Property

practice problems- future interests, concurrent estates (pg 353; went over in review session), pg 629 & 638 (restrictive covenant problems)

Property, possession and ownership

Property- consists of a bundle of rights or expectations in a tangible or intangible thing that are enforceable against 3rd parties, including the government

- Types of property:o Real property- immoveable property (buildings, land, etc.)o Personal property- moveable property (cars, clothes, etc.)o Inchoate/intangible property- (life insurance, stocks, patents, etc.)

- Common attributes of property ownership:o Possession, use, right to exclude others, alienation (right to give away/sell

property during your lifetime; usually includes power to destroy), descent (right to give away property after death), and the right to divide up all of these rights

- Critiques of property law:o Efficiency arguments- private property maximizes wealth production

Posner- If you have a private property regime, people who are good at maximizing wealth will end up w/ the property.

Also implied- Wealth maximization is a good thing (his implied justice argument)

o Justice arguments- x is good or bad because x is a good or bad thing The notion of ownership of your organs is bad. You can’t put a

price on everything. Personhood requires that we put certain things “out of bounds.” Ownership of our organs is out of bounds.

Also implied- Having ownership of human organs reduces personhood (her implied efficiency argument)

o Efficiency and justice arguments are not mutually exclusive.o Sunstein- You can’t be free unless you have your own basic stuff and

don’t have to depend on gov’t. We should make sure everyone has basic things.

- Judicial remedies for protecting property:o In specie/replevin- action to recover the property itselfo Money damages- i.e., for damaged propertyo Also Ejectment, conversion, trespass, nuisance, injunction, etc.

- Possession:o Possession includes- (a) a physical relation to the object possessed, and (b)

an intention to control/exclude others (Popov v. Hayashi)o Owner has possession or right to possessiono Owner can exclude others from useo Owner has right of inter vivos and testamentary transfero Owner holds property subject to no superior right to possession in another

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o Popov v. Hayashi- court holds that possession requires possession and control (not merely intent to control and attempt to stop momentum of the ball); Popov had a pre-possessory interest in the ball

The law of finds

- Abandoned property- requires intent to no longer owno First finder has an interest against all others, including former ownero Innocent owner’s exception- innocent owner of property traceable to

illegal activities can remain owners against the gov’t (In Re Seizure of $82,000- finder of drug money in car purchased from gov’t has interest good against gov’t)

- Lost property- unintentional, involuntary parting of propertyo Finder has an interest that is good against everyone except true owner

(Ganter v. Kapiloff- court rejects “finder’s keepers”)o Finder has the property, and has probably put in more effort to get it than

anyone elseo Often there are statutory periods in place- i.e., finder of lost property who

follows proper procedures may become owner after 1 year- Mislaid property- intentionally put somewhere and then failed to reclaim

o Finder acquires no rights in the propertyo Usually no statutory period after which finder owns found propertyo Owner of premises upon which property is found has an interest that is

good against all others except true owner Owner of premises has interest over the finder (Benjamin v.

Lindner Aviation- owner of plane where money was found has interest over finder)

Theory- thought is that true owner will return to the place where he left it

- Treasure trove- coins or currency concealed by owner; element of antiquityo Finder has interest good against all others except true ownero Courts have largely eliminated this category.

- A finder’s rights may subject to claims of the landowner upon which chattel was found

o Generally accepted that landowner owns and posses anything that comes from his land, even if he has no knowledge of it

o Mislaid property- landowner prevailso Lost property- finder prevailso More public the place, more likely courts will give to finder (he put in

more effort than anyone else)- Prior possessor has interest against subsequent possessors (even if possession was

obtained illegally)o Theory- promote stability

- Finder vs. employer- If employee was acting w/in scope of employment when he found, then the chattel is awarded to the employer

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o (Exception to the rule that those who put in more effort have an interest against those who put in less effort)

o If employee shows he was acting outside scope of employment, he will be awarded the chattel

Bailments (duties of possessors)

- Bailment- the rightful possession of personal property by one who is not the true owner for a specific purpose, w/ an express or implied K that the property will be returned when the purpose has been accomplished

- Whether there is a bailment: it is the element of lawful possession, however created, and duty to account for the thing as property of another, that creates the bailment, regardless of whether possession is based on a K (can be implied)

- Elements that P must allege to recover under a bailment theory:o (1) Express or implied agreement to create a bailment;o (2) Delivery of the property in good condition;o (3) Bailee’s acceptance of possession of property (actual or constructive)o (4) Bailee’s failure to return the property or bailee’s redelivery of the

property in a damaged conditiono P may have an action for damages, conversion, etc.o Finders are usually treated as bailee’s; “constructive bailees”

- If property is damaged, bailee (the D, not the P) has burden of proving that it was not negligent and should not be liable (it was in bailee’s possession last)

- In a normal tort claim, P has burden of proving that D acted negligently- P always wants a bailment; D never wants a bailment

- Traditional rule- There are 3 levels of duty:o (1) Bailments entirely for benefit of bailor; gratuitous bailment

Ex.- bailor asks bailee to watch her car Bailee owes only a slight duty of care

o (2) Mutual benefit bailment; bargained for exchange bailment Ex.- railroad gets paid to ship something Bailee owes an ordinary duty of care

o (3) Bailments entirely for benefit of bailee; gratuitous bailment Ex.- bailor borrows a movie from bailee Bailee owes an extraordinary duty of care Minimal negligence will result in liability

- Modern rule- one uniform standardo Ordinary care (or reasonableness) standard is used, regardless of who

receives the benefitso Bailee has burden of proving that it acted w/ ordinary careo Peet v. Roth Hotel- court applies this reasonableness standard, where a

hotel employee agreed to take a guest’s ring and lost it

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- The traditional and modern rule for bailments is essentially the same. If a court uses the reasonableness standard, it will likely consider who is benefitting from the bailment

- Valet parking- creates a bailment; street parking- no bailment; parking garage- in between (Allen v. Hyatt Regency- court says a parking garage creates a bailment)

- In general, exculpatory agreements for liability are effective w/ regard to negligence, or for preventing categorization as a bailment, up to a point.

o General rule- You can waive yourself out of liability up to the level of willful and wanton conduct. A waiver of liability will absolve negligence, but not willful and wanton (or intentional) conduct.

- Public policy effects of bailments: incentive to keep things protected that are not your; higher costs of insurance (i.e., for stolen cars from parking garages)

Adverse possession

- Adverse possession- the nonpermissive occupation of another’s land, which possession, if continued for the period of the statute of limitations on actions to recover land, will give the occupier the estate owned by the person then legally entitled to possession

o Encourages productive use of land; there is a limited amount of lando Adverse possession is constructive abandonment. In law of finds,

abandonment is actual. In adverse possession, abandonment is constructive.

o Adverse possession does not run against the government.o Disseisor- one who is or may be in adverse possession of another’s lando Disseisee- the displaced owner

- Elements; possession must be:o Actual

Real possessiono Open and notorious

Not hidden; patento Hostile

Possessor must occupy w/o owner’s permission Permissive use (i.e., landlord/tenant) is insufficient

Bad faith is not required Courts will not look into intent of the adverse possessor. What is

required is that the adverse possessor acts like an owner. Trespassers are assumed to be hostile

o Exclusive Possessor must exclude others as an owner would

o Continuous Continuous possession for the statutory period

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Possessor may leave but must continuously possess as an owner would

Continuous under the circumstances Alaska case- adverse possessors didn’t use property during

winter months, but no one else would have either since it was way too cold

Tacking- if S/L is 10 yrs, and A occupies for 7 and B for the next 3 (and A and B agree to want to adversely possess) then adverse possession has occurred

o (The adverse possessor must use the land as a true owner would)

- If adverse possession has occurred, adverse possessor may be awarded the land, or may be awarded the land provided he pays market value for it

- Averse possession creates new title (title does not pass from the original owner)

- Adverse possession against a co-tenanto For possession to be hostile, possessor must commit an ouster (ejecting the

co-tenant).o Usually actual knowledge is required: i.e., writing a letter notifying co-

tenant that you are claiming the property

- Adverse possession of personal propertyo Adverse possession is usually not applicable for chattels (hard to have

open and notorious possession)o Adverse possession of chattels can occur if the facts show that all of the

elements are supported, but vast majority of adverse possession cases are for real property.

Nuisance

- Nuisance- a non-invasive (not trespass) interference w/ the enjoyment of property from outside the property

o Trespass (e.g., football through window)- P gets damages automaticallyo Nuisance (e.g., smoke)- P must prove injury to be awarded damages

- Nuisance is designed to prevent landowners from using land unreasonably so as to interfere w/ neighbor’s right to enjoy their property

- Damage must be material (e.g., physical, economic, or ecological effect)o Whether something is a nuisance depends on its effect on a “reasonable

person”- A nuisance does not have to be illegal (compliance w/ regulations does not

preclude the finding of a nuisance)

- Factors that may be considered: (Penland v. Redwood Sanitary Sewer Service)o Location of the claimed nuisance (i.e., rural v. urban)o Character of the neighborhoodo Nature of the thing complained of

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o Frequency of the intrusiono Effect upon P’s enjoyment of life, health, and property

- Remedies- injunction or damageso Courts may refuse an injunction where the hardship caused to D by the

injunction would “greatly outweigh” the benefit resulting to P Boomer v. Atlantic Cement- shutting down the cement plant would

have eliminated many local jobs (public policy)o In some cases courts will allow D to pay damages to P to continue the

nuisance (Boomer v. Atlantic Cement); basically a servitude on P’s lando Damages calculation- value of property before nuisance minus value of

property after nuisance

- Coming to the nuisance rule (coming to the risk) – If someone came to the nuisance, courts will not recognize an action for nuisance by that person.

o If the nuisance was there when the person bought the land, then he came to the risk.

o Spur Industries v. Del E. Webb- very rare case where a court enjoined a nuisance despite P coming to the nuisance

Arizona wanted to promote development, and purchaser of land built a large apt complex next to an existing nuisance, so court allowed P to pay D damages for cost of having to move (cost of injunction); dangerous- seems to be taking private land for private purpose

Coming to the nuisance will almost always bar a P’s claim.

- Private nuisance- activity that invades the interest of a landowner (or tenant, etc.) in freedom from unreasonable nontrespassory interference w/ his use and enjoyment of his land

- Public nuisance- activity that invades the public interest in freedom from activity that endangers the health, safety, or property of a considerable number of people, offends public morals, or interferes w/ the comfort or convenience of a considerable number of people.

o Public nuisance actions- typically brought by public prosecutors or other public officials, on behalf of the public

Rights above and below the surface

- One important right of property ownership is the right to sever it.- Subjacent (below the surface) and superjacent rights (above the surface) in one’s

property can be severed and sold.

Subjacent rights

- Rights to valuable minerals beneath the surface of one’s land (subjacent rights) may be sold (McCormick v. Union Pacific Resources)

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o This splits the estate in 2: a surface estate and a mineral estate- Hypo: A owns surface estate and mineral estate, but B sneaks underground to get

to valuable minerals underneath A’s land in the mineral estate. C adversely possesses A’s land. What estates can C claim?

o If A owns the entire estate but is not exploiting the mineral rights, then C can claim A’s surface estate. C cannot claim A’s mineral estate, though.

Superjacent rights

- The old common law rule was the “ancient cone” of ownership: property owner owns the cone of land from the center of the Earth out to the end of the universe

o No longer applicableo Congress has placed navigable airspace above minimum altitudes of flight

in the public domain. (US v. Causby) Below the minimum altitudes, gov’t takes an easement because it’s

committing a trespass. Above the minimum altitudes, there is a nuisance analysis: actions

only allowed for actual damage.

- Whether landowner has a cause of action to prevent an occupant of nearby land from blocking sunlight that reaches landowner’s land from nearby land (or blocking landowner’s “view”)

o Generally, one may not gain a prescriptive right to light or a view.o (Easements, restrictive covenants, etc. may be enforceable in certain cases;

But that would be based on the easement or covenant, not a prescriptive right to light or a view)

Water rights

- 3 general distinctions of types of water: (1) flowing (stream) water, (2) surface water (precipitation that runs across land), (3) percolating (underground) water

- Water rights are use rights (for flowing water and percolating water)

Flowing (stream) water

- Riparian doctrineo Used in eastern 2/3 of the USo Property that touches a water body is riparian to that water bodyo All riparian properties get to share (reasonable) use of the riparian water

body. Those w/o riparian property have no rights to the water. Borough of Westville v. Whitney Home Builders- sewage treatment

plant was not trespassing because it was a riparian owner, and all riparian owners have equal rights to the use of stream water

o Unity of title doctrine- If you buy a riparian property adjacent to your non-riparian property, that property becomes riparian property.

- Appropriative doctrine

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o Used in western 1/3 of the US (much dryer)o All areas that feed into a watershed are part of that watershed.o “First in time, first in right”

First people to make beneficial use of the water, once they obtain a permit for it from the gov’t, get use of the water.

Those w/o riparian property can use the water. Riparian rights usually take priority over appropriated rights, but not always.

o Rights are determined by priority of beneficial use. If a later appropriator comes along and will make a more beneficial use of the water, he can displace an earlier appropriator but must pay compensation.

o Source of title doctrine- riparian property could never get larger, but it could get smaller.

- Development of rule for stream water rights:o Old English common law rule- “First come, first served”o Developed into: natural flow theory- you can take a little bit of water, as

long as it doesn’t disrupt the water flow or quantityo US has largely adopted: reasonable use doctrine

Allows full use of stream water in any way that is beneficial to riparian owner provided it does not unreasonably interfere w/ beneficial uses of others.

Surface water

- Unique situation- property owners want to get rid of surface water

- Development of rule for stream water rights:o Old common law rule- common enemy doctrine:

Landowners could do whatever they wanted w/ surface water w/o regard to its effect on neighboring property.

Problem- encouraged battles of ‘hydraulic engineering’o Next alternative- civil law doctrine:

Higher elevation tracts had an easement over lower tracts for surface water that naturally flowed downhill. Those who increased or interfered w/ natural flow of surface waters so as to cause an invasion of another’s interest was liable.

Problem- essentially shut down development, because development usually requires some sort of drainage control

o Reasonable use rule Each landowner is allowed to make reasonable use of his land even

though the flow of surface water is altered thereby and causes harm to other property. Landowner incurs liability only when his harmful interference w/ flow of surface waters is unreasonable.

Interference must cause demonstrable harm to be prohibited.

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Westland Skating Center v. Gus Machado Buick- court adopts the reasonable use rule (one party builds giant concrete wall and other party sledgehammers it)

Percolating water

- Old common law rule- everyone can take as much water as they want (even w/ malicious intent)

- 2 modern theories:o Reasonable use doctrine

Everyone can use as much as is reasonableo Correlative rights doctrine:

The rights of all landowners over a common basin or underground reservoir are correlative (coequal), and one cannot extract more than his share of the water where others’ rights are injured thereby.

Each share is proportioned by amount of land owned.

Lateral support

- 2 theories for the law of lateral support:o Strict liability:

Absolute duty for lateral support for a neighbor’s land in its natural state (unimproved land). Strict liability applies.

D may be liable absent a showing of negligence.o General negligence:

Duty of reasonable care for lateral support for a neighbor’s land in its unnatural state (improved land). General negligence applies.

D only liable if P proves D was negligent. Factors to consider under general negligence:

Necessity of excavation Whether adequate notice was given to adjoining

landowners Whether reasonable precautions were taken to prevent

harm to adjoining property Whether competent workers were employed Whether proper instrumentalities were used

- Natural state of land is the state of land before any human improvement on the property, not the state of land at the time of purchase (XI Properties v. Racetrac Petroleum)

- Hypo: A builds a pool between A and B’s house. B’s foundation begins to crumble. To recover, B must prove 1 of 2 things:

o (1) As a result of A’s conduct, B’s land subsided and would have subsided in its natural state (w/o the weight of B’s house); or

o (2) A acted negligently

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Property transfers

Inter vivos transfer (during life)

- Most inter vivos transfers of property are for the entire property interest (fee simple absolute estate)

- Sale or gift- Most are by deed- grantor conveys property to grantee in writing

o Includes a description of what is being conveyedo Must be signed and delivered to granteeo Deed is not a K (grantor receives nothing in exchange)o You buy a house- you will probably exchange both a K for sale and a deed

- Involuntary inter vivos transfers- Eminent domain, adverse possession, foreclosure, judgment after tax default, etc.

Transfers at owner’s death

- Transfers of property at death often given different property interests to different people (“the dead hand”)

- Testamentary disposition- transfer by will

- Intestate successiono Can apply to both real and personal propertyo Intestacy- a set of default rules for transfer of property by one who dies

intestate (w/o a will) State statutes dictate how property will transfer in the absence of a

will Table of consanguinity (blood lines) – follow statute if provided

In absence of a will, it is presumed that decedent would rather have closer relatives get their property than further relatives.

If wife- wife gets all; if no wife but kids- kids get all; if wife and kids- wife gets most, kids get some; if no wife or kids- living blood relative (i.e., parents), or adopted relative

If everyone renounces it (no one wants it), it can eventually go to the government (e.g., debts)

- 2 possible ways to transfer property at death:o Per stirpes (“by representation”)

Ex. – Bob dies, and leaves 3 children, 2 living. The dead child leaves 2 living children.

Bob’s 2 living children get 1/3, and Bob’s 2 grandchildren of the dead child each get 1/6.

o Per capita (“by head”)

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Count up the number of potential takers and give everyone an equal share

- Revocation of willso No written will may be altered by oral declaration.o Statutes universally recognize revocation of wills by subsequent written

instruments Must be in writing, have a signature, attestation of witnesses, etc.

o 2 basic changes in circumstances that may revoke or alter a will absent an express revocation- marriage and divorce

In some states, a divorce creates a revocation of the will at law.

- Will substituteso Co-tenancies:

If co-tenant dies, others can keep it.o Tenancy by the entirety:

If one spouse dies, property goes from joint tenancy to sole ownership w/o will and cannot be undone.

Spouse cannot try to give property to someone else.o Trust

Decedent transfers property to be retained by a trustee Ex. – decedent gives land to bank to hold until his son is of age to

claim it

Present and future estates

- Estate- an interest in land which (a) is or may become possessory; and (b) is ownership measured in terms of duration

- Freehold estates- fee simple absolute, fee tail, defeasible fees (fee simple determinable, fee simple subject to condition subsequent, fee simple subject to executory interest), life estate

o Non-freehold estates- leases

- Fee simple absoluteo To “A and his heirs”

A’s heirs have no interest. Heirs do not arise until A’s death.o To “A, and his heirs and assigns”o To “A”o Carries all rights that can go w/ propertyo Lasts for an unlimited duration; freely alienable, divisible, and

descendableo No future interest createdo There is a preference at common law for fee simple absolutes (require the

least court attention; fully alienable)

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- Fee tailo “To A and the heirs of his body”o Virtually abolished in the US (historically passed to lineal blood

descendants)o The intention to create a fee tail will instead create a fee simple absoluteo Historically- future interests of a fee tail:

Reversion in grantor Remainder in a 3rd party other than grantor

- Fee simple determinableo “Blackacre to A, for so long as A uses Blackacre as a nature conservatory.

But if A uses Blackacre for any other use, then back to grantor”o Can last forever, but there’s a condition. Upon occurrence of condition

there is a forfeiture.o Future interest- possibility of reverter in grantor

If condition is met, transfer is automatico No matter what is done w/ it, it will always be subject to the conditiono Green Tree Services v. Williams- banks should never allow anyone to use

a fee simple determinable, or anything other than a fee simple absolute, as collateral for a mortgage

o If condition is met, and grantee collects rent from a 3rd party, grantor can bring a cause of action for “mesne profits” against grantee to collect rent (grantee’s continued possession is wrongful after the condition is met)

o Adverse possession clock starts right when condition is met In Re .88 Acres of Property- fee simple determinable; condition

was met (automatic reversion to grantor), but grantor did not reclaim the property; after adverse possession period passed, the county got the land, free of the fee simple determinable

- Fee simple subject to a condition subsequento “Blackacre to A, for so long as A uses Blackacre as a nature conservatory.

But if A ceases to use Blackacre as a nature conservatory, then grantor may enter and reclaim”

o “To A but if x event occurs, grantor reserves the right to re-enter and retake”

o Future interest- right of entry (power of termination) in grantor If condition is met, grantor has right to enter or retake (not

automatic)o No matter what is done w/ it, it will always be subject to the conditiono Grantee still has right to be there until grantor exercises right of entryo Holder of right of entry must exercise power of termination in a timely

manner

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o If condition is met, and grantee collects rent from a 3rd party, grantor cannot bring a cause of action for “mesne profits” against grantee to collect rent until after right of entry has been exercised.

o Adverse possession clock doesn’t start until grantor enters and reclaims- Fee simple subject to an executory interest

o “Blackacre to A so long as used as x, but if used for any other interest then to B”

o “To A but if x event occurs, then to B”o “To A for A’s life and then to B when B turns 30”

If B is already 30 when A dies, then it’s a shifting executory interest

If A dies before B turns 30, it’s a springing executory interest; It goes back to grantor during the open period

o Just like fee simple determinable, but if condition is met then the estate is automatically forfeited in favor or someone other than grantor

o Future interest- executory interest in someone other than grantor

- Life Estateo “To A for A’s life”

When A dies, reversion back to grantor If A grants to B, then B has a life estate for the life of A

o “To A for the life of B” Life estate pur autre vie (for the life of another) If B dies first, then back to O If A dies first, then A could have transferred it intestate to A’s

heirs for the life of Bo “To A for life, then to B”

B has a remainder interesto Future interest- reversion in grantor, or remainder in 3rd party

- Words of purchase- identify the taker of the estateo “To A”

- Words of limitation- describe (delimit) the type of estate giveno “and his heirs”

- You can only transfer the interest that you have- Grantor must use the correct language in the grant (Wood v. Board of County

Commissioners- language of the deed trumps grantor’s intentions)- Conveyance by owner of a fee simple is presumed to transfer a fee simple absent

language to the contrary- A living person has no heirs. Heirs only arise at the moment of death.

Examples:- “To A so long as used as a pub”; “To A until not used as a pub”; “To A during

use as a pub”

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o Tend to be interpreted as a fee simple determinable- “To A for church purposes”

o Language is insufficient; no possibility of reverter or right of entryo Fee simple absolute; no defeasibility attaches

- “To A city for the purpose of creating a public park”o Language is insufficient; no possibility of reverter or right of entry

- “To A used as a pub, but if…”o Tends to be interpreted as a fee simple subject to a condition subsequent

- “To A school district on condition that the premises be used for school purposes”o Some courts- fee simple subject to a condition subsequento Some courts- find a covenant; just a promise, w/ no right of entry; owner

may have a lawsuit for damages or injunction requiring return of the land- “To B, and B covenants and agrees that the land will be used only for single

family residential purposes”o Covenant

5 types of future interests- Originally created in grantor

o Right of entryo Possibility of revertero Reversion

- Originally created in one other than the grantoro Remaindero Executory interest

Remainders- 4 rules (If 1 of the rules is violated, then it’s an executory interest)- (1) A remainder must be created at the same time as, and by the same instrument

that creates, the prior estate or estates.- (2) A remainder may never follow a fee simple defeasible estate.

o (Remainders must follow either life estates or leasehold estates)- (3) A remainder must not have the capacity to cut short the prior estate(s).

o It must take in possession only upon the natural termination of the prior estate(s).

- (4) There must be no “built-in time gap” between the termination of the prior estate and the remainder’s taking of possession.

- 2 types of remainder:o Vested remainder- a remainder that as it were has landed, or come to rest,

in the relevant party 3 kinds of vested remainder:

Indefeasibly vested remaindero “To A for life, and then to B”

Vested subject to complete divestmento “To A for life, then to B, but if B ever joins the Air

Force, then to C”

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o The condition subsequent could divest B’s interest Vested remainder subject to open

o “To A for life, then to the children of B”o Rule of convenience- the class shuts when the gift

can become possessoryo Here, the class stays open for A’s life, and when A

dies, the class closes “But if” – points toward a vested remainder

o Contingent remainder- a remainder that is not certain to come into existence (not certain to come to rest) in any given set of parties, either because no relevant parties exist yet, or there is a condition in the way

A contingent remainder is not vested Not currently clear who (if anyone) will take A remainder is contingent if it has either of 2 characteristics:

The taker of the remainder is unascertainable; oro “To A for life, remainder to those children of B who

survive A” The remainder is subject to an unfulfilled condition

precedento “To A for life, and if B has reached 21 by the date

of A’s death, remainder to B” “If” – points toward a contingent remainder

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Limits on transfer and alienation

The rule against perpetuities- “No interest is good unless is must vest, if at all, not later than 21 years after some

life in being at the creation of the interest”- Purposes of the rule:

o To prevent land from being off the market for an extended period of time. If not for the rule, property would be inalienable; it would remain off the market for long periods of time

o If grantor was crazy, he could make any ridiculous clauses that he wanted (problem of the “dead hand”)

- Allows one to have some control of the things that they own, but not to make it inalienable forever

3 types of direct restraints on alienation:- Disabling restraint- grantor seeks to make transfer of the land literally impossible

o “Attempts to transfer Blackacre shall be void”o Almost always held to be void

- Forfeiture restraint- grantor seeks to create an estate in grantee which either automatically terminates upon an attempt to alienate or which is subject to a power of termination held by the grantor in such event

o “Blackacre to A, but if A attempts to sell Blackacre, revert to grantor”o A fee simple determinable, where condition is “any attempt to sell”o Unlimited forfeiture restraint- usually voido Forfeiture restraint limited in time or scope- can be upheld

Alby v. Banc One Financial- forfeiture restraint measured by life of grantor and expressly stating that interest would revert back to grantor only if grantee encumbered (mortgaged) the property

The forfeiture restraint is upheld; was a reasonable restraint, not a direct restraint

- Promissory restraint- grantor seeks to create a contractual promise by grantee not to convey an interest in land which grantee is receiving

o Unlimited promissory restraint- usually voido If time or scope is limited- more likely to be upheld

“To A, and any attempt to transfer during grantor’s lifetime will require grantor’s consent”

Protection of future interests

Waste- an unreasonable use of the property by the owner of a possessory estate which reduces the value of a future estate

- Future interest holder of a successive estate can bring a cause of action against present interest holder for waste

- Life tenant is entitled to the use of property ultimately to be enjoyed by the reversioner or remainderman, provided the use does not unreasonably reduce the value of the future estate.

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- Equitable doctrine- Remedy- injunction or damages- Voluntary waste- overt acts by the interest holder which will have detrimental

effects on the interesto Per se voluntary waste- removal of the actual substance of the state

(dismantling the land or the building on the land) Exception: open mine doctrine- if a mine is already open,

possessor of land can continue miningo Doctrine of estovers- you can use on-site materials for on-site maintenance

purposes E.g., you can cut down trees for heat or to repair a hole in the roof

o Doctrine of emblements- you can harvest regularly that which is normally harvested regularly, and take the profits (don’t have to give profits to future interest holder)

- Permissive waste- allowing the property to decrease in value by failing to make reasonable repair (i.e., fixing a leaking roof)

o Breach of obligation to repairo Does not require repair of catastrophic loss (i.e., losses from flooding)o Normal depreciation- life tenant is not required to repair normal wear and

tearo Life tenant would be required to fix a small hole in the roof

Little effort required to keep the property air and water right; failure to repair the small hole constitutes permissive waste

o Repair above the base wear and tear and below the catastrophic event is required

- Ameliorative waste- will make the property more valuable (and so should be allowed)

o E.g., property is worthless to begin w/, and D materially changes the property, resulting in an increase in value of the property

o Called ameliorative “waste,” but it’s actually necessary for some reasono Exception to the waste doctrineo Brokaw v. Fairchild- P, present holder of a life estate, was enjoined by

those who had a remainder future interest, from tearing down a house and building an apartment complex.

Just because it would increase the value of the property does not mean it is permitted.

A life estate is not ownership.

- Mortgage hypo: Blackacre has a 25-year mortgage. Who should pay the mortgage, present interest holder or future interest holder?

o Courts require present interest holder to pay the interest on the mortgage (a rent equivalent), and require future interest holder to pay the principle of each month’s mortgage (Because that’s what they’re getting, eventually. They’re getting the principle).

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- Partition- splitting up the land evenlyo Division of concurrent estateso Available only to concurrent interest holders, not successive interest

holders (would be inconsistent w/ the meaning of partition) Example- Co-tenants partition, splitting up the property 3 ways

equally to each co-tenant; or 1 of the 3 co-tenants buys out the property and pays the other 2 for their share

- Time value of moneyo The right to receive a sum of money (or an asset w/ a monetary value) in

the future is not worth as much as the right to receive the same amount today.

o Money has “time value;” if you have the money in hand, you can make it work for you by investing it

o Hypo: You’re a future interest holder, and actuarially the life estatesman has 8 years left to live. Blackacre in 8 years is mostly likely to be worth $250,000. How much is your future interest worth right now at this present moment?

What one pays for Blackacre right now will be less than if they paid for Blackacre in 8 years (i.e., accounting for inflation)

If interest rate is 10%, then the present value would be about $225,000. (10% of $250,000 subtracted from $250,000)

Concurrent estates

- Whatever may be divided, right to possession is to be enjoyed concurrently- At common law- default was joint tenancy- Today- default is tenancy in common (because it’s the least restrictive)

- Any co-tenant (concurrent interest holder) can sell that co-tenancy interest, but they can only sell what they have

o Any co-tenant can petition for partition.o The co-tenancy is an undivided interest in all of the property. A seller of a

co-tenancy cannot partition the interest and sell a portion of the property to someone else. The co-tenant has an undivided interest in the whole property. He does not have a full interest in any part of the property.

3 types of concurrent estates:

- Tenancy in commono “To A and B”o “To A and B as tenants in common”

A and B together enjoy an undivided interest in Blackacreo Default tenancy; If a court is not sure what kind of tenancy it is, it will say

that it’s a tenancy in common.

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o Free alienationo Only requires unity of possession (not unities of time, title, or interest)o No survivorship rights

- Joint tenancyo “To A and B, not as tenants in common but as joint tenants with the right

of survivorship”o “To A and B as joint tenants”o Exactly like a tenancy in common, except it includes a right of

survivorship Survivorship- if 1 party dies, remaining interest goes to surviving

party(s)o If it stays a joint tenancy, the last survivor gets the fee simple absoluteo 3 joint tenants, and 1 dies: the 2 survivors then own 50% instead of 33.3%o Transfer from A to x: it becomes a tenancy in common (right of

survivorship lost)o 4 unities:

Time- interest of joint tenants must arise at the same time Title- interest must arise by same title (same instrument) Interest- with identical interests (of equal size) Possession- with identical rights to possess the whole (all possess

property equally, and can use it at the same time) If any unity is missing, concurrent estate becomes a tenancy in

common (Crowther v. Mower)

- Tenancy by the entiretyo “To H and W, husband and wife”o “To H and W, husband and wife, and the survivor”o “To H and W, husband and wife, as tenants by the entirety”o A special kind of joint tenancy for married peopleo When you marry you become 1 corporate entityo Cannot be severed w/in the marriage; As long as you’re married you own

the relevant property as tenants by the entirety.o Purpose- in states that have tenancy by the entirety, its purpose is to

provide the family home to the surviving spouse when the other spouse dies

Ensuring that innocent surviving spouse doesn’t lose the house due to dead spouse’s debt

If one spouse dies with debt, the surviving spouse is protected. A bank cannot take the dead spouse’s interest in the property (Coraccio v. Lowell Five Cents Savings Bank)

o Must have 4 unitieso Not severable

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- Most states say that a joint tenancy is independent from marriage (marriage not an element of a joint tenancy as it is an element of tenancy by the entirety)

o Therefore it is not automatically destroyed by a divorce decree (as it would be in a tenancy by the entirety)

o To destroy a joint tenancy there must be either explicit language in the divorce decree, or a separate document destroying it.

- Hypo: 2 people hold a joint tenancy and then get married.o They do not become tenants by the entirety.

3 theories of who holds legal title when banks/mortgages are involved (states answer this question differently):

- Title theory- If you make a mortgage w/ a bank, then the title passes at the time the mortgage is signed.

o Joint tenancy is severed at the time of the mortgage. It becomes a tenancy in common. The bank has a tenancy in common interest (on what had previously been a joint tenancy) at the time the mortgage is signed.

- Lien theory- The mortgage creates a lien on the property for the bank. Title passes at foreclosure.

o Title remains in property owner, and the bank has a lien that it can begin to enforce if default occurs.

o Lien- a claim on a piece of propertyo Only at the point of foreclosure does title switch hands. Only then is there

a severance of the joint tenancy. (no earlier than that; Brant v. Hargrove)o In a lien theory state- if a bank becomes mortgagee for owner of a joint

tenancy, and that mortgager dies, the remaining owner would owe nothing. Bank’s security for the loan would disappear.

- Intermediate theory- Intermediate position that title passes at default (when person fails to pay). When default stage is reached, then title passes.

o No severance as long as you keep paying

- Joint bank accountso Essentially creatures of K’so Both parties contribute, and survivor gets at death;

Or a pay on death account: account of one goes to chosen payee at that person’s death (instead of becoming part of their estate)

- In-tenants- those currently in possession- Out-tenants- have the right to use the property, but are not actually currently using

their possessory rights

3 common law causes of action brought by cotenants

- Accounting- equitable action in which one cotenant seeks to have another state the net income, rents, or profits for the property and give P his share

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o Brought by out-tenants seeking to collect rents collected by in-tenants

- Contribution- action in which one cotenant seeks reimbursement from other cotenants for expenses in repairing, maintaining, or operating the property

o Brought by in-tenantso Expenses subject to contribution: real property taxes, mortgage payments,

repair costs, insurance premiums, etc.o Co-tenant who incurs expense for necessary preservation of property is

entitled to reimbursement from other co-tenants But a co-tenant who goes beyond preservation and develops the

property in someway is not entitled to reimbursement from other co-tenants (Co-tenant cannot be “improved out of his interest in the property”)

Exception- House is sold for much more than it would have sold for w/o the improvement. The co-tenant who paid for the improvement may be entitled to increased sale value if it can be attributed to the improvement.

- Partition- action seeking to end the cotenancy when the parties cannot agree on its operation or management

o Equitable actiono 2 types:

Partition in kind- physically divides the property in kind (courts usually prefer this method)

Some properties cannot be partitioned in kind (i.e., a narrow plot of land in a very urban area)

Partition by sale- proceeds of the sale are distributed to reflect a cotenant’s past efforts in improving the property (the more common method)

Concurrent estates hypos

- P and M are cotenants in Blackacre. M is in-tenant. P is out-tenant, but contributes taxes. P has 2 kids, G and B. G and B hate M. P dies, and G and B inherit P’s interest in Blackacre. They want to use Blackacre but don’t want to deal w/ M. What can G and B do?

o They could buy M out.o They cannot sue M to eject her for failing to pay for the cotenancy.o They could partition (partition in kind or partition by sale).o They could just use the property and deal w/ M.

- Same facts, but P is still alive. M moves into an apt down the street and rents out Blackacre to S. Then P dies, and G and B inherit P’s interest.

o G and B can bring a successful accounting action M cannot successfully argue that she is just substituting someone

into her cotenancy.

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Courts say that if cotenant rents out to a 3rd party, that is a profit for which rent is due to the other cotenants.

Courts treat ‘use’ and ‘money generation’ are separate categories

- Same facts, but M invites S to live w/ her on Blackacre, and S does not pay rent. G and B sue for accounting. What will their theory be?

o M is a cotenant and S is not a cotenant. There is a rental value for S, not being a cotenant, staying there. G and B are entitled to ½ of that rental value.

o M’s response- All cotenants have the right to live there, and all cotenants have the right to bring their significant others to live there too. This is one of the rights of being a cotenant.

- M is an in-tenant, P is out-tenant, and M builds an addition on the house. Can M make P pay contribution?

o No. M can improve the property, but P is not obligated to contribute to that improvement. This is not repair (or preservation), but improvement. P as a cotenant cannot be improved out of his estate.

- Cotenant A can lease his cotenancy interest in the property w/o consent from cotenant B, but Cotenant A cannot interfere w/ cotenant B’s interest in the property (Carr v. Deking)

- Partition by allotment- 1 cotenant buys out other cotenancies and becomes owner in fee simple absolute

- Parties can agree to owelty- money paid to even up a partition in kindo The divided areas may not be equal in value

- Agreements not to partition are held valid for a reasonable timeo If the agreement violates rule against perpetuities, then held void

- A joint tenant or tenant by the entirety cannot benefit from murdering a cotenant. Murderer forfeits his right to survivorship.

o Courts treat murderer as having pre-deceased the victim as a matter of law (Lakatos v. Estate of Billotti)

o Slayer statutes- do not allow cotenants to benefit from voluntary manslaughter.

Most states do not include involuntary manslaughter, but some do.

Marital estates

- At old common law:o Dower- for widowso Curtesy- for widowers

- Hypo: In 1750 H and W are married. In 1760 Blackacre to H in sole name. In 1770 H sells Blackacre in sole name. In 1780 H dies.

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o W may claim dower, a life estate in Blackacre. W gets the property back from the owner for the rest of her life, and then it goes back to the new owner after she dies.

o Property becomes inalienable for long periods (this is odd)

- Forced share (elective share; augmented share)o Over time, the forced share replaces dower and curtesy.o Purpose- support surviving spouse out of decedent spouse’s estateo Allows surviving spouse to claim a certain % of decedent spouse’s estate

(generally 1/3 to 1/2)o Hypo: H dies and says that all of his goods in his will go to his secretary.

The state will not allow this. A set % goes to W under the forced share.

Augmented share augments back into the estate for forced share purposes all those devices used in order to avoid probate. So the wife is still able to get a percentage.

- Pre-nuptial agreement- document by which forced shares, intestacy, etc. are signed away before marriage

o Courts uphold these agreements.o They are K’s; subject to K law; consideration is agreeing to get married

- Post-nuptial agreement- document by which these things are signed away after marriage

o All states treat post-nuptial’s more carefully than pre-nuptial’s.o One of the spouses usually has more knowledge of the marital funds after

they have been married. There is already a confidential and fiduciary relationship, potentially putting the other spouse is a vulnerable position.

o Consideration is no longer ‘marriage’ (past consideration is no consideration)

Consideration is ‘not divorce’ – Courts are reluctant to view this as valid consideration.

- Community property theory (most states other than east coast use this theory)o Based on the partnership theory: marriage creates a marital corporation.

There is marital property and separate property Marital property- the work product created by the marital

partnership during the marriage I.e., money earned during marriage The presumption is that a piece of property is community

property. Separate property- everything else

I.e., property owned before marriage Spouse intending to keep separate property should keep

very good records of that to rebut presumption of community property.

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- Homestead rights- created by constitutions and statuteso Purpose- to assure a home for the family both during life of owner and

lifetime of surviving spouse

- Modern spousal options (upon the death of a spouse)o Will- spouse gets whatever is in the willo Intestacy- surviving spouse has the right to claim a share (generally 1/3 of

spouse’s estate) Forced/elective share- If spouse isn’t satisfied w/ what was left,

they can take the intestacy option. If decedent’s will makes some provisions for spouse, spouse may

elect to “take against the will” – renounce whatever is given by will and take intestate share

Spouse cannot take what was assigned in will and elective share

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Leaseholds

- Leasehold- possessory, non-freehold estate; lessee has exclusive right to possession; lessee’s estate is assignable (unless lease provides to contrary), devisable, and capable of descent

- Lease- documented by landlord & tenant to create a leasehold in the tenanto A lease is both a K and a conveyance (property document)

- Leasing (letting; demising)- the act of creating a lease- Ejectment- cause of action to get someone off of your land

o Landlord usually brings ejectment claim against tenant for failure to pay rent

Leasehold vs. license- Leasehold: tenant has exclusive right of possession of the property (Landlord has

lower standard of care)o Common law rule- Landlord has no duty for patent (obvious) defects

- Licensor-licensee relationship (e.g., hotel): licensor retains some right to possession (Landlord has higher standard of care)

o Licensee merely has K for use w/o a transfer in interest in land- Factors to consider:

o Whether owner retained keys, had free access to the room, had right to enter for repairs, lived in the building, posted a doorman or desk clerk, provided meals, utilities, etc., held premises out to public

Benham v. Morton & Furbish Agency- Court held a licensor-licensee relationship where it was a 2 week duration (weighed more towards a license; not a lease)

Concessionaires (i.e., renting a snack cart that moves around)- licensor-licensee relationship

- Rent presumption- reasonable rent is presumed due absent an explicit expression that rent is not due

o Exception- express document stating that rent will not be due; a gifto Once a rent is set, that’s the rent. T cannot pay a ‘reasonable rent’ after

rent is set (David Properties, Inc. v. Selk)

4 types of leaseholds

- Tenancy for yearso Duration- for a fixed time (3 months, 5 yrs, etc.)

Term may be subject to possibility of reverter, right of entry, or executory limitation

o Creation- by agreement (written or oral) Subject to S/F requirements

o Termination No notice required

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By expiration of stated period of time (most common); by happening of stated limitation (right of entry); by expiration of landlord’s estate

By surrender (T) plus acceptance (L) By release (i.e., L conveys L’s interest to T) By condemnation (by gov’t)

- Periodic tenancyo The 2 things you must know: (1) how often rent will be paid; and (2) how

much rent will cost Possible but uncommon to be subject to possibility of reverter,

right of entry, or executory limitationo Duration- may run indefinitely until 1 party gives x amount of notice

Most are month-to-month; could be a 6 month-to-6 month tenancy, etc.

o Creation- by agreement (written or oral)o Termination

Most states require 1 month’s notice to terminate Courts are split on whether this means 30 days or the

remainder of current month + 1 whole extra month Year-to-year tenancy- by notice from L or T 6 months prior to end

of current period if tenancy is year-to-year Tenancy period < 1 year- by notice 1 full period prior to end of

current period Louisiana- can give notice at end of month unless there’s less < 10

days left of month (if < 10 days, then notice not effective until next month)

Most states- If notice served on 9/6, it would be effective on 10/31 (not 9/30); full month’s notice required

Missouri (minority position) –must all be in 1 document that adds up to full notice

No appropriate termination, no appropriate detainer

- Tenancy at willo We know there’s a tenancy, but we haven’t identified how often rent is to

be paid, or the amount of rent to be paid Uncommon; mostly occurs w/ non-business people who are not

carefulo Must have a meeting of the minds; some agreement (This distinguishes

tenancy at will from tenancy at sufferance)o Duration- No fixed term

Tenancy at will exists until the periodicity and amount of rent is established

o Creation- by agreemento Termination

By either party w/o formal notice

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If L terminates w/o notice, T has reasonable time to vacate By L’s conveyance of fee or T’s assignment of interest, or by death

of either party

- Tenancy at sufferanceo Hanging out period while T holds over and L decides what to doo Purpose- to eliminate adverse possession

Must be on another’s property w/o permission for adverse possession clock to start

Tenancy at sufferance- T is on property in sufferance (L tolerates it)

o Duration- until L demands possession or until L elects to have a tenancy other than tenancy at sufferance

o Creation- By one entering into possession rightfully and retaining possession wrongfully

Really not a tenancy at allo Termination

Technically, there is no formal L-T relationship, so there is no tenancy to terminate

Wrongdoer (T) has possession, which cannot be defended against any reasonable action of the owner in fee (L)

L may terminate immediately w/o notice L may consider tenant as holding under a new tenancy for

additional period if he wishes

Statutory modifications- Statute of Frauds

o Varies by stateo Leasehold should be in writing

Exception- can survive w/o a writing if duration is < 1 yearo Hypo: Lessor seeks to create tenancy orally for a term longer than

permitted by appropriate statute. Agreement as to duration of the lease is void, but other terms of

tenancy are enforceable.- The Uniform Residential Landlord and Tenant Act (1972)

o States what different tenancies are and what they become under certain circumstances

o Many states adopting and implementingo Applies to most residential leasing arrangements

Does not apply to: certain public and private institutions (prisons, hospitals, schools), K purchasers in possession, fraternal and social organizations, hotels, residence as employee, condos, etc.

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Landlord and Tenant Obligations

- Lease sets out rules between L and T- Components of a lease: description of property, landlord’s obligation to fix things

that need repair and not to enter property unauthorized, tenant’s obligation not to conduct illegal activities on property, etc.

o Courts will uphold some covenants and not others

Implied landlord covenants (contractual promises)

- Covenant of power- power of the L to lease what the L says the L is leasing

- Covenant of quiet enjoyment- keeps lessor out of property while lessee is leasingo Lessee has exclusive possession as against lessoro Covenant that L will put T in legal possession

Whether T has actual possession does not relate to covenant of quiet enjoyment

o Covenant is issued by L and runs only to L and those who could acquire possession through L

o Applies to both residential and commercial leaseso Examples:

L throwing a party on the property- violates covenant of quiet enjoyment

3rd party (i.e., neighbor) throwing a party on the property- does not violate covenant of quiet enjoyment

- Covenant of possession- 2 theorieso English rule- L has a duty to clear out anyone from the leased property,

and open up the place for the new T’s Majority rule in the US Relates to actual possession Fits people’s assumptions- What people assume when they rent is

that they will get a new, vacated place that they can actually move into

L is in better position than T to make sure property is vacated- L is the party that’s already there. Until T begins the lease, T has no underlying interest in the property.

o American rule- L puts tenant in legal possession and lets T work out the rest

By far the minority rule, even in the US

Duties (obligations) of the tenant (absent express terms)- Duty to pay the rent

o Even if it’s just “a reasonable rent”- No duty to occupy

o Usually it should not matter

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o Certain situations where it might matter- e.g., T rents residential property in suburbs, and neighbors complain that shrubbery on property is getting out of control

o Exception- where a large store is leased in a shopping mall Usually involves a best efforts K- the only way for the K to have

consideration is if one or both of the parties have to give their best efforts

T has a duty to put forth “best efforts” in order to constitute consideration and has a duty to occupy

But must be explicitly stated in K Mercury Investment v. Woolworth Co.- court held no best efforts K

where L precluded itself from making a best efforts K in the lease Express provisions trump implied provisions

Traditional duties of fitness and repair of leased premises

- Traditional common law rule- caveat emptor (“buyer beware”)o T should have inspected property before signing lease to see what they

were getting. If T failed to notice something, “tough luck”o L has no implied duty to repairo T has duty not to commit or permit wasteo Traditional common law rules are still the primary rules for commercial

leases Use for commercial purposes varies greatly (doctor’s office,

business center, etc.)o Caveat emptor has largely gone away in residential leasehold context

Everyone can pretty much be assumed to use the property in essentially the same way: T will live there (cook, sleep, shower there, etc.)

- Service Oil Co. v. Whiteo Rare exception to the rule of caveat emptor- latent (hidden) defectso Commercial lease contexto Court finds against L. L and T agreed that property would be leased as a

gas station. L knew that it could not be used as a gas station, but leased it to T as a gas station anyway.

There is a latent defect here that interferes w/ T’s ability to use the property as the T intended.

o (Court could have reached same result by using covenant of power: L leased away property that L did not have; L did not have what L represented that he had)

- General repair clause- T agrees to keep property in good condition- Redelivery clauses T agrees to return property in exactly the same way that T

received it- (Must make sure that these 2 clauses match)

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- Where T agrees to keep property in as good a condition as received throughout leasehold:

o Makes T liable for wear and tearo Makes T liable for casualty

Lightning strikes. T has obligation to build a new building that is in the same condition as when first leased.

- Barash v. Pennsylvania Terminal Real Estate Corp.o Court holds that merger clause in K invalidated prior oral promise to

provide sufficient ventilation in the building after 6pm Merger clause- states that the K is the entire meeting of the minds

of the parties. No oral agreements previous to signing have any validity

o T claims he was actually evicted and partially constructively evicted (temporally; from 6pm – 9am)

Actual eviction- L physically removes T (i.e., changes locks) Constructive eviction- acts by L that substantially and materially

deprive T of use and enjoyment of property For constructive eviction to occur, T must actually vacate

Partial eviction- can be partial actual eviction or partial constructive eviction

Residential Warranty of Habitability

- Background rule was caveat emptor; development of the law in residential leasehold context

- Larger cities; slumlords renting to people in terrible conditions- Housing Codes develop- require minimal services and conditions on premises

o Way for T’s to vindicate their rightso 4 minimum standards- structural elements (walls, roofs, floors, etc.),

facilities (toilets, sinks, stoves, outlets, etc.), services (heat, water, electricity, sewage, garbage, etc.), and occupancy limits

o T’s complain to gov’t agency that sends out an inspector to review the conditions and require L to fix substantial defects

o Problems: agencies are understaffed, bribed, etc.; usually T has no cause of action to motivate L’s

Warranty of habitability- L has duty to provide premises sufficient for human habitability at commencement of lease, and a continuing duty to maintain the habitability

- Starts around 1960’s- Most states have an implied warranty of habitability- Both a warranty (obligation to pay money if goods do not fully match what is set

out in warranty) and a K (obligation for specific performance; to continue keeping premises habitable)

- States have materiality requirements (that violation relates to safety and sanitation for human habitation)

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- Does not apply to single family homes n most states (applies to multi-dwelling units)

o Also does not apply to: certain public and private institutions (prisons, hospitals, schools), K purchasers in possession, fraternal and social organizations, hotels, residence as employee, condos, etc.

- T must show that L had notice of defect and failed to repair w/in a reasonable time

- T can waive the warranty- If there is an express provision that T does not have a warranty for habitability, then there is no warranty of habitability

- Hilder v. St. Peter- Vermont goes further than any other court in holding that the implied warranty of habitability is irrevocable.

o T cannot waive the warranty, and warranty covers both patent and latent defects

o Indirect result- rents will rise

- Effect of a violation of a Housing Code:o At least evidence of breach of warrantyo In some courts a presumption of breach of warrantyo In some courts is conclusive on issue of breach of warranty

- Remedies for T’s for claims of breach of warranty of habitability:o Termination (not usually T’s 1st choice; nowhere else to go)o K damages (3 formulas)

Agreed rent minus value of rented promises Value as warranted minus value as actually received Percentage reduction; how much premises are reduced due to

defective conditiono Rent withholding

True rent withholding- goes into escrow to pay for repairs and then surplus, if any, goes to L

Offset rent withholding- T refuses to pay all or part of rent When L tries to oust him, T brings claim for damages for

breach of warrantyo Repair and deduct; T pays for repairs and deducts from next month’s rent

o Uniform Residential Landlord and Tenant Act (1972) - reluctant to give T’s some remedies for fear of frivolous suits:

Annoyance and discomfort damages, in addition to lost value Punitive damages

Retaliatory eviction

Retaliatory eviction- T complains to a gov’t agency about lack of habitability of the leased premises, and L evicts T

- Flip side of constructive eviction

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- Retaliatory eviction is an affirmative defense available to a T in a L’s action for unlawful detainer (trying to clear a T wrongfully occupying premises of leasehold)

- 5 requirements for retaliatory eviction (Restatement 2nd of Property; adopted in Building Monitoring Systems v. Paxton):

o L has taken retaliatory action against T where L tries to terminate a tenancy, jacks up price, or refuses to renew tenancy if:

o (1) There is a protective housing statute protecting proper conditions of low income housing;

o (2) L is in business of renting residential property;o (3) T is not materially in default in his obligations under lease at time L

acts;o (4) L is primarily motivated in acting because T (either alone or through

participation in a lawful organization) has complained about a violation;o (5) T’s complaint was made in good faith and w/ reasonable cause

- Issue- How long is L barred from evicting T w/o there being retaliatory eviction?o Building Monitoring Systems v. Paxton- L has burden of showing that he

has given T a reasonable opportunity to procure other housingo Uniform Residential Landlord and Tenant Act- Evidence of a complaint

w/in 1 year before L’s conduct (eviction notice, increased rent, etc.) creates a presumption that L’s conduct was in retaliation

Once there’s a finding of retaliatory eviction, L cannot raise rent or evict T until L shows that he is not acting in retaliation

Puts L in very poor position; Hard to prove that malice has gone away

Security deposits

Security deposit- T usually pays about 1 month’s rent, and L can keep the rent at the end of the lease to pay for T’s damages

- Gives L fund-in-hand if premises are left damages, unpaid rent, etc.- Security deposit regulations (by URLTA and other statues):

o L must give deposit back in full if premises are clean, undamaged, and rent paid in full

o L must give itemized list of damages withheld to To If L inappropriately retains a security deposit, L must pay double the

deposit, and/or L must pay T’s attorney fees for legal actiono Amount of security deposit usually limited to 1 month’s rent

Tenants can do more damage than 1 month’s rent This indirectly raises rents

Landlord tort liability

Where a T is physically injured on L’s property:

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- Traditional rule- no tort liability for L, because L cannot be on the property (L cannot be held liable for something that he cannot control; after exclusive possession has passed)

o T has duty to maintain premises in a reasonably safe condition- 6 exceptions to basic common law rule of L tort liability: (“3rd parties” = 3rd

parties who are not guests of the T)o (1) Undisclosed dangerous conditions to L from T

Latent defect exception (i.e., mold in the walls) What L knew, T could not reasonably have known Lasts until T is actually informed of the defect, or L is purposely

concealing the defect If L actively conceals defect, then L is liable until T

discovers defect or reasonable should have discovered it Unless L actively conceals something, T is expected to be

reasonable; Once T is aware, L is no longer liableo (2) There’s a condition on premises that could harm general public that L

is aware of, and member of general public is injured L is liable Latent or patent defects 3rd party here does not have exclusive possession of property as T

does; L is better party to bear tort liabilityo (3) Where general public is invited onto premises

I.e., general public invited to haunted house, and faulty wiring burns everyone to death

L is liable to those 3rd parties (members of general public)o (4) T injured in a common area

L is continually liable, throughout L’s entire lease, for injuries occurring in common areas

o (5) T includes an ongoing covenant for repair in the lease, and L promises to repair something but fails to repair w/in a reasonable time

L is liable Borders v. Roseberry- no provision in lease for L to make repairs,

so L not liableo (6) L starts to make repairs

Once L starts to make repairs, then L is liable if injury occurs as a result of faulty repair

- Minority rule- to use an ordinary negligence standard for L’s tort liabilityo If L’s conduct constitutes ordinary negligence, then L is liable

- L tort liability in commercial context- no liability for Lo Very narrow exception: L tort liability for criminal activity occurring in

common areas- L may be liable under very specific circumstances (criminal conduct is foreseeable, etc.)

Governmental activities in the housing market

Rent control

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- Public policy: Rent controls have existed since 1970’s and are justified on the ground that they are necessary to control rapidly rising rents, especially for low-income T’s, during periods of great inflation

- Gov’t must guarantee L’s a reasonable rate of return on their investmentso If not- this is a taking

- Purpose of rent control- to stop excess profits by monopolies while also allowing a reasonable rate of return on L’s investment; to provide the poor w/ secure housing

- Enacted under executive power of gov’t; police power- Takings Clause- private property should not be taken for public use w/o just

compensationo “To bar gov’t from forcing some (private) people alone to bear burdens

which, in all fairness and justice, should be borne by public as a whole” (Scalia)

Regulations against discrimination in housing- Shelly v. Kramer (1948 US Supreme Ct case)

o 14th Amendment forbids gov’t from acting in discriminatory ways, and courts are an arm of the gov’t

o US courts can no longer uphold racially restrictive covenants, or religion-based restrictive covenants, etc.

- Civil Rights Acts (Fair Housing Act)o Prohibits discrimination in residential housing on basis of race, religion,

sex, national origin, etc. (w/ some exceptions for single-family houses) Later amendments add factors of age and handicap; sexual

orientation still not protected Later amendment creates exception for retirement communities:

They can discriminate on basis of age or family status.

Assignment and subletting

- Assignment- assignment of the entire remaining leasehold that the tenant haso Assignment of the entire interest

- Sublease- transfer of something less than the whole interesto In all jurisdictions, the way to make sure you have a sublet is to make the

assignment at least 1 day shorter than the term of the lease that the T haso I.e., T sublets his apt for a few months and then re-takes possession before

the end of the lease

- Privity of estate- arises when one party transfers all of that party’s interest in an estate to another party

o It means ‘taking an assignment’o Where assignee takes assignor entire estate, assignee is in privity of estate

w/ assignoro Where assignor conveys something less than assignor’s total interest, there

is no privity of estate between the parties

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- Privity of K- exists between 2 parties who make a K w/ one another

- Sublessor and landlord are in both privity of estate and privity of K- Sublessee and landlord are not in privity of estate or privity of K- Assignor and landlord are not in privity of estate (assignor transferred entire

interest to assignee) but are in privity of K- Assignee and landlord are in privity of estate, but are not in privity of K- Landlord must have either privity of estate or privity of K in order to sue a party.- Surety relationship is created between assignor and assignee

o For landlord, assignor and assignee are jointly and severally liable

- If lease contains no clause restricting right to do so, T is free to assign or sublet- Majority rule- clauses restricting power to transfer are generally enforced as

written, but they are not judicial favorites (restraints on alienation).o These clauses will generally not be implied from other lease provisions.o Clauses absolutely forbidding assignment or subletting are enforced.o Clauses forbidding assignment or subletting w/o L’s consent: consent may

generally be withheld arbitrarily

- Majority rule- If an assignment is attempted but violates restrictions of the lease (i.e., lease specifically says no assignments), the attempt to assign is valid and L has a right to seek recourse (generally and preferably right of entry) or seek damages form T that is attempting to assign

- Minority rule- attempt of assignment w/o consent is void ab initio and as long as assignment continues it is a continuing violation

- Hypo: T has 10 months left in lease and transfers all 10 months to Ao L and A are in privity of estate but not in privity of Ko L and T are no longer in privity of estate but remain in privity of Ko L and T are secondarily liable to each other

- Hypo: L leases to T, who assigns to A1, who assigns to A2.o Can L proceed against A2, the direct wrongdoer?

Yes, because of privity of estate.o Can L proceed against T?

Yes, because of privity of K. T is secondarily liable to L, while A2 is primarily liable to L.

o Can L proceed against A1? No. Privity of estate ended here when A1 assigned to A2. There

was never privity of K between L and A1 unless A1 expressly assumed all promises in the original lease.

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Termination and eviction

- Fixed term tenancy may end:o At the end of the fixed termo By an evictiono By the terms of the agreemento By condemnation by the governmento Release of property to the T (never happens)o Abandonment and surrender

- Periodic tenancy may end:o Termination w/ notice (usually once period’s notice)

- Tenancy at will may end:o L or T gives reasonable notice

- Tenancy at sufferance may end:o L tells T to get out (L not required to give T notice)

- A late notice of termination is effective at the end of the next month (Restatement 2nd of Property)

o Davidson v. Kenney- In Missouri, one notice must be perfect in itself to serve as notice of termination (late notice of termination is completely void)

- Unlawful detainer- action brought by L against T after T has completed a period of lawful possession

- Ejectment- action brought by L against T where T is kicked off of property because T has no right to be there

Summary eviction- Old English rule- L may use minimum possible force to evict T (small minority)- American rule- No force may be used by L. Instead we have a summary eviction

process. L must give T at least 5 days notice of the petition to go to court- Summary eviction process prevents L from “taking the law into their own hands,”

because the court process is very speedyo Notice of eviction proceeding is given, and then a few days later the

hearing takes placeo One party’s breach does not excuse other party (i.e., if L does not change a

light bulb, T cannot stop paying rent) Warranty of habitability- must be a material breach to violate the

warranty- At common law L must reserve a right of entry in order to evict. W/o a right of

entry L would have to sue. (L’s want to reserve this right of entry)- Forcible entry and detainer statutes- sought to protect T’s interest in not being

forcibly evicted

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Abandonment and surrender

- Abandonment- T leaves before end of lease w/o intent to return- Traditional rule of abandonment and surrender- L has 3 options where T

abandons:o (1) Ignore and enforce the lease

L brings T to court to require T to pay rent, either at the end of the lease term every month that rent is not paid, or once at the end of the lease

o (2) Re-enter and mitigate (mitigation of damages) L enters (cleans, etc.) and re-lets the property at a lower price

(because he has to get someone paying rent on the property quickly)

Old T owes difference between original rent paid by old T and lower rent paid by new T

o (3) Re-enter and release T L releases T of his responsibilities, letting T off the hook (may be

in L’s best interest to do this)

- Public policy favors re-entering and mitigating over ignoring and enforcing the lease

o Ignoring and enforcing lease does not encourage productive use of property (may lead to damage, waste, vandalism, etc.)

- Majority rule- L has a default duty to enter and mitigate.o If L cannot mitigate, L can collect the entire remaining rent of abandoning

T.o If L does not mitigate, L is precluded from claiming that rent.o In some states- the default rule may be trumped by express terms of the

leaseo Austin Hill Country Realty v. Palisades Plaza- L brought action against

T’s for anticipatory breach. Court holds that since anticipatory breach is a K cause of action, K defenses (including failure to mitigate) comes w/ it.

T’s have failure to mitigate as a valid defense against L. L re-entered but failed to mitigate.

Fixtures

- Fixture- a chattel (piece of personal property) that is expected to be either transferred to lessee as part of the leasehold, or transferred back to lessor at the end of the leasehold

o Attached to real property (i.e., microwave, cabinets)- General rule- Nothing is found to be a fixture in personal property unless it would

hurt the personal property to remove it.o T buys microwave and put it on countertop- T takes it w/ when he leaves

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o T buys microwave and drills it inter cabinetry- T has probably added a fixture to L’s property (It would damage the property to remove it)

o Where T removes a fixture, he commits voluntary waste (even if T installed the fixture himself)

- The parties’ private agreement on the matter is binding (T should negotiate ahead of time that “following installation is not to be considered a fixture)

- If a chattel has been specially cast to fit the property or if it’s been affixed to the property, then the presumption is that it is a fixture.

o Exception- trade fixtures; “not in the law of fixtures” Special rule for commercial property: Commercial T’s tend to

change the property a lot, so they can drill into the walls, add fixtures, etc. These fixtures will be considered ‘trade fixtures,’ as long as T returns the property in the same manner it was when T took the property.

Condemnation of leased land

- “Taking” of land – government must pay just compensation (fair market value)o Market value- what a willing buyer would pay a willing seller for the

property- Partial taking/condemnation

o Hypo: L rents out Blackacre to T and gov’t condemns part of it to build a library. T should have an abatement (lowering) of his rent to the amount he lost due to the condemnation.

T’s compensation- L reduces T’s rent. L’s compensation- gov’t pays L

- Complete taking/condemnationo T’s compensation- absolved from obligation to pay rent

T can claim “bonus” if T is paying less than the market rate and can collect the discount from market for the rest of the rental period

Not very commono L’s compensation- gov’t pays L

- Well-drafted leases (especially long-term commercial leases) contain agreements for division of condemnation awards.

Restrictive covenants (covenants running w/ interests in land)

- Servitude- a right to do something on someone else’s land w/o a possessory interest

o A servitude burdens one estate and benefits another estate.o Restrictive covenants and easements are both servitudes

- Restrictive covenant- a promise not to do something w/ your own property that runs to somebody else

o A covenant is a promise that implicates a property interest.o Personal covenant- does not run w/ the land (runs w/ people)

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o With any promise- there should be 2 burdens and 2 benefits (each party has a burden and a benefit)

o Covenant that runs w/ property- the covenant binds later purchasers of the property, even if they didn’t agree (even if they weren’t parties to the original agreement; in privity of K)

Even where there is a sale of property, there are still benefits and burdens on each side.

- Ex.- Homeowner pays neighbor for neighbor’s promise not to obstruct homeowner’s view of the ocean.

o Anyone buying neighbor’s property gets the benefit of buying at a lower price, but also has the burden of not being able to block homeowner’s view w/o there being an injunction against him.

- Remedy for breach of a covenant running w/ land: injunction, damages, or both- What makes a restrictive covenant different from “regular” contractual promises

is whether is runs w/ the land.

Analysis for whether the covenant runs at law

(1) What is the covenant’s burden(s)? What is the benefit? (might be mutual on-going burdens and benefits)

a. (Identify the promise. Identify the burdens & benefits on each side. If there are none- there is no running covenant.)

(2) Is the burden associated w/ any property interest? The benefit?a. (If not- there is no running covenant)

(3) Has there been a relevant transfer of property? (i.e., are the associated property interests owned by parties other than the initial parties to the covenant?)

(4) Does the burden run? The benefit?a. Is there intent?

i. (intent that the benefit and burden should run)ii. (generally an inference of intent that it’s ongoing)

b. Does the benefit/burden touch and concern the associated property interest?

c. Is there privity of estate between the current property owner and the original covenanting party?

i. Is there vertical privity?ii. Is there horizontal privity? [Not necessary (in some jurisdictions)

to be shown for the benefits of a covenant to run at law; only universally necessary for burden to run (except in the few jurisdictions in which horizontal-privity analysis has been abandoned altogether)]

Touch and concern tests(1) Unrelated/related/inextricably bound?

a. (general rule is that if you don’t need to be on the property to fulfill the burden, then it doesn’t touch & concern)

(2) Effect on value of relevant property interest?a. (generally T’s promises to repair touch & concern)

(3) Part of overarching land-use plan?

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a. (If you are restricted in your use of land, then it touches & concerns)(4) Bigelow test (from Abbott): Are the party’s interests as an estate holder altered by

the covenant?a. (not as a member of the community)

(5) Clark/layman test (from Abbott)a. (Would a layman believe it runs?)

- Statute of frauds- will apply to restrictive covenants in general; must be a document in writing

o This is really only true w/ covenants running at law, not w/ covenants running in equity.

- Ex.- T promises L, by a term of the lease, to repair the leased premises, and then passes the leasehold to someone else.

o T is burden & L is benefitted (Blackacre also benefitted)o The leasehold is the property interest that is affected here. The duty

potentially runs w/ the leasehold interest.o There must be a secondary transfer to a new party to worry about whether

the covenant runs at all. (If not, then the party made the original K and is liable)

- pg 638: Following promises by L or T have been held to touch & concern (and therefore run w/ the leasehold or the reversion or both, as the case may be)

o By T to pay rent or (in the case of a mineral lease) royalties A rent obligation always touches & concerns the land (L can try to include things as rent in the lease so that they touch

and concern)o By T to pay taxes on the leased premises

It is directly related to the property. Could argue that you don’t have to be on the property to pay taxes

on it, but generally it touches & concernso By L or T to repair the premises, or do, or refrain from doing, some other

act affecting the physical condition of the premiseso By L to provide services, such as heat, water, etc. to the premiseso By T not to assign or sublet, or not to do so w/o consent of Lo By L to renew the lease or convey the reversion to T

Inextricably bound to the leasehold estate itself- Other examples- Do they touch & concern?

o T covenants to use the premises only as a carwash and for no other purposes

Yes- relates to use of the propertyo T promises not to permit any illegal activity on the premises

Yes- As soon as the premises are implicated, then the premises are the only place where this could occur.

o T promises to paint the house Yes- You have to be on the premises to do it.

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o T promises to (do something that cannot occur on the premises) No- It does not touch & concern because it cannot occur on the

property.o T covenants to employ L as general contractor in the event the T remodels

the property Could be yes or no- Touches & concerns because you have to do it

there; but it’s irrelevant that they are in a L/T relationshipo T covenants to insure the premises for L’s benefit

No- L’s benefit is personal and doesn’t touch & concern the land (unless there’s some obligation to use insurance proceeds to repair physical damages)

o L promises to refund security deposit Yes- duty to refund security deposit always runs

o Covenant not to compete Can touch & concern Can be written so they don’t have anything to do w/ an underlying

piece of land Can also be written to run w/ the land: “I’ll sell you a grocery store

building, and I run an appliance store. You can’t put an appliance store in that building for 20 years.”

To run w/ the land these covenants should be limited temporally & geographically.

o T covenants to allow L to post political signs on the premises Probably yes Can only be accomplished on the property (but not obviously

directly connected to property interest)o L covenants to provide T a discount on insurance bought from L

No- doesn’t have to do w/ the property

Privities- If there’s a K between L and T, then there’s privity of K.

o There is always a K between L and T. They also have horizontal privity of estate.

o Privity of estate- having the whole interest of the assignor (then there’s an assignment)

If a party has less than the whole interest, then it’s a sublease, and there is no privity of estate

Assignment- both vertical & horizontal privity Sublease- no vertical privity

- Horizontal privity of estate- occurs anytime there is a transfer of an estate in property

o A document transferring an interest in property creates horizontal privityo Horizontal privity is privity of estate between covenantor and covenantee

at the time the covenant was createdo Grantor grants to grantee- horizontal privity

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o Simultaneous privity- parties have simultaneous interest in the same parcel of land and the covenant relates to those interests

Ex.- A and B own adjacent parcels. A gives B a driveway easement over A’s lot.

Parties enter into a covenant dealing w/ the maintenance of the driveway; both parties have simultaneous interests in A’s lot and the covenant concerns one of the interests (the easement)

o Instantaneous privity- covenant is conveyed at the time of deedo 8 states do not require horizontal privity (including IL)

- Vertical privity of estate- created when the whole interest of the transferor is transferred

o Assignment- creates vertical privity (sublease- no vertical privity) Makes assignee primarily responsible for the running covenants.

The assignor remains secondarily liable (surety) L may sue both assignee and assignor if he wishes.

o Sublease- does not create vertical privity Therefore running covenants do not run to sublessees

- Vertical privity: at least 3 situations in which its absence may prevent enforcement of the covenant:

o Transfer of less than predecessor’s full estate A owns Blackacre in fee simple absolute and transfers to A2 a

leasehold estate, life estate, defeasible fee, or another estate less than fee simple. A2’s land is not bound by the covenant.

o Adverse possessors A and B enter into a covenant. Then A’s land is acquired by A2 by

adverse possession. A2’s land is not bound by the covenant.o 3rd party beneficiaries

A and B enter into covenant and it is stated that by A enforcing the covenant against B, C’s land is benefitted

Some courts allow this; others don’t

- 3rd partieso There may be 3rd party beneficiaries but not 3rd party burdeneeso Runyon case: Court held there were no 3rd party beneficiaries to restrictive

covenantso Majority rule- If 3rd party beneficiaries are explicit, courts will enforce it

(must be a small list of 3rd party beneficiaries; not the whole state)

- Novation- an agreement to release

- Assumption- voluntary K’s under which assignee assumes all obligations of assignor regardless of whether those obligations run with the land

o Does explicitly what running covenants do implicitly

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o I.e., “T2 agrees that T2 is liable for whatever T1 is liable for during the leasehold” (promise by T2 to become personally liable on the lease covenants)

- For the L, assumption agreements are better than running covenantso They can apply to all of T’s covenants, in the lease, not just those that

touch & concern the lando An assumption agreement survives a reassignment by the assignee, while

running covenants do not. Running covenants do not if that state requires horizontal privity

- When you’re suing in equity rather than at law, you cannot sue for damages.o Injunctive relief is often what is sought

- Ex.- T1 assigns to T2, who later assigns to T3o If T2’s liability was based solely on the fact that T2 held the leasehold

estate (and hence that the burden of the rent and other covenants “ran to” T2), then T2 could get rid of the liability by reassigning the estate to T3.

o T2 would still be liable for any unpaid rent or unperformed duties that accrued while T2 had the estate, but not for any matters accruing after the resassignment.

- Ex.- Lease provides that L’s consent must be obtained for any and all assignments. T1 assigns to T2, w/ L’s consent, although T2 does not assume T1’s lease covenants. Now T2 assigns to T3 w/o obtaining consent. Is T2 still released from any further liability?

o Majority rule- Yes, because even an unconsented assignment is still an effective assignment. Assigning w/o consent may be a breach of original lease covenant not to do so, but it still actually passes the estate to T3.

L’s only remedies are a claim for damages (very hard to establish) against T2 or a termination of the lease (not desirable for L- creates a vacancy)

o Minority rule- No. The assignment is void ab initio.

- Ways for duties under an assumption to endo By a natural termination of the property interest (end of the leasehold)o T or assignee breaches a condition in the lease, allowing L to terminate ito T becomes bankrupt, and bankruptcy court permits a rejection of the lease

- Assignments, subleases, and covenants:o Assignments- If no horizontal privity required, covenants will touch &

concern and therefore run w/ the lando Subleases- Benefits/burdens do not run w/ the land because there is no

privity (vertical or horizontal) Subtenant cannot get damages for breach of covenant made by L

because benefits don’t run (since transfer or full estate is not made as it is in assignments)

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L cannot recover damages against subtenant for breach of covenant made by original T because burdens do not run

But subtenant has strong interest in upholding the covenants because L can terminate the lease w/ original T which terminates sublease as well

Sublessors/sublessees can still recover in equity (no privity required); remedy- injunction

- Exception where covenants that run are not enforcedo A covenant can begin to violate public policy if the surrounding area

changes in ways that are so radical in nature that the original purpose of the covenant has been defeated (Tippecanoe)

o Generally, covenants that restrict business activity do not violate public policy

Covenants at law between fee simple owners

Externalities- Land generates externalities: economic benefits and detriments that fall upon

other nearby land ownerso Ex.- a run down house makes the property value of surrounding land

decrease; a luxurious house raises the value of surrounding land- Coase theorem- If a group of landowners can and do negotiate a K restricting land

use to control the impact of externalities, the law should enforce it because it will increase the overall wealth of society

o Ex.- Homeowners all pool their money to give to x so that x doesn’t build something he wants to that will decrease the value of homeowners’ properties

o Homeowners pay less (strength in numbers) and x gets moreo This burden of not building runs w/ the land and is enforceable

- Where a covenant attempts to regulate externalities, courts will often try to enforce it

- Where a covenant does not purport to regulate externalities, courts are much less likely to enforce it

- Ex.- Cul-de-sac w/ 9 houses at $100,000. 1 property owner wants to put in a Quick-E-Mart, which would increase that property value by $200,000 but decreases the other houses to $80,000 because of traffic, etc.

o Before Mart: whole area = $900,000o After Mart: whole area = $840,000o There is a $60,000 interest in keeping it all residential. So each house has

to pay $12,500 to make up for the Mart staying as a house. Their properties are then essentially $87,5000 (100,000 – 12,500).

o Could be the opposite also: Quick-E-Mart pays off other residents to allow him to build the store

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- Back-fence agreement- Contractual covenant between neighbors; no horizontal privity because there is no exchange of property estates

o Just an agreement about property they already haveo Back-fence agreements do not run at law (but generally enforceable in

equity)o For a back-fence agreement to run at law: Parties can sell the house to a

strawman w/ the covenant and then sell back to owners w/ the mutual covenant

This would satisfy the formal requirement of horizontal privity

- Covenants to pay money (other than rent)- usually arise w/ regard to condo fees, homeowner’s association fees, etc.

o Covenant to pay money- an affirmative covenant (promise to do something)

Negative covenant- promise to refrain from doing somethingo An affirmative covenant to pay money has to run at law (cannot run in

equity). In equity the remedy is an injunction, not damages. Cannot vindicate an affirmative covenant to pay money by an

injunction.- At traditional common law, traditional affirmative covenants to pay money other

than rent did not run. They were personal covenants because they did not touch & concern the land

- Ex.- All owners of single lots and timeshares are members of the homeowner’s association, which owns the recreational areas. They all have easements on the recreational areas. They collectively decide how it will be maintained, etc.

o They don’t have a license that can be revokes. They have an easement.o Each owner is burdened by the obligation to pay money. Each owner is

also benefitted, because each has a property interest in the regulated property, and each is a member of the homeowner’s association that owns that property.

- Ex.- Same facts, but owners have licenses to use the recreational areas, not easements.

o Because owners have no easement rights in the amenities financed by the paid money (merely have a revocable license to use the amenities), the covenant to pay amenity fees does not touch & concern the land. The covenants are personal covenants and therefore do not run with the land

- Homeowner’s association- Developer buys a bunch of land and records for the whole of the original property a set of CC&R’s (covenants, conditions, and restrictions); bylaws

- Unit owners have right to “opt out” of the association and by so doing, to avoid paying dues

o Modern trend is to say that as long as it makes sense, the court will allow the opt out.

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Types of owner’s associations- Planned unit developments

o Benefitted/burdened lando Affirmative covenants to pay assessments touch & concern: generally only

when unit owners have easements to use the common areas (they don’t have to be gated communities)

- Condominiumo Individual unit owners own the interior of their own unit, and all unit

owners own the common areas as tenants in common.- Cooperative apartment

o Everyone owned shares in the building. You owned the interior of your unit as a shareholder, and you also owned the common areas as a shareholder.

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Equitable servitudes

- Equitable servitude- a restrictive covenant that runs in equity- (reciprocal negative easement = implied covenant)- Remedies:

o At law- money damages available, and almost always an injunction as well

o In equity- no money damages available- Backfence agreement- will not run at law, but because privity is no longer

required, if the other requirements are met there may be an equitable servitude

- Elements of an equitable servitude:o (1) Intent to burden/benefit future landownerso (2) Touch & concern the lando (3) Actual or constructive notice

Best way to give notice- Record the covenant in the deed (recorded in the office of public records). Then anyone taking the property has constructive notice that the covenant runs.

3 ways to acquire notice: Actual notice- i.e., seller of land informs buyer before

closing that there is a covenant restricting its use Constructive notice- principle that documents in the chain

of title to a parcel of land that are recorded in the public records are deemed to be notice to anyone acquiring the land

o To be considered in the chain of title, the document must be recorded in the office of the recorder of deeds and must be indexed in that office in the name of the owner of ht burdened land so that a later title searcher can locate it

Inquiry/appearance- Existence of some covenants may be apparent from the appearance of the property

o This theory of notice is only applicable where covenants are imposed in a relatively uniform manner on many lots, so as to create a “common plan or scheme”

o (no privity requirement; notice instead)o (3rd party beneficiaries- in gross)

- As long as you’re willing to live w/ an injunction rather than money damages, you can achieve restrictive covenants that will run, w/o having to worry about creating horizontal or vertical privity.

o At law, neighbors would have to sell a property to each other and then sell it back for the covenant to run

- 3rd party beneficiaries can gain enforcement of equitable servitudes (cannot sue at law for violation of a covenant)

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o A 3rd party can enforce an equitable servitude as long as the burdened party has notice of who the 3rd party beneficiaries are, and the world of 3rd party beneficiaries is limited and coherent.

o Most jurisdictions require 3rd party beneficiaries to have some connection to the land. (not requiring this allow dumb & frivolous lawsuits, and could end the marketability of the burdened property)

o Some jurisdictions- 3rd party beneficiaries who have no attachment to specific land are allowed to recover

- There are recording acts in all states that provide that if a covenant is not recorded in the public records, a person who buys the land for value, and who has no notice of the covenant, will take the land free and clear of the covenant.

o So the recording acts’ rules, which apply to covenants whether in law or in equity, are almost identical to the court-made notice rule in equitable servitude cases.

- The covenant should expressly state what land is not only burdened but benefitted by the covenant

o If burdened landowner were to begin negotiations w/ benefitted landowner to modify the covenant or abrogate it, the only way for him to know who to negotiate w/ is by giving him notice of what land is benefitted by the covenant.

Common plans and schemes- Tentative definition of a common plan- a group of lots or parcels that are

clustered nearby one another, and most or all of them are burdened by similar or identical covenants

- Identifying the benefitted lando If not w/in common plan of lots, then usually not held to be benefittedo Where no express statement of benefitted land is made, and party

imposing the covenant continues to own some adjacent or nearby land, only that land is usually treated by courts as benefitted

- Hypo: Development w/ 8 houseso Developer should record a Declaration of CC&R’s for the whole property,

but things don’t always work out that wayo Developer sells lot 1 to buyer 1 on January 1, lot 2 to buyer 2 on February

1, etc. Lot 3 can enforce against lot 1. Lot 3 was still part of the

remaining property when lot 1 was sold. Lot 1 cannot enforce against lot 3. Lot 1 cannot enforce because it

was not part of the developer’s remaining property when lot 3 was sold (“This is weird and stupid”)

o Here comes the common plan/scheme: The parties know who the members of the community or

subdivision are. The common scheme should put the purchasers on notice. Everyone in the subdivision should be considered a 3rd

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party beneficiary. Everyone gets the same benefit from being party of this community.

- Negative reciprocal easements = implied covenantso Implied restrictive covenant- one or more of the elements of an

enforceable restrictive covenant is missing (i.e., a writing). If there is no writing, the courts in certain circumstances may imply one.

o Implied covenants are very rare and limitedo Implied covenants may be fair where all of the properties include pretty

much the same structures. In these cases, it would be a gross injustice not to imply the

restrictive covenant for the one person who did not have the covenant in their deed.

“Notice from neighborhood appearance” Courts seem to require that at least ½ of the properties must

have restrictive covenants for there to be notice from neighborhood appearance.

o Statute of Frauds applies to restrictive covenants (creation and conveyances of interests in land)

They can be “implied” w/o a writing in the notion of estoppel (reasonable, detrimental reliance by an innocent party)

- The declaration: a better method of imposing covenantso Declaration of Covenants, Conditions, and Restrictionso Developer prepares, signs, and records in the public records a declaration

of covenants. Essentially a statement of the covenants, but it has only one party

(the developer)o Later, as individual lots are sold and deeds are executed, each deed will

contain a statement incorporating the declaration by reference and making it part of the deed.

o Well-crafted declaration will specifically identify the burdened and benefitted land, making unnecessary any reference to the “common plan” concept for that purpose. Will also contain clear language concerning intent to run, will spell out remedies for breach, and may include detailed provisions for enforcement by an owner’s association.

- 4 distinct uses of the common plan concept in subdivision covenants:o (1) Common plan defines the extent of the benefitted land; land outside

the common plan isn’t benefittedo (2) Common plan allows courts to include, as part of the benefitted land,

lots that had already been transferred by the developer to other owners at the time the covenant was imposed on the burdened lot in question

o (3) Common plan allows courts to “imply” a covenant on a lot which had no express covenant imposed upon it by the developer

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o (4) Common plan, as carried out by actual and visible construction of houses or other improvements, gives notice of implied covenants to persons who buy lots burdened by such covenants.

Managing covenants (interpretation, amendment, and termination of covenants)

- Covenants are narrowly interpreted.o Courts don’t want to restrict use of land where they don’t have to. The

people writing the covenant had the opportunity to prohibit what they wanted. They should have been clear about it.

o Traweek v. Lincoln- A covenant will only be given effect where the intent of the covenant is clear and unambiguous.

“No structure shall be erected, altered, placed, or permitted to remain on any residential building lot other than one single family dwelling, not to exceed two stories in height and appropriate out-buildings.”

Court narrowly construes the covenant, ruling that it did not prohibit Traweek from placing a mobile home on his lot (covenant was ambiguous as to whether it allowed mobile homes on residential lots in the subdivision)

o When drafting restrictive covenants, be specific and define terms (You know that the covenants will be construed narrowly)

- Covenants prohibiting construction vs. useo When drafting, make sure you include both the terms “construction” and

“use” and define the terms. If you don’t clever people will get around the covenant.

o “Construction” or “erection” vs. “use” or “purposes,” etc.

- If a whole town were restricted in using their properties only for use as ‘single family homes,’ there would be no place for group homes for disabled people, etc.

o This brings up constitutional questionso Some courts say these group homes are commercial activities; others say

they are residential activities

- 2 standards by which restrictive covenants are judged by the courtso Reasonable standard

Minority rule today The court will independently review restrictive covenants to

determine whether the court thinks it is reasonable. Objector must prove that it is more burdensome than beneficial to

the affected properties (as a group) or violates fundamental public policy

o Business judgment rule Very much the majority rule today As long as there is some rational basis for a given restriction, and it

does not violate the constitution, then the court will uphold it.

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Much more covenant-friendly; will uphold covenants more often “As long as the covenantors thought it was reasonable, then it will

be upheld”

- Waiver/abandonment/acquiescence- The idea that if nobody attempts to enforce the covenants in the face of a substantial number of violations, the owners must intend to give up their right to enforce.

o Ex.- A client comes to you and wants to enforce a covenant prohibiting “additional structures” against neighbors’ kids’ play hut

The argument is that if we let the kiddy hut stand, it’s a slippery slope. If we allow this, then other violations (i.e., sheds and detached garages) will also be allowed, because of the waiver doctrine

o Waiver is determined by scale. There are slight violations and substantial material violations.

Pietrowski v. Dufrane- D argued that P was also in violation of the covenants, so P waived the right to enforce the covenant

Court rules that D did not waive the right to enforce. P’s violation (building a shed) was a slight violation. D’s violation (detached garage) was a material violation.

- Changed neighborhood conditionso Defense where D argues that numerous violations of the restrictive

covenant in a subdivision demonstrates a change in neighborhood conditions (change in the character of the neighborhood), and this constitutes an abandonment of the restrictive covenant

o The changed neighborhood conditions doctrine is a very hard argument to make. D would have to show, for example, that the residential character of the neighborhood is completely gone.

o If there is a changed character of the surrounding community, so that it is now a very commercial area, that is irrelevant.

CC&R’s only apply to the subdivision. Exception- Government takes some properties and builds an

elevated railroad running over and through the neighborhood. Courts have held that the character of the neighborhood in

this case has changed significantly. Even though there was no waiver or abandonment by the landowners, the neighborhood has changed.

Landowners would argue that the government took the benefit of the restrictive covenant (a property interest), but the government would not pay for this.

- Important to include provisions in the CC&R’s that allow for a voting waiver procedure for voting on waiver or amendment of the covenants(i.e., 1 vote per lot, and need 2/3 approval)

o If a voting mechanism is not included, then unanimous agreement to waive or amend is required (usually at least 1 person will holdout)

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Theories for opposing enforcement of covenants- Changed neighborhood conditions- Waiver/abandonment/acquiescence- Unclean hands

o P should be denied relief if P is also in violation of the covenants.o Defense may fail because P’s violation is too minor or trivial, or because it

is a violation of a different aspect of the covenants.- Express waiver or release

o If everyone who has the right to enforce a covenant expressly relinquishes that right, the covenant is no longer enforceable.

- Lacheso The failure for an unreasonable time to assert a known equitable right, to

the prejudice of the person against whom the right might be asserted.o If violation of the covenant is obvious and no action is brought for several

years, laches might be found. Key is to show that the delay as such has injured the violator.

- Estoppelo Very difficult to satisfy requirements of the estoppel defenseo “For estoppel to have occurred, there must be evidence that P’s made a

false representation to D’s, that P’s knew the true facts, that D’s were ignorant of the truth, that statement was made w/ intent that D’s act on it, and that D’s did act on it”

o In most cases, there’s no evidence that P knew of the covenant and represented that he would not enforce it. (silence during time of construction isn’t enough)

- Mergero If the same person acquires ownership of all of the benefitted and

burdened land, the covenant is extinguishedo The covenant will not be revived even if that person later sells some of the

land to others.- Expiration

o A covenant may by its terms have a limited duration.o (A covenant may state that it will terminate on the occurrence of some

stated condition in the future, much like a fee simple determinable)- Taking in eminent domain

o Power of gov’t to take land plainly includes the power to disregard preexisting restrictive covenants once the land is acquired.

o Gov’t might acquire a subdivision lot, restricted to residential use only, and construct and operate a post office on it.

o Argument against compensation for benefitted landowners of the covenants- Concern that landowners might enter into covenants in anticipation of an expected taking by the gov’t to get compensation money

Also, problems calculating damages- Tax sales

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o Most states have statutes that expressly or by judicial construction preserve the covenants despite a tax sale. (may break down common plan)

- If original developer of the subdivision sells off all of the land, then he has no more property interest and cannot sue to enforce covenants.

o If he retains some land, then he would presumably be able to enforce covenants in court.

o A few courts have allowed developer to enforce equitable servitudes in gross where developer gave himself these rights in the CC&R’s (very rare)

- Amendments: The courts defer to anything in the original bylaws in the Declaration over anything agreed on later (any acts agreed upon by owner’s association)

o If a later agreed on act is in violation of the original bylaws in the Declaration, then courts will find that the act is void.

o If the amendments are uniform under a reasonable and rational standard, then courts are more likely to approve them

- Architectural review boards- before any new buildings can go up, they need approval of the architectural review board of the subdivision

Easements and profits

- Easement- a right to enter, but not to possess- Profit- a right to use, and to take something off of the estate (easement plus an

extraction right)o Easements and profits are interests in land to those who hold them.o They give the holder a right to use or take something from the land (not a

right of possession)o Easements and profits are also a burden (encumbrance) upon another

person’s estate.o Estates give rights of “possession.” Servitudes give rights of “use.”o Ex.- easements for driveways, roads, rail lines, walkways, and pipe and

other utility lineso Ex.- profits to remove from the soil substances like minerals, gravel, and

timbero Easements & profits- the right to exclude others extends only so far as to

prevent their interference w/ the servitude’s particular purposeo To determine if interest is an estate or servitude, courts look at the total

circumstances: labels the parties used, kinds of activities in which grantee may engage, etc.

o Large majority of courts agree there can be a profit in fish and game, even though the landowner does not own the wild creatures.

o Easements have a presumption of eternality.

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Easements & profits vs. licenses- A license is terminable at the will of the creator landowner (license is a revocable

permission)o An irrevocable license is really an equitable easement. (equitable because

there would be nothing written down; implied by courts)o If a license is irrevocable, then it’s a property interest (not a license)o IL court recently held that a Cubs season ticket holder held a revocable

license granted by the Cubso A license will become irrevocable (equitable easement) where:

Intent to create a formal legal easement, plus failure of formalities, plus reliance; or expenditure plus reliance; and

Grantor has full knowledge that reliance will occur- Easements & profits exist for a determinate time or “perpetuity”

o I.e., “an easement to hunt for 75 years” (“a license to hunt for 75 years” would be an easement that was named wrongly)

- Easement appurtenant- has a dominant estateo An easement or profit appurtenant is one whose benefits serve a parcel of

land. It serves the owner of that land in a way that cannot be separated from his rights in the land.

o E.g., walkways, driveways, utility laneso Courts prefer to find appurtenant easements over easements in gross

because the scope is easier to identify- Easement in gross- does not have a dominant estate

o An easement or profit in gross is one whose benefits serve their holder only personally, not in connection w/ his ownership or use of any specific parcel of land.

- (Easements and profits always have a servient estate, whether appurtenant or in gross)

- Easements- presumption is to find an appurtenant easement (easier to determine what kind of a use right there is)

- Profits- presumption is to find an in gross profit (profits tend to be in gross, either for personal or commercial purposes)

Negative easements- Negative easement is like an affirmative easement in that they both impose a

burden or servitude upon grantor’s land.- Negative easement- gives its holder a right to require the owner of the burdened

land to do or not to do specific things w/ respect to that land but not to go upon or use it (i.e., “scenic” and “conservation” easements)

o Easements of light, air, and view (turn out to be exactly like restrictive covenants)

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o Negative easements are just another way to enforce a backfence type agreement (could use a restrictive covenant, equitable servitude, or negative easement)

- Not clear whether “scenic easements” should be regarded as common-law negative easements of prospect or as equitable servitudes

- Conservation easement- nonpossessory interest of a holder in real property imposing limitations or affirmative obligations the purposes of which include retaining or protecting natural, scenic, or open-space values of property, etc.

o All states now have statutes authorizing conservation & preservation easements

Grant and the effect of informal grant or license- Most easements are created expressly by an instrument in writing (at common

law, called a grant)- There remains a requirement of a written instrument for grant of an easement- Granting an easement- giving an easement- Reserving an easement- keeping an easement- Drafting- instrument should say that grantor or testator “grants an easement (or

profit) for the purpose of x to the grantee”o Avoid words of grant like “convey and warrant” or “quitclaim and

convey” (suggest estates in land)o The thing conveyed should be described as an “easement” or “profit” or, if

in doubt, a “right to use” but never as a “strip of land,” “right of way,” etc.

Formation of easements- Grant of an easement has to be more precise than grant of a fee simple interest

(easement is just for use of a certain location)- The use is what is granted. The use must be described specifically (scope of the

easement- how it may be used, under what circumstances, etc.)- Possible expiration (presumption is perpetuity)- Should set out who will be responsible for maintaining the easement (i.e.,

permission to pave driveway, obligation to pave driveway)

Easements by implication

- Creation of easements by implication- Easements may be created in connection w/ a written conveyance even though there is no express language to that effect.

- The easement arises from the facts and circumstances surrounding the transaction rather than from the language of the conveyance.

- 3 doctrines of easements by implication:o Easement implied from prior use (or “easement implied from a quasi-

easement)o Easement implied from necessity (or “way of necessity”)o Easement implied from a plat (a subdivision)

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- Hypo: Owner of Blackacre sells front half of its property to Greenacre, and has always used the part of the property conveyed to Greenacre to access the roadway, and owner of Blackacre was careless and forgot to expressly reserve an easement.

o Good case for an implied easement by prior use: Prior use gave buyer notice that seller would continue to use the driveway.

- If you can show prior use, then you don’t have to show absolute necessity.- General test for an implied easement by prior use- Is it reasonable to find an

easement by prior use under the circumstances?

- Majority (and traditional) rule for implied easements by necessity- No easement by necessity to be found unless there is a true and absolute necessity to find the easement.

o Some true necessity courts will even go as far as only finding true necessity where the necessity was created by a party other than the person seeking an easement.

o Traditional/majority rule- courts require strict necessityo Minority rule- Some courts now allow reasonable necessity (Hurlocker v.

Medina)

Easement by necessity test (from Boyd v. Bellsouth Telephone)- (1) Unity of title

o Cannot combine small parcels to make up one big parcel unless a strawman is used

- (2) Severance of the title- (3) Necessity of the easement

o Requires a showing of more than convenience- Easement by necessity is based on the presumption that grantor intended grantee

of a landlocked parcel to have access to his property, a right recognized as essential to the enjoyment of the land.

- Some courts allow easements by necessity but require compensation to be paid to the servient tenement of the easement (for loss of use rights by the easement)

o Constitutional takings problem- Requiring a lot owner to give another lot owner an easement w/ compensation seems to be a taking for private (not public) use.

o Boomer v. Atlantic Cement- seems to be an easement to pollute w/ payment of compensation

Easement by pre-existing use test (from Boyd v. Bellsouth Telephone)- (1) The dominant and servient tracts of land originated from a common grantor- (2) The use was in existence at the time the original grantor severed the tracts- (3) The use was apparent/obvious, continuous, and necessary for enjoyment of the

dominant tract.

- Easement implied from prior use, once established, becomes permanent.

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- Easement implied by necessity terminates once reasonable access to a public road becomes available.

o Easement by necessity ends when the necessity ends.

Easements by prescription

- “Prescription” is the word in the easement process that means “adverse possession”

- Prescription and adverse possession are essentially the same doctrine today. But 2 of the elements differ somewhat:

o Continuous- i.e., you don’t have to use a right of way for 17 years straight Continuousness is still relevant in prescription. You have to

continue to use the easement as a reasonable person would (just like how a reasonable person would use the land for adverse possession; not required during frigid winter months)

Continuousness will help establish the scope of the easement (e.g., to be used twice a day, not to be used as a racetrack)

o Exclusive- This element is not relevant for easements by prescription.

- To establish a prescriptive easement, P must prove use of the servient land that is:o (1) Open and notoriouso (2) Over a uniform routeo (3) Continuous and uninterrupted for (statutory number of years)

For wild/unenclosed lands, mere use is not generally sufficient to give rise to presumption that the use is adverse (because owners are not in position to detect trespassers)

o (4) Adverse to the owner of the land sought to be subjected Must be adverse/hostile use; not permissive use

o (5) With the knowledge of such owner at a time when he was able in law to assert and enforce his rights

o (Drake v. Smersh)

Public prescriptive easements- A public prescriptive easement arises in the people.- In many states, a prescriptive easement may be obtained based on long continuous

use by the public.- To establish a public prescriptive easement- public must show that the use and

enjoyment of the land was exclusive, adverse, continuous, uninterrupted, open and notorious, and under a claim of right for the full prescriptive period.

- Once obtained, the prescriptive easement belongs to the public (not an individual)- P must prove continuous use by the public in general, not use by the P itself or by

any individual member of the public.o Hard to prove continuous use by the public; the public is a bunch of

people (Why is person A “the public” rather than simply “person A”?)

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Scope of easements

- Scope of an easement- how much use right is covered in the use (i.e., how often it may be used)

- Surcharging the scope- using more use right than is allowed (misusing an easement)

- Courts want easements to have a defined scope.

- Brown v. Voss- Court rules that using a driveway easement for an additional adjacent lot owned by dominant landowner is a per se surcharge, even though as a practical matter the easement is not being used any differently than it was before

o Generally, an easement appurtenant to one parcel of land may not be extended by the owner of the dominant estate to other parcels owned by him, whether adjoining or distinct tracts, to which the easement is not appurtenant.

In this case, extension of the use of the easement for the benefit of a nondominant property constituted a misuse of the easement.

o Hypo: Original owners of lot B can use lot A to get to lot B. Someone buys lot B and then puts up 6 condo units on lot B.

This would not be a per se surcharge of the easement (unless the easement said “lot B only to be used as a single family dwelling”), but there would surely be a surcharge.

Courts in their equitable powers would very likely find a surcharge of the easement (driveway being used by 40 cars instead of 2)

- Normally it is a per se surcharge of an easement to add a parcel to the dominant estate and then attempt to extend the benefit of the easement to the additional parcel.

o This is the case even though there is no cumulative increase in the use of the easement.

- Hypo: O grants D, an adjoining landowner, an “exclusive easement” for ingress and egress and for the placement of utilities over O’s land.

o O, grantor of the easement, still has a right to use the right of way over his own land.

o If the grantor were not able to use it, then the easement owner’s interest would look very much like a fee simple (exclusive right to use and possess), not merely a use right

- In the absence of explicit language to the contrary in the grant, what the courts will find is a general easement.

o Where a general easement is found, courts will allow reasonable use based on what they can determine from previous use.

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o Reasonable use can adapt over time (Cameron v. Barton- court found ‘slaughterhouse use’ was generally the same use as ‘highway use’

- Hypo: Easement appurtenant to Blackacre states simply that it is “for roadway purposes” or “an easement for ingress and egress from Blackacre.” Easement holder now proposes to install utilities in the easement to service Blackacre. Servient owner tries to prevent the installation.

o Courts have generally been inclined to favor such an expanded use of the easement.

- Test for determining the scope of a prescriptive easement (Glenn v. Poole)o To determine whether a prescriptive easement is overburdened the

factfinder must balance the prior use of the right of way established during the prescriptive period against any later changes in the method of use that unreasonably or unforeseeably interfere w/ the enjoyment of the servient estate by its current owner.

o Overburdening may occur when the change in use manifests itself in some greater independent burden on the servient estate, but a mere increase in the volume of traffic does not constitute a per se overburdening.

- Responsibility to repair an easement:o Default rule (absent expressions to the contrary) – Courts will assume that

the dominant easement holder has a responsibility to keep the easement in sufficient repair to use it. (Pasadena v. California-Michigan)

- There is a presumption that easements are non-exclusive (easement holder’s rights are not exclusive)

- Appurtenant easement passes automatically w/ dominant tenement (even if not mentioned in conveyance)

- Easement in gross is not transferable unless it is for commercial purposes.

- Hypo: A has an easement to lay pipe into a house. B wants an easement to run fiber optics into the house. Who does B have to contact to get an easement?

o The landowner. All landowner has given is a non-exclusive easement to the pipe-layer. Landowner can still determine what goes into landowner’s house.

o Landowner has not given the holder of the easement the right to grant away an easement on landowner’s land (easements are presumed to be non-exclusive)

- Commercial easements are presumed to be transferrable/devisableo If a water company has an easement, then it can transfer that easement for

water rights to one other company.o The taker must take the same use of the easement

- Traditional rule- “one stock” rule

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o “The 2 assignees could not work severally, but together w/ one stock, or such workmen as belonged to them both.” (pg 845)

o Modern rule- As long as the actual activities for which the easement is being used is not surcharged, then there is no surcharge.

- Massachusetts rule (MPM Builders v. Dwyer) – If following the old explicit scope of an easement impedes development, as long as there is now a reasonably similar easement, then the business wins.

o Minority rule- Wisconsin rule- If there’s an explicit description of the scope of an easement, then

that wins out. That’s what the easement says.o Majority rule

- Glosemeyer v. US (2000)o RR companies had easements to cross Glosemeyer’s lands for railroading

purposes, but they didn’t own the land. Gov’t tries to transform the RR easements into bike path easements.

o Scope of the easement: was this a taking?o This is a specific easement (not a general easement) – specifically for RR

use.o What the gov’t wants to do w/ these easements is not included in the scope

of these easements. If the gov’t wants to transfer the easements into biking easements, this would be a different use of the easements, and compensation must be paid for that.

Extinguishment of easements

Ways an easement may be extinguished- Merger

o If dominant and servient estates merge, the easement is extinguished (You can’t have an easement in your own property)

- Abandonmento Actual, real abandonment (not constructive)o Mere failure to use an easement over a period of time will not constitute

actual abandonmento Submitting to certain things over time would seem sufficient (letting a tree

grow, or a deck to be built)o Abandonment of a fee simple requires a writing, but abandonment of an

easement does not.- Extinguishment by the end of a natural term

o “An easement for 15 years”o Lessee gives an easement and lessee’s lease ends (Lessee can’t give an

easement in lessor’s interest)- Estoppel

o Reverse of reliance to establish an easement

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o Dominant owner says to servient owner, “I don’t need that right of way anymore.” Then servient owner builds a pool over where the easement used to be. Then dominant owner sells to another, who looks at the deed and says, “Hey, we have an easement”

Analysis of reliance- Condemnation

o When servient land is taken under power of eminent domain for a purpose which is inconsistent w/ the continued exercise of easement, the easement will be extinguished.

- Death of the person who has the easemento For personal in gross easements, the natural termination point is the death

of the person who has the easement.- Release

o Easement owner decides to release the easement, and puts it in writing.- Prescription

o You can get rid of an easement by prescription.o Hickerson v. Bender- Benders defeated an old easement by prescription.

They had built a wall, a deck, barbecue, etc. over where the easement used to be.

- Tax sale of servient estateo The foreclosure will normally wipe out all interests in the foreclosed real

estate, even those created prior to the tax delinquency.- Mortgage foreclosure

o An easement is terminated when a senior mortgage is foreclosed.

Eminent domain

- Purpose of Takings Clause: “To bar gov’t from forcing some people from bearing public burdens which in all fairness and justice should be borne by the public as a whole”

- Paying “just compensation”o Gov’t is stingy about paying incidental expenses (i.e., moving expenses),

stingy about paying full market value for a property, etc.

Physical takings vs. regulatory takings- Physical takings- Gov’t takes your property and turns it into a nature preserve

o Gov’t owes you the value of Blackacre- Regulatory takings

o Gov’t sends you a letter and says you can no longer use your property for hunting or fishing, and you have to shut down Blackacre estate, and you essentially cannot use 80% of it.

Whether cases like this should be counted as regulatory takings A “mess of balancing” to decide whether gov’t owes you any

moneyo The only way you get compensation for a regulatory taking is if you are

deprived of 100% of the use of the property.

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The public use problem- Background rule- Government should not take, even if it pays compensation,

except for public use.- Originally this meant actual public ownership, but also gov’t purposes that were

privately owned (i.e., a privately-owned post office)- Then common carriers were added. These are also considered a public use.- Kelo case (2005) – If a state gov’t says there’s a public use, then there’s a public

use. (very controversial case)o Supreme Ct permitted, as acceptable “public use,” the transfer of non-

blighted property from private home owners and businesses to private real-estate developers for resale to other private entities as part of a “redevelopment plan.”

o Court held that economic development represented a sufficient public purpose to permit a taking, and deferred, essentially completely, to legislative declarations of public purpose.

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