renting tenant can reserve right to reenter if rent is not paid by assignee (under modern law) 1. CL it would be a sublease b. Privity of estate exists, but NOT privity of contract i. LL has a c/a against tenant (privity of contract) AND/OR against the assignee (privity of estate ii. Original tenant is sometimes held as a surety and therefore becomes liable for back rent due by his assignee 1. He can then sue assignee to recover steps into shows of LL for rent due (subrogation) iii. If original tenant gives up primary lease voluntarily, a sublesee would retain the right of possession and would be in privity of estate with LL 2. Sublease grants an interest in the leased premise less than his own to another person, leaving a reversionary interest 33

a. Privity of contract with sublessor i. Unless LL expressly agrees to substitute the transferee for the tenant, looking only to the transferee for rent payments and to satisfy all obligations under the lease. 1. This is a novation 3. Intent determines which type the parties intended in minority of jurisdictions viii. Rights of Lessor 1. Minority view A lessor may refuse an assignment as long as it is commercially reasonable a. Majority view unfettered right to reject or assent to any sublease or assignment (it can be capricious and unreasonable) when there is a clause stating that a LL has a silent consent provision (AKA a refusal clause) b. The current trend is to follow the minority view i. We are now dealing at an arms length, not so personal c. In commercial leases, there must be a commercially reasonable basis (a business reason, not a personal reason) i. This is implied, but can be defeated by an express provision ii. Does not need consent for sublease (courts want to promote alienation) 2. Every contract has implied covenant that neither party shall hurt the others right to receive the fruits of the contract (Good faith and fair dealing!) a. He cannot deny based on personal taste, convenience, or sensibility (should have contracted for the right to deny) b. In commercial lease, a lessor cannot take into account other building when deciding a reassignment 3. Rule in Dumpors Case a. Rule terminates prohibition against assignments when LL consent unless he specifically states i. If LL consented once to a reassignment, he does not need to be asked again unless he specifically states so II. APPLIES ONLY TO ASSIGNMENTS, NOT SUBLEASES b. Restatement disagrees with this rule should look to parties intent c. A sublease or assignment without consent does not forfeit the property automatically, rather it is voidable and LL can accept rent and waive the covenant or evict the transferee 4. LL can transfer his interests, but leases will transfer with the title 34

a. LL therefore is not liable for real covenants, only personal covenants b. He is still in privity of contract with lessees! 5. Criminal Acts a. LL is responsible for criminal acts of third parties when he knew of the defect (broken lock) and had control over it and it foreseeably increased the risk of criminal acts i. As long as LL acts reasonably, then he may not be liable 1. Remember, LL is not an insurer of all things ix. Tenants Duties 1. Tenant has a duty not to commit waste and redeliver the premises in the condition he received it a. Voluntary waste direct intentional injury to premise i. CL - Doesnt matter if it increased the value, still waste (ameliorative) ii. ML allows for some changes as long as they are reasonable b. Permissive waste not doing anything to prevent waste 2. Today, residential tenant is responsible for minor repairs a. CL tenant had a duty to repair 3. ML tenant has no duty to rebuild a. CL had duty to rebuild 4. Security deposits secures a tenants performance of the lease covenants a. Usually strictly followed x. Defaulting Tenant 1. Self-help: retake premise when legally entitle to possession and the LLs means of reentry is peaceable a. Must keep the peace (peaceable is not just absence of violation, it is any likelihood of violence) i. If it is non-peacable, tenant can sue to regain possession, not for damages b. If tenant is in active possession, ejectment is considered a breach of the peace (except Cook County) c. Remedies summary proceeding i. Other tenants may receive stricter renting policies and higher rents if LL goes to summary proceedings 2. Surrender a. Explicit surrender: Tenant can unconditionally surrender and if LL accepts, tenant is liable for back rent, not the remaining (future) rent i. Should be in writing to satisfy S/F b. Implied surrender: LL relets to a new tenant, advertises for a new tenant i. If LL does give notice, defaulting tenant is responsible 35

ii. If LLs act are consistent or repugnant with the lease (length of lease, physical alternations, amount of rent), either it is a replacement or mitigation 3. Remedies for LL when tenant abandons a. Sue, release, evict (remedies) i. If eviction, then tenant is no longer liable for further performance b. Let tenant go (accept surrender and relet on LLs behalf) i. Tenant is no longer liable ii. Must act inconsistent with the previous lease iii. Should give tenant notice that LL is renting his own behalf c. Get new tenant and hold old one liable i. If rent is more, tenant may receive the benefit unless the LL gives notice he is reletting the premise on LLs behalf 1. Tenant is responsible for any reasonable costs incurred by LL in attempting to relet ii. Mitigation LL has a duty to mitigate damages if tenant abandons property if he seeks to recover from the defaulting tenant (must have notice from tenant) 1. It is an objective test 2. LL should mitigate damages to discourage vandalism and not create an attractive nuisance 3. Extends to commercial leases d. Allow premise to remain vacant and sue for balance of unpaid rent as it becomes due i. Beware of letting the claim go stale (laches) ii. CL NO DUTY to mitigate damages xi. Remedies for Tenant 1. Breaching the covenant of quiet enjoyment results in either actual or constructive eviction of tenant a. Actual Eviction physical ousting of a person or physical ouster of possession (changing locks, removing stuff) i. Tenant no longer is responsible for rent ii. Partial eviction where tenant does not have access to a portion of the premises 1. Restatement rejects rule of release of all liability from tenant, instead allowing tenant to receive a reduction in rent b. Constructive eviction tenant must have substantial interference with the right to use and quiet enjoyment of the premises on an objective standard i. Look towards: purpose of lease, foreseeability of the harm, potential duration of the harm; nature and 36

degree of harm and interference, availability of means to abate harm ii. CE is available for failure to fix latent defects; breaching of a covenant; failure to fix problem within reasonable period of time 1. Must give LL reasonable time to repair iii. Damages include replacement housing and lost profits and the time it took to locate a new place 1. Tenant does not have to vacate to receive damages or abate rent (Restatement/modern view) 2. Under minority view/CL, tenant does have to vacate in a reasonable time in order to sue for damages of the difference between the contract rent and the fair rental value of he actually received (difference money) c. Applies to residential and commercial leases 2. Retaliatory Eviction (modern law) when tenant exercises rights and complains to public departments and LL gets in trouble with those who regulate his activities and require him to repair, costing money reputation and time. In response, LL evicts tenant a. This is prohibited for 90 days if complaint was alleged in good faith b. In CL, a LL could evict for any reason or no reason at all xii. Habitability 1. In the 1960s, LL had to make residential tenancies habitable a. There was a history of LL offering inferior products on unfair terms (CONTRACT OF ADHESION) i. LL need to be restrained b. Government could interfere because people have a basic human right to adequate housing c. Modern law gave interdependency of covenants (exchange of one thing for another) d. Tenant must notify LL to bring action for breach of habitability e. Remedies: Rescission, restitution, money damages 2. IMPLIED WARRANTY OF HABITABILITY a. Requires rental premises be offered and maintained in a physical condition that provides safe, decent and habitable housing for tenants i. This makes covenant to pay rent and LLs duty to repair DEPENDENT covenants ii. It is an objective reasonable standard (based on the reasonable person) b. Urban tenants do not have time to inspect premises and has a lower bargaining power than LL 37

IX.

i. Does not apply to commercial leases ii. Tenant does not have to abandon, but can sue for damages (restitution, rescission, and reduced rent if he remains on premises) 1. If a tenant leaves he can sue for all rent paid while condition exists c. Applies whether or not it is expressed in lease; any lease provision that attempts to negate the IWH is void as a matter of public policy d. Applies only to conditions that make the premise PHYSICALLY habitable (heat, hot water, safe appliances, etc.) e. Breach occurs when LL has notice, defect must be substantial and LL had reasonable time to repair the defect and failed to do so i. Remedies: 1. Withhold rent a. Tenant should put money into escrow account 2. Sue LL to collect damages a. The difference money b. Punitive damages are available when inserts exculpatory clause or when there is emotional distress c. Exculpatory Clause a clause that LL attempts to absolve himself from liability for injuries on premises i. Usually found void for residential leases, 3. Repair and deduct reasonable cost from rent payment xiii. Illegal leases 1. When leases violate a housing house from the first day of the lease, it is void ab initio a. The tenant can recover rent paid b. When the lease is made for illegal purposes, the courts leave the parties where they find them (gambling, prostitution) xiv. Commercial Frustration 1. In commercial leases, unforeseen or supervening events can legally frustrate purpose of lease a. Changes that make the lease less profitable do not constitute a frustrated purpose i. Premise is leased to be bar. Zoning laws change and make it illegal. This is a frustration of purpose Co-ownership a. Concurrent ownership can occur in personal (moveable) or real property 38

b. Types of concurrent ownership i. Tenancy in Common (T/C) 1. Most common form of concurrent ownership a. It is now the default 2. Interest are separate and undivided and each have an equal right to possess the whole property a. There can be different estates (ex. LE to A and remainder to B) 3. A co-tenant can mortgage his interest, but not the other cotenants half interest 4. A tenant in common interest is assignable, devisable and descendible and conveyable (inter vivos) a. If T devises property to A and B, they are tenants in common. A devises interest to C, then B and C are tenants in common. If B dies intestate, Bs heirs are in T/C with C. ii. Joint Tenancy with right of survivorship (J/T) 1. Most desirable type of concurrent ownership a. However, modern view favors T/C b. To be a J/T, one must expressly state that it is J/T with right of survivorship c. Jointly in a conveyance will be construed as T/C 2. Right of survivorship is key: surviving tenant succeeds to the whole interest doesnt enlarge, but no longer has to share a. At death, all interest of decedent vanishes 3. Must have four unities present: a. Unity of time interests must vest at same time b. Unity of title must acquire title in the same deed or will c. Unity of interest must own equal shares of the same estate i. Under modern view, joint tenants can have unequal shares when created with intent to do so d. Unity of possession right to possession of the whole property i. A tenant can give exclusive possession to other tenant without severing the J/T 4. Avoidance of Probate a. Married couples favor J/T because it acts like a will, but avoid probate i. Probate judicial supervision of the administration of the decedents property that passes to others iii. Tenancy by its Entirety 1. Limited to husbands and wives who own property as a unit, not by equal shares a. Hawaii is an exception T/E for domestic partnerships b. Same four unities apply, in the addition of status of husband and wife c. It is not descendible or transferable inter vivos 39

d. Creditors cannot attack the entire property when only one party has signed and defaulted e. In many states, a grant to husband and wife is presumed to create a T/E Example: T devises Blackacre to A and B as joint tenants for their joint lives, remainder to the survivor. What interests are created? Joint life estate measured by the first to die with contingent remainder in FS to survivor and reversion in Ts heirs during LE, they are TIC, which is why there is no survivorship when the LE ends, it ends upon the death of A or B Either JT can unilaterally destroy the relationship, but persons holding life estates with a contingent remainder cannot unilaterally terminate the survivorship requirement CR is indestructible and cannot act alone, but acting together they can convey a fee simple to a buyer If it is signed by only one joint tenant, what did the purchaser buy? A life estate pur autre vie (life estate measures by another and dies with the grantor) It should specifically state right of survivorship for a joint tenancy c. Severances i. If one of unities is destroyed in a J/T or T/E, then it is severed and a T/C results 1. A joint tenant can unilaterally sever a J/T by transferring interest to a third party (straw person), unilaterally or without notice (secret severance) a. Clear intent should govern; some objective act clearly showing the intent to sever (declaration of deed, notarized document) 2. A spouse in a T/E CANNOT unilaterally sever or convey the T/E a. Divorce terminates the T/E and T/C results i. Can keep T/E for a period to protect the family home 3. Most common involuntary severance is a foreclosure sale in bankruptcy proceedings 4. Simultaneous Death Act a. If all joint tenants die simultaneously, one half interest goes to one and the other half goes to the other ii. Absent intent to sever, the modern trend is that a conveyance is not a severance 1. Leases a. Short term leases by one joint tenant do not sever a J/T i. Lease will end upon the death of the leasing joint tenant b. A joint tenant cannot vest more than his share without the express consent of the other joint tenants 40

2.

3.

4. 5. 6. 7. 8.

i. The lessee stands in the shoes of the leasing joint tenant and assumes all rights, so other joint tenants cannot do anything that they couldnt do to joint tenant 1. Remedy is to get partition of that specific area 2. Disaffirm the lease do not approve and sue for half of the rental value (recovery of mesne profits) 3. Affirm the lease ask for accounting of rents (joint tenants would be acting as one) ii. If leasing joint tenant leases only her interest, nonsigning tenant cannot get anything because nothing more than half of the rights were being leased Mortgage a. Lien theory states (majority) i. Mortgage is security for a loan 1. Borrower has legal title and lender has equitable title ii. Not an actual conveyance iii. Mortgage by one joint tenant does NOT act as a severance unless the creditor forecloses iv. Vanishing theory when the interest vanishes, the lien vanishes 1. This hurts casual lenders, not commercial lenders b. Title theory states (minority) i. Mortgage conveys legal title to the creditor ii. Creditor owns the debtors interest in FS determinable, to revert to the debtor when debt is retired Life Estate a. A life estate pur autre vie of the joint tenant does not sever a joint tenancy because the joint tenant still has the right to possess the whole A term of years does not affect the right of survivorship Alienation (voluntary or involuntary) will severe J/T Murder severs J/T Partition severs J/T Contract to sell severs J/T

Suppose A and B own Blackacre as JT. A conveys a 10 year term of years to C. After 5 years, A dies, devising all of her property to D. What are Bs rights? Under modern theory, JT is not severed by lease, so B has everything in FSA. What about Cs lease? Vanishing theory, so lease disappears (unfair to lessee, but he took that risk) o Cant sue estate because there is no interest passed to estate 41

o This lease might be a commercial lease and has equal bargaining power and he should have figured out if there was a JT and should have required both signatures Find that out by running the title Does the lease act as a severance? NO: There must be a clear intent to end the joint tenancy Suppose A and B own Blackacre in JT. They are married and hold by JT not EBT. They are getting a divorce. They sign an agreement as part of the divorce that stipulates that the land will be sold and proceeds will be divided equally. Before it can be sold, B dies. What is the ownership status of Blackacre? Most courts have held that a property settlement as part of a divorce decree does not sever a JT as a matter of law unless it is clearly stated at that time that the parties intend to sever at that time. There was only an intent to make an executory contract unperformed contract, not fully performed to divide the proceeds, which could be enforced d. Partition i. Partition is available to T/C and J/T but NOT T/E 1. Must have concurrent possessory rights ii. Partition by kind (physical) 1. Usually when the relationship is amicable 2. Court favors partition in kind because partition by sale is without owners consent and is an extreme exercise of power warranted in specific cases 3. Payment maybe ordered from other cotenants - owelty iii. Partition by sale (if physical division is impossible) 1. Used in only two instances: (1) physical attributes of the land are such that a partition in kind is impracticable or inequitable OR (2) the interests of the owners would be better promoted by partition by sale 2. Must take parties interests into account and not public interest a. Emotional aspect are usually not considered b. Burden of proof is on the party requesting a partition by sale to show that the parties interest would be better promoted 3. Focus only on the tract of land in dispute e. Reimbursement i. Contribution 1. A cotenant paying more than his share of taxes, interest on mortgages payments, and other necessary carrying charges, generally has a right to contribution from other cotenants (up to value of their share in the property) a. However, if paying cotenant is in sole possession and value of use and enjoyment equals or exceeds such payment, no contribution is due up to the FMV 42

b. WITH THINGS THAT PROTECT THE TITLE, YOU HAVE A RIGHT TO DEMAND CONTRIBUTION ii. Repairs 1. Cotenants do no usually have affirmative right to demand contribution from other cotenants in absence of agreement a. They cant collect now, but have a credit for those repairs in the division of the proceeds if there is a partition by sale iii. Improvements 1. Same for improvements, but improver may get award for the added value resulting from improvements if there is a partition by sale 2. WITH THOSE THINGS THAT MAINTAIN OR IMPROVE THE PROPERTY, NO RIGHT TO CONTRIBUTION AT THAT TIME iv. Accounting 1. Accounting is equitable proceeding 2. Occurs when cotenant rents property to a third party a. Must share profit with cotenants b. Can offset rent revenues by the amount expended on taxes, interest, mortgage principle and actual amounts spent on repairs or maintenance and utilities, etc and can request contribution if rent revenues are insufficient 3. Happens before the partition by sale v. Final settlement 1. If there is a partition by sale, a final settlement takes place a. A cotenant who has paid and not reimbursed for taxes, interest, mortgage principle, repairs, maintenance, insurance, and other common expenses will be reimbursed out of sales proceeds f. Possession and Ouster i. A co-tenant owes no rent to his co-tenants for using property 1. EXCEPT when the occupying tenant acts to prevent the other cotenants from using the property (ouster) ii. Ouster 1. Ouster applies in two fact situations: a. Beginning the running of statute of limitations for adverse possession i. Here, the cotenant exerts complete ownership of the premise 1. This is demonstrated by failing to pay accounting or selling land b. Liability of occupying cotenant for rent to other cotenants i. Here, the cotenant refuses a demand of the other cotenant to be allowed to use and enjoy the land 1. Installing new locks do not prove ouster without demand for keys 2. Refusing to pay rent would be an assertion to the whole 43

2. Details a. Ouster is a legal conclusion b. There must be a demand to enter and a refusal to enter i. If there is silence by the occupying cotenant, it depends on the amount of time (reasonable) g. Fiduciary Relationships i. Cotenant are generally not fiduciaries except for 1. Familial relationships 2. Property acquisition in a foreclosure sale by one of the cotenants a. Cotenant acquires fiduciary duty by allowing title to be lost when he could have prevented it b. The buying cotenant holds the title for the benefits of all cotenants who can reimburse him for their interest i. If there is a delay, they forfeit their claim for occupancy and are accountable for damages 3. Adverse possession by a cotenant who is in exclusive possession where the cotenants are kindred h. Joint Bank Accounts i. True Joint Tenancy one may intend to make a present gift to another of one-half the whole sum on deposit 1. A creditor can reach the entire account of joint tenants during As lifetime (each joint tenant has a right to the whole) a. Use parol evidence (any oral or written statement outside the transaction that explains the transaction) to show contributions i. Burden of proof is on the party making the argument ii. Payable at Death one may intend to make a gift to another only of the right of survivorship iii. Convenience one may intend that another only have power to draw on the account to pay Os bills and not to have the survivorship rights iv. Intent 1. Always look towards intent of grantor there must be an express intent to create a joint tenancy and an express intent to sever a joint tenancy a. Safety deposit box is treated differently than bank accounts and the intent should be express and the evidence should be strong to indicate that gift was intended X. TRANSFER OF LAND a. Inter vivos transfer i. There are social, political and economic consequences/implications from selling/buying the land b. Remedies for breach i. Specific performance (since each parcel is considered unique) 44

ii. If SP is not sought, then nominal damages (out-of-pocket) and/or actual damages (equals excess of property s FMV at time of breach OR excess of the contract sales price over propertys FMV if nondefaulting party is seller) 1. Liquidated damages may be available if difficult to determine (LD is amount contractually stipulated as a reasonable estimation of actual damages to be recovered by one party if the other breaches) 2. The monetary award is termed loss of bargain damages a. When a marketable title cannot be produced 3. Incidental, nominal or reliance damages can be awarded if no loss of bargain damages are awarded 4. Earnest money is returned if not otherwise stated in sales contract c. Steps to Land Transaction i. First, an offer to purchase (sales contract) is made 1. Earnest money must be deposited 2. This agreement envisions the larger Purchase and Sale (P&S) agreement a. RE contracts are almost always executory (transfers immediately but requires both parties to certain things between contract and closing) 3. The sales contract contains broad details (price, property, inclusions, date of closing and location, contingencies, and type of deed) ii. Second, the P&S agreement must be executed 1. It must state: a. Seller is owner of property and ensure the deed is recorded b. States the purchase price and down payment amount (usually 10%) i. Earnest money is likely held by a third party and interest is split between buyer and seller c. Identifies property d. References to inclusions and exclusions (fixtures) e. States the closing date i. Should include clause time is of the essence 1. Any late performance prohibits the faulting party from seeking specific performance and may be entitled to pay damages a. However, look to parties actions to see if clause is waived f. Includes financing and inspection contingencies i. The mortgage contingency is the most important and if there is failure to notice, then the buyer is still liable for buying property 45

1. The contingency is precise: it states the kind, the rate, etc. ii. The inspection contingency requires one to walk the land and inspect premises and use professionals to inspect for termites, hazardous substances, radon, etc. g. Type of deed and title report h. It must contain: parties, price, terms and conditions, signature of the party to be charged, and description of land (PETER PIPER TOOK SOME DRUGS) i. If no financing is mentioned, then assume cash ii. Closing date can be inferred iii. Second, buyer must secure a mortgage 1. The mortgage is on the property itself and must be secured by a promissory note (naked promise to pay) 2. Mortgage is relatively new development which took off in the 1930s, which started the suburb boom because it only applied to new single family homes iv. Third, there is inspection followed by closing 1. The period between the P&S and closing is called the executory period 2. At closing, seller transfers title to property to the buyer a. Interest in property is usually transferred by deed d. Brokers i. Brokers are usually hired by the sellers and cannot be agents of buyers as well (unless there is disclosure) 1. Real estate agent acting as a subagent is under the same duty as the primary broker (in privity with seller) 2. They must disclose any materially latent defects if a reasonable broker would have discovered them even if the purchaser did not a. Material defects that affect the value or use of property b. No duty to disclose patent defects CAVEAT EMPTOR (let buyer beware) i. Broker may be liable for intentional misrepresentation on material facts ii. Brokers have fewer duties in the sale of commercial property ii. They have a fiduciary duty with respect to client (must exercise fidelity and good faith) and must disclose any dual agency or better deals to client and failure to do so is a breach of duty iii. They must produce a ready, willing and able buyer for fee 1. Originally, as long as they produced such a buyer, the fee was due even if they did not close 2. Now, fee is usually due at closing iv. Types of sales 1. Open or nonexclusive 46

2. Exclusive agency contract (broker is only broker, but seller can sell home) 3. Exclusive right to sell (no matter who sells property, broker gets fee) e. Contract of Sale i. STATUTE OF FRAUDS was enacted in 1677 in England 1. No interest in land could be created or transferred except by an instrument in writing signed by the party to bound (charged) a. Can occur from a single document or multiple documents so long as they refer to each other and are signed b. Oral contracts may be enforceable as long as a sufficient writing exists concerning the transaction 2. A memorandum of sale must (at minimum) be signed by the party to be bound, describe the real estate and state the price and intention to convey property a. Oral contracts are voidable, not void 3. It is an evidentiary function 4. Uniform Electronic Act anything that serves as a symbol of authentication adopted by the sender is sufficient to bind ii. Remedies for breach of sales contract 1. Rescission 2. Damages for contract breach a. If seller breaches buyer can recover FMV at closing less the contract price b. If buyer breaches seller can recover contract price less the FMV at closing c. If there is no difference or negative, then only nominal damages and foreseeable reliance damages 3. Specific performance iii. Exceptions 1. Part performance allows for specific enforcement of oral agreements when particular acts have been performed by one of the parties. a. Purchaser must do a combination of the following: pay the contract price; take possession of property (physically move in); improve the property (more than clearing, digging wells, fencing, etc) i. Because the buyer does these things and seller permits, it is a contract of equity not law 1. Under laws of equity, even if you have a right to do something but still engage in impermissible opportunistic behavior the law will find a way for you to lose a. Orally agreeing to sell to A, but then receiving better offer from B after O knows A sold his house 47

b. This is an exception because such action could only be explained if there were a deal UNEQUIVOCAL REFERABLE to an oral contract c. How can one help his case in an oral agreement? PAPER THE FILE with letter of intentions of the party 2. Another remedy would be equitable estoppel or equitable fraud a. Requirements: (1) a certain and definite oral contract; (2) acts that refer to, result from, or are made in pursuance of the agreement; and (3) a refusal to fully execute the oral contract would operate as a fraud on and place the moving party in a situation not remediable by damages i. It must be reasonable foreseeable reliance HYPOS: If O conveys as a gift to A. Deed is not recorded, but tells A she wants the land back. A gives it back. O tears it up. Who owns Blackacre? There is a present intent and there is a best evidence rule (dont need to show document existed), so A would own it because there is no legal affect of ripping up the deed When the initial gift and that gift was accepted and there was a writing, the second transaction has no writing by the party to be charged A keeps the property If O conveys interest in joint tenancy to A and A subsequently wants B to have her interest and whites out her name. O subsequently dies, what result? A does the whiting out has no affect on statute of frauds (deed giver must sign deed) Where there is no straw needed, by conveying interests, the joint tenancy severs and they become tenants in common Recording of a deed matters when it involves third parties, NOT between parties iv. Marketable Title 1. Every land sales contract contains an implied condition that the seller will convey a marketable title a. Marketable title is a title free from reasonable doubt as to the promised titles validity in the minds of a reasonable person b. Generally, a title in unmarketable if acquiring the property would subject the purchaser to a real risk of litigation i. Minor encumbrances do not make the title unmarketable, only UNDISCLOSED ENCUMBRANCES 1. Only private restrictions/covenants must be disclosed (zoning laws or building codes can be discovered by research) a. However, if there is a current violation of zoning codes, then it is an encumbrance 48

b. Violations of building codes do not generally make the title unmarketable because it affects the condition of the building and is technical, not material c. If the zoning changes prior to closing and it materially would interfere or frustrate the intended use, many modern courts wont enforce the contract due frustration of purpose or unfairness 2. Mortgages, liens and taxes will render the title unmarketable a. However, the seller can correct the defect before closing, making the title marketable b. The purchase price can be applied towards the money owed 3. The test for public covenants is reasonability a. A PERFECT TITLE cannot exist because the recording system can discover what is recorded b. A reasonable person wants a FSA and would not contract to buy a lawsuit ii. A reasonable, prudent person under legal advice would be willing to take and be willing to pay full market value c. If seller cannot convey a marketable title, buyer an rescind the contract i. It must be done prior to closing ii. Any flaw in the deed records that could lead to litigation makes the title unmarketable d. Encumbrances i. Include undisclosed co-owners, mortgages, easements, real covenants, equitable servitudes, leases, options, etc. 1. Monetary obligations secured by property in amounts less than the sales price likely do not justify a rescission of the contract e. Chain of title problems i. AP can affect the chain (CANNOT be marketable until theres a judicial decree) 1. One can sue for rescission if owners claim is affected by AP 2. Buyer cannot reasonably know if AP is present 3. Off the record claims of AP may deprive the owner of the title ii. Chain of title 49

1. Any inconsistencies (flaw or missing link) in the chain of title renders the title unmarketable iii. Title Clause 1. If a buyer is in a contract with a marketable, insurable title, he is forced to accept it 2. Seller has a reasonable time to correct defects if title does not contain time is of the essence a. If it does, then no time to fix v. Equitable Conversion 1. If there is a specifically enforceable contract for sale of land, equity regards as done that which ought to be done a. It shifts the many risks/benefits from seller to buyer once a sales contract is executed (CL/MAJORITY RULE) i. Buyer has interest in real property 1. If a natural disaster destroys the property, the buyer bears the risk 2. Minority view: seller bears risk and buyer can take land and have insurance proceeds to rebuild or can get deposit returned a. This is the current trend ii. Seller has interest in personal property (he holds legal title as trustee constructive trust) 2. This is a default provision which can be overridden by the parties 3. The minority rule under the Uniform Vendor and Purchaser Act allows the seller to bear the burden of material loss until the buyer takes possession or title vi. Duty to Disclose Defects 1. Seller is thought to be required to disclose material and latent physical defects (Modern view) a. Applies to RESIDENTIAL property b. Materiality is objective standard of what a reasonable person in the position of the buyer and if it affects the following standards i. Price ii. Willingness to purchase iii. Terms and conditions c. Material defects are those that materially affect the propertys value or significantly impair occupants health or safety i. Ex. Murders, ghosts, empty gas tanks (only for environmental reasons) d. Stigma statutes shield sellers from disclosing murders, death, AIDS, etc. (not a majority rule) i. General rule is to disclose everything 50

e. Generally, there is no duty to disclose off-site conditions f. Under Megans Law, sex offenders have to register, so there is no duty to disclose 2. Caveat Emptor (Common Law/Minority view) a. Requires that buyer act prudently to assess the fitness and value of his purchase and operates to bar the purchaser who fails to exercise due care from seeking rescission b. If seller remains silent, he incurs no liability c. However, there can a misrepresentation i. To be actionable: it must be false, known to be false and it must be material f. Deed i. A conveyance of realty by an assigned right 1. Short form of deed includes grantor, grantee, words of grant, description of land and signature of grantor which must be notarized and any covenants, conditions, easements, equitable servitudes, leases, or other encumbrances (or state subject to all restrictions of record) a. It does not require consideration, only that the price was agreed upon to show that the purchaser is a BFP for value b. Hierarchy of description of land: survey, natural monuments, artificial monuments, maps, distances, name, and then quantity i. Parol evidence can be used to resolve discrepancies in the description 2. A deed must include grantors signature, the parties, description of the property, interest conveyed, and intent to transfer (convey, sell, assign) a. Everything in the sale contract must be restated in the deed, otherwise it will be considered discharged i. The Sales contract and the deed are said to merged 3. A deed is not effective for testamentary transfers; it must be delivered during grantors lifetime 4. A deed must be delivered, though not physically (must reflect grantors state of mind INTENT IS ESSENTIAL) a. Oral conditions on the deed are ignored i. When in the hands of a third party, parol evidence is admissible and the conditional statement may survive b. A seller cannot rescind the contract from a BFP who gets the property i. Doctrine of last clear chance c. A deed can be delivered to an escrow agent who then delivers to grantee upon payment.

51

i. Relation back occurs on the second delivery (to grantee) and the date of the deed is the date of the first delivery (to escrow agent) d. A deed cannot be canceled by returning it! ii. Types of Deeds 1. General Warranty Deed warrants title against all defects in title, whether they arose before or after the grantor took title (by whomever, whenever) a. Contains 6 warranties: (these are usually contained in habendum clause) i. Covenant of seisin grantor warrants that he owns the estate that he is conveying (PC) ii. Covenant of right to convey grantor warrants that he has the right to convey the property (PC) 1. Often breached at the same time the covenant of seisin is iii. Covenant against encumbrances grantor warrants that there are no encumbrances on the property except for those mentioned in deed (PC) iv. Covenant of general warranty grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that he grantee may sustain by assertion of superior title (FC) 1. To be breached, he must be evicted by a party with superior title. There mere existence of the interest is not sufficient v. Covenant of quiet enjoyment grantor warrants that the grantee will not be disturbed in possession by assertion of superior title (FC) 1. No interference vi. Covenant of further assurances grantor promises that he will execute any other document required to cure any defect in the title conveyed (FC) b. The first three are present covenants which is broken if ever when the deed is delivered i. These are also known as personal covenants and do not run with the land to subsequent purchasers ii. S/L begins at date of deed delivered c. The last three are future covenants which cannot be breached until grantee or his successor is evicted from property, bought up by superior claim or is otherwise damaged i. These are real covenants which run with the land ii. S/L begins at the time of the breach iii. Remote grantees can seek relief against remote grantors for breach of future covenants 52

XI.

1. Damages are limited to the lesser of the remote grantees actual damages or remote grantors sales price 2. Special Warranty Deed contains warranties only against the grantors own acts but not the acts of others (only by the grantor) 3. Quitclaim Deed contains no warranties of any kind. It merely conveys what the grantor has (if any) iii. Estoppel by Deed 1. When grantor purports to convey an estate larger than what he has and subsequently gets the title he purported to convey, the title automatically passes to the grantee by estoppel a. There must be an intent to convey an estate he doesnt have iv. Forgery and Fraud 1. A voidable deed can be avoided, not necessarily void ab initio 2. A forged deed is a nullity (void) a. A fraudulent deed is voidable in the hands of the first purchasers (obtained by fraud) i. Any subsequent hands, it is a good deed (so as not to penalize the BFP) 1. Due to the doctrine of last clear chance NUISANCE a. A substantial and unreasonable non-possessory invasion on the use and enjoyment on the land of another i. Any substantial non-trespassory invasion of anothers interest in the private use and enjoyment of the land by any type of liability forming conduct is a private nuisance 1. It can be intentional or unintentional a. Intentional acting for the purpose of causing the invasion (knowing or should have known that it was substantially certain that it would have resulted from conduct) b. Unintentional usually results from negligent, reckless or abnormally dangerous activity i. Ex. blasting 2. It is usually intangible (smell, light, noise, dust, view, etc) a. Physical invasions usually are deemed trespasses ii. It must be substantial 1. It means that persons of normal senstivities would consider the interference to be substantial iii. It must constitute an UNREASONABLE invasion 1. BALANCING OF THE UTILITIES each landowner must tolerate some inconveniences for the benefit of technological advances and only if harm to P outweighs the social utility of Ds activities would there be an injunction issued

53

2. Look to the character of the neighborhood, the value of the land, alternatives available to D, who was there first, zoning, and the economic benefit a. Discuss those elements to show the burden on Ps enjoyment and use v. utility and necessity of Ds use 3. If there is no utility and act is totally done in spite, act must be unreasonable 4. REMEDY (if B/U is found): injunction or damages a. Monetary damages seem appropriate when D provides a significant social utility and it cannot prevent the nuisance iv. Interference with what? 1. Land 2. Health 3. Peace of mind v. Lateral and Subjacent Support 1. Lateral support varies depending on whether the supported land is in its natural state or if structures or other improvements have been built on the supported land a. strictly liable if land is in its natural state b. if land is altered, then may be liable for negligent acts 2. Subjacent support involves actions that may cause the land surface to subside (mineral rights; pumping of water) a. Extends to buildings that were present before the subjacent estate was severed b. As long as landowner does not exceed the amount of water he legally can remove from the land and does not act maliciously, he is not liable for subsidence of neighboring land (American Rule) b. Every person should use his land so as not to injure that of another! i. Coase theory (Efficiency Theory) the more serious harm should be abated; it depends on the efficiency of enjoining or minimizing 1. Two questions to ask to determine: a. What is the cheapest way to avoid the problem (efficiency) b. Who should bear the cost of the avoidance ii. Corrective Justice Theorem 1. It doesnt matter if there is reciprocity (that P can act to stop the invasion), only that P makes a PFC by showing that D physically invaded Ps land a. D is held strictly liable subject to defenses iii. To determine which theory to employ, look towards the social utility value to society versus the harm to P XII. EASEMENTS a. Involves two or more pieces of land i. Servient tenement (it is burdened) 54

1. It is serving the interest of Bs land, which can be paid for/compensated between the parties 2. It must be more than an agreement, it must bind and benefit the parties and their successors and assigns a. RUN WITH THE LAND ii. Dominant tenement (it is the benefited) 1. The dominant estate holder has a right and duty to make repairs a. Servient estate holder will only have such a duty if he expressly agrees b. Servitudes i. An interest which burdens and benefits parcels of land and which bind both parties to the original agreement and their successors and assigns 1. Since it is an interest, easement are within the S/F 2. BFP bona fide purchaser has no knowledge of there being any problem with the title (no actual or constructive knowledge) a. A BFP can acquire a good title courts are trying to protect the innocent good faith purchaser ii. Easements 1. It is a grant of interest in land not merely a promise, but an actual grant of an interest a. If a BFP purchases the servient estate, the easement will pass only if there is actual, constructive or inquiry notice 2. It gives the easement owner the right to use, or restrict the use, of land they do not own a. You have the right to do something b. The holder of the easement is the owner of the easement: it is transferable, transcendible, or deviseable i. The landowner may use the easement as long as it does not interfere with the easement holders use of the easement for its intended purposes c. Easement Appurtenant i. The right to whomever owns the land that the easement benefits 1. it attaches to and benefits the dominant tract of land ii. Requires both dominant and servient tenements 1. It is thought to transfer automatically when the dominant is conveyed 2. When it is the servient tenement conveyed, the new owner has to have notice (actual, constructive, or inquiry) for the easement to remain iii. It usually transferrable to successive owners iv. It is said to run with the land v. It is the preferred construction 55

d.

e.

f.

g.

h.

1. Easement in gross must be clear from express grant or surrounding circumstances Easement in Gross i. Right to some person w/o regard to ownership of the land 1. It is a benefit to a particular person/entity not land ii. Requires only a servient estate iii. May be alienable or inalienable Affirmative Easements (positive easement) i. Grant from O (servient owner) to A to allow A to go on the property of O in order to do something 1. Requires some action; the right to do something on the servient tenement (a right of way) Negative Easements i. An owner of a dominant estate can prevent O (servient estate) from doing something that would harm the dominant estate 1. Blocking of light; blocking the view; blocking air; lateral support; blocking water flow 2. Cant be created by prescription Express Grant i. Grantor sells only part of her property and grants the purchaser an easement over sellers retained land ii. It must be in writing to satisfy the S/F Express Reservation i. Grantor retains an easement over the grantees land 1. A reservation is a provision in a deed creating some new servitude which did not exist before as an independent interest a. An exception is a provision that excludes from the grant some preexisting servitude on the land 2. It must satisfy the S/F ii. CL: easements cannot be reserved in third parties (majority approach) 1. Under CL, it could be overcome by using two pieces of paper instead of one, called a regrant (turns third party into grantee) 2. Modern approach (Restatement), a reservation in a third party could occur because to deny it would be to produce an inequitable result b/c the original grantee has presumably paid a reduced price for the title to the encumbered property 56

iii. Reservation to a Stranger to the Deed 1. Grantor is selling part or all of her property and wishes to provide a third party be given an easement over the transferred land a. The church with parking rights 2. Not recognized in many states (CL) i. Profits a Prendre right to on to anothers property and take off something (timber, crops, minerals, wild animals) i. With a profit, there is an implied agreement to cross the land 1. Rules that apply to easements, apply to profits a. It is an interest in land entitled to compensation if servient land is taken by eminent domain 2. It must satisfy the S/F 3. Profits are transferrable ii. Profits can be created either expressly or by prescription ONLY iii. There are appurtenant profits and profits in gross iv. Today, they are essentially the same as an easement j. License oral or written permission to go on the land of another to do a specific thing that otherwise would be a trespass i. It is a privilege, not an interest! 1. Ex. Guests, delivery persons, repair persons providing services to landowner (either private or public systems) ii. It is revocable at will 1. It can become irrevocable if substantial improvements or investment of money is employed under rules of estoppel 2. Or it can become irrevocable when it is coupled with an interest iii. It is not transferrable iv. A conveyance automatically revokes a license k. Covenants i. Real covenants enforceable at law ii. Equitable covenants enforceable at equity 3. When it is an easement, lease, or license? a. The standard is the intent of the parties!!! b. Factors: i. Permitted uses (more limited = easement) ii. Specific location (more specific = easement) iii. Rent reserve (periodic payments = lease) iv. Duration (limited in time = lease) c. Why the significance? 57

i. Short term leases do not fall under S/F, but easements do ii. Leases are revocable, but easements are irrevocable iii. Easement holds must sue landowner to eject trespasser iv. Easements appurtenant are divisible, last forever, and can be achieve through prior use, by prescription and by necessity whereas leases cannot 4. Implied Easement (implied easements can be created even though they are not in writing or no permission is given they are off the record claims) A. IMPLIED EASEMENT FROM PRIOR USE i. Easements can be implied from prior use when the use was in place at a time a single parcel of and was divided into two parcels 1. Elements necessary: a. Unity of ownership is severed (common owner) b. The use was a pre-existing use before it was severed i. This is a quasi-easement as explained below ii. Some courts have added continuous or permanent c. The use must have been visible or apparent at the time of the severance i. Conditions discoverable by a reasonable inspection ii. Apparent does not mean visible, but that it could reasonably be discovered by inspection or asking owners d. The easement is necessary for the enjoyment of the dominant estate i. Strict necessity standard (for implied reservations) AKA Absolutely necessary ii. Reasonable necessity standard (usually for implied grants) AKA convenient iii. Reasonable necessity is now the standard for both grants and reservations ii. A factor to determine if implication of the easement is the extent to which the manner of the prior use was or might have been known to the parties 58

B. IMPLIED EASEMENT BY NECESSITY i. Easement implied for right of way or egress and ingress ii. Degree of necessity is greater for conveyor than required of the conveyee 1. It is a test for reasonable necessity (carrying out intent of the parties) iii. Elements necessary: 1. A common owner severed the property a. Such severance caused the dominant estate to become landlocked 2. The necessity for egress and ingress existed at the time of the severance 3. The easement is strictly necessary for egress from and ingress to the landlocked property iv. It lasts for only as long as it is necessary v. Strict necessity states that there is always another way out! Therefore, there can be no implied easement by necessity 1. It doesnt matter if you have to climb out or fly out 2. The buyer should have known there was no way in/out c. Hidden easements i. BFP are thought to win out against a hidden easement for purposes of equity (and fairness) ii. It may be an economic question 5. PRESCRIPTIVE EASEMENTS a. A person can gain an easement by prescription by longcontinued adverse use (it is an individual right, not a public right) 1. A public right would be an implied dedication ii. Applies only to affirmative easements (either appurtenant or in gross) iii. Elements necessary: 1. Actual use a. Must be physically present on servient estate b. There must be a specific/definite location 2. Open and notorious 3. Peaceably 4. Under a claim of right (hostile use) a. With knowledge and acquiesce of owner b. It can be interrupted by a legal claim or physically interfering with the adverse use 59

5. No permission to use 6. Continuously for statutory period of time (usually 15 years) b. If a man neglects to enforce his rights over time, he cannot complain that the law follows his example!! c. Contrary, the NY view holds that parol license is revocable over time (even if there were substantial improvements) i. Prevent burdening of land w/o written agreements 6. Quasi easements a. Since a person cannot have an easement in his own land (just refers to land before easement was created) b. An apparent and continuous use that the parties would reasonably expect to continue once it was divided i. This is not the English view which holds that for an implied easement in the grantor, it must be strictly necessary 7. Easements by Estoppel a. License can become irrevocable under rules of estoppel i. Substantial improvements often lends argument for estoppel ii. There must be some act or failure to act that it is reasonably foreseeable that P will rely and he does so rely to his detriment 1. It does not say that they act reasonably, only that it is reasonably foreseeable b. A servitude may be created by estoppel. Normally the change in position that triggers application of the rule stated is an investment in improvements either to the servient estate or to other land of investor i. It doesnt matter where the money was invested (road or house) as long as it was done in reliance ii. It does matter if other property is involved improvements must be made to the land in question iii. If the house is destroyed by natural disaster, then the license will probably be extended 8. Public Trust Doctrine a. PTD acknowledges that ownership dominion and sovereignty over land flowed by tidal waters which extend to the mean high water mark (wet sandy area) is vested in the state entrusted for the people i. It has not been very successful because usually permission is granted to cross land (can be shown by adversity) 1. Owners can show that it is not adverse by posting signs stating they are entering by permission or put a similar notice in public records 60

ii. Once the state exercises the right to use PTD, it must continue to do so b. It is like a profit, that there has to be a way to get there; however, it is not an unrestricted right, but reasonable i. Government can take land if landowners are compensated for it 1. On the other hand, the landowner should have known about the way because of the reflection in the price (no compensation is due, otherwise it would be a windfall) iii. Assignability of Easements 1. Easements appurtenant are assignable (sold, gifted, inherited, devised or otherwise conveyed) a. Even with subdivision, the easement is transferred with each parcel i. The holder of the E/A transfers the E/A with each subdivision of the dominant estate 1. It is divisible and apportionable 2. Easements in gross (noncommercial use) are NOT assignable a. Sometimes they are assignable if there is clear intent of the parties 3. Easements in gross (commercial use) are assignable a. Exclusive easements in gross are those where the easement holder has the sole right to use the easement i. When there are two or more, they may have to act as one voice because interest is indivisible One stock rule ii. If the easement is exclusive, only the party using the easement has a duty to repair b. Non-exclusive easements in gross is one in which the easement holder has a right to use the easement, but the servient owner can authorize others to use the easement and the non-exclusive holder of the easement cannot prevent the servient owner from doing so iv. Scope of Easements 1. The scope of the easement cannot be exceeded a. It must look towards the parties intent (the standard for intent is reasonable foreseeability) i. Price often indicates intent 2. Moving the easement creates misuse a. Generally, an easement cannot be moved without both parties consent i. The Restatement states that the servient owner can change the location of the easement at his expense if the change does not lessen the utility of the easement, increase the burdens of the easement in 61

its use and enjoyment, or frustrate the purposes the easement was created for b. Traditional definition an extension of the easement is misuse, even if it is merely a technical misuse i. This is a bright line rule and any misuse is a trespass 1. This can be avoided by showing that there is no increase in the volume or increase of the burden and still within the original scope 2. The test is that of reasonableness ii. The trespass would be continuing and it would hard to associate damages as a measure, so appropriate remedy would be injunction c. Damages i. The standard of review for injunction is actual and substantial injury sustained by the person seeking the injunction 1. It is an equitable remedy and it is at the discretion of the court (once one court decides, a higher court cannot reverse just because it disagrees; it can only reverse if the decision was arbitrary ii. Another remedy (for extreme cases) is forfeiture 3. The intensity of the use of the easement should not overburden the servient estate a. The easement holder has a right to make improvements as long as it within the scope and does not burden the servient estate i. Easement holder must also maintain and repair the easement b. The Restatement states that scope of the easement may change over time to accommodate technological developments i. If the developments interfere with the right to enjoyment, then the easement holder cannot enforce the change 4. An easement appurtenant may only benefit the dominant estate a. It cannot benefit adjoining properties even if the owner of the dominant estate also owns the adjoining property

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HYPO: O grants A an easement of way over Blackacre (express grant) to reach adjacent land owned by A. the easement has a fixed location by mutual agreement of the parties. Subsequently because of normal develop of dominant estate. O proposes to move easement and may at his expense in order to further develop Os land. A objects. What result? Established rule is that it cannot be changed w/o mutual agreement of the parties (majority rule) o Need permission of both parties Under Restatement, a servitudes owner right to change compliments the rule (minority rule) o If the increase does not unduly increase the burden of the owner of the easement or lessen the utility of an easement or frustrate the purpose, he can move it at his expense (civil rule) o It is a reasonableness test v. Termination of Easements 1. The easiest way to terminate is by express release of the owner to the servient tenement by the dominant estate a. It must satisfy the S/F!!! 2. Easements may be limited by an express time in the language or when the estate of the grantor terminates (like a LE) a. Ex. Of when estate and interest end: LE, FSD, T/Y i. This is a rule of construction (rests on the intent of the parties) and not a rule of law (automatically w/ no regard to intent) 3. Easements can be abandoned a. It must be an unequivocal act showing intent to abandon i. This goes against the concept that land cannot be abandoned! BUT IT IS AN EXCEPTION ii. Mere nonuse is insufficient iii. There must be an intent to abandon and subsequent nonuse 4. Other ways to terminate easements a. Purpose of easement ends b. Merger of estates c. Forfeiture for misuse d. Estoppel e. Prescription i. Usually requires building something over the easement f. Recording Acts i. If BPF does not have actual, constructive or inquiry notice of the easement, he is not bound by the easement g. Eminent domain (must have compensation) 63

Suppose A grants B an easement through its building to reach Greenacre. Then building is destroyed. A builds a new building at the same space. Is the easement destroyed or is it extended to the new building? It is the same use over the same space and therefore should continue in use Other side: it is a different building!! The easement is not revived through the replacement building UNLESS it is the intent of the parties that the easement should continue through new building This is the general rule (easement is limited to life of the building) Suppose the building was destroyed by natural disaster. What results? Split of authority: some say that it is within the intent of the parties that it continue But if we say that the owner cannot demolish the building o It would limit the alienability of the land since it could be the best use of the building Suppose the building was foreclosure and is in the hands of either the state or a new owner. What happens to the easement? It is not extinguished b/c when easement is appurtenant it is fixed to a given estate and it will reduce the taxable value of the property and a benefit will incur to dominant owner o It will survive the sale XIII. REAL COVENANTS AND EQUITABLE SERVITUDES a. R/C and E/S are agreements, promises or deed provisions that relate to real property and that bound or benefit subsequent owners of the respective properties solely because they own the property 1. It is not a right, but it allows/restricts the use or action to be done on that land ii. R/C and E/S run with the land iii. R/C and E/S must satisfy the S/F (part performance and equitable estoppel are exceptions) iv. Terms 1. Burdened property whose owner is bound by a covenant to act or not to act a. Covenantor has the burden of performing 2. Benefited property whose owner benefits from a RC or ES a. Covenantee has the benefit of enforcing 3. Affirmative require that an owner of the burdened estate perform some act or pay money 4. Negative (restrictive) restrict or prohibit the uses that can be made of burdened property v. Affirmative or negative covenants may be either R/C or E/S depending if the elements are met vi. Termination 1. Again, there must be unequivocal evidence of an intent to abandon a. They simply cannot walk away 64

2. Servitudes can be terminated by prescription or by AP a. To terminate by prescription, one must do something that is inconsistent with benefited use: i. It must be substantial, like a wall or building b. Real Covenants i. RC are enforceable by law by a successor owner of the promisees property and also is enforceable against a successor to the promisors land ii. Remedies 1. Monetary damages and injunctive relief iii. Mutual Horizontal privity (substitute or MA privity) 1. Exists when the covenant is created in grant of an easement or leasehold (already have related interest in land) iv. Instantaneous Horizontal Privity 1. Involves a transfer of land 2. This is the majority v. Elements (intent and T/C are the same for both R/C and E/S) 1. Intent a. Can be ascertained from deed 2. Touch and Concern a. It must T/C the burdened property before a court will enforce the covenant against subsequent purchasers i. A covenant that T/C a particular piece of land that performance or nonperformance will affect the quality, value or mode of enjoyment of the land b. Focuses on reasonableness of having the covenant bind successors c. Looks towards content, not surrounding circumstances (PUBLIC POLICY) d. T/C FOR BURDENED PROPERTY i. Generally payment for burdened property does not T/C EXCEPT homeowners associations 1. Courts find that a promise to pay is like a grantor, so it becomes like an affirmative covenant e. T/C FOR BENEFITED PROPERTY i. Covenant must T/C the benefited property for the benefit to run with the land regardless if the burden is personal to the promisor or is R/C or E/S running with burdened property f. Three tests for T/C (courts use at least one test to determine if covenant T/C the land for burden to run in law and in equity) i. Physical test affects the physical use and enjoyment of the land 65

ii. Common sense test met by covenants that are intimately entered into only to promote land use iii. Balancing or reasonableness test weighs advantages of enforcement against disadvantages of non-enforcement 1. It is highly fact sensitive allows court to look at reasonableness of today (it can change!) a. Burden of promisor v. burden of promisee b. Importance of covenant to society v. importance to original parties c. Duration d. Impact on alienability g. If it does not T/C the land, it is said to be personal, binding only on the original promisor 3. Privity of Estate (benefited party must prove there was privity of estate before a R/C will bind the subsequent owners of the burdened property) a. Privity of estate is not required for benefit to run b. Horizontal privity relationship between original parties to the agreement i. They are in privity of contract, so no privity of estate is needed to enforce ii. Transfer of property and creation of covenant must arise simultaneously iii. However, there is now a trend to drop privity of estate (merges R/C and E/S together) 1. If no H/P, then notice is required iv. HP is not required for benefit to run c. Vertical privity relationship between original party to contract and those subsequent purchasers tracing their interests in the benefited or burdened property back to the original party i. For burden to run with the land to remote party, the party must have succeeded to original promisors entire interest 1. Lessees are not in vertical privity ii. For benefit to run with the land, a remote purchaser has a possessory interest in the property 1. Lessees are in vertical privity iii. AP defects the running of both benefits and burdens! d. Terms i. Subsequent owners will only benefit or be bound if the benefit or burden runs with the land 4. For E/S, privity of estate is not need, but NOTICE is 66

a. For E/S to be binding on remote purchasers, the purchaser must have notice of the covenant when he buys the burdened property i. Purchasers must have notice of the covenant when he buys the burdened property ii. It can be actual, constructive (from deed records) or inquiry notice (from viewing premises and surrounding properties) b. NO NOTICE IS REQUIRED FOR BENEFITED PARCEL can enforce it as long as there was intent and it T/C the land vi. Restatement views R/C, E/S, restrictive covenants, affirmative covenant and negative easements as SERVITUDES c. Equitable Servitudes i. Expanded the number of subsequent purchasers who would be bound and burdened by the land 1. It is enforceable in equity by or against successors to land of the original parties ii. Remedy is injunctive relief iii. It is valid unless it is illegal or unconstitutional or violates public policy 1. Invalid servitudes includes arbitrary, capricious or one that unreasonably burdens a constitutional right or places an unreasonable restraint on alienation, imposes unreasonably restraint on trade or competition or is unconscionable iv. Common Scheme 1. Common scheme allows a court to conclude that the common owner (developer) intended to impose an identical covenant in all parcels of land from the time the common scheme began (must begin at the same time) a. Therefore, the entire tract is benefited and burdened b. This is called implied reciprocal negative easements/restrictions i. It enforces negative covenants or equitable servitudes on all parcels ii. All owners are benefited and burdened in equal measures iii. They also all have notice (constructive or inquiry) iv. Must be a BFP 2. When there is a substantial number (there are 51 out of 90 with covenant), then this is substantial weight that they relied on such a covenant a. A buyer w/o such a covenant would have notice because of the character of the neighborhood HYPO A and B are neighbors Restrict the lot for single family use Sign agreement B sells lot to C C builds an apartment building A sues for damages What result? What if A had built apt can C sue? 67

There is no vertical privity between A and C they have no relationship this is the first question you need to ask are they in privity If horizontal privity is required then covenant cannot be enforced but this is only the case if HP is needed A cannot recover damages from C if HP is required for the running of the burden some Js require this If A had build apt in most Js C can recover b/c privity of estate is not required for the benefit to run

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