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Property Outline

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TipsCHAP IA. Conceptions of Property: 31) Right to thing: Jacque2) Bundle: Hinman 43) Philosophical PerspectivesB. Trespass/Nuisance1) Nuisance2) Exclusion v. Governance 53) Coase TheoremC. Property and Equity 61) Use of equity: Injunction/Bldg Encroach2) Property Rules and Liability Rules (Calabresi) 7D. Restitution 81) Mistaken Improver

CHAP 2: Original Acquisition 9 1) First Possession: wild animals/open access/abandoned property2) Discovery 103) Creation: News/Publicity/Patent 114) Accession: Doctrine/Increase/ad coelum/accretion/fixtures 125) Adverse Possession: Exclusive/O & N/Adverse/Continuous 13

CHAP 3: Values subject to ownership 15 1) Personhood: Human body/artists’s rts/cultural patrimonyB. Academic Perspectives: Demsetz internalizing/Radin personhood/mkt inalienability162) Public Rights: Navigation Servitude/Public Trust/Custom/Easement/Commons173) Electronic Communication: Radio Waves/Internet/Trademark 19

CHAP 4: Owner Sovereignty and Limits 20A. Protecting Right to Exclude1) Criminal Laws: Larceny/Trespass2) Civil Actions: Trespass/Ejectment/Nuisance-Replevin/Conversion/Trespass21 tochattel3) Self HelpB. Exceptions to right to exclude: Necessity/Custom/Public Accomodation 22

Laws/Antidiscrimination Laws/Racist trespass C. Other Powers of Sovereign owner: Licenses/Bailments/Abandon/Destroy/Transfer24

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CHAP 5: Forms of Ownership 28A. IntroB. Divisions by Time: Present Interests: Fee Simple/Life Estate/Defeasible FeesFuture Interests: Grantor/Grantee/VestingC. Maintaining the System: Conservation of Estates/Estate Planning/Numerus Claus30D. Mediating Conflicts over Time: Waste/Valuation/Restraints on alienation/RAP 32E. Co-ownership and Mediating Conflicts b/w Co-owners: TIC/JT/TBTE/CP 35

Legal Remedies: Partition/C & A/Severance of JT/Bank AcctsF. Marital Interests: Distribution in case 38

CHAP 6: Entity Property 39A. Possessory Interests1) Leases: Types/Indep Covenants/Dep/ Covenants/Transfers/Assignment/Sublease/Rent Control2) COOPs/Condos 46B. Nonpossessory Interests: Trusts 47

CHAP 9: Law of Neighbors 49B. Servitudes: 1) Easements 492) Covenants 543) Equitable Servitudes 56C. Zoning and Other Land Use Regulation 571) Zoning: Goals/Policy/Exclusionary/Religious Land Use

CHAP 12: Takings 58A. Eminent Domain 591) Intro2) Public Use Requirement3) “Taking”4) Regulatory Takings 605) Just Compensation 61 6) Denominator Problem7) Exactions Problem: conditions imposed 628) Temporary Takings9) Litigating Takings Cases 63

Tips: Do not only write simple answer Broaden possible options, what could parties ask for and what could courts do,

even if they won’t work out. Explain options to provide hooks for all you know on topic. Say we have a number of options and can bring in policy and doctrine arguments

for each If think something is essential to assume, say “assuming that ___”.

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Apply logic to new situations Speak as if you know you’re right. Be certain of answers The best outlines try to organize the material around such arguments,

justifications for a body of law like AP, and efforts to change the law, as well as the obvious doctrinal distinctions that we need in order to grasp the material (like the requirements of open possession, claim or right, etc.).

-do not have to cite cases but can explicitly talk about cases to compare or inform policy argument on short questions

Major Issues in the course:Which institution should resolve: legislature or judiciaryWhat is the bundle of rights in property?Rule like fashion or case by case basisTrespass/NuisanceExclusion/GovernanceParallel issues from the case law Fixed rule/Flexible standardsTransaction costsEnforceabilityCoasean argumentUnintended consequences Ex Ante/Post AnteProperty/Liability RulesOpen Access problemsNumerus Clausus

Policy Question:Key will be to structure your answer. You can do this according to what you

view as important themes/problems from the casebook, or by each clause in the proposed policy in terms of arguments for and against and with a sense of whether the analysis is different for joint tenants or tenants in common

CHAPTER I What is Property?A. Two Conceptions of Property1) A right to a thing, good against the world (essentialist, exclusivity

i) Exclusion Theory: management of resources are delegated to the owner(a) Right to privacy(b) Protection (to prevent self help)(c) Expectation (people can have most efficient use of their land)(d) Jacque v. Steenberg Homes, Inc: Absolutist view of right to exclude,

not allowed to cross another’s property to deliver mobile home. Right to exclude is essential stick in bundle of property rights and nominal damages are not enough to deter so need punitive (100,000). Considerations: self-help avoidance, history with adverse possession experience, audacity of Steenberg. Good example of Property Rules (Calabresi) with entitlement given to plaintiff.

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(e) Can lead to efficient outcome (Coase) if parties willing to negotiate in good faith.

2) A bundle of rights, with content that varies according to content and policy choices (skeptical)

i) Governance Theory: courts authorize what exactly is allowed to be done on the property

(a) Hinman v. Pacific Air Transport: Court allows planes to go above property, limitation of the right to exclude (trespass, see also easement, tenant). Public and private restrictions to land use. Ad coelum is not taken literally; must have dominion (or capability) over property to have ownership rights. Otherwise absurd results.

Considerations: Reasons to avoid literal reading of ad coelum; tho each is problematic

1. Landowner can only sue for trespass of land they’re in possession of, asserted dominion over. (but owner of land is assumed to be in “constructive” possession of land even not under his control)

2. Requirement of actual harm (Jacques)3. Implied license: by also having benefit from air travel

(takings?, what if somebody doesn’t use)4. Public space: no surface owner has any claim of private

prop rts

3) Conceptions of Property – Philosophical Perspectives(a) J.E. Penner, Idea of Property in Law

i. In rem: rights against the worldii. In personam: bind only specific individuals, party to the

contractiii. Exclusion thesis: right to property is right to exclude others

fro things which is grounded by the interest we have in the use of things (not just the use, nor just the exclusion)

(b) Tom Grey, Disintegration of Propertyi. Meanings of property in law that cling to their origin in the thing-

ownership conception are integrated least successfully into general doctrinal framework of law, legal theory and economics

ii. Discourse about property has fragmented into a set of discontinuous usages, bundle of rights

iii. Restatements definition: Legal relations between person with respect to a thing.

B. Trespass/Nuisance Divide: Trespass requires physical displacement/interest in the land, while nuisance protects use and enjoyment of land against more intangible problems. 1) Nuisance

(a) Nontrespassory invasion that diminishes use and enjoyment of someone’s land

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(b) Substantial and unreasonable interference with private use and enjoyment of another’s land. Includes intentional, unreasonable, negligent or reckless, or results in abnormally dangerous conditions or activities in inappropriate place

(c) Intrusion with large object able to physically displace plaintiff (home, person, vehicle): trespass

(d) Invasion by smaller objects (gas, sound, light waves): nuisance(e) Noninvasive spite fence: nuisance(f) Hendricks v. Stalnaker: Claim that another’s water well position is

nuisance b/c cannot build septic tank due to distance regulations. Considerations:

i. Reasonablenss test, harm caused, recklessness, danger, intentional, malice

ii. Balance of interests test (gravity of harm vs. utility of offending conduct): is water well as essential as septic tank?

iii. Invasion test: does one “invade” the other (here they both do)

iv. Normal use test: which use is more normal?v. Temporal issue: who came first?vi. Neighborlinessvii. Example of governance: parties perceive that their land can

be used either for groundwater extraction or sewage disposal but likely cannot be used for both. If exclusion, could decide whatever they wanted to do with their land.

2) Exclusion and Governancei) Two different strategies for resolving disputes about scarce resource use

(a) Exclusion strategy : decisions about use are delegated to owner who acts as manager of resource. To implement this authority, law allows owner to repel any intrusions without his consent

(b) Governance strategy : Focuses on particular uses of resources and makes particular rules about permitted and prohibited uses. (Societal norms, contracts, government regs, etc)

3) The Coase Theoremi) Ronald Coase, Problem of Social Cost

(c) An argument for how judges should decide nuisance issues(d) There is reciprocity in damages between parties(e) to avoid harm on B would be to harm A(f) Without transaction costs, reach efficient result b/c of bargaining(g) Parties take harmful action into effect b/c factor in opportunity cost of

potential payoff(h) Legal rights/entitlements damage the efficiency(i) So do bargaining problems: holdout/bilateral monopoly (only one

entity can provide the need)/assembly problems (large number of owners)

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(j) Judges should be wary of placing entitlement because transaction costs do exist so if entitlement is inefficient, since bargaining will not work, it will stay there

ii) Resolving Property Disputes by Contract(a) Contractual modifications (Coasean bargains) may be cheaper and

more efficient than litigation (Hendricks v. Stalnaker could have used alternative solutions/compromises)

C. Property and Equity1) Traditional maxim of equity is that property rights enjoy special protection in

courts of equity, such as granting specific performance to enforce contract for sale of real property, even though breach of contract ordinary results only in damages award

i) Injunction: court order to perform act or refrain from act, when violated pay damages or held in contempt

(a) Conditions for equity: i. Clean handsii. No adequate remedy at law

(b) Repeated Trespasses: possible reason for equity/injunction (Baker v. Howard County Hunt)

i. Dogs from Hunt club kept overrunning property and causing damage

ii. Equity affords injunctive relief against series of trespasses part of single course of conduct which seriously interferes with right to peaceful enjoyment of property

iii. Move into equity from trespass/damages b/c of repeated trespass cannot assess damages

iv. CL rule: dogs can go wherever they want unless: owner has power to prevent or owner takes them to prohibited area and knows it will happen

v. No possibility of Coase bargain because in rem rights w/ respect to world (assembly problems); cannot make bargain with everybody who would trespass

vi. Considerations: custom, equity requirements, implicit agreement, habit evidence

(c) Building Encroachmentsi. If building encroachment has not existed for period of

statute of limitations, no AP claim. ii. Under CL, could force removal of encroachment. Pile v.

Pedrick: Unintentional 1-2 inch building encroachment; plaintiff demanded nothing but complete destruction of the wall. Offer to treat as permanent trespass with compensation or removal, plaintiffs chose removal. Court enforced injunction and split costs because of plaintiff intransigence? . Strict view of ad

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coelum; defendant has no right at law or in equity to occupy land that does not belong to him

iii. Modern law: sometimes good faith improver gets some relief. May allow to remain if pays damages (Golden Press); or court gives to landowner and he must pay value to encroacher; or court can give option of paying encroacher the value of the house or selling the encroacher the land at fair market value.

Considerations : encroachment magnitude, plaintiff’s affected use, damage, cost of removal, plaintiff’s malice?

iv. Generally, courts today would deny injunctive relief and award only damages

v. An intentional encroacher must remove the encroachment if the neighbor demands

2) Property Rules and Liability Rulesi) Calabresi & Melamded, Property Rules, Liability Rules and

Inalienability: One view of the Cathedral(d) Entitlement: law decides which party will prevail; states then decide

the manner in which the entitlements are protected and whether an individual can sell or trade the entitlement. Three types of entitlement protections: property rules, liability rules and inalienable entitlements. Remedial orders do not define the appropriate degree of protection, just are indicative of it.

(e) Property rule: Entitlement cannot be taken without holder’s consent. Least amount of state intervention. Ex: Buying/selling house

(f) Liability rule: someone may take away initial entitlement if willing to pay objectively determined value for it; determined by court, fair mkt value. Ex: eminent domain. But court determined costs not always reliable; no subjective value valued; discourages doing it on your own;

(g) Inalienable: transfer is not permitted between willing buyer and willing seller. Ex: intoxicated sale of house

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Rule 4: Polluter can keep polluting and plaintiff can stop him if he pays money.

If transaction costs high, go with property rule and they can sort it out. Give entitlement to the party who the non-efficiency factors favor. Unclear if high transaction costs.

p. 61Rules have advantages and disadvantages

ii) The Ex Ante/Ex Post Problem(a) Ex ante: analysis before conflict arises(b) Ex Post: analysis afterwards(c) Ex Post may produce much lower maximum joint benefit (once the

building goes up)D. Restitution1) a) Enrichment of defendant b) at expense of plaintiff c) under circumstances that are

unjust(a) Not bargained for benefit and harms: contracts(b) Not bargained for harms: torts(c) Not bargained for benefits: restitution

i) Mistaken Improver(a) Traditionally, the rule is that if someone erected a structure on

someone else’s property, became fixture of the property (accession); intended so that people think before they build

(b) Producers Lumber & Supply Co. v. Olney Building Co.i. Orts ordered destruction of building he unintentionally built

on land belong to plaintiffii. Trespasser has remedies if built in good faithiii. Here, Ort’s good faith is negated by his malicious

destruction

Plaintiff

Defendant

Rule 1Pile: Kept/Injunction

Rule 2Golden Press: Kept/Damages

Rule 3Hinman: airplanes can fly they would need consent to stop

Rule 4Plaintiff can force return for $ (factory can continue polluting but not if P pays $)

Liability Rule

Property Rule

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Assignment of Entitlement


iv. Improver is never authorized to go upon land of another, without his knowledge and demolish improvements. If he does, must pay landowner for such waste (value of building)

v. Dissent argues that as accidental improver, has right to remove his property and pay any damages caused to P’s land

ii) Origins and Basis of Restitution

CHAPTER II Original Acquisition-Five general principles to establish ownership other than through voluntary

conveyance from previous owner-First possession, Discovery, Creation, Accession, and Adverse Possession

1) First PossessionRule of Capture: first person to take possession of a thing owns iti) Wild Animals

(a) Must be captured to be owned(b) Mere chase is not enough(c) Pierson v. Post: Property of ferae naturae is acquired by occupancy

only. What amounts to occupancy? Proximity rules: Spot, pursuit, close in, wound, trap, kill: when do you have possession/ownership? Majority says must wound and not abandon. Dissent says pursuit with reasonable chance of capture. Advantages to each choice (protection of investment, rewarding of initiative/success). What notice must one give?

(d) An owner of land does not automatically own the wild animals on the land. But see rationale soli

(e) Generally, captor must acquire physical control over animal absent custom. Ghen v. Rich: custom to shoot whale with mark and finder must return has been existence for long time and without would be no incentive to whale hunt. As long as does not infringe on others’ rights or go against maritime law, it’s ok even though CL says otherwise (see State of Oregon ex rel. Thornton v. Hay for custom requirements)

(f) Cannot hinder another in his trade by scaring off animals. Unfair competition will discourage participants. Keeble v. Hickeringill: Defendant shot gun at plaintiff’s decoy pond, scaring off wildfowl intentionally. Court gave defendant right to the ducks in his decoy pond under the protection of his livelihood. One who hinders another in his trade is liable for an action. But if damage caused by same employment, no action

No trespass b/c not on land, would be nuisance today Considerations : action brought for disturbance not the loss

of fowl, this business is good for society

ii) Open Access and the CommonsEggertsson, Open Access versus Common PropertyCommons, Anticommons and Semicommons

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(a) Open access: (Rule of capture/fishing) access is open to all members of particular community or jurisdiction

(b) Common Property: complex structure that involves rules and enforcement mechanism

(c) Open access problems when independent actors have incentive and ability to withdraw at will. Supply and demand effects

i. Supply: no incentive to invest or maintain resource since cannot exclude others from benefits

ii. Demand: excessive withdrawal can deplete to zeroiii. External effects: if people not responsible for all costs and

benefits that follow their actions, watch average values instead of marginal values, leading to inefficiency

(d) Solution: contracting among parties for regulations, private owner or state regulatory access (landlord, coop, condos, corporation)

(e) Semicommons: somewhere in between the two extremes (doctrine of fair use in copyrights)

(f) Anticommons: too much exclusion; prevents rights to larger resource or good because fosters stability

iii) Other Applications of First Possession(a) Finder must (like wild animal capture) acquire physical control

over the object and have intent to assume dominion over it. Eads v. Brazelton: E prevails b/c B has shown only intent to take possession but has not shown sufficient acts of physical control. Must have placed boat over wreck with the means to raise it, to give notice of possession.

(b) Home run baseballs: Popov v. Hiyashi: Popov dropped and Hiyashi recovered, judge ruled they divide value b/c once the ball in Popov’s mitt, had exclusive pre-possessory interest when mob interfered, even though could not prove est’d possession and did not have control. Consider: intent, control, custom, pre-possessory interest

2) Discoveryi) Discovery of Land

(a) When faced with conflicting claims to single piece of property, recreate “chains of title.” Johnson v. M’Intosh: Since rights of Indians were impaired with European dominion (right to dominion supersedes right of occupancy), Indians’ sale of land invalid. Natives had status of occupants but not title.

(b) Land Grants from the Federal Public DomainHow the land was dispersed

Land Ordinance of 1785: created townships according to guidelines

Squatter problems Homestead act of 1862: any citizen could claim 160 acres

(c) The Mining Camps

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Miners concerned about absence of legal rules to assign ownership of valuable mineral land

Formed over 600 mining camp governments in Far West to devise local rules for recognizing and enforcing private mineral rights

These rules later incorporated into state legislation Expected aggregate gains were large and most of the

contracting parties expected to share in those rights(d) Gary D. Libecap, Contracting for Property Rights

3) Creation: Recognition of property by creation is to reward labor. How do we define “creation”?

i) News requires large investment to produce but copying and reproducing is zero, so different from tangible goods

(a) Use of information by one consumer does not diminish the use by another, so a “nonrival” good.

(b) Primary reason for creating property rights in information is to provide incentives for producing more of it, not to assure that it is allocated efficiently among potential users of it

(c) Labor can assert property right, should not reap what another has sown (Locke). International News Service v. Assoc. Press: INS copied news from AP for distribution. No right in uncopyrighted news after publication but quasi-property with limitations to others in the business (not against the world). Unfair competition.

ii) Publicity: (a) Used to be a name or a likeness; but courts have expanded this to

vague notion of celebrity’s persona; unauthorized use of an attribute of Midler’s identity (publicity) in Midler v. Ford Motor Company.

(b) But can hurt the public if applied too broadly (satire, free speech). The celebrity’s labor in creating a persona of value is protected against another’s using it for profit.

iii) Patent: (a) Shows boundaries of time limited right to recover investment; does not

give any positive rights which come from CL. (b) Balance between protecting creativity and not creating

monopolies/stifling creativity. (c) Need to be more than first (as in discovery), actual novelty

required. Cannot be “obvious”. Trenton Industries v. A.E. Peterson Manufacturing Co.:

Plaintiff showed demo of new high chair and they decline to use but produce own version

Cannot have patent protection for something “obvious”- this standard changes with time though

Used to be needed, “Flash of creative genius” but this changed as recognition of how r & d occurs

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Equity in agreement can be implied by showing item to party before patented

(d) In copyright, “newness” requirement is “originality”. Supreme Ct said that names and numbers in telephone book cannot be copyrighted b/c not “original” enough (Feist Publications, Inc. v. Rural Telephone Service)

4) Principle of Accessioni) Used to establish title to property. Should award things that are unowned,

to the owner of the most prominent thing to which ownership has been established

ii) Principle of Accession : family of doctrines, each which shares common features: ownership of some unclaimed or contested resource is assigned to owner of some other resource that has particularly prominent relationship to the unclaimed or contested resource

iii) Doctrine of Accession : narrower common-law doctrine that is part of larger family of doctrines – when someone mistakenly takes up physical object that belongs to someone else and transforms it through labor and new materials into fundamentally different object.

(a) Where A adds labor to B’s raw material, the courts usually award the final product to the owner of the raw material (B), unless A’s efforts have sufficiently increased its value or complete change of chattel to make it unfair to award the final product to B. A must have acted in good faith.

(b) Wetherbee v. Green: Wetherbee cut down trees with permission and fashioned into barrel hoops (huge increase in $). Turns out was somebody else’s land and they want to keep the hoops (replevin)

When trespass is in good faith, and significant labor put into it, product belongs to new operator, who should make satisfaction to former owner for materials converted (J. Blackstone)

Accession b/c value of labor has swallowed up and rendered insignificant the value of original materials

Considerations for doctrine of accession: Mental state of improver, degree of transformation, degree of value added

iv) Increase:(a) Animal offspring belong to owner of mother. Partus sequitur ventrem

(offspring follow the mother). Carruth v. Easterling: Calves born while on another’s property court ruled belong to cow’s owner

v) Explaining the Principle of Accession*David Hume, Treatise of Human Nature*Robert Sugden, Economics of Rights, Cooperation and Welfare

vi) Ad Coelum Rule

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(a) Accession by ad coelum: whoever owns surface owns incremental values below as surface is most prominent pre-assigned property, or accession by labor

(b) Edwards v. Sims: Valuable cave underground with entrance on his property. Did his labor add significant value to underground parts so they should become part of his property (accession)? Court found that ad coelum applies so cave does not belong to the discoverer (who is trespasser in the earth below neighbor’s lot).

(c) If capture rule was used, giving ownership to owner of entrance, may be more efficient and reward exploration. Lower transaction costs than surveying and profit sharing among many owners.

(d) Underground resources : Rule of capture has been applied to oil and gas by courts. Some characterize them as analogous to wild animals, which might wander from A’s property to B’s (even if drained from neighbor. Reason to apply rule to give incentive to produce the resource.

vii) Accretion(a) Accretion: gradual process (changes boundary of the river)(b) Avulsion: sudden change in stream path (does not change boundary)(c) In Nebraska v. Iowa, question whether accretion or avulsion as the

river has characteristics of both. (d) Accretion considered accession because small deposits of sand are

absorbed into more significant large land

viii) Fixtures(a) A thing which, although originally moveable chattel, is by reason of its

annexation to, or association in use with land, objectively shows intent to improve the realty, regarded as part of the land

(b) Can be default rule or doctrine of accession because can acquire objects by owning land that originally were personal property belonging to someone else who had no intention to make a voluntary conveyance

(c) Strain v. Green: Greens sold house but took many things when moving out. Strain sued arguing they were fixtures. Court says as times change, some things considered chattel have become fixtures (bathtubs, hot water heater). Cannot consider secret intention of sellers, must judge based on nature of article affixed.

(d) Modern trend is to be liberal in permitting tenant to remove any chattel he installs on leased premises, as long as substantial damage not caused

5) Adverse Possessioni) Owner sits on right to exclude, and statute of limitations for challenging

original unlawful entry expires, barred from asserting right to exclude and

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new title springs up in adverse possessor. Retroactive ownership rights (may have to pay taxes)

ii) To acquire legal title, AP’er has to file quiet title action against former owneriii) Justification :

(a) Gatekeeper: responsibility to be gatekeepers of land(b) Avoid disrepair, reward productivity(c) Personal relationship of AP to the land(d) Reliance Issue(e) Reduces costs of investigation who really has title

iv) Requirements for AP :(a) Actual entry giving exclusive possession

i. Exclusive possession: cannot share possession with owner nor public generally

(b) Open and Notoriousi. Must constitute reasonable notice to owner so owner can

defend his rightsii. Look like typical acts of owner, appropriate to land

involvediii. E.g. fencing, farming, building; granted permission, sued in

trespass, paid taxes (Ewing v. Burnet)(c) Adverse and under a claim of right

i. Must hold adversely to the owner under a claim of right (without owner’s consent)ii. Majority view: actions of possessor must look like claims of ownership, without permission of owneriii. Minority view: AP’er must have bona fide or good faith belief he has title (Carpenter v. Ruperto: knew she did not have title and held not to be AP )iv. Color of title: Claim founded on written instrument (deed, will) that unknown to claimant, is defective or invalid. Not required to be AP in most states

(d) Continuous, uninterrupted possession: degree of occupancy and use that the average owner would make of the particular type of property. Continuous when made without a break in the essential attitude of mind required for adverse use. Sometimes ok even with intervals of disuse.

i. Purpose: to give owner notice of AP and not just trespassesii. Seasonal use: Use during summer home during summer only is continuous use (Howard v. Kunto). iii. AP’er cannot abandoniv. Tacking by successive AP’ers:

1) Can tack on previous periods of AP by predecessors in interest to establish continuous possession (Howard v. Kunto)2) Must be privity of estate b/w AP’ers: Voluntary transfer

by estate in land or physical possession

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(e) If owner fails to prevent use as opposed to possession, then prescriptive easement

v) Adverse Possession against the GovernmentUnder CL, cannot use AP against crown, this followed to US Government.Open ended adverse possession problem

vi) DisabilitiesState statutes slow statue of limitations for owners suffering from certain

narrow classes of disabilities (under age, insane, legally incompetent, etc.). Not poverty. vii) Future Interests: Statute of limitations does not run against remainder

existing at the time of entry by an AP’er b/c the holder of the remainder has no right to eject the adverse possessor from possession. But if AP’er entered before life estate started, and never gained possession, would never go to remainder (see p. 39 Gilberts)

viii) Chattels: Can take AP to chattels just like land. Same requirements as land but period is shorter.

(a) Difference: Open and notorious requirementi. NY: statute of limitations starts when owner knows who

has the goods and makes demand for return that’s rejected (Songbyrd: possession of recordings)

ii. Majority: S of L starts when owner should reasonably know where stolen goods are ( but runs as long as owner continues to use due diligence in looking for them)

F. Sequential Possession IssuesG. Competing Original Acquisition Principles

CHAPTER III Values Subject to Ownership1)Personhood

Certain interests are inappropriate for treatment as property because they are too closely connected to personhood (people, peonage)

Two questions: 1) who has decision making authority over the interests and 2) Can the government restrict that authorityi) Property and the Human Body

(a) Body parts: US v. Garbar: blood plasma is transferable property (replenishable parts; with non-replenishable parts, more restrictive)

(b) National Organ Transfer Act: prohibits sale/transfer interstate commerce organs for valuable consideration. Excludes paired organ donor, perhaps for scientific purposes.

(c) Dead bodies as property: Next of kin have exclusive right to possess bodies of deceased family members, creating property interest, even though inalienable. (Newman v. Sathyavaglswaran). But one could argue that it’s personhood and a body cannot be “owned”.

(d) Concern about making body parts property that could be sold. Moore v. Regents of the Univ. of CA: Man does not have property right in his spleen following removal by doctors (abandonment?) who made valuable patented cell line; they acquired original ownership

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(accession?). However, not all property is alienable. Argument that cell line was not Moore’s property b/c it was factually and legally distinct from the cells taken from Moore’s body. Considerations: could be property for hospital but not Moore, abandonment (like hair at salon), medical progress, human privacy

(e) Sperm deposited in sperm bank was found to be property of donor and could be devised by will. Hecht v. Superior Court: Interest was in the nature of ownership (interim category of property/quasi property).

(f) Penner’s separation thesis: only items thought of as separate from their owners can be “things” and hence objects of property (spleens and sperms after separation)

(g) Trend in CA away from personhood, more towards property

ii) Artists’ Moral Rights(a) Personhood rights implicated when individuals create things that are

expressions of their beliefs and experiences (accession/creation?). Issue of artist retention of control over use to which creations are put by future owners.

(b) Sometimes legislation protects physical defacement or alteration of a work of fine art for certain amount of time (Moakley v. Eastwick)

iii) Cultural Patrimony(a) Personhood interests implicated when cultural artifacts taken from

communities in which they have particular significance. I.e. Native American Graves Protection and Repatriation Act (US v. Corrow: even when Indians sold the item still illegal under act)

(b) To be considered “cultural patrimony” object must:i. Have ongoing historical, cultural or traditional importanceii. Be considered inalienable by the tribe culture (good

indication is if communally owned)

B. Academic Perspectives on Domain of PropertyWhat values should be subject to property rights?

Harold Demsetz, Toward a Theory of Property Rights Economic terms why and when property rights emerge in

resources that previously were regarded as not being subject to ownership

Property rights develop to internalize externalities when the gains of internalization become larger than the costs of internalization

For example, before the fur trade the Indians did not have property conceptions

The rise in prices of furs was a gain that resulted in internalizing the costs of monitoring property rights

Margaret Jane Radin, Property and PersonhoodAnti-Commodification and Inalienability Rules

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Moral basis for regarding certain things as inappropriate subjects for treatment as property

Two types of property: Fungible property (held purely instrumentally) and Personal property (bound up with a person)

Rights afforded to property go on spectrum of somewhere between personal and fungible (but can go to extremes like fetishism)

As things move towards more personal should have stronger entitlement/protection, harder to take away, broader liberty of control

But you can’t go too far or you get fetishismThings too personal cannot be considered property at all (personhood)

Radin, Market-Inalienability Three possible methods of justifying market-inalienability:

prophylactic argument, assimilation to prohibition, and domino theory

Prophylactic : people should not be allowed to sell things that are too personal, would be destructive to personhood (slavery, body parts, sexual services)

Assimilation to prohibition : commodified object is different from “same” thing noncommodified and embedded in person relationships; market-inalienability is prohibition of the commodified version, resting on some moral requirement that it not exist (may create and expose wealth and class-based contingencies for things critical to life (healthcare))

Domino theory : slippery slope; allowance of commodified version of thing will affect all and commodity

2) Public RightsThings too public to be parceled out into private ownership. Inherently public and

remain accessible only on equal terms to all members of the communityi) Navigation Servitude

(a) Navigable Watersi. English framework of these rights exported to US. Supreme Court expanded from waters subject to ebb and flow of tides to all navigable waters to federal governmentii. Federal navigation servitude on all waters of US that are navigable. No state gov’t, individual or corp acting under authority of state law can obstruct or interfere with public’s right to free use of waterways for transportation; related to Commerce Clauseiii. Title to submerged lands subject to state law; may be different if waters subject to ebb and flow of tides or not

(b) Navigable Airspacei. Supreme Court held that federal control principles of navigable waterways extends to navigable airspaceii. Airspace above safe flying altitudeiii. Test is whether use of airspace harms the surface owner. In US v. Causby, Supreme Court held that planes flying low over a

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farm was a taking b/c ruined the chicken business. Gov’t had to pay compensation b/c of action for inverse condemnation (government takes but does not use formal eminent domain) iv. Private parties may be liable in nuisance if substantial interference via air that is unreasonable as measured by sensibilities of an average person (not an uncommon use of land where more harmed than average person)

ii) Public Trust Doctrine(a) If property held in trust for the people for the state, it cannot be

abdicated. Illinois Central Railroad Co. v. Illinois: Held that state has ownership of lands under navigable waters (Chicago Lakeshore) and cannot give control to private corporation

(b) Resources covered under Public Trust Doctrine: Mostly navigable water; can sometimes extend to public parks and state wilderness areas unconnected to navigable waters; question whether federal land held in public trust, no court has ever endorsed

(c) State has no power to transfer public lands except to the extent that selling small parcels promotes public interest or transfer does not substantially impair public interest in the land and waters remaining (Illinois Central). Dissent: only necessary to invoke doctrine if private company violates public rights

(d) Debate over what is public interest (Lake Michigan Federation v. United States Army Corps of Engineers: Loyola Univ. sought twenty acre landfill on its Lake Shore campus in Chicago with some benefit to public; cleared environmental, legislative, federal hurdles until injunction brought by Lake Michigan Federation)

i. Courts should be critical of attempts by state to surrender valuable public resources to private entityii. Public trust is violated when primary purpose of legislative grant is to benefit private interestiii. Any attempt by state to relinquish its power over public resource should be invalidated under doctrine

(e) Purpestures: Encroachments on public lands by private persons, dealt with by nuisance laws, not trespass law

(f) Easement by prescription to the public: State of Oregon ex rel. Thornton v. Hay: Issue whether state can prevent landowners from enclosing dry-sand area contained within the legal description of their ocean-front property. Trial court found public had easement by prescription for recreational purposes. Appellate court thinks custom is better b/c can cover larger area

i. Custom: such usage by common consent and uniform practice has become the law of the place, or of the subject manner to which it relates

1) Must be ancient2) Exercised w/o interruption

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3) Peaceable and free from dispute4) Reasonableness5) Certainty of what it covers6) Must be obligatory7) Not be repugnant or inconsistent with other customs or law

Carol Rose, Comedy of the Commons: Custom, Commerce, and Wants to have theory of public rights immune to attacks

against it Extrapolates form other laws to see how they apply to

public rights Original doctrines grew out of need for commerce but

later applied to recreation and conservation Argues for public rights because of diffused

publics/economics of scale/nobody could handle the property

Believes that there is inherently public property, with ownership vested in society

Inherently Public PropertyD. Water3) Electronic Communications

i) Radio Waves(a) Before Congress passed regulatory framework, CL showed can have

property rights to wavelength. Tribune Co. v. Oak Leaves Broadcasting Station, Inc.: Restrained defendant from broadcasting over same wave length or in close proximity. Guyon: cannot have property rights to wavelength; Coase: idea is not about wavelength but devices used to broadcast and receive wavelengths. Considerations: Industry customs, labor theory notions, first possession/property in time

ii) Internet websites(a) Peta v. Doughney: Peta sued Doughney after creating website peta.org

(people eating tasty animals) as parody on trademark infringement. Held it was trademark infringement.

(b) For trademark infringement/unfair competition must provei. It possesses a markii. Defendant used the markiii. His use of mark occurred “in commerce” iv. Used mark in connection with sale… of goods or servicesv. Used in manner likely to confuse consumersvi. *Court in Peta said was in “connection with goods and services” even though not commercial b/c prevented users from obtaining or using PETA’s goods or services due to frustration (huge expansion)

(c) Trademark: requires no novelty or originality, different from copyright/patent/other IP

i. Generic terms cannot be trademarks

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ii. Nongeneric descriptive marks must acquire secondary meaning, association in minds of consumers between mark and product to be protectible (Dunkin Donuts)iii. Fanciful marks (“Exxon”) and arbitrary marks (“Apple” for computers) need only be used in commerce to be protectediv. Traditional test is consumer confusion but trend to allow trademark dilution cases even when no confusion

CHAPTER IV Owner Sovereignty and its LimitsA. Protecting the Right to Exclude

A. Protecting the Right to ExcludeBegin surveying various ways in which law recognizes and protects right of an

owner to exclude others from her “thing”. Then various exceptions to the right to exclude: necessity, custom, public accommodation laws, anti-discrimination laws. Then Basic powers associated with owner sovereignty: right to include others (license), right to transfer custody but not ownership (bailment), right to abandon or destroy property, right to transfer ownership. 1) Criminal Laws

i) Criminal Laws Protecting Personal PropertyNeeded to prevent people from resorting to self help among other

reasons(a) Larceny

i. At CL: prohibited taking personal tangible property by trespass (diminished this requirement-store customer) from the possession of another without legal authority with the intent to permanently deprive. How do you define “possession” though (in a store)?

ii. Protects the right to excludeiii. Person can be charged with larceny for shoplifting while

caught with goods inside the store if the evidence establishes the elements of larceny (People v. Olivo)

iv. Case law focuses on actor’s intent and exercise of dominion and control over the property; if customer exercises dominion and control wholly inconsistent with continued rights of owner and other elements of the crime are present, larceny has occurred

v. Considerations : concealment of goods, furtive unusual behavior, proximity to exit, possession of known shoplifting device

(b) Criminal Laws Protecting Real Property (Trespass)State v. Shacki. Trespass: used to block one from “taking possession” of

owner’s property;ii. Exception to trespass: necessityiii. State v. Shack: Rights to exclude from private property can

be violated when trespassers seek the welfare of the tenants

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(necessity); here to aid migrant farmers medically and legally

iv. Similar to public trusts: public right to medical care and legal counsel precludes other rights

v. Owner still has right to exclude solicitors or peddlers and require ID from anybody in the interest of safety

vi. Criminal law systematically more concerned with protection of persons than property; most severe punishments for property (arson and burglary) threaten people as well

2) Civil Actionsi) Civil Actions Protecting Real Property

(a) Trespass : used to vindicate interest that person in actual possession has in exclusive possession to land; damages and injunctions

(b) Ejectment : used to vindicate interest of person who has title to land against person wrongfully in possession

(c) Nuisance : protects interest in use and enjoyment of land; damages and injunctions

ii) Civil Actions Protecting Personal Property(a) Replevin : plaintiff can recover possession of goods; can be used in

variety of circumstances involving wrongful taking of personal property in which plaintiff wanted to recover possession

(b) Conversion : wrongful possession or dispossession of another’s property as if it were one’s own; willful interference with an item of property in manner inconsistent with another’s right, whereby other is deprived of the use and possession

(c) Trespass to chattels : i. Allows recovery for interference with possession of

personal property not sufficiently important enough to be classified as conversion

ii. Rarely used until recently with hacking, spamming, unwanted internet intrusions

iii. No trespass to chattels when no damage or impairment (actual injury; loss of productivity not enough): Intel Corp v. Hamidi

iv. Intel Corp v. Hamidi: Unwanted emails that do not damage computer system or impair functioning but costs effort and expense to remove is not trespass to chattels

v. Creating absolute property right to exclude undesirable communication from email will raise costs to society, lost openness of communication

vi. Dissent: do not need actual damage if repetitivevii. Can invasion by electrons be considered nuisance?

3) Self-Helpi) To what extent can owner or possessor use self-help to vindicate interest in

property?

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(a) MPC: can use reasonable force to prevent unlawful entry onto property or unlawful carrying away of tangible movable property

(b) Many jds say can use deadly force to avert burglary(c) Retaking of lease premises, need two conditions:

i. Landlord is legally entitled to possessionii. Landlord’s means of reentry are peaceable

(d) Berg v. Wiley: Wiley changed locks when tenant Berg was away, with police officer present. He was worried about her causing damage to the property.

i. Self help repossession of landlord’s premises by locking out tenant is wrongful here b/c not done in peaceable manner

ii. Trend to use judicial process as proper way to evict since forcible changing of locks can cause violence (can never be peaceable)

(e) Repossession of property: Repossession of car at night is allowed and not considered “breach of peace” under UCC (Williams v. Ford Motor Credit Company)

(f) How is “breach of peace” defined: force or threat of force?

B. Exceptions to the Right to Exclude1) Four categories of exceptions stated above:

NecessityCustomPublic accommodation lawsAnti-discrimination laws

. Issue whether to apply in rule-like fashion or on case by case basisi) Necessity

(a) Can allow trespass in unexpected situations(b) Ploof v. Putnam: P sailing and caught in storm, needed to moor his

boat. D’s man unmoored it, ship was destroyed and injuries resulted. Doctrine of necessity applies with special force to preservation of human life

(c) Preserve human life; to protect property from unexpected nature; to stop property that is uncontrollable (an animal)

(d) Necessity rule transfers property rule to liability rule (how?)ii) Custom

(a) Custom allows hunting on forest lands that are unecnclosed and the owners cannot negate this (McConico v. Singleton)

(b) Many states allow people to hunt unless there is a sign excluding hunting

(c) Where custom causes damage, may be overridden (see Baker hounds)iii) Public Accomodation Laws

(a) Owners of public accommodation have more qualified rights than private owners to exclude.

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(b) Subject to general duty of nondiscrimination, must provide service to customers on first-come, first-serve basis and charge reasonable rates

(c) Title II of Civil Rights Act of 1964: all persons entitled to full and equal enjoyment of places of public accommodation (inn, hotel, motel, restaurant, lunchroom, cafeteria, motion picture house, theater, concert hall, etc.). Does not include private clubs and non-public establishments, schools and hospitals

i. Courts have said that use of a group as a public accommodation makes them enforceable under the act (Boy Scouts)

ii. Discriminatory name on public accommodation can effect P’s enjoyment of it (Redskins, racist name)

(d) Common carrier regulated under Commerce Clause (interstate commerce)

(e) Private venues governed by govt commission (gambling) lose their total right to exclude; that right transferred to government commission and they don’t have rule against card-counters (Uston)

(f) Uston v. Resorts Int’l: Common law right to exclude is substantially limited by competing common law right of reasonable access to public places. The more public access, the less you can exclude in an arbitrary manner. This applies not only to common carriers, innkeepers but to all property owners who open their premise to the public.

(g) But still have right to exclude those whose actions disrupt operations of premises.

iv) Anti-discrimination Laws(a) Private owner can exclude based on race from his home or apartment(b) Restrictive covenants: See requirements below(c) Shelley v. Kraemer:

i. Neighbors signed agreement restricting for 50 years purchase of property by non-whites. Property sold to Shelleys (blacks) and neighbor sued to restrain Shelley from possession of property

ii. 14th Amendment (Equal protection clause) only when government involvement, does not affect private agreements

iii. Since enforcement of agreement was done through state actions, satisfies criteria. But for intervention of state courts, would have been free to occupy the property. But “voluntary action” not to sell would not be a problem if no state action involved.

iv. Racist covenants can also be argued against by saying violate public policy

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v) Use of Trespass Actions to Exclude Persons based on race(a) Supreme Court held that prosecutions for criminal trespass were state

action when segregation required by law. (b) In Bell v. Maryland, argued that restaurant owner relied on police and

courts to enforce racist preferences transforms private discrimination into state action and forbidden by 14th amendment. But J. Goldberg wrote that no need to show that it’s state action to enforce. He wrote that framers of 14th Amendment intended to constitutionalize common law rights of equal access to inns and common carriers as part of the civil rights enjoyed by all persons. This was positive b/c did not threaten to transform all judicial enforcement of trespass law into state action

(c) Sup Ct ducked question whether enforcement of trespass law for racist reasons is state action b/c Civil Rights Act prohibited racial discrimination in any public accommodation affected by interstate commerce

(d) But b/c never resolved question above, meant that owners of property not open to the public can continue to call upon the power of the state to enforce their right to exclude, even when that right is exercised in a discriminatory manner

vi) Fair Housing Act(a) Prohibited discrimination in renting, selling, pricing of housing except

for single family house with conditions and religious organization/private club (on 468).

(b) Objectives: Eliminate discrimination and promote diverse communities

(c) Allowed to discriminate discreetly? but not allowed to advertise b/c gives sense that it’s allowed (woman who wants female roommate); this requires loose reading of the act

(d) Cannot discriminate in housing based on marital status. But when right to exercise religion is weighed against right to discriminate against unmarried cohabiting couples, courts can allow (Attorney General v. Desilets); marital status discrim not as intense state concern as other discrimination; law already discriminates against unmarried, cohabiting couples by giving benefits to married couples

C. Other Powers of the Sovereign OwnerBasic powers of inclusion and exclusion that sovereign owner can exercise:License: give permission to someone to access propertyBailment: transfer temporary custody of property to someone elsePower to abandon and destroy propertyPower to transfer property to someone else by gift or sale

i) Licenses

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(a) “Permission slip” from owner of asset to another person allowing gaining access to land or property on certain terms. Waiver of owner’s right to exclude.

(b) Statute of Frauds does not apply; not considered interest in land. Can be oral or implied.

(c) At CL, licensor can revoke license at any time. (d) Automatically revoked when licensor dies or conveys title to someone

else. (e) Can be irrevocable when license coupled with interest. (f) Only irrevocable for time taken to use interest. (g) Also can become irrevocable if reasonably rely on statements of

licensor.(h) Marrone v. Washington Jockey Club of DC: Marrone brings action of

trespass for preventing him from entering race track after he bought ticket of admission. By throwing him out, asserts that they trespassed on his “property” (right to use the racetrack)

i. An attempt to overthrow the commonly accepted rule that tickets do not create right in rem. ii. A contract creates personal right while an in rem right is person against entire world. iii. A ticket is a contract and does not create an interest in the property that it may concern unless it’s also a conveyance. It does not convey an interest in the racetrack.

His only recourse was to sue for breach of contract, could not use self-help to resist being thrown out

(i) Was assumed that entertainment ticket created a revocable license. In Hurst v. Pictures Theatres, Ltd: the ticket gave a contract not to revoke the license for the entire show. Or could say was a grant to see the show and a license to be on property; a license with a grant is not revocable

(j) To make license irrevocable: i. Give license and interest (ltd only to the interest)ii. Make a license into an easement

(k) If exceed scope of permission of license, can be guilty of trespass(l) If ticket revoked: can sue for breach of contract(m) License agreement can be shrinkwrap or clickwrap and are

enforceable even if not on outside of box. Impractical to put entire contract on the box. (ProCD, Inc. v. Zeidenberg)

ii) Bailments(a) Owner of property (bailor) temporarily transfers custody of the

property to another (bailee) for some purpose (Must be full transfer of possession and control of subject matter to bailee to exclude it from possession of the owner and all other person (sole custody and control of);

(b) Exception: car parked in secured lot and kept keys. Since lot had controlled entrance/exit, uniformed security guards and owner had

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limited access, court found bailment created (Allen v. Hyatt Regency Nashville Hotel)

(c) Generally, need Delivery, custody and control(d) Once the purpose is accomplished, understood that the property will be

returned(e) Some of the bailor’s rights associated with ownership, most notably

the right to exclude others from owned thing, are transferred to bailee

(f) Bailmee has more rights than licensee. He has exclusive right to possess it, may maintain actions against violating third parties (damages, breach of contract, conversion, replevin). If not gratuitious, can maintain action against the bailor. Can sue for damages from breach of contract or conversion or replevin.

(g) Depending on who the benefit is for, the bailee’s responsibility changes (slight, ordinary, extraordinary)

i. Bailee’s Duty of Care Roman code: complicated 6 fold classification of bailments

and standards of care Justice Story: Degree of responsibility depends on who the

benefit is for Things within normal scope of bailment need to be returned

but unexpected items may not be in scope of responsibility Strictly liable for misdelivery

(h) Involuntary Bailee: not responsible for property at all unless he exercises dominion over it; lesser liability than ordinary bailee, reasonable care.

i. Only liable if negligent in delivering goods to wrong person (Cowen v. Pressprich)ii. In Pressprich, unclear whether bailee, involuntary bailee or stranger. If involuntary, no contractual understanding but did possess it for 15 seconds. Court says voluntary possession never established, that Pressprich is stranger to the bond.

(i) Bailee treated as surrogate for ownership: i. Bailee has general action of trespass against stranger and can recover damages for property he was responsible over (Winfield: Postmaster (bailee) files claim on behalf of mail owners (bailors). Jus Tertii: rights of third party limit your ability to sue. Refutes theory here that just b/c postal customers can’t go after Postmaster, that Postmaster cannot go after them. Bailee has special property rights independent of bailor’s rights. ii. Bailee has right to sue over chattel converted.

iii) Abandonment and Destruction(a) Owner sovereignty commonly thought of to include right to abandon

property or destroy it

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(b) Makes sense if think of property as individual right (efficiency) but maybe not from view of broader social welfare

(c) Opposite of first possession: parting with possession to no one in particular with no intention of resuming possession

(d) Law in PA (and traditional rule) does not allow abandonment of real property if have title to it (so that cannot abandon hazardous waste without cleanup and impracticalities of abandonment process). This results in MacKenzies’ unable to abandon property that is costing them fees and taxes (Pocono Springs Civic Assoc. Inc. v. MacKenzie)

(e) Easements, mineral fields or anything that can be thrown out can be abandoned

(f) Limits to destruction: Court allows injunction to prevent testatrix from razing home after death. Court says home is necessary for property, architectural values, available housing and overall monetary loss to society (Eyerman v. Mercantile Trust Co.)

(g) Pro-destruction: economic gains (efficiency), expressive value(h) Anti-destruction: lower property values, against public good/policy,

dead-hand control (Everman)iv) Transfer

(a) Rules Designed to Enhance Transferability: i. Transferability good for efficiency (Coase) but some things

may be inappropriate for transfer (body parts) yet still be afforded attributes of property (right to exclude)

ii. Inalienability: Original owner barred from engaging in transfer that that absolutely limits future transfers. Partial restraints will be allowed if “reasonable”

iii. In Lauderbaugh v. Williams: court says that rule requiring membership in organization to buy property was unreasonable restraint on alienation. If standards to membership were articulated, courts would have basis for reviewing for abuse and discretion (reasonableness) but since no standards, court didn’t like

iv. Coops and condos: acceptable to be more picky since more close substitutes for condos than vacation lots and more about interdependence and keeping up common areas/management

v. Statute of Frauds: Any conveyance of property right in land (other than short term lease) and any contract for the assignment, surrender or sale of property right in land must be in writing and signed by at least one of the parties

vi. SOF has served to increase overall security of property rights (and lower costs). The requirement is restriction on alienation (selling without writing) but increases overall transferability of property

(b) Delivery Requirement

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i. Some transfers take place by law only when thing being transferred, or evidence of title, is delivered to transferee (deed-formal writing evidencing sale or easement, etc.)ii. Irons v. Smallpiece: colt was never delivered after oral promise. But perhaps other evidence could validate the transferiii. Delivery requirement for gifts: writing which establishes donative intent does not fulfill affirmative action requirement of delivery of the property by the donor, which is a separate and distinct requirement for gift causa mortis (made in expectation of death) (Foster v. Reiss) iv. Purpose of the delivery requirement for gifts causa mortis:

potentially override more formal methods of disposing property upon death

Court worried about fraud Provide additional assurance that donor adequately

appreciates decisionv. Wills: must be in writing and witnessed by one or two disinterested parties; sometimes need notarization. Holographic wills acceptable in half of estates (no witnesses)

CHAPTER V Forms of OwnershipA. Intro

Seisin: somebody must have possession of the land to pay feudal duesLivery of Seisin: ceremony to give notice of the transferProperty rights were “Usufructuary” – means deriving benefits from land owned

by someone else (King). If you had no sons, land would revert back to King. B. Divisions by Time: more efficient use of land; limited number of ways to do (numerus clausus)

Estates in LandPresent Possessory Interests (as opposed to non-possessory interest where limited

powers)i) Fee Simple Absolute (90% of privately held land, rare to use other forms)

(a) “to Marge and her heirs”. Resembles absolute ownership.(b) Potentially infinite duration(c) At ancient CL, needed to say “and his heirs” or it would be life estate

(no more tho)(d) Fee Tail: no longer in US, “To A and the heirs of his body”; used to

create succession of life estates to keep in the familyii) Life Estate: Comes to natural end with death of named person, usually holder

of estate. (a) “To Marge for life, then to Lisa”. (b) If Marge sells, when she dies, Lisa will take; cannot sell or lease more

than she has(c) Purchaser will receive pur autre vie (life estate according to Marge’s

life)

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(d) Can be followed by “reversion” or “remainder”; see Future Interestsiii) Defeasible Fees: May end on happening of named contingency

(a) Fee Simple Determinable: ends automatically upon occurrence of named event, where grantor or successor takes property (possibility of reverter)

i. “To Springfield Law School, as long as it is used for instruction in the law, then to O”ii. Language of duration: “as long as”, “while”, “during”

(b) Fee simple subject to condition subsequent: Continues until happening of named event, then right to retake by grantor or successor (right of reentry)

i. “to Springfield Law School but if it is not used for X, then O has the right to reenter and take the premises”ii. Transfer not automatic

(c) Fee Simple subject to Executory Limitation: If Defeasible fee is followed by interest not reserved to the grantor.

i. “To Springfield Law School, as long as it is used for instruction in law, then to Springfield Animal Hospitalii. Vests immediately in third party regardless of words of limitation or condition

Future Interests:iv) Interests Retained by the Grantor

(a) Reversion: when owner has not disposed of the entire feei. “To Marge for life, then to O.” or implicitly if just “To Marge for life”

(b) Possibility of Reverter: interest reserved to grantor that follows fee simple determinable.

i. “To Springfield Law as long as used for instruction in law, then to O.”ii. Can be implicit

(c) Right of Entry/Power of Termination: Interest retained by grantor following defeasible fee simple subject to condition subsequent

; not automaticv) Interests Created in Grantee

(a) Remainder: Like reversion, follows life estate but goes to party other than grantor

i. “To Homer for life, then to Bart, Lisa, and Maggie and their heirs”ii. Indefeasibly vested: identity of takers is known and no other contingency that has to be fulfilled b/f interest ready to become possessory other than natural termination of preceding one; see above. Even if Homer dies before Marge. Can be for term of years: vested remainder in term of X years.

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iii. Contingent remainders: some uncertainty exists to identity of the class of takers or the occurrence of the condition (*Subject to RAP)iv. Vested subject to complete defeasance (Contingent): occurrence of a condition can cause interest to shift to someone else

1) “To Homer for life, then to Bart; but if Bart fails to graduate from High School by age 19, then to Lisa”

v. Vested subject to partial defeasance (subject to open) (Contingent): more members could enter the class (*Subject to RAP)

1) “To Homer for life, then to his children and their heirs”. -----Maggie has not yet been born.

(b) Executory Interest: Interest in a transferee (not retained by grantor), that divests or cuts short a previous interest such as fee simple or life estate (*Subject to RAP). Derives from Fee Simple subject to executory limitation.

1) “To Bart, but if alcohol is ever consumed on the premises, then to Ned Flanders”2) Shifting: like above, b/c divests interest of a 3rd party

(Bart)3) Springing: If divests interest of the grantor

a. Marge grants to “Bart for life, remainder to Lisa 5 years after his death”. Reversion to Marge in five-year period after Bart’s death. Lisa divests Marge’s (grantor) interest.

vi) Vesting: (a) Interest vests in possession when becomes present possessory one. (b) Vests in interest means that various types of uncertainty about the

interest have been resolved(c) Once have vested remainder, even if life estate subject dies before

grantor, still have remainder.(d) If B has life estate remainder but dies before life estate, remainder

goes to heirs of B since indefeasibly vested. (e) Future interests are now often transferable and devisable

C. Maintaining the Systemi) Conservation of Estates: everything must add up to fee simple; last interest

involved in situation when it becomes possessory has to be in fee simple absolute; courts can add interest when unclear to maintain fee simple absolute

ii) Flexibility of the Estate SystemUsing the Estate System for Estate Planning

(a) Heirs at law (intestacy):i. Intestacy statute: how property gets divided without will according to stateii. Spouse gets b/w ½ and 1/3iii. Law of Gravity: inheritance moves downward first. After spouse, descendants. If no descendants, then parents.

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iv. Uniform Probate code approach: growing minority idea that tries to more closely adhere to what people would want to do. If not, 3 methods to figure out how to divide up stuff for kids: v. Per stirpes: By the stocks/branches. used by 14 states; initial division occurs at level immediately below decedent so if one child (X) already died, X’s children divide his interest. Even if no surviving children at the immediate level. vi. Modern per stripes (majority rule): used by 25 states; initial division occurs at level where there is living descendant. If A had 2 kids and both dead, and has 3 grandkids, each will get 1/3. vii. Per capital at each generation: adopted by 13 states; initial division first level where there’s a survivor but after that, remainder gets divided equally for next generation (everyone on same level, same amount of inheritance). If intestate has 3 kids and 2 die, surviving child gets 1/3 but remaining 2/3 divided equally among survivors. viii. If no parents, brothers and sisters and children will be next.ix. Nearer blood relatives take precedence over more distant ones but states very whether based on consanguinity or on parentelic systemi. Cosanguinity: counts distance in terms of number of generations to common ancesterii. Parentelic (majority rule): priority is given to those close by in terms of sharing a common ancestor so grandnieces (4th degree under cosang) are higher than aunts (3rd degree) b/c descended from decedent’s parents

(b) Will construction: Williams v. Estate of Williams: Parsing of language in the will to determine whether intent was fee simple or life estate defeasible or determinable on marriage. But cannot penalize b/c of marriage

(c) RAP does not apply to reversionary interest but does to executory interest. In City of Klamath Falls v. Bell, Corporation gave executory interest to its two principal shareholders so was subject to RAP and void. But this invalidation implied possibility of reverter in the grantor, the company, and since it was dissolved, still went to their heirs.

(d) Interests less than fee simple can be held void for reasons of public policy or constitutionality (willed land for white persons use only deemed invalid and implied reversion)

iii) Disclaimer(a) Cannot be forced to take property against will and can disclaim it(b) Considered predeceasing and goes automatically to heirs (avoids

taxation)(c) Must put disclaimer in writing and identify the transfer and sign and

deliver within 9 months of its vesting

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(d) If accept any benefits of ownership of that property, lose right to disclaim

(e) Once disclaim, considered passing away before testatoriv) Numerus Clausus:

(a) Closed system of property interests, unlike contract(b) Property is in rem rights, difficult to communicate to all people what

their responsibilities are(c) Other parties would lose out by search costs of whether property has

new category (Merrill and Smith)(d) Excessive fragmentations (anti-commons)(e) Gives power of creating and destroying forms of property to the

legislature(f) Argument against limitation: decreases control of property, less

efficient(g) Merrill and Smith, “Optimal Standardization in the Law of Property:

Numerus Clausus Principle”i. Need for standardization stems from externality involving measuring costs; parties who create new property rights will not take into account the full magnitude of the measurement costs they impose on strangers to the titleii. Allowing even one person to create idiosyncratic property right, costs of all who have potential interests in this type of property go upiii. Individual’s interest in creating the non-standard right, extra benefit, is less than additional measurement costs imposed on other market participants, rationale to prohibit their creation

(h) In Johnson v. Whiton: Question whether language creates new fees structure that would limit alienability of property (estate descending to heirs only on the father’s side new kind of inheritance), so Holmes rejects it. Also numerus clausus.

(i) Garner v. Gerrish: Court says that lease of indefinite duration creates a life estate in the tenant, determinable on his death. Other courts will say it creates a tenancy at will.

(j) Personal Property: Can create estates in chattel (trusts, bonds, etc.) but some restrictions on creation of future interests in “consumable” chattel (food, current crops). Interesting line-drawing exercises. Solution is to make specific grants of personal property

D. Mediating Conflicts Over Timei) Waste

(a) Historically, tenant had limited opportunities to change land. Angy act of life tenant that does permanent injury to inheritance is waste.

(b) Waste is most important cause of action that can be brought by persons who hold non-possessory interests in the property against other owners currently in possession

(c) Affirmative waste: Life tenant actively causes permanent injury (destroying buildings, removing resources)

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(d) Permissive waste: Land is allowed to fall into disrepair or fails to take reasonable measure to protect the land, failing to pay taxes

(e) Ameliorative waste: Principal use of land is substantially changed (tearing down building) but increases value of the land. May be actionable if:

i) The grantor intended to pass land with specified buildings on it and ii) The existing building can reasonably be used for purposes built by grantor. Brokaw v. Fairchild: contingent remainder holders claim that planned demolition of mansion is waste, even though an apartment building would be more valuable. Erector intended to pass “my residence” on to B.

(f) Minority view permits ameliorative waste where can be justified by changed circumstances (Melms v. Pabst Brewing Co.)

(g) General rule: structure must be maintained as is unless testator’s purpose cannot be served without it being destroyed (see Changed Circumstances, Cy Pres)

ii) Valuation of Interests(a) PV=C/(1+discount rate)^n(b) Used to value various interests carved out of fee simple(c) Present value of future estate is cost divided by (1+ discount

rate)^number of years deferred(d) Once you valuate PV of future interest, can subtract that from purchase

price to determine life estate value

iii) Restraints on Alienation: courts will strike down restraints on alienation and turn them into fee simple (Blackacre to A so long as A does not alienate)

(a) Reasons against inalienation: i. Take property out of marketii. Inefficientiii. Unmortgageable and therefore unimprovableiv. Concentrates wealth in elite classv. Prevents creditors from reaching property to pay owner’s debts

(b) Sale to member of club: effective unless no reasonable standards for admission to association and have arbitrary power to deny membership (see Restrictions on Transfer above)

(c) Reasonablness test: partial restraints on fee simple valid if reasonable (Preemptive option to reserve right of first refusal if owner decides to sell; sale of coop with permission of board)

(d) Restraints on use of property: Usually upheld. Mountain Brow Lodge No. 82 v. Toscano: upheld restraint limiting use to club. “property is restricted for use and benefit of second party only, if they fail to use or they sell or transfer all or part of property…, it reverts back to first parties, their successors and heirs, etc.” Is it fee simple subject to condition subsequent (valid) or restrictive language

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amounting to absolute restraint because of vagueness, the restriction is not on the land use but on who uses, therefore absolute restraint on power of alienation and void? Criteria used to analyze:

i. How severe is the remedy involved if one fails to abide by restriction (Penalties/injunctions or Forfeiture)ii. Effect of land use restriction on number of potential buyersiii. Benefits to land in area from the restriction?iv. Does restriction discourage improvements?v. Dissent: can fragment into thousands of descendants when it reverts; impossible to track them down

iv) Rule against Perpetuities(a) Invalidates interests that gave too much control to “dead hand”.

i. Costly to the owner b/c cannot sell it or give awayii. Focus on needs of future generation more than dead personiii. Testator cannot be expected to see all the contingencies

(b) Allows people to control use of property for one generation into future plus next generation up to traditional age of minority.

(c) “No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest”.

(d) Elimination of the suspense element:i. contingent remainder: ascertainment of identity of the taker and satisfaction of all conditions precedentii. executory interest: taking of possessioniii. remainder subject to open: closing of class

(e) Rule of two charities: an interest does not violate the RAP, if interest involves a transfer from one charity to another, as opposed to City of Klamath Falls, where executory interest was given to stockholders of donor corporation and violated RAP.

(f) Future interests only have to vest in interest, not in possession, within the statutory time limit to be valid under the Rule.

(g) A remainder to A’s children is valid since it must vest or fail at A’s death (cannot have more children after death). A is the validating life.

(h) When an interest violates the Rule, it is struck and the remaining valid interests stand. This may leave a fee simple determinable if language struck is “as long as…” or fee simple absolute if language is struck is “but if … then…”.

(i) Rule only applies to contingent remainders and executory interests, not to any grantor’s interests (reversions, rights of entry, possibilities of reverter)

(j) Corporations and RAP: Symphony Space, Inc. v. Pergola Properties, Inc: Court held that RAP applies to corporations as well, and when no validating life, 21 years. Option agreement to repurchase property

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violated RAP. Defeats policy goals of RAP: disincentive to develop and hinders alienability. Ways to avoid problem:

i. Option to purchase land that originates in lease provision and not exercisable after lease expiresii. If option was construed so can only apply within 21 yearsiii. Separability Doctrine: when instrument conveys future interest that may vest upon one events or more, and one occurs within period and next one may not, then that conveyance is valid if occurrence happens at the first time and void if it happens in the second. iv. Wait and see doctrine: (E.g. Wait to see whether or not additional children are born; if not interest valid) does not apply because if there is a contingency beyond the period, interest has to be void

(k) Interpretation and Implication: drafters and courts can insert perpetuities savings clause. Cts can invalidate only part of it, so if gift made to A’s children, interest is held to vest even if a child might be born too remotely. Interest simply fails with respect to that child only (rejects all or nothing approach)

(l) Uniform Statutory Rule Against Perpetuities: (USRAP): allows someone to petition a Ct to reform a disposition in the manner that most closely approximates the transferor’s plan

v) Vestigial Maintenance Doctrines : (a) Served at one time to clean up conveyances and make them more

alienable than they otherwise might have been. (b) Recently, future interest have been made more fully alienable than

they were at common law, alleviating some problems courts traditionally faced.

(c) Also, most future interests are now created in trust, where trustee can be given powers of alienation and appointment and entire arrangement as far as management and distribution of the proceeds is concerned, can be customized to degree impossible within catalog of legal estates and interests.

(d) No longer in effect except Merger Rule: Any combination of transfers that puts in the hands of a single person a series of interests that add up to a larger estate, that person would be given a fee simple absolute.

i. Method to evade taxes by giving intervivos life estate and reversion at end of life estate, which adds up to fee simple absolute, avoids estate tax.

(e) Rule in Shelley’s Case : landowners would attempt to convey property while still alive in such a way that persons would take as purchasers rather than by descent. If someone creates life estate in A, and remainder to A’s heirs, then life estate and remainder are both legal and interest becomes fee simple. Has been abolished in most states today.

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E. Co-ownership and Mediating Conflicts between Co-owners: can be concurrent ownership in fee simple, life estates and remainders of executory interest

i) Types of Concurrent and Marital Estates(a) Tenancy in common: Two or more person own the property with no

right of survivorship between them; when one dies, interest passes to her heirs or devisees

i. Each has right to entire property subject to same right in cotenant. Independently descendible and conveyable ii. Equal shares not necessaryiii. Whenever conveyance made to two or more person not husband and wife, presumed to take as Tenants in commoniv. Heirs always take as tenants in common

(b) Joint Tenancy: Two or more person own property with right of survivorship; when one joint tenant dies, survivor takes all.

i. Four unities requires under CL. Interests must be equal in all respects. ii. If one of four entities not present, tenancy in common created: TTIP

1) Time: Interest must vest at the same time (heirs ascertained at different times would not work)2) Title: Must acquire title by same deed or will, or by joint

APStrawperson: Cannot convey to another as joint tenants;

need to use strawperson to convey; but many states no longer require strawperson.3) Interest: each must have same legal interest in property,

such as fee simple, life estate, lease, etc. although not necessarily identical shares4) Possession: Each JT must have right to possession of the

wholeiii. Traditionally, if any of first three unities destroyed, JT is severed and TIC is created. iv. Each JT has power to unilaterally transfer his interest while living. Once transferred, that interest becomes TIC. If at least two others in JT, they still share JT. v. JT is only appropriate for intimate relationship like committed relationship or family business.vi. Can change JT into TIC without consent of other parties by using straw man but a growing number of jurisdictions require some form of notice to the other joint tenant for such a severance to be validvii. Movement away from four unities to try to honor intent of grantor.

(c) Tenancy by the Entirety: Exists only b/w husband and wife, with right of survivorship that cannot be severed without consent of both spouses or divorce

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i. Only minority of states haveii. Only available to married couples. iii. Like JT, right of survivorship. No unilateral exit as long as couple stays married. iv. Both spouses can use a “straw” to become tenants in common but cannot do on own except through divorce. v. In addition to four unities, require fifth, marriage in some states.vi. If property acquired without marriage, even though intend to be TBTE, default would be TIC. Minority follows intention and JT would most closely resemble what they chose so it would be JT.

(d) Community Property:i. Some states of South and West have community property for married couples. ii. All property acquired during marriage automatically becomes community property. iii. Any alienation must have consent of both spousesiv. Upon divorce, each spouse has to be able to trace property and show who it came from

ii) Legal Remedies(a) Partition: most important legal remedy for concurrent owners. Can

sue for any reason or no reason and court will grant request. Terminates co-tenancy and divides common property; not available to tenants by the entirety b/c neither spouse can destroy right of survivorship of other spouse

i. Partition in kind: partition property into separate tracts if feasible. Each party then owns her tract alone in fee simple. If not equal in value, one must pay owelty (cash payment) to other. Can be favored for personhood/business reasons or if significant improvements made. ii. Partition sale: If physical division not feasible, court will order property sold and proceeds divided equally. Houses, apartment bldgs, urban lots, commercial property do not lend themselves to physical partition usually.

1) Physical division not feasible2) Interests of owners would be better served by sale

iii. In Delfino v. Vealencis, partition in kind was practicable and partition by sale would have forced defendant tenant to surrender her home and perhaps jeopardize her livelihood, even though her operation of rubbish and garbage removal service on a portion of the land might reduce fair market value of the proposed residential lots. Partition in kind the default because sale of one’s property without consent is extreme exercise of power warranted only in clear cases. Also may cause loss in value.

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iv. Partition may be to blame for decline in African-American farming b/c less likely to use wills and under intestacy ownership became more fragmented to increasing number of decendants

(b) Contribution and Accounting: i. If one cotenant rents to third party, obliged to share payments with other cotenants. If not, non-renting cotenant can bring action for accountingii. In ouster, deprives another co-tenant of right to possession, co-tenant may sue for his share of rents and profits from common property. An ouster starts clock ticking for AP. iii. In Gillmore v. Gillmore, sued for accounting and recovery of damages in being denied right to use land. Court held that defendant exercised exclusive possession and use of common properties in such a manner as to exclude plaintiff from using the land (if she had put more animals on, it would have damaged the land)

(c) Severance of Joint Tenancyi. Either joint tenant can unilaterally ‘sever’ the joint tenancy which destroys right of survivorship and converts tenancy into tenancy in commonii. Actions leading to under CL, destruction of one of four unities (time, title, interest, possession) creates severanceiii. Modern law may be lenient when unintentionally severediv. Mortgages: In title theory states, a taking out a mortgage gives title to lender and JT is destroyed tho can argue and say not an actual conveyance; in lien theory states, lender only has lien to the property and legal title and JT remains. Debate over whether surviving joint tenant takes one-half subject to the mortgage if debt not paid off b/f debtor joint tenant dies. In Harms v. Sprague: held that survivor has right to debtor’s half unencumbered by the mortgage (lender loses his security). Lender who knows of this rule will not give credit to one joint tenant; lender who doesn’t know loses security and survivor gets windfall. Minority view.

(d) Special Problems of Joint Bank Accounts:i. Joint and Survivor Bank Account: either party on the account can withdraw the amount deposited and survivor takes remaining sum when other JT dies.ii. Convenience Account: O needs another person A to pay bills. If this is the intent, A can write checks but has no rights of survivorship. iii. Presumption that joint account provides survivorship rights but this can be overcome with clear and convincing

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evidence. In re Estate of Filfiley, estate could not prove that it was a convenience account, therefore statutory presumption prevails that was true joint tenancy. The surviving daughter is entitled to entire fundiv. Will substitute: to avoid will and probate process, can use survivorship feature of JT of the accountv. A JT cannot withdraw entirety of fund (or deed)

F. More on Marital Interestsi) Marital Issues:

i. Special rules for marital interests emerge in context of divorce and inheritance. ii. In CL states, divorce division governed by principles of equitable division unless pre-nup. iii. Central issue is how to treat increases in human capital during marriage. iv. Community property distribution: NY was one of last states to switch from title theory to equitable distribution. Things held in your name, stay with you after marriage (title theory). Equitable distribution: ad hoc approach that considers dozen factors. No presumption for 50/50 split. v. Is property Marital property or separate property?vi. Professional degrees: Split approach.

1) Not divisible property2) Reimbursement alimony (restitution remedy)3) Divisible property (NY – O’Brien v. O’Brien)

Could make argument for accession Exchange value not required for property interests Question is not if degree is property but if expected

earnings interest isvii. Unmarried Partners:

1) Most states hold that express contract b/w partners on division upon separation or death is enforceable2) Some say contract can be implied from conduct of

parties. Although contract is unenforceable to extent that it explicitly rests upon sexual services, not the case in Marvin v. Marvin b/c does not solely rest upon it. 3) Courts may employ principles of constructive trust or

resulting trust to prevent unjust enrichment. Dissent: this is better system than marriage, etc. Do we want to provide these benefits to people who do not get married?

CHAPTER VI Entity PropertyA. Entity Property: Possessory Rights

To provide for more effective management of resources in complicated settings (hi-rise apts, business firms, pension plans) law developed certain devices that allow owners to switch to a governance strategy for the mgmt of resources. Three forms of

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legal ownership of greatest continuing importance are fee simple (and full ownership), lease, and trust

1) Leasesi) Why so popular?

(a) De facto financing device. Owner lends possession in return for periodic payments of money called rent. Certain financial positions prefer lease to ownership

(b) Risk spreading device. Can always move out or kick tenant out.(c) Form of entity property in which complexes of assets can be

integrated and professionally managedii) Lease Types

(a) Term of years: Fixed time at which terminates or ends. Neither landlord nor tenant needs to give notice before terminating relationship. Simply ends. Most state SOFs say need to be in writing if year or more

(b) Periodic Tenancy: Automatically rolls over, usually for year or month. Requires that each give notice to other if they desire to terminate lease, usually same period as rollover. At CL, year to year was 6 months but now mostly one month.

(c) Tenancy at will: lasts only so long as both parties wish it to continue. Either can terminate for any reason at any time. At CL, no notice needed but mostly need equal period of time at which rent payments are made.

(d) Tenancy at sufferance: Individual who was once in rightful possession of property, holds over after right has ended. Not trespasser b/c original entry not wrongful. Landlord is free to evict. Not really a form of lease but can be used by courts to force rent to be paid.

(e) Numerus clausus: only four types under CL. If for “duration of war”, may put in term of years at 50 or maybe tenancy at will.

iii) Independent Covenants Model(a) Until recently, promises in leases were assumed to be independent

of the other party’s performance (quiet enjoyment to tenant, payment of rent to landlord). Conception of lease creating a property interest was preferred to the conception of lease as creating promises (contract).

(b) Paradine v. Jane: Even if farm is overrun by army of alien enemies and building destroyed, still need to pay rent. Just as can have unforeseen profits, can have risk of losses and tenant bears risk. Even if landlord fails to perform covenant, tenant must continue to perform his covenant. Remedy is to sue for breach of contract.

(c) Partial Eviction: Smith v. McEnany: Exception to rule of independent covenants in Paradine v. Jane. Covenant to pay rent was recognized to be dependent on the performance of the

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covenant of quiet enjoyment. Partial ouster by landlord (building encroachment) completely absolves tenant from performing covenant to pay rent. Tenant has made it an absolute condition that he should have the whole of the demised premises, at least against willful interference on landlord’s part. However, tenant still has independent covenant to repair which is in force. Rule would not apply to de minimis encroachment.

(d) Complete eviction terminates obligation to pay rent(e) Obligation to deliver premises:

i. American Rule: landlord must only provide legal possession of the leasehold estate. In other words, they must only put the lessee in superior right of possession. They have no duty to ensure that the property is open for entry. This rule assumes that the tenant has adequate remedies against the holdover tenant, and it reduces lawsuitsii. English Rule: landlord has an implied covenant promising that the premises will be open to entry to the lessee at the time fixed by the lease. If the premises are not open to entry, the lessee has a cause of action against the landlord. This rule assumes that the landlord is in a better position to ensure the property is open and is in a better position to take legal action to force off any holdover tenants

(f) Caveat Lessee (tenant beware). In Sutton v. Temple, no implied warranty that the leased premises will be fit for tenant’s intended purposes (eatage for the cows). Judges distinguished from implied warranty of habitability in a furnished cottage b/c was mixed nature of furniture and house, which had an understanding to be reasonably fit for immediate habitation (less ability to inspect?)

(g) Constructive eviction is defense against paying rent. Substantial interference with tenant’s use and enjoyment of the leased premises, tenant may terminate lease, vacate premises and be excused from further rent liability.

i. Substantial interferenceii. Tenant must vacate premises (risky though, and does not necessarily prove anything); minority says do not need to vacateiii. Fault of the landlord (modern trend to hold landlords responsible for acts of tenants that they could correct) Blackett v. Olanoff (have the lounge turn off the music!)

(h) Surrender : courts reasoned that landlord and tenant could create mutual release of further lease obligations by implied contract. Tenant vacates with intention never to return (offer to surrender), landlord takes action inconsistent with tenant’s continuing right (accepts surrender).

1) In In re Kerr: in absence of express provision in lease authorizing landlord to relet, making of new lease is acceptance of tenant’s surrender of then existing lease. Even when we

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have a statute in lease allowing landlord right to relet, only allows for balance of term of lease. If new lease extends beyond term of bankrupt’s lease, landlord presumed to be acting on own account and accepted surrender

iv) Model of Dependent Covenants: 1970s revolution in landlord-tenant law, characterized by repudiation of “property” conception of leases in favor of “contract” model of leases. More accurate to say, contractual aspect of landlord-tenant law moved decisively away from model of independent covenants to model of dependant covenants.

(a) Dependent covenants. Rule that covenants that run to entire consideration of contract are mutual and dependent. The restrictive covenant in defendant’s lease in Medico-Dental Building Company of LA was of such a nature. Because it was not honored, had remedies, including rescission of lease.

(b) Contract law can apply to leases. If breach is sufficiently serious, goes to essence of consideration, options of promisee include rescission and termination of further performance. If less serious covenant, promisee could sue for damages only. Major breaches treated under model of dependant covenants, and minor breaches under model of independent covenants.

(c) Implied warranty of habitability:i. Under CL, no implied covenant b/c tenant able to inspect the premises and protect himself. Except for furnished house for short term rental, hidden defects, building under construction.ii. The W of H: implied covenant of initial habitability and fitness in leases of urban dwellings, including apartments (not commercial settings)iii. The dependent covenant doctrine applies and tenant is relieved of his obligations when landlord breaches the implied covenant of habitability. iv. Rationales:

1) No time to inspect premises (but sometimes do)2) Landlord knows more about defects and better position to

remedy them 3) Housing codes impose duties on landlord and are enforced4) Tenants have less bargaining power than landlords5) UCC imply warranty of fitness for purpose intended in sale

by merchant where buyer relies on seller’s skill, similar warranties should be applied to sale of leasehold

v. Criticism: 1) Economic grounds: raises rents to cover costs2) Poor will lose more housing

vi. Scope of Warranty: not everything in the housing code but those that have substantial impact upon safety or health (Javins v. First National Realty). Statutes govern now

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vii. Remedies: Contract remedies of damages, restitution, and rescission. Using rent for repair or withholding. Tenant can move out and recover any prepaid rent or stay in possession and recover damages (rent reduction). Trier of fact determines what’s appropriate. viii. Landlord responsible for common areas under CLix. Waiver by tenant: May be against public policy for tenant to waive defects. In Javins v. First National Realty, tenants are not able to waive. x. Other doctrines introduced in late 60s: Doctrine of retaliatory eviction: cannot retaliate for reporting code violations. Illegal lease doctrine: if leases property that’s subject to one or more code violations, so unsafe and unsanitary, lease is void and cannot sue for unpaid rent.xi. Damages for violation: Could not subtract cost of lease w/ violations from cost of lease w/o violations b/c that’s what they were already paying! Courts devised other ways to actually create damages but can be viewed as arbitraryxii. Consequences of Implied Warranty of Habitability: may be bad or good for people depending on demand curve. Some will benefit, others will be priced out. xiii. Duty to mitigate when breach: Have moved away from original conception of lease where no duty to mitigate, where landlord would not be better party to find new tenant (Absentee landlords); today, in urban residential area, landlord will have presence on the premises and in a better position to find substitute tenant when original tenant breaches. Must make reasonable efforts to relet apartment wrongfully vacated by the tenant.(Sommer v. Kridel). Aspects of contract law.

v) Transfer of Interests: Some situations where property-like notions continue to hold sway so not complete shift to contracts. .

(a) Transfer of possession to the tenant: lessee acts as gatekeeper of property and can exercise in rem rights of exclusion associated with possession of property (like bailments). State v. Shack?

(b) Transfers of landlord’s reversion or tenant’s leasehold interest to third party during term of lease: generally, transferee takes reversion subject to tenant’s leasehold interest, like someone acquiring property in which another has a life estate would acquire subject to the life estate.

i. Assignee and tenant are in privity of estateii. But they are not in privity of contract. Original landlord

and tenant remain in privity of contractiii. Ordinary rule: new owner of reversion takes property

subject to ongoing leasehold interest but perhaps can contract around (“leasehold will terminate upon any transfer by landlord”)

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iv. Ordinary rule: when reversion is sold, new landlord and original tenant not bound by all provisions in lease, only by those that “run with the land” (like covenants)

v. “Run with the land” Test1) Whether parties intended covenant to run2) whether covenant “touches and concerns the land”

vi. Mullendore Theatres, Inc. v. Growth Realty Investors Co: defines “Touches and concerns the land”: so related to the land as to enhance its value and confer a benefit upon it. Court says that provision in lease stating that all covenants run with the land will not be enforced if the covenant does not in fact touch and concern the land. Promise to repay security deposit needs to restrict use of funds to the benefit of the property, which it does not here. Person in this district would want to make sure that deposit is transferred to future landlords and spell out functions of security depositvii. Touch and concern the land (murky):

1) Some say affects use and enjoyment of land2) Some say affects market value of land

(c) Assignment and Sublease i. Creation

1) Assignment by Tenant:a) At CL, tenant transfers entire remaining term of

leaseholdb) Assignee comes into privity of estate with the

landlord but not privity of contract. Unless is novation/assumption new contract b/w L and T2 leaving T1 out of the picture.

c) Privity of estate makes the landlord and the assignee liable to each other on the covenants in the original lease that run with the land (see test above).

d) If landlord assigns the reversion, assignee and tenant are in privity of estate

e) If T1 retains right of entry, mostly say not enough of retained interest to create sublease and still assignment

2) Sublease by tenanta) At CL, if tenant transfers less than entire

remaining term of his leaseholdb) Sublessee is not in privity of estate with landlord

and cannot sue or be sued by landlord but landlord can: Terminate original lease due to breach which would extinguish right of T1 and deal directly with T2. Or LL can go after T2 in equity b/c LL was third party beneficiary

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c) Cannot be sued on contract either since no privity of contract

d) Sublessor is the landlord to the sublessee (both privities)

3) Jaber v. Miller: Intend of parties determines whether a transfer is an assignment or a sublease (modern rule). Transfer of the lease for lump sum, even if payment is to be made in deferred installments, indicates an assignment. 4) Covenants against assignment or sublease: unless

covenant to contrary, leasehold is freely transferable by tenant without L’s consent.

a) Arbitrary denial of consent: if lease contains covenant against transfer w/o L’s consent, older view: may arbitrarily refuse to accept new tenant. Minority/Modern view: denial of consent must be reasonable (Kendall v. Ernest Pestana, Inc., where court abandons traditional doctrine that landlord has sole discretion over when to approve a transfer, even tho L has reversion interest. Profit is not reasonable denial.

ii. Privities1) Of Estate: (Landlord/tenant relationship) Concept

designed to enable landlord to sue assignee of the tenant on the covenants in the lease (e.g. rent) in addition to assignor and give assignee right to sue landlord on his covenants (e.g. right to repair) even tho no privity of contract. Can sue for all covenants that run with the land. (test above)2) Of Contract: parties have agreed with eachother to do or

not do certain things; obligations bind even if not in privity of estate. Can sue for all covenants in the lease.

Think in terms of triangles (landlord, primary tenant, transfer of some kind)

Landlord T1

T2

f. A Form Lease

**Variety of ways to look at document and determine if lease, easement or licenseIf lease: LL cannot engage in self help and recover property; need to evict

Tests: If can keep out people

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EK

KE


If can relocateRetention of power to move

vi) Rent Control(a) Reasons/Method

i. Used during wars/inflation to prevent undue hardshipii. First rent freeze, then stabilization

(b) Problemsi. Shortage of housing, waiting listsii. Conversion to condosiii. Deterioration of housingiv. Less new developmentv. Restricts mobility of labor market

(c) Benefitsi. Rent stabilization betterii. Promotes stability (enhances personhood values-Radin)iii. Affordable housing

(d) Constitutionality:i. 12 Sup Ct cases on whether rent control is taking which requires just compensation from owners. Never ruled unconstitutionalii. Three prong balancing test of whether “taking” or not. What is the property being taken? Financial opportunity? Expectation of monetary gain?-in Lucas v. S. Carolina Coastal Commis. Price regulation. iii. Held constitutional on theory that bears rational relation to legitimate public purpose: welfare of housing consumers

(e) Reasonable Return: Rent control ordinances must provide landlord with just and reasonable return on her property. If does not have mechanisms for changing economic conditions, considered confiscatory and taking of landlord’s property without compensation

(f) Eviction of tenant: If could evict at end of term, would defeat purpose so always include provision requiring renewal of lease unless good cause to evict

2) Cooperatives, Condos and Common Interest Communitiesi) Recent rise in use of coops, condos and common-interest communities

(Hansmann, Condo and Coop Housing: Transactional Efficiency, Tax Subs, and Tenure Choice)

(a) Cooperative: occupants lease their individual units and collectively own the building thru shares; finance mortgage collectively

(b) Condo: Occupants each own units they occupy; collective ownership to common areas (tenants in common); must finance individually

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(c) Collective decision making costlier and less efficient than landlord/housing corp

(d) Condo spread due to tax reasons/subsidies and less risk based on others than in coops

(e) But Coops may save b/c only one mortgage (f) Operate outside of bounds of federal constitutional issues because

viewed as private entity. (g) Local governments like them because increase tax base but not

increase in services municipality would provide because homeowner provides more services (landscaping, garbage, etc.). Privatization effect.

ii) Rules of Conduct/Governance(a) Generally the test of validity is reasonableness but courts moving to

applying different standards to different rules(b) Restrictions appearing in originating document have strong

presumption of validity. Trend is to invalidate only if arbitrary or violative of constitutional right b/c buyers agreed to be governed by these terms and entitled to rely on enforceability.

(c) Nahrstedt v. Lakeside Village Condo Assoc: upheld prohibition on pets, even though pets were only inside her home. “Reasonablenss” test by legislature should not be based on specific facts of the case but to common interest development as a whole (arbitrary, more burdensome than beneficial to affected properties, etc.).

(d) 40 West 67th Street v. Pullman: Coop society ejects troublesome tenant. Question of which standard to use (business judgment rule or “Competent evidence”). Court uses unanimous vote as competent evidence to justify eviction.

B. Entity Property: Nonpossessory Interests1) Trusts

i) Creation:(a) Settlor: creator of trust; Must manifest appropriate intent to manifest

trust relationship (“given for the use of benefit of another”)(b) Would not fail if unaware of who trustee is (court can appoint)(c) Do not need actual words “trust” and “trustee”(d) Precatory language: avoid if creating trust (reciting of moral intent- I

wish to)(e) Trustee: has all managerial responsibilities; serves as fiduciary for

benefit of beneficiaries (benees). If no responsibilities to perform, trust fails. Property must be delivered to trustee.

(f) Trustee can be beneficiary but not sole trustee and sole beneficiaryii) Features

(a) Trust assets in absolute ownership so trustee can treat as full owner would

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(b) Very flexible, can be used to get around tax problems; on behalf of people not capable of managing their affairs.

(c) Discretionary trust: trustee can have flexibility on payment; easier to avoid creditors

(d) Trusts v. Life Estatesi. Life estate difficult to sell interest without permission of other remainders but in trust law, trustee has power of sale. ii. Life tenant can be sued for waste by remainder holdersiii. Trust interests can be placed out of reach from creditorsiv. Trustees have power to get loans based on trust, while life estate holder is not; broad powers of management

iii) Spendthrift Trusts(a) Settlor imposes valid restraint on alienation, providing that

beneficiary cannot transfer his interest voluntarily and creditors cannot reach it

(b) Despite general invalidity on alienation, validity of spendthrift restrictions on equitable interests in trust has been recognized in most states (Broadway National Bank v. Adams: where spendthrift clause said that creditors cannot reach any assets until in hands of beneficiary). Then, creditors are free to go after (but it’s a nuisance). Just as creditors cannot impose lease on future potential gifts if settlor were still alive. Not exactly the same tho, since benee has vested right in the money while none to gifts in his lifetime.

(c) In NY only money needed for support is immune to creditors in spendthrift trusts. Different rules but majority of states look at variety of specific uses of the money and declare that those are impossible for creditors to attach to.

iv) Trust Fiduciary Duties(a) Held to highest standards of conduct and is personally liable(b) Prudence: must make property productive, invest in prudent fashion. (c) Undivided loyalty: can reap no personal advantage from his position

nor put himself in situation of possible conflict of interest. i. Rothko v. Reis: Trustees set up contract with certain gallery giving exclusive right with very good deal. Terms of agreement alone were not enough to support breach of duty. Was confluence of events: Relationships, Stamos contract w/ gallery, Levine’s lack of objection, contract to sell all the paintings.

v) Changed Circumstances(a) Often in charitable trusts, conditions may change in ways that were not

foreseeable when created(b) Cy Pres (“so near”): operates where settlor who cannot be consulted,

expressed specific charitable intent but is impossible or undesirable to fulfill. Where also expresses related general charitable intent, may still be fulfilled with some judicial modifications of interests created and trust is not terminated

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(c) Wilber v. Owens: specific intent to use his notes impossible, but court says that dominant intent is improving the world by charitable uses so trust does not fail (Cy Pres)

(d) Courts are increasingly expansive in use of cy pres; more interventionalism

2) Corporations and Partnerships: not on the exam

CHAPTER IX Law of NeighborsB. Servitudes: encumbrance consisting of a right to the limited use of a piece of land or other immovable property without the possession of it. Important contribution is that they are contracts that “run with the land” and bind all future owners of both parcels.

1. Easementsa. Intro

Baseball Publishing Co. V. BrutonVarieties of Easements

b. Creation of EasementsSchwab v. TimmonsWarsaw v. Chicago Metallic Ceilings, Inc.Holbrook v. TaylorFontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc

Blocking sun: no cause for nuisance but was cause when blocking solar collector (Prah v. Maretti).

Easement?c. Termination of Easementsd. Misuse of Easements

Penn Bowling Recreation Center, Inc. v. Hot Shoppes, Inc.2. Covenants

a. Equitable ServitudesTulk v. Moxhay

b. Real CovenantsNeponsit Property Owners’ Association, Inc. v. Emigrant

Industrial Savings Bankc. Requirements for Covenants to Run

Real Covenant TheoryEquitable Servitude TheoryThird restatementEagle Enterprises, Inc. v. Gross

d. Notice and the Common PlanSanborn v. McLean

e. Conservation Easementsf. Termination of Covenants

Bolotin v. RindgePeckham v. Milroy

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Servitudes: Inability to resolve all conflicts with contractsJustifications: get around problems of bargaining in bilateral monopoly

1) Easement: Owner agrees to waive right to exclude certain kinds of intrusions (run with the land; in rem rights). Gets around problems of bargaining in bilateral monopoly. In between lease (transfer of possession) and licenses (revocable)

General Categories

i) Appurtenant: An appendage of a particular tract of land (the dominant estate); carved out of the servient estate; belongs to whomever owns the dominant estate. Parcels usually adjacent. Cannot be switched to In Gross without new agreement.

(a) Favored b/c it’s the usual intent and increases land value by more than the decrease in servient land (efficient) while In Gross just decreases value

ii) In Gross: Belongs to a particular grantee, not an appendage to a tract; only permissible if for commercial land use (primarily by RR companies). Gives owner right to use servient land but not considered appendage to his land. Assignable if parties intend. Ex: the right to erect a sign on another’s land (Baseball Publishing Co. v. Burton)

iii) Appurtenant/In Gross: (a) Transferability:

i. Appurtenant: benefits and burdens pass automatically to assignees of land to which they are appurtenant, if the parties(a) intend and (b) the burdened party has notice of the easement

ii. In Gross: also transferable unless involves a recreational easement (hunting, fishing, camping, etc.) if the parties so intend

iv) Affirmative: Easements begin with affirmative rights to enter land and perform an act on it (e.g., place clothing on lines over land, nail fruit trees onto neighbor’s wall, water cattle at pond on another’s land)

v) Negative: Forbid owner of servient parcel from doing something on his land that might harm a neighbor (courts more wary of creating these); much rarer

(a) England: limited to four categories (light striking window, air flowing in a defined channel, lateral support of a building, flow of water in an artificial stream); each could be created by prescription; no other categories allowed

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(b) U.S.: not limited to four categories; possible to create other negative easements (e.g., negative easement of view); no negative easement by prescription though

vi) Different from Licenses:(a) Licenses are mostly revocable(b) Licenses do not run with the land(c) Although some licenses are irrevocable (estoppel, movies tickets are

license)

Creation

i) Express: Written instrument signed by the party to be bound (because in land, must satisfy Statute of Frauds); if gives orally, grantee has a license; if intention not clear, assume an easement over fee simple if for limited purpose.

ii) Implication: Show that land and another parcel were (a) once held in common ownership and (b) at time of severance, the common owner was making an apparent use of the now servient estate for the purpose you now want to establish as a legal right. The use must also be (c) reasonably necessary for access.

(a) Example: O owns parcels A and B. Private road crosses A to reach a house on B. O transfers B to X. The road is reasonably necessary for access to the house on B. X has an easement by implication over A.

(b) The prior existing use that forms the basis for implication is a “quasi-easement” because the use pattern looks like an easement but a unitary owner cannot hold an easement against himself

(c) No easement by implication when original owner made no use that was so obvious and continuous to show it was meant to be permanent. No easement by implication if a use is not reasonably necessary for the beneficial enjoyment of land (Schwab v. Timmons)

(d) Notice argument against implication: It is so easy to express any limitation to be reserved over land or conveyed with it that the necessity of raising any such reservation by implication is not apparent (Schwab v. Timmons) ????

iii) Necessity: No need to show prior use of the easement, but strict construction of the necessity requirement governs. Strict necessity means that easements by necessity will usually involve cases where the owner (a grantee) is now landlocked. Does not just mean suffering inconvenience (Schwab)

(a) Rationale: public policy or parties intended to create but overlooked

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(b) Example: Parcels A and B abut. O transfers B to Y. B is now completely landlocked. A route of access across A is a matter of extreme necessity if parcel B is to be used productively. Y has an easement by necessity.

(c) Extinguished: When strict necessity disappears (another road is built, etc.)

(d) No easement by necessity if party seeking the easement caused the parcel to become landlocked through conveyance (i.e., grantors may not seek necessity for a retained parcel that is now landlocked) (Schwab v. Timmons)

(e) Impeaching your own grant: O transfers A to Y and keeps B for herself. O argues that an easement over A to get to B should arise by implication or necessity. O has impeached her grant and the courts will likely deny an easement. O is in the best position to retain a use in the deed to Y. (Did herself in)

iv) Public Easement: States have used custom for public beach rights; NJ uses it as public trust.

v) Estoppel: If there is no writing (express grant), prior unity of title between now neighboring parcels and apparent use (implication), or strict necessity, find whether landowner gave oral permission to use land for a certain purpose and substantial expenditure in reliance on that permission was made, without objection

(a) A license to use land becomes irrevocable through estoppel when the licensee makes a substantial expenditure in reliance on the licensor’s permission and it would be unfair to permit revocation of the license (Holbrook v. Taylor)

(b) Easement by estoppel = irrevocable license (license + interest = irrevocable); lasts as long as necessary to vindicate the owner’s reliance interest

vi) Prescription: Stepchild of AP. If there is no writing, prior unity, strict necessity, or oral promise and reliance, consider whether there was use of land for a substantial period of time (for the running of the state’s statute of limitations), and the requirements of (a) actual, (b) adverse, (c) open and notorious, (d) continuous, and (e) exclusive use are met. As opposed to AP, requirements in terms of use and not ownership.

(a) Adverse: Majority: Presume the use is adverseMinority: Presume adverse once Open and Notorious is metMinority: Presume permissive use (often based on distinct variables

– whether parties are related, land is unenclosed, etc.)

(b) Open and Notorious: As with Adverse Possession, may be based on constructive knowledge

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i. Issue often comes up with underground sewers/drains. If could reasonably be discovered by inspection, satisfied.

(c) Continuous: Extent depends on nature/character of the use; may be seasonal but not sporadic and occasional.

(d) Exclusive: Greater flexibility than for Adverse Possession (one or more individuals)

i. Use of road must follow a definite and certain line of travel; slight deviations and for the same purpose sufficient (Warsaw v. Chicago Metallic Ceilings) ii. Continuous use of an easement over a long period of time without true owner interference is presumptive evidence of its existence in the absence of mere permissive use (Warsaw v. Chicago Metallic Ceilings)iii. Adverse User is using property in the way a party with a granted easement would use it; there is no need to show use approaching ownership

(e) No negative easement by prescription in the U.S.: No trespass, no prescription (notice-serving function). Since the owner had no cause of action on which the statute of limitations has run, would be unfair to give other party a prescriptive right that owner could not prevent from arising. Fountainebleau Hotel: no new negative easement for sunlight unless by express grant, not prescription. But can claim nuisance if solar panels blocked.

vii) Conservation Easement: Tax incentive: by giving gov’t agency this easement that you will not develop land, get tax benefit

Termination:

i) By deed (release/extinguish the easement), law (gain common ownership), adverse possession (easement is blocked and dominant owner does not object, SOL runs); abandonment (prolonged nonuse and indication of intent to abandon)

ii) One cannot use an easement for land other than the dominant parcel; if the use is too intertwined, the use will be enjoined (Penn Bowling Recreation Center, Inc. v. Hot Shoppes, Inc.). Servient owner can use the easement as long as does not unreasonably interfere with it.

iii) Appurtenant easements may not be expanded beyond the scope defined at the time of creation, except in the event of reasonable and foreseeable changes in use that benefit the dominant owner and/or that occur as technology changes or improves.

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iv) Courts have applied injunction (Penn Bowling) as well as liability (Brown v. Voss) to remedy the addition of parcels to the dominant parcel

v) Intensity of use will be assessed according to rule of reasonableness (Penn Bowling)

2) Covenant: Promise regarding use of land (right to insist on use/nonuse) (no duties of forbearance in third parties). Agree to abide by certain restrictions on the use of his land for the benefit of one or more others. To do or not do something. Less often prescribe affirmative behavior on part of burdened landowner. More of a governance than easements.

Ex: building use, building height, door color, promise to maintain fenceCovenants run with the land if conditions are met. More in personam than

easements because generally do not give rise to rights against third parties, other than successive owners.

i) Real Covenant : runs with the land at law. (remedy for breach is damages in a suit at law); if want equitable relief must show that covenant qualifies as equitable servitude.

Requirements:

(a) Notice requirements:

i. Covenant must be in writing (unless implied covenant) (Sanborn)ii. Purchaser of servient estate is on noticeiii. Original parties intended for both the burden and benefit to run with the land

“This will run with the land”iv. Privity of Estate:

1) Original parties were in privity of estate with each other (for burden to run) (HORIZONTAL)

Horizontal: traditional test required covenant to be part of a lease or deed dividing property between present and future interests (creating simultaneous interest); now any grantor-grantee relationship will do (establishes instantaneous privity)-Courts wanted to be more strict with burden – to keep land free of burdens undiscoverable; since benefits do not adversely affect marketability, no horizontal privity requirement

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2) Subsequent owners in privity of estate with original parties (for benefit or burden to run) (VERTICAL)

Vertical: traditional test required an owner to succeed to the entire interest held by the original covenanting party (not the entire area of land, but an estate that lasted as long as the prior estate) (e.g., a life estate conveyed from a fee simple would not create vertical privity)Modern: strict test still often followed for burden to run; for benefit to run, party need only succeed to some of the interest in the estateException: Homeowners’ association: may sue to enforce benefit of covenant even though association succeeds no land owned by original promisee. Regarded as the agent of the real parties in interest who own the land (Neponsit)

-Bona fide purchaser of the land is not bound at law if has no notice of the covenant.

(b) Substantive requirement (which restrictions are allowed):

i. The covenant touches and concerns the land ii. T&C: usually satisfied when covenant restricts use of servient land and is of use to owners’ of dominant estatesiii. Modern tests include: affects the quality, value, or mode of the interest conveyed; rule of reasonableness; alters legal relations/advantages or burdens of owning tract of land (Neponsit)

1) Compulsory fees for maintenance of public areas appurtenant to ownership of estate touch and concern the land (Neponsit Property Owners’ Association, Inc. v. Emigrant Industrial Savings Bank)

2) While a promise to spend money on property affected by covenants benefiting the burdened lots is akin to an affirmative covenant, it T&C the land because it alters the legally enforceable advantages and burdens of the parties as owners of interests in land (Neponsit – very broad view)

ii) Affirmative covenants: requires affirmative conduct of the servient owner (e.g., repairing a fence or road, paying a sum of money)

(a) Haywood v. Brunswick Permanent Benefit Building Society (England): burden of affirmative covenant does not T&C

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i. Exceptions: covenant to repair fence on boundary line or driveway (usually when the agreement was prospective and imposed on land of each party a burden, such as dedicating a portion of each lot to a party wall)

(b) Miller v. Clary (NY court commits itself to the English rule prior to Neponsit): court will not compel grantor to forever operate machinery on retained parcel

(c) Reasons courts are reluctant to enforce affirmative covenants against successors:

i. Orders to perform acts require judicial supervision; enforcing an affirmative covenant may impose a large personal liability on a successor while a negative covenant is limited to successor’s loss of investment in the land itself; affirmative covenants look like perpetual rent or feudal services. May be changed circumstances or fear of dead hand control with no benefits (Eagle Enterprises, Inc. v. Gross)

iii) Negative: restricts a use which can be made of the servient landiv) To make change to covenant in complex, need unanimous approval

usuallyv) Sunset provision: E.g. covenant lasts 30 yearsTERMination of covenants at end of equitable servitudes

3) Equitable Servitude: Covenant (whether or not running with the land at law) where remedy for breach is injunction in a suit in equity

i) Requirements:

(a) Purchaser of servient estate is on actual or constructive notice at time of purchase (for burden to run)

(b) Exception: Negative equitable servitudes may be implied from general plan for development of residential subdivision even if no writing (Sanborn v. McLean)

i. Done b/c purchaser relied on promise of subdivider to restrict other lotsii. If developer had general plan and purchasers had notice of covenants in prior deeds, court will imply covenant iii. General plan must exist at time developer sells first burdened lot within general plan; if arises later, cannot impose burdens on lots previously sold without burdens.iv. Servitude is Reciprocal (similarly binds other lots in subdivision), Negative (forbids some use of land/courts will not imply affirmative) Easements (interest in the land)

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(c) Original parties intended covenant to run with the land

(d) The covenant touches and concerns the land(e) No horizontal or vertical privity of estate required (f) Exception (for benefit to run): when a covenant is made for the

benefit of a third party, it cannot be enforced by the beneficiary unless he can show that he acquired title to his land from the original covenantee, either before or after the covenant was made. In these jurisdictions, privity of estate is required in equity for enforcement of the benefit by the third-party beneficiary

ii) Remedies compared: an injunction may be more efficient overall(a) Ex: A wants to build commercial, gain of $75 but B will lose $30.

If liability rules, A will pay 30 to B and build. If injunction, B can bargain with A and get 30-75 for the injunction. If buys off for 55, A gets 20 gain and B gets 25. Both are better off.

(b) No privity requirement for equitable servitudes because, unlike a real covenant which attaches to an estate in land, an equitable servitude burdens the land itself. In this respect, it is like an easement.

(c) Restatement treats negative easements and restrictive covenants as both “negative covenants.”

i. Restatement: also treats both equitable servitudes and real covenants as “covenants running with the land” if there is intent, notice, and enforcement does not violate a statute or public policy.ii. Restatement: a court may enforce a covenant running with the land by any appropriate remedy or combination of remedies, including declaratory judgment, compensatory damages, punitive damages, nominal damages, injunctions, restitution, and imposition of liens

(d) It is inequitable for the purchaser of a parcel at a price reflecting the burden of a covenant to be able to charge his purchaser the price of unburdened land (Tulk v. Moxhay where buyer of land planned to build even though was covenant prohibiting such)

iii) Termination of Covenants and Servitudes:(a) Merger: if burdened and benefited land become property of one

person(b) Equitable servitude: estoppel, hardship outweighs benefit, change of

conditions(c) Abandonment: but an affirmative covenant cannot be abandoned(d) Eminent domain: government takes burdened land and condemns

covenant, owner of benefited land entitled to damages

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C. Zoning and Other Land-Use Regulation1) Zoning and other land use regulation:

i) Created by state and local lawii) Nuisance and covenant not enough to deal with problems of congestion,

factories, industry, unfit areas to live. Not effective b/c(a) Nuisance: courts didn’t enforce in all situations(b) Covenants: mostly used for subdivisions, not effective everywhere

iii) Zoning goal was to plan ideal cities: Resulted in:(a) Segregated land use, although we know now it’s inefficient(b) Single Family Housing, or duplexes if not possible: highest on

hierarchy of land uses(c) Open Space(d) Anti-Apartment Bldgs: cause traffic, accidents, difficult fire

management, health problems for children, air circulation, etc.iv) Village of Euclid v. Ambler:

(a) Established constitutionality of zoning, not in violation of due process by diminishing potential value of land; led to increase

(b) Supreme Court justified with “rational basis test”: rationally related to legitimate public purpose. Doesn’t need to be the best way to achieve the objective.

v) Arguments against zoning: Deprives of due process, cannot be justified by compelling state interest, deprives of equal protection b/c no rational relationship to permissible state objective, Taking (of property without compensation)

vi) Nonconforming Uses: typically, grandfather nonconforming uses of property in existence when zoning plan enacted.

vii)Zoning Policy: controversial: can potentially deal with land-use externalities, increase value of home, provide services homeowners will want but: can be poor planning, bureaucratic, high costs, class/racial segregation

viii) Exclusionary Zoning: Southern Burlington Country NAACP v. Township of Mt. Laurel: town faced with rapid growth and wanted to save money on property taxes caused by schools. Encouraged middle to upper income housing and precluded low and moderate income housing. Made no provision for low income housing and court found that patterns resulted in economic discrimination. Holding: cannot use fiscal reason alone to justify, housing is a basic right. No requirement to build low income housing but need to make it possible. Other courts go further and require affirmative steps.

ix) Religious Land use and Institutionalized Persons Act (RLUIPA): (a) Claims of discrimination and exclusion contend with municipalities’

stated desire to protect tax bases and amenities from religious land use(b) RLUIPA: forbids gov’t agency to impose or implement land use

regulation in manner that imposes substantial burden on religious exercise of a person… unless it’s in further of compelling gov’t interests and is the least restrictive means of furthering that interest.

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(c) Sts. Constantine and Helen Greek Orthodox Church, Inc. v. City of New Berlin: city concerned about use repercussions of allowing church in residential neighborhood (may later revert to non-religious institutional use) and Church sues over RLUIPA and wins.

(d) Issues are what constitutes a “substantial burden” (ordinance that wholly excludes houses of worship in residential areas?) and does this legislation go too far in favoring religion.

CHAPTER XII Takings

A. Eminent Domian1. Public Use requirement2. Just compensationB. Regulatory Takings – Basic ContoursC. Regulatory Takings – Extensions and Applications1. Scope of Police Power2. Denominator Problem3. Problem of Exactions4. Temporary Takings5. Litigating Takings Cases

A. Eminent Domain1) Intro:

i) 5th Amendment: nor shall private property be taken for public use, without just compensation

ii) 14th Amendment: Due Process Clauseiii) General idea that owners should be protected when costs of improvements

should be covered by everyone (compensation)iv) Coase:

(a) ED transforms property rule protection into “liability rule” protection. Government allowed to compel transfer of property rights in return for payment of just compensation

(b) Avoids bilateral negotiating problem and compensation avoids extreme difficult for landowner

v) Requirements: public use; just compensation; notice; opportunity for hearing

2) Public Use Requirementi) USSC hold that public use means “public advantage” and that preservation

of jobs or taxes qualify. Restrictive usage would be actual “use by the public” not favored by Sup Ct.

ii) Federal courts have almost never invalidated taking of property for failing public use requirement but economic use justification, trend is changing

iii) Kelo v. City of New London: Government may use ED to transfer land to private individuals if benefits the public with economic development (but

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strong arguments against- too broad, advantage to private company, slippery slope). Great deference to legislature

3) What is “Taking”?i) Taking titleii) Taking permanent possession; physically invades property permanently, no

matter how trivial the invasion (Loretto). Can be done through 3rd parties too (cable comp)

iii) By physical possession: lose right to exclusion, autonomy, property value while regulatory takings only chop out some sticks in bundle

iv) Different from easements: permanent right to use vs. right to possessv) Miller v. Schoene: State decides that cutting down one tree to save another

averts the greater harm and compensates (Coase)

4) Regulatory Takingsi) Does not involve physical entry but regulation under police power to

protect public welfare (zoning)ii) Regulatory Takings Doctrine: if regulation is especially severe, regulation

deemed taking and requires compensationiii) Tests to determine whether permitted without compensation or taking

(ED or police powers):iv) Pennsylvania Coal Co. v. Mahon:

(a) Diminution of value: if more severe, need EDi. What “property” is damaged (units of analysis)?ii. PA Coal: Holmes: rights to coal; Brandeis: overall rtsiii. Penn Central: Maj: surface rts and air rts; Dis: air rts

(b) Average Reciprocity of advantage: not a taking if reciprocal advantages and disadvantages (restricted owner gets some utility - zoning)

But: Brandeis says this is disregarded when stopping nuisance(c) Protection of public from nuisance harms: if protecting, don’t need

ED; Holmes: damage to one house not public nuisance b/c not common;

v) Penn Central Transportation Co. v. NYC: mirror image of Penn w diff result(a) Economic Impact/Diminution of value(b) Character of gov’t action: physical invasion or just adjustment of

benefits and liabilities of owner(c) Interference w/ reasonable investment backed expectations: does

not impair present use and expectations of train station profitability(d) Removes: “preventing nuisance” and “reciprocity of advantage”

which were in PA Coalvi) Lucas v. South Carolina Coastal Council: law prevented development on

beach after he bought(a) Destruction of all economic value: if regulation denies all

economically beneficial uses of land it is categorical taking, unless

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state can justify its actions as preventing common law nuisance (protecting the coast from development does not fall under this)

(b) Criticism: Nuisance is too narrow a confine for the exercise of regulatory power in a complex and interdependent society. When is property wiped out? Is it when the total value is destroyed or partial?

Things to look for (1) physical occupation not in context of easement (2) right to advise property at death. (3) rule apply in Lucas—denial of total economic use. (4) rule apply in Dolan

In Dolan and Nollan: say that regs requiring dedication of permanent easement of public access would be takings under Loretto.

5) Just Compensationi) Approaches for estimating

(a) Recent transactions in which property in question was sold(b) Recent transactions in other parcels in area(c) Estimating and capitalizing rental value(d) Determining replacement cost of land and improvements taken and

adjust downward o reflect depreciation and wear and tear(e) Opportunity Cost of having land taken away: highest and best use of

land other than the use proposed by condemning authority (e.g. subdivision development) (US v. Miller)

ii) Problem: no recovery for subjective value owners attach to propertyShould residential props have higher standard of review? Radin

iii) Value in time: US v. Miller: Value paid was to be before gov’t authorized the project to avoid windfall

iv) Eminent domain typically used when negotiations break down so no true fair market value (failure of property rules, go to liability rules)

v) Quick Take Statutes: transfer title to condemning authority before all contested issues raised are resolved (streamline) to avoid costly delays from lawsuits

6) The Denominator Problem

i) Denominator Rule: must compare values before and afterNumerator: value of property taken by regulation to the Denominator: value of property before the regulation

ii) How do you determine the denominator (for the denominator rule)? Courts argue over how. Then came with penn central, and keystone which overruled Penn Coal. In Keystonethe court said separate support estate is a legalistic notion with nothing to do with how we should define the denominaror. Regulation had more clearly expressed public benefits that the regulations in

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Penn Coal. In Penn Central, said we won’t separate the air rights. It seemed to do away with conceptual severance in the courts.

iii) As in Loretto, we see the issue is not dead. That court suggests the notion of complete severance (.

Philips v. Washington Legal Foundation—NOT RESPONSIBLE FOR Palazzolo v. Rhode Island—If you have notice of a regulation prior to acquiring it you do not automatically preclude your ability to challenge the regulation. Like Penn Coal, there can still be claim without a totaldiminution in value. While post regulation purchase is fatal to a claim, it may havebaring to it (you bought the property cheaper because it was regulated).

Tahoe-Sierra Preservation Council v. Tahoe Regional PlanningAgency Complete ban of activity for 32 month period, the temporarydestruction of value will not be considered a taking. The court refuses to accept conceptual severance (that the 32months is a separate entity). The denominator should be something physical and geographicaland temporal for the denominator (which allows the majority to say thereis not a per se takings). The 32 month period is a small fraction ofthe whole and therefore is not a taking.

7) The Problem of Exactionsi) When apply for building permit, city may impose condition on development

which benefits city not the owner (e.g. public path)ii) Exaction must be logically related to specific public need or burden that

owner’s building creates or to which it contributes; mitigates impact of development

iii) Must be essential nexus to dispel suspicion that it’s subterfuge to allow physical occupation of property without paying (Nolan)

iv) Test: Is exaction legitimate state interest; Is there nexus between legitimate state interest and permit condition; is there reasonable relationship to projected impact of petitioner’s proposed developer (Rough Proportionality Test) (Dolan v. City of Tigard)

8) Temporary Takingsi) Temporary and Partial takings also subject to compensation

First English Evangelical Lutheran Church v. County of LA Government’s should we require a period of damages before thatregulation is considered null and void. The takings clause by its terms is self executed (that a

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sovereign government must be compensation). Because of this nature ofthe clause, it trumps all other kinds of limits that can be placed onjudicial relief (e.g. sovereign immunity). It applies to the states through the 14th amendment. Tahoe-Sierra Preservation Council v. Tahoe Regional PlanningAgency (2) A temporary taking of value is not a per se taking and must beevaluated under the ad hoc balancing test of Penn Central. The moratorium on development. 3 precedents that do not apply: First English sets down the rule that L owners who believe thattheir property has been taking by government regulations may seekdamages from the government for that temporary takings. First Englishis only controlling regarding remedies (they assume there is already atakings and just comment on the remedy). Lucas doesn’t control here because that case only found that aregulation that permanently denied an owner an economic and productiveuse was a property. Here is a moratorium. The precedent that is available to the court in context tophysical takings, that should not automatically deal with regulatorytakings.

9) Litigating Takings Cases Williamson County Regional Planning Comm. V. Hamilton Bank ofJohnson City. Test: 2 prongs if you want to have a takings claim to be “ripe”for a hearing in a federal court. You must do 2 things (1) A final decision by a government entity in charge ofenacting regulation. (2) If you want to go to the federal courts with your takingsclaim, you must first bring an as applied takings claim in state courtand after that your claim will be ripe.• By the time you do this, such as issue and claim preclusion willdo away with 99% of the case. Ripeness is necessary to prevent cases that don’t have aconcrete injury from being heard. For takings law, the fitness for issues of review is a federalquestion. It is setting up a false bargain, that if you do what we say andthen you will not be able to bring it to the supreme court. San Remo Hotel v. City and County of SF Is devestaing on when you can bring a takings claim and in whatjurisdiction. A constitutional right to compensation that is only violated ifyou have the very goverrnemnt’s arm that is taking it away from youdeclare it a taking and even then the federal court may not review it.

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CLASS REVIEW:Policy question and ½ dozen short answer questions is where to becreative. Does the material translate into other contexts. Look at theoutline and see other vehicles that will get you across the course. Ex.Possession started with original acquisition and the timelinelabortheoryproximity rulesIP (is this 1st possession or 1st possession +creativity)accession doctrine. Is 1st possession a sufficient basis tobuild property rules. Could we build it around something else, e.g. thelabor theory?

1) A lot of tools with dealing with problems, some have evolved intoothers into years. How do you look at them and decide which is best tosolve a problem. Eg. Nuisance and servitudes servitudes.Leases v. licenses v. life estates. Trusts v. life estates. ---

2) Unwritten rules and custom.3) Various times you see attempts to plug gaps in existing laws what wewant to do (e.g. Fair housing act when looking at other methodsavailable before the act was enacted).

4) Role of property rules and liability rules. Why do we have both?Which one do courts use?

Servitudes at the end of the day are important stuff(A) what is thedifference between the two and waiving the rights to exclude (easements)and promises (covenants), Than you have moving into licenses. Then youhave courts tend to view implied easements with skeptism. The languagein the easmenetn is important, the languages must be … Parties creatingeasements and impeaching their own land. Then there is compensation foreasements. Also switching from proerpty to liability rules in anadverse user who gets easement (which rule would be better).Prescriptive easements that approach a level of comprehension that it isalmost AD but doesn’t have as many requirements. 4 negative easementsallowed under CL. NOTICE.

Covenants seemed odd because it was one of the few areas trending moretowards property than a contract based rights.

Question for short answer: Chose 2 areas of property law that utilizepossession in different ways and which is better?

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Assignment-Sublease: L leases to PT term of years 5 years for $900 amonth and the T covenants to pay rent and not to sublet or assign w/outpermission of the L. Later, with the L’s permission, PT assigns to T1(not assumption of any of the responsibilities) and now T1 assigns to T2without the L’s permission and T2 defaults. L sues T1, what will he beable to collect? The key rule to solve this problem. When somebodyassigns with a L’s permission, all subsequent assignments are ok unlessthe L explicity rejects all future assignments. The future assignementto T2 will be allowed. T1 is no longer in privity of estate (which isT2) and doesn’t have privity of contract (which is T).

The REP does applies to trusts (but some states now allow for it).

For Coase, just be clear what it is saying. Given the fact that thereare transaction costs, how do we mimick in a world that does not havetransaction costs. It assumes reciprocity of causation, it doesn’ttranslate well outside of nuisance. The broader point is thatentitlement doesn’t matter because ppl will bargain ot the same number if no transaction costs.Given the transaction costs, that his how we make one decision overanother (ppl making decisions vs. firms (who minimize transactioncosts), gov’t regulation.

Prescriptive easements similar to AP (except AP vs. Adverse Use). Thedifference would look like that for any of the 5 prongs, you arefocusing on use that would be akin to what someone holding a realeasement would do (PE) vs. use that soemnoen with real ownership woulddo (AP).

two issue-spotting questions - 1 hour apiece

one law/policy question - 30 minutes

three short essay and/or problem questions at 10 minutes apiece

one short essay - 15 minutes

30 minutes extra to plan your answers

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propoutline_tofcincorp- macey

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