b. Adverse Possession
Two parties making claims to land
o Record ownerrecording act requires person who acquires interest in real estate to
record that interest
o Adverse possessor
In minority of cases have whole hog adverse possession, but majority are boundary line disputes
with two adjoining parcels of real estate both of whom have true owners but one true owner has
extended fence, structure, etc. a minor amount onto the other partys landboundary line disputes
inevitably trigger adverse possession claims
Policy behind adverse possessionwhy do we have adverse possession?
o People shouldnt sleep on their rightsif didnt think to recover property within statute
then didnt value the propertyplus there is chance of estoppel reliance
o Estoppel reliance theoryadverse possessor may rely to their detriment on the fact that
no one lives there
AP who is innocent might make improvements to land and invest money only
to find out that it belongs to someone else
This doesnt apply to knowing APs but only innocent APs
o Pro development concept
the govt values real estate development thus allowed adverse possessors to
gain titles if they had made improvements to land, etc
not as relevant today esp from environmental point of view
o efficiency
if fence is on others property make assumption that it belongs to that person
on other hand could just go back to records office instead of going through
entire AP trial
AP statutesexceptions and limitations
o Some allow recovery for AP in shorter time if
AP has paid real estate taxes (CA)
Not applicable to boundary disputes generally though in foreclosures
can be relevantforeclosure sale may be defective and not give an
actual title to the buyer but since buyer thinks he has title and pays
real estate taxes, he can gain title by AP
Easement by prescription can be gained without paying taxes but not
AP thus no titlecan gain title by adverse possession if pay taxes
In CA no AP at all unless pay taxes though can have easement by
prescription
AP has color of title
Deed to landAP thinks gives him title but doesnt
Some papers cant even be color of title bc grantee knows its
fraudulent
Color of title may help AP get title to whole land when only used part
o Monroe v. Rawlingshunters bought land at tax sale and
even though purchase invalid, gives them color of title
which helps them gain AP to whole land even though had
only used part of it
o Some land/people not subject to adverse possession
Land owned by government
Can argue this is because we all own the government land
But in contrast land owned by warehousers is subject to it even
though many shareholders would lose, unions, pensions, etc. so this
isnt that strong of an argument
Exclusive
Exclusive of the true owner. If AP and true owner are both using property in
reasonable way then negate AP.
Courts more and more permitting some use by third party as well as use by AP
that does not necessarily destroy exclusivity
Porter v. Poseythird parties had used tract but true owners hadnt so
no exclusivity problem
Hostile
Without the owners permissiondoesnt mean must be angry, mad, etc.not
hostility in that sense
If get permission at any point the AP clock stops ticking
o i.e. if one side grants other easement to use land that will
avoid AP, but if easement only 5 years then clock starts
ticking at that point
Cant be AP if by through or under the owner
In sense treat the person who does the right thingask owner if can
use landworse than one who does not ask permission
State of mind? Different jurisdictions have four different tests
1. Claim of right thought it was minemust have claim of right
i.e. think he owns itmust be innocent in good faith and have made
mistake
o Essentially must be mistake which is often the case esp in
boundary line disputes
2. knew it wasnt minemust be an intentional
wrongdoer/knowing thiefmust know it is not ones own land but
still try to own
o Jurisdictions that like this theory say this is the way one
shows adversenessME view
o Policy argument would be to restrict AP to real land
grabbing and not include boundary line disputes
3. emerging view intent to claim as ones ownmust be an intent
to claim as ones own but assumes that doesnt matter whether
intentional or mistakenfrom time went into possession claiming it
as ones ownmore efficient than 1 but less than 4
o Manillo v. Gorskiencroaching steps are hostile bc intent to
claim land as her own but AP case fails anyway bc not
notorioussmall encroachment cant be notorious
4. hostility element of AP can only be destroyed by permission or
licensedoesnt even consider state of mind but asks whether AP
objectively uses land as reasonable person in that community would
have. Most efficient means to establish AP
o Nome 2000 testsame as Monroe for actual requirement
AL natives use land and other party tries to argue cant have
had hostile possession bc their culture doesnt believe in
owning land, ct rejects, says used land as owner would have
thus hostile
o Whitcombsquatter caseonce court labels someone a
squatter cant get title by AP bc at most view selves as
expectant licenseeexpecting to stay on land until owner
tells them to go
Continuous
Be there for statute of limitations and must be continuous
Permission will stop AP but AP can choose not to accept permission which
makes his AP more hostile
Person physically kicks others off land or keeps them from coming on
Actual ousterkicking others off land
AP applies when true owner has fee simple defeasible as well
o Easier to prove if determinable, harder to prove if SCS
In re. 88 acres
2. Transferring Property
a. Intervivos
Voluntary transferstwo types of deeds
o Warrantee deed not worth anything unless title is good so sellers pay for buyers title
insurance that way if title turns out to be bad have reserves to go after
o Quitclaim deed passes everything seller has to buyer but still if title turns out to be bad no
cause of action against seller bc quitclaim deedgenerally govts wont give warrantee
deeds so more important to get title insurance and make sure title policy doesnt have
certain exceptions
Involuntary transfers
o Seller doesnt want to sell the property at the last minute is forced to due to contract
o Govt wants to buy land and seller doesnt want to but have to so long as govt pays fair
market value
o Mortgage or tax foreclosure
o Adverse possession
b. Intestate
Definitions
o Heirssomeone who takes your property if you die without a will
By and large people who take under intestate succession get percentage of every
asset in the estate
Can still have heir even if have a will because there are people who WOULD
have taken your property if you didnt have a will
o Consanguinityrelated by blood
o Affinityrelated other than blood i.e. in laws
o Ancestorpeople from whom one descend lineallyparents, grandparents, great
grandparents and onalso called ascendants
o Descendantspeople who descend from one lineallychildren, grandchildren, etc.
also called issuethis includes adoptees
o Lineally consanguinityancestors and descendants
o Collateral consanguinityrelated by blood but not lineally consanguineousbrothers
and sisters, aunts and uncles, etc. related by blood and share common ancestor
o Default willeach state has a default will statute when there is no will
o Per stirpeseach person takes by representationif heir dies then his descendants take
by representation
if three children then all three take equally
but if two children alive and third dead but leaves two children, then two
original children take one third and grandchildren each take one sixtheven if
just said to my children and one dead, would probably go to his or her heirs
o Per capitaeach person takes an equal amount even if heir dies
Thus in above example the children and grandchildren would share equally
o First cousinsshare same grandparents, first cousin once removedfirst cousins child,
second cousinshare same greatgrandparents, second cousin one removedtheir child
o If die without any heirs at all property escheats to the state
Some states go to a certain degree of consanguinity before property escheating
to state whereas others go to the nth degree before it goes to state
o
o
o
o
o
Wills
o
o
Joint tenancy
Tenancy by entirety
Payable on death bank accounts
Trusts
Beneficiaries of trust have equitable title and trustee has mere legal titlecould
be to settlor for life then remainder to my children because when settlor dies
trustee transfers
Life insurance
Estates
o Freehold
Feepotentially infinite duration OR of uncertain duration
Simplenot much meaning anymore except to distinguish from tail
o Absolutelargest bundle of rights
no restraints on alienation (ability to transfer)
will be transferred by will or intestate succession
upon death
Tail
Life
o Nonfreehold
Tenancies
Fixed, periodic, at will, sufferance
a. Fee Simple Absolute
Fee simple defeasablecourts do NOT favor these and will construe ambiguity with presumption
against restrictionmust have magic language so long as or until to be unambiguous
o DeterminableO immediately reenters when condition occurs
Examples: From O:
to A and her heirs so long as land is used for X religion then back to
grantor
to A and her heirs until liquor is sold on premises
to A and her heirs so long as dont marry outside of X religion
to A so long as land used for church purposes
o Even if dont say back to grantor probably good enough
key words: until, so long as, but
O has future interest called possibility of reverter which is contingent upon event
happening
10
11
12
For right of entry in some states if wait too long waive right of entry
Also certain conversations may waive right of entry bc may basically
be saying waive right of entry in future but not determinable
o Ex: from O to A so long as no liquor on premises and A then
serves liquor and O tells A thinks is good idea. If right of
entry then conversation alone may be enough to waive right of
entry, but if fee simple determinable still problem bc of
automatic nature
o O can waive title on determinable by giving deed to A but just
saying that thinks breach of condition is good idea probably
not enough
c. Fee Tail
Fee tail
o Examples
From O:
to A and heirs of his body
to A and heirs of his body, then to B and his heirs
o History
In England when said to A and his heirs could have meant life estate to A and
each of heirs and go down the line and if no more descendants back to O
Court didnt read it that way and instead said to heirs were just words of
limitation and thus to A and his heirs meant fee simple absolute
Court wanted to create something to convey land to A and his children but if he
had no lineage then to B
First called it fee simple conditionalconditional upon him having a
child and once has child can convey in fee simple absolute
Establishment didnt like this system because wanted land to descend
to lineage and if no lineage back to original ownerwith conditional so
long as had child could do whatever wanted which wasnt objective
What really wanted was series of life estates in the surviving eldest
male issue and when the line runs out reversion to O
Created fee tail to convey this objective: to A and his direct heirs and if they died
out then to B
Who could make this a fee simple absolute?
O could because they have reversioncould convey the reversion to A
otherwise would need all of As issue to agree to fee simple absolute
but some are obviously not born
environmentalists would love the fee tail bc land used at most for crops, trees bc
cant convey fee simple absolute
fee tail worked for 200 years then court began to have problems with it again
and tried to disentail land using devices bc didnt want it tied up
had A execute deed conveying his interest to X and then X convey back
to A and then A would have fee simple absolute even though it doesnt
make any senseviolates notions of property law
hostility to the fee tail in the US bc represented everything Englisharistocracy,
land tied up, etc.
most states have leg to render fee tail obsolete
o some say remainder that follows executory interest so to A
and heirs remainder B means A has fee simple subject to
executory interest and B has ex int cont upon A not having kid
13
Examples:
o O conveys to A for life, then B for life, then C for life, then D and his heirs.
o compared to O conveys to A and the heirs of his body (meaning life estate in A and
remainder in fee simple absolute to As surviving issue per stirpes): assume A is 21 years
old at conveyance
In first instance land is tied up but in way that law would not view as violating
public policy bc if can get B, C and D to agree to it A can convey fee simple
absoluteeven though says to D and heirs that means fee simple absolute so no
problem in that areaalso if D died money would go through his will or
intestate succession or to whoever he sold it toNOT to C
In second instance (fee tail) land is tied up in way that does violate PPuntil A
dies and she has no issue at that time bc cant get future heirs to agree to convey
fee simple absolute bc they do not have rights to it until A dies and all of As
issue are present to make the decision
If A were 90 instead still couldnt convey fee simple absolute but if he
still didnt have any kids might take chances that wouldnt have any
kids and thus own fee simple absolute
d. Life Estate
e. Future Interests
14
15
o
o
o
o
1) not created at same time and in same document that creates prior
estate. O still has fee simple determinable and this was not created at
same time Bs interest was (prob long time ago).
2) remainder not following life estate or fee tailfollowing a fee
simple defeasible instead thus not allowed
3) Bs interest cuts shorts Os interest because if B never reached 21 O
would have fee simple absolute thus if he does turn 21 then he cuts
short Os estate
thus executory interest
O to A for life then B for life then C and her heirs
A has present interest
B has remainder because doesnt violate any of the rules
1) created same time
2) follows life estate
3) doesnt cut As short
4) no time gap
in sense this is contingent upon B outliving A but doesnt specify this
so not considered contingent remainder even though implicit in the
deedinstead call it vested remainder just bc has no express condition
precedent
C has remainder bc doesnt violate any of the rules (has fee simple absolute in
the future)
1) created same time
2) follows life estate
3) doesnt cut Bs short
4) no time gap
Cs interest is NOT contingent at allneed not outlive A or B because
it is a vested remainder in fee simple absolute and if C dies it will go to
whoever gets Cs property in his will
To Boone county school board for school purposes
Fee simple absolute OR at most restrictive covenants
To Boone County school board on express condition that land be used for school
purposes
Either fee simple condition subsequent OR just restrictive covenant
Assume land used for 30 yrs then stands vacant
if fee simple subject to condition subsequent then condition violates
and O has right to take title back
if restrictive covenant also violated O just has right to damages, relief,
maybe injunction (equitable relief
Assume land used as school for 30 yrs then building used by school board for
storing then question is whether condition really violated and if so same analysis
as above
To first Methodist church on condition that land be used for Methodist uses and if ceases
to be so used then land reverts to O
Fee simple determinable
To first Methodist church on condition that land be used for Methodist uses and if ceases
to be so used then O has right to reenter
Fee simple subject to condition subsequent
Assume that by later deed O transfers all right, title and interest in same land to
first Methodist church
Now fee simple absolute because one party owns the fee simple subject
to condition subsequent plus the right to re enter
16
Assume that by later deed O transfers right title and interest in property to Mary
then Mary purchases Methodist churchs interest in land
Now fee simple absolute bc Mary had the right to re enter (executory
interest, not remainder bc not same time) and the fee simple subject to
condition subsequent
To John provided he never uses alcoholic beverages and if he ever shall do so land passes
to daughter Mary
Fee simple subject to executory interesttitle flies if he uses alcohol
What happens to land if John dies without having a drink though? Does the
restriction apply to Johns successor or notin all probability ct would grant fee
simple absolute to Johns successor bc condition satisfied during his life
f. Restrictions on Alienation
17
What default rules does the law use to protect future interest holders when present and future
interest holders are at odds
o Present interest holder has right to possess and use but not right to exercise dominion
over owner and is not allowed to create waste
o In general holder of present interest may not unreasonable impair value of future interest
o Though right to possess includes right to exclude future owner can get ct order to go on
property to see if waste is being created but NOT allowed to bring potential purchasers
on property thus right to possess somewhat limited
a. Law of Waste
Law of wasteapplies to life estates and leaseholds
o For life estates law of waste governed by default rules i.e. case law defining reasonable
18
Sometimes life estate will be written to A for life without impeachment for
waste which is attempt to exculpate life owner from being liable for waste
o For leaseholds law of waste governed by contract and landlord tenant law, not case law
whole set of different rules than other sets of present and futures interestswe will
consider later
o Harder to sue for waste if only have contingent interest
But Brokaw allows it
Types of waste
o Voluntary waste
Affirmative wastetearing down buildings, stripping forests etc. generally this
is considered waste
i.e. A tears down 6 mil viable building to make parkmight even be
punitive damages since intentional
testators intent is a consideration for whether the actions are
considered affirmative or ameliorative waste
Brokaw v. FairchildP has life estate of NYC house. If he has
children who survive P, they inherit, but if that doesnt happen, then
goes to his siblings. Pretty unlikely that siblings will ever inherit bc P
has 4 yo child who will probably survive him yet ct still takes their
interest into acct. P says cant get adequate return unless makes it apt.
o P says best interests of everyone to change into apt. bc more
revenue, wont continue to lose money on its upkeep as now
o Court says P cant tear it down. Why?
Testators intentin Brokaws will he conveyed his
home to P and court thinks this means that tearing it
down would be waste bc would change the
inheritance based on the testators intent (even
though no financial injury)
Distinguishes from Pabst, saying that Pabst was
accidental and also was business owner
Even if court said it wasnt waste P would still have
difficulty building this? Still needs a mortgage and if
cant get consent of future owners then bank might
not lend him the money w/o consent of future owners
need consent of siblings AND child bc they still
have future interest in property
Legislature changed this rule (see below)
Ameliorative wastesometimes tearing building that owned life estate in was
not considered waste because improved value of property for future owner
PabstPabst had life estate in house and tore the house down but after
did that realized only had life estate and owner of remainder sued Pabst
for waste. Pabst said increased value of property by tearing it down so
remainder owner should not be upset. Court said no waste bc future
harm benefited if anything
After Brokaw leg said if person had life estate for >5 yrs and
demolition would increase value and his actions were reasonable, then
not wasteinstead ameliorative waste
o Permissive wastefailure to act when law imposes duty to acthave duty to turn over
principle of property, reasonable wear and tear excepted
Default rules: A life estate holder, B future interest holder
Cap on As liability is greater than rent being paid OR fair rental value
thus A doesnt have to make repairs that exceed fair rental value
A takes property as he finds it thus if property dilapidated when finds it
can turn it over in same condition
19
20
A can exercise dominion in 1st ex but not second bc life tenant only has
possession and ownership, not dominion
Therefore can make argument that O has no right to sue for waste bc
whatever A does to property has nothing to do with O
Only time O may have cause of action against A for waste is if A does
something to diminish value and then A sells liquor and title reverts to
O bc until then A exercises dominion not mere possession, ownership
Assume A for life, remainder to B vs. to A and B as tenants in common
b. Unproductive Property
Partitioningdefault rule is that it is only allowed in concurrent interests, not future ones
o Concurrent interests both have possession at same time thus law must deal with it and
partition so long as one party wants it
o Future interests dont have possession at same time so more difficult
Which party should have more compelling argument for partition?
What if future interests not born yet?
Life tenant because has current possessory interest and future interest holder has
no right to possession now
In essence partition accelerates future interest to the present
When can future and concurrent interests be partitioned?
o In some states the following factors are considered and court of equity determines
whether the partition/sale should occur
Waste
Unproductive land
Necessity of life tenant
Land not producing enough income to pay taxes (or support life
tenant?) Deterioration
Interests of the remaindermen
Baker v. Weedon-- Weedon married had two daughters. Then married Anna but
had no kids. Left life estate to wife and if she dies to her issue if any then to
grandchildren sharing equally. Anna goes to court and says wants property sold
so she can get her share and get income from invested share. Grandkids want to
wait a few years bc land value appreciating quickly (normally would be
opposite).
Appellate court says given property values about to increase shouldnt
sell now bc not in best interests of all parties but should sell part of land
to provide Anna with income
o Strange that ct assumes land will increase in value bc never
know future value
If this happened today and Anna unable to live on the income she had
and court denied partition Anna would have gone on welfare and
government will get paid back bc get lien on her life interestproblem
is when she dies life estate gone so lien worthlessin all likelihood
social welfare office would come in as party and ask for partition so
taxpayers dont have to pay for her when she has an asset
o In others (CA) only allow partition if in best interests of all parties
But if going to court clearly all parties dont think sale in best interest
Basically telling parties what best interests arenonsensical standard
o Some states dont allow at all (CO) unless statutorily specified
Beach v. Beach19 acres of land in rural CO. Daughter owns log home and
allows parents to build addition on it and live there for life and she will inherit
when they die. Father dies and mother and daughter no longer good
relationship. Mother wants to partition land so she can sell and move away.
21
Ct says state statute does not overturn common law which disallows
partitioning of nonconcurrent interests
o Statute does not specifically say deals only with concurrent
interests bc common law only allows partitioning of
conconcurrent interests thus if legislature is going to change a
common law rule they must be explicitnot enough to be
silent on the matter
Also says partition makes no sense because essentially destroys
daughters remainder interest (kind of like CA rulelooking at
interests of all parties) because
o If partition land then daughter either forced to live with
whoever buys the addition on foreclosure or bid higher than
all of the others and buy out interest
o Court could have
forced daughter to buy out life estate but didnt
forced daughter to mortgage mothers life estate
Right to receive stream of payments in future isnt worth number of payments times installment
o Always less bc of time value of money
o i.e. $1 mil for 20 years is really worth $11.7 mil today
o the higher the inflation the less its worth in the future
Example: pension plan
o right to 60k year until die OR all of it now
o assume 20 yr life expectancy
o based on table N=20, at 6% X=11.4699 times 60=688k; at 10% X=8.5136 times 60=510k
o if take lump sum payout bet that inflation will go up and/or interest rates will go up
Example: L leases building to T for ten years with rent of 8k a year. After five years T abandons
the building and refuses to pay any more rent. L relets to T2 who signs a lease for five years at
rent of 6k a year. L sues T for damages. How much recover?
o Landlord entitled to recover difference between lease rental and fair market rental
usually determined by what landlord obtained when rerented though landlord
could purposely lease to friend for very low amt and then would have to figure
out actual fair market rental
o 8k-6k=2k stream of money for N=5 years at 6% X=4.212 times 2k=8.4k; at 10% X=3.79
times 2k=7.6k
Example: O conveys farm to A for life, remainder to B. Fair market value of 50k. Highway dept
wants land and pays FMV. How should be divided btwn A and B where A has life expectancy of
20 years so B has right to money 20 years from now
o N=20 at 6% X=.3118 times 50=15.6k so B gets 15.6k, A gets 34.4k
o N=20 at 10% X=.1486 times 50=7.1k so B gets 7.1k, A gets 42.9
o Thus future holder actually has minority of interest even though seems like true owner
o Seems more fair to put it in bank acct and then divide because then at least takes into
account when A actually dies instead of speculating
Example: Anna and three grandchildren case but say ct orders property sold in partition. Worth
350k and sells to third party in partition sale for that amt. She has life expectancy of 10 years.
o N=5 at 6% X=.5584 times 350=195.4k so grandchildren split that and Anna gets 154.6k
o N=5 at 10% X=.3855 times 350=135k so grandchildren split that and Anna gets 215k
o So Anna wants higher interest rate and then invest proceeds
o Even with short life expectancy Anna owns close to or more than half
o Usually would not go to ct to split up small amt of money and just try to divide without
going to court because court fees not worth it
22
Rights of surviving spousesif will didnt account for spouse these rights took over
Common lawright of curtesy and dower
o Only applied to land
o Dowergiven to surviving widow
Smaller than curtesy
1/3 of lands H owned at any time during marriage but only for life
o Curtesygiven to surviving husband
All of lands W seized also only for life
Curtesy initiate as soon as issue born
o People would only buy land if both spouses signed because otherwise when one died may
elect dower rights and choose to take ownership of that particular piece of land
Modern lawright to elect against will but NOT in comm property states
o Same for husband and wife
o Applies to personal property as well as land
o Fee simple
o 1/2 or 1/3 of estate
o applied to estate owned at death OR
o conveyed by gift in fraud of marital rights
i.e. H leaves 500k in land and 500k in checking acct in Hs name
H deeds land to mistress in gift before deaththis is considered gift in fraud of
marital rightsthen leaves rest of money to daughter
W elects against will and argues that she gets 1/3 not just of 500k H gave to
daughter but also 500k value of land bc argues that gift is in fraud of marital
rights
Can look bk on whole marriage and examine giftsnot transactions for fair
market valueand include those in value of estate
Problem can be for buyer that surviving spouse might say that it was
not a transaction for fair market value bc not fair cons.
This is why buyers of land from married couples always try to get both
spouses to sign bc then cant argue gift in fraud
Entire value of land will still go to Paula so the 1/3 value of land will come out
of daughters estate
If 1/3 of gift adds up to more of actual estate then court might have to sell the
land to give W her fair share and daughter and Paula might have to split the
remaindersdepends on whether set gift aside completely or just enough to
give W fair share
But would ONLY consider setting aside gift if had to sell it to give W fair share
otherwise Ws share must come out of actual estate
o Some states have augmentation instead of fraud on marital rights
similar to fraud on marital rights but is double edged swordcan make pot
bigger OR smaller unlike gift in fraud which can only make it bigger
i.e. H has bank acct 500k, 500k land and deeds land to wife while alive
H leaves estate to daughter in will so she gets 500k
W elects against will because thinks can get 1/3 of daughters 500k
Augment estate to include land so entire estate is valued at 1mil
So now W already has more than her 1/3 so she gets nothing from daughters
500k so has nothing to elect against
but does not keep her from only getting 1/3she gets the land she was deeded
but just cant elect for more
23
Example: H and B married and B inherits 1mil. B dies, H remarries S who has 5
kids and is a widow. H leaves his estate to his kids with B. H dies. S elects
against the will (if in a non community property state) and can inherit 1/3 of the
money and leave it to her kids.
Even if H had given gift of most of 1mil to his kids so his estate was
much less S could STILL elect to have 1/3 of the augmented estate
which includes the gift in fraud of marital rights
24
o
o
25
o
o
o
o
Involuntary transfer can also sever joint tenancy i.e. foreclosurebut again if two
remaining joint tenants they remain as joint tenants
Example: A, B joint tenants. A wants loan and asks for mortgage on land. A
signs promissory note plus mortgage to bank. A defaults and bank forecloses on
land. Sells at auction to third party. Third party and B now tenants in common
Doesnt even have to mortgage bc that was voluntarycould just be default on
credit card and same results from execution sale
4) mortgages
Mortgage by one joint tenant
and are in title state (doesnt matter which jt dies first)
Formalistic approachno longer unity of titleone only has equitable
title whereas other joint tenant has full title so mortgagee has rt to half
property
Though intent approach more difficult bc prob intended to pay off
mortgage and remain in house
And are in lien state (MAJORITY)
non mortgagor dies
o no severance, mortgagee has rt to total property
o Brant v. Hargrovelender has rt to all property bc mortgage
did not sever joint tenancy
mortgagor diestwo approaches
o Anti lender approachmortgage worthless bc surviving joint
tenant takes whole title
o Partial severance approachmortgage valid but only on half
of property and surviving joint tenant gets remainder
mortgage by both tenants
no severance in either title or lien state bc
Keep same title interestboth may lose legal title in title state but both
have same
Intent is NOT to sever but stay together, just like in EMC but actually
even stronger case
5) leases
Lease by both tenants
Formalistic approach
No change in ownership occurred because no longer fee simple
absolutelandlord now owns reversion BUT the interests are still
symmetricalno upset of unity of interests
Intent approach
No intent to change survivorshiponly leasing land for certain amount
of time and continue to own itnot contemplating ending relationship
bc leases have a clear end
Where if had chosen to sell land there is at least contemplation of end
of relationship and STILL dont presume severance so certainly not in
this case
Lease by one tenant
If applied Nelsons rule no severance bc lease is nullity until other party signs on
CA says unilateral lease does NOT sever joint tenancy as do some other states
Formalistic approach
Could argue unity of interest severed bc now one jt owns reversion and
other owns fee simple absolute
Intent approach
Lessor tenant probably didnt intend to sever relationship so using this
approach might not find severance
26
Middle ground
Could look at unity of interest at TIME of death so if lease ended
before other party died then no severance but if was in place at time of
death then severance
This is logical but makes no sense in terms of intent
What if lease initially rejected by one party but later consented to?
Could argue mini severance
6) criminal proceedings
Joint tenancy when one jt kills the other
What behavior should we punish?
o Any intentional killing?
But cant include self defense which is intentional
some killings are privileged
o Some statute says must be willful or/and unlawful killing but
Nelson thinks it should be willful and unlawful bc otherwise
excludes self defense
o Other statutes say must be felonious and intentional killing
some drunk drivers would be excluded then, but maybe we
want that
What should burden of proof be?
o If have criminal conviction then we know that is enough bc
heaviest burden of proofbeyond a reasonable doubt
o But if dont have criminal prosecution or have not guilty
verdict then have separate civil proceeding dealing with estate
with preponderance of the evidence standard
Majority of states follow UPC and say killing severs jt, parties become
tenants in common
Some states say doesnt sever, killer can inherit all
Some states say kill has nothing except life interest in one half, no
survivorship
Minority of states say constructive trust for those who would have
inherited estate without killing for either full half or half property
o Killer has life estate but then it passes to victims heirs
Lakatos jurisdiction says treat killer as predeceasing victim so killer
gets nothing, not even his half
Lakatos v. Estate of BillotiFrank Billotti and wife owned three
parcels, two as joint tenants one tenancy by entirety. He murdered her
and kids and convicted of second degree murder. Only heirs to her
estate are her parents. Frank died but before his death conveyed two
prop in joint tenancy to his mother. Dead wifes parents filed
complaint seeking partition of three parcels owned by her daughter and
husband. Trial ct ordered wifes mother to be sole owner of the
cotenancy one but denied request for joint tenancy ones so Frank and
Rose owned the two joint tenancy parcels.
o Trial judge interpreted statute to mean that killer husband still
had right of survivorship
WV slayer statute listed several ways that the killer
would be assumed to have predeceased the victim
(thus no right of survivorship) but joint tenancy was
excluded from the list
Judge just said if legislature had meant to include
joint tenancy they would have included itcant
assume forgot about joint tenancy bc big area of law
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o
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7) divorce
Divorce decrees sometimes sever joint tenancies and sometimes do not
In some states presumption that divorce decree severs joint tenancy and most
divorced people would assume that the joint tenancy was severed
Judges may allow feelings to get involved in these cases when make
statements about whether or not divorce severs
Mann v. BradleyMarried couple have joint tenancy in property and
divorce decree says joint tenancy severed 1) upon mutual agmt 2) if
Betty remarries or 3) youngest kid hits 21. But wife dies before the
property sold. H says no severance, he takes all. Kids argue for
severance because they would then inherit wifes half
o Court says parties contemplated permanent dissolution thus
the intent was the sever the joint tenancy bc they intended to
sell the property within a relatively short time
o Suppose H had died first and he had new wife. Court would
probably NOT have found severance even though similar
situation bc parties had still contemplated dissolution, but then
second wife would inherit it and court might not want that.
o This case may have more to do with the judges feeling about
what was just then anything elsemay have gone other way if
question was whether new wife got half or kids got all instead
of kids get half or husband gets all
Other states presumption that it is not terminated and there must be specific
statement that it is terminated because joint tenancy is not tied to marriage like
tenancy in entirety thus it is not affected by divorce
Clearly intent approach bc formalistically the jt has been severed bc
after divorce only one person living there so unity of possession gone
Porter v. PorterMary Jane and Denis porter married in 48 and bought
house in 63 under joint tenancy. Divorced in 70. Final judgment of
divorce contained references that Mary Jane had exclusive occupancy
of residence. After divorce, Denis married Martha and remained
married to her till died in 83. No modification to divorce decree.
o Ct says granting of exclusive possession of house to appellant
did not destroy joint tenancy because of the modification
clause that allowed later change in divorce decree
Court takes modern approachno real intent to sever
joint tenancy bc would have specifically clarified
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8) wills
do NOT sever joint tenancymust be a deed or written document like deed
Nonseverable joint tenancies are not severable like basic joint tenanciesonly in MI and OR
o starts to approach tenancy in entiretysame language that would otherwise create basic
joint tenancy creates this nonseverable type
o purchaser of one half of nonseverable joint tenancy thus essentially has life interest with
contingent future interest (if person he bought from survives other one)
If A conveys to N, then N has right to property during life (rents and profits) but
if A dies first then B takes over and Ns interest ends whereas if B dies first A
has conveyed not only present life estate but also right of survivorship so N
owns all of the property
Conveyance is just same as basic joint tenancy conveyance: To A and B for their
joint lives then remainder to the survivorLiterally no way to sever this except
death
o Albro v. AllenCommercial proper deeded to Allen and Albro (as joint tenants with full
rts of survivorship). Conveyance in most states would be normal severable joint
tenancyAllen agrees to sell her share to Kinzer. Albro then sues for injunction to prohibit
Albro from completing sale.
Ct overrules lower ct, says that life estates are alienable and that Allen can sell
her life estate to Kinzer BUT it will not destroy right of survivorship thus Kinzer
only buying a life estate with chance of survivorship if Albro dies before Allen
If this was regular joint tenancy Kinzer would own half interest in the
land because the joint tenancy would be severed when Allen conveyed
to him thus Albro would have no right of survivorship
Instead Kinzer basically only owns life estate because the joint tenancy
is NOT severed by conveyancehe has contingent interest in future
estate but not full interest
In both joint tenancy and tenancy in common each party has right to force partition
o Can partition in kind or partition by sale.
o Courts used to prefer partition in kind when mostly rural land
but when hard to divide land by value may have partition by sale
o With much real estate today cant have partition in kind so have partition by sale
Current joint tenants have advantage at sale bc they come to sale with money in
their pocket bc they already own part of it and dont have to pay for that part
o Example: A, B, C joint tenants. A wants to develop land for shopping center and B and C
disagree. A can file partition action if they dont agree with her or buy her out. Usually
preference for partition in kind v. in sale bc arose when most land rural
Mortgage role in severing joint title in detail
o Title theoryminority of statesas soon as mortgage is signed mortgagor retains
equitable title and mortgagee gets legal title
Titles dont come back together until mortgage paid off by debtor or third party
buys at foreclosure and mortgage is paid off
Gives lender more power before foreclosure sale to get at rentspower usually
only used w/commercial real estateusually dont try to get into possession of
residential home
o
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If have joint tenancy in title theory state and both parties get mortgage title
CLEARLY not severed bc
Formalistic approachthough there has been a change in the title they
both lost legal title and still together have equitable title
o Like earnest money contract (when both parties agree to sell
property) because parties act jointly
Modern approachEven stronger case of maintaining joint tenancy
then earnest money contract bc at least in EMC have intent to get rid of
land and thus have to split up profitshere intend to KEEP the land
and just get mortgage
If have joint tenancy in title state and ONE party gets mortgage
Formalistic approachJoint tenancy severed bc unity of interest
severed (one party has legal and equitable title and one has just
equitable title)
o if foreclosure occurs there is mortgage on that half of property
and surviving joint tenant has no rt of survivorship
modern approachtrickier bc may not have actually intended to sever
bc mortgage suggests wanted to keep house so mortgagor may have
right of survivorship depending on ct
Brant v. Hargrove if in title theory state
o Formalistic approachIf Nick died first then mortgagor has
right only to his half under formalistic approach bc unity of
title severed
o Moderntrickier bc may not have intended to actually sever
bc mortgage suggests wanted to keep house so since she died
first mortgagor may have right to whole property if he has rt
of survivorship
Lien theorylien created on land but no bifurcation of title and only time original owner
gets title back is if property is foreclosed
If have joint tenancy in lien state and ONE party gets mortgage and mortgagor
joint tenant dies first then two options
anti lender approachunity of interest NOT severed and survivor has
right of survivorship and mortgagor has no interest in land anymore
o mortgage was essentially contingent interest
partial severance approachsurvivor owns all of the land subject to the
mortgage on a half interest in the land so they can only recover up to
half of the property value
if non mortgagor dies first
joint tenancy NOT severed and mortgagor has right to ALL of land
Brant v. Hargrove under lien theory (real result)
o Formalistic approachnick didnt lose title so unity of interest
still presentno upsetting of unities thus joint tenancy not
severed
o Modern approachsameNick didnt intend to sever
o So Brants get the entire house on foreclosure bc Nick alone
lent them money since ct found that his wife and joint tenant
never validly signed the mortgage
Basically saying that if debtors title improves then mortgagee benefits
from itif acquire property after mortgage then mortgage is then on
that property too if clause in it
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Do H and W need to retain property for life of marriage in order to keep the property safe
from debtors?
No. W can file for bankruptcy bc only other asset they have is 50k in bank.
Trustee appointed. Submits form to W and asks her to list all of her assets so
that tort creditor can recover. Trustee gives 50k to tort creditor and bankruptcy
court says W is discharged of all pre-existing debts bc cant obtain that property.
H and W then sell the land, get their 2mil and put it in bank account.
o Homestead lawsin some states one house is exempt from creditors (i.e. FL) so people
buy biggest one house they can and never risk losing it from creditors
Three types of tenancy by entirety
o Pure tenancy by entiretyneither party may act independently so as to affect the other
partys interest in any wayany attempt to convey deed, give mortgage, or judgment
from creditor is completely void
o Modified (MACoraccio)if not talking about home but instead other property then
one party can act independently either voluntarily or involuntarily BUT the purchaser
ONLY gets right of survivorship if H dies after Wcontingent future interest and NO
present interest (like lien state in mortgages)
Coraccio v. Lowell SavingsP filed action against bank bc bank took second
mortgage from her husband on property owned by her husband as tenants in
entirety. P bought prop. Bank gave H money and put second mortgage on prop
without Ps signature. Then loaned H more money and got second mortgage
from him alone. He defaulted and bank foreclosed.
Modified tenancy stateMA
Spouse may convey or encumber his or her interest in prop held as
tenants in entirety.
Nothing prevents one of co-owners from mortgaging interest in
tenancy.
o Does not require consent of both spouses.
BUT bank ONLY gets right of survivorship
If we were in NY or NJ bank would get half of rents during life plus
right of survivorship if H dies after Wsame would apply if
conveyance or judgment sale
o Modified (NY and NJ)H and W have cotenancy for life, remainder to the survivor (like
in Albro v. Allen)one party can sell but purchaser only gets a life estate plus the right of
survivorshipso half of rents during life of person who purchased from and remainder if
seller dies after the other cotenantpresent interest and contingent future interest
Killing in tenancy in entirety
o Treated same as joint tenancy above
o NC take approach where killer only has one half of life estate, no survivorship
o
c. Community Property
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Separate property
o Property owned before marriage
o Property received as gift or probate (through will or intestate succession)
o Income, rents or interest from separate property
Some debate about this but most states treat it as separate
If assume income, rent or interest was community property unfair in
sense that interest is in part compensates owner for inflation and if treat
as community then essentially reduce value of principal each year
Community propertyessentially tenancy in commonno right of survivorship like in joint
tenancy
o Most important community property is income from services
o Interest, income, rents off community property
Transmutationchanging property from separate to community or ones separate to others
separate property or community to separate (though this last is very hard to do because
presumption is in favor of community)
Why do we care why property is community or separate? Because it affects:
o law of wills
surviving spouse has no right to elect against the will in community property
statesspouse already has right to half of community property and cant elect
against deceased half of community or separate property
o intestate succession
if person dies without will spouse gets all of community property and gets
intestate succession share of separate property
o divorce
each spouse gets half of community property and own separate property
generally law favors community property so unless transactions are crystal clear
courts will favor community property
many states which do NOT have community property (thus are common law
states) nonetheless have Uniform Marriage and Divorce Act which can be
somewhat like community property. It is of two varieties
one institutes a community property regime for divorce purposes even
though not community property pre-divorce (use terms marital property
instead of community property)
o in divorce marital property split 50/50 so for divorce purposes
are community property states
other equitably distributes property however and whenever acquired
and whether property is name of husband wife or both and takes into
consideration length of marriage, prior marriage, prenuptials
agreement, health, age, skill, other sources of income etc.
o not community property states but look to ALL property for
equitable divisions
o control during marriage
real estate
spouses exercise joint control over community propertyneed
signature of both parties to make conveyance because
o buyer should make sure get signature if buy from married
couple because never know whether is separate or community
separate control over separate property but still buyer should get both
in signatures because of fraud on marital rights or augmentation
person property
either spouse can deal with third parties and bind the other spouse by
selling itthird party does NOT need both parties signatures to have
good title whereas with real estate need joint action
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purchases
purchasers should be sure to get two signatures bc if that property happens not to
be community then person may argue that was fraud on marital rts
once have both signatures protected whether comm prop or not
rights of creditors
if in NON community property state than creditor can only collect from property
in the debtors namelook to title
if in community property states then can collect from debtors separate property
and half or all of community property depending on purpose that caused debt
family or community purpose doctrine
o if the debt (whether contract or debt) is created by an
individual spouse for a family or community purpose then can
reach that spouses separate and all of the community property
o if not for family purpose then can reach that spouses
individual property and half of community property
6. Landlord Tenant
a. Nature and Creation of Leaseholds
Leaseholds used to last about ten years and leaseholder essentially had ownership with reversion
o Usury lawused to be immoral to charge interest on lent money
o As a result people found way to get around this by making tenant technically a lender
who stays on land while landlord (borrower) pays rent which was really interest until
he pays the debt off and moves onto the land
Modern leaseholds
o amalgam of property law and contract law
Probably more like contracts because material breach by one party allows other
party to sue for damages
Suppose have commercial lease in office building and tenant signs lease for ten
years for space on first floor. LL agrees to remodel common areas then breaches
by failing to remodel common areas
Contract lawLL breaches so tenant can opt out of lease and sue for
damages
Property lawcovenants in lease are independent of each other so
tenants obligation to pay rent is separate from LLs duty to remodel
thus tenant cant sue for damages or opt out of lease
o But implied covenant of quiet enjoyment is exception
covenant to pay rent IS dependent on covenant of quiet
enjoyment even under prop law
o Could put provision into lease to make it like contract law
where if either party breaches other party can sue, but usually
one sided and says if tenant violates lease LL can term and sue
for damages
Some say this distinction is not real, just figment of imagination of a
few courts and scholars but this is still the dispute
o Unlike life estates which are one sentence leases are pages long and full of contractual
provisionseven more so in commercial than residential leases
o Landlord has right to rents and a reversion
o Tenant has rental obligation and right to possess
Sometimes tenant has substantial asset on balance sheet if value of right to
possess exceeds the rental obligation under the leasebonus value
But part of value is freedom to alienate which is usually forbidden in residential
leases
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Month to month is most common form though can be six month to six month or
year to year as well
Requires notice to terminate by both parties (usually 30 days enough for month
to month tenancy)
Unlike fixed term tenancy does not expire once time runs but continues until
terminated by appropriate notice so can go on forever
o Tenancy at will
Seldom expressly created though sometimes it is
Created by agreement, taking of possession with consent of owner,
entry into possession under a void lease prior to making periodic rental
payments
No pattern of rental payments, no agreement as to rental periods
only lasts as long as neither side terminates
Either side can terminate with no requirement of notice
Tenant can terminate by moving out without reasonable amt of time or
by assigning it to someone else
LL can terminate by ending lease, conveyance of fee but usually tenant
is given reasonable time to get out
Death of LL or tenant effects termination
o Tenancy at sufferance
Never expressly createdonly occurs when tenant holds over from fixed term
tenancy
Court could instead of made holdover a tenant a licensee to prevent AP
but instead created tenancy at sufferance
not really a tenancy at alljust describes relationship btwn owner in fee and
tenant who was in possession rightfully, now wrongfully
serves to distinguish holdover tenant from person whose intrusion has
no basis in right at all
Lasts until demand for possession by LL or until LL elects to have other than
tenancy at sufferance
Once tenant holds over he can be either trespasser or tenant depending on how
the landlord treats him
If trespasser tenant only owes damages equal to reasonable market
value of property
If tenant, he owes damages equal to value of lease that landlord
specified and tenants failure to respond to lease is considered
acceptance of that value of lease
How do tenancies switch from one type to another?
o Statutes of frauds requires contracts to be in writing including ones concerning land and
if trying to enforce lease must include term, rent, description of property and signed by
party to be charged which is party against whom trying to enforce lease so usually both
sides sign because never know who will become plaintiff
o When a lease violates a statute of frauds bc it fails to include term or description it is void
but not completelywhat might have been a fixed term tenant becomes a tenant at will
Law could have made these tenants mere licensees but it doesnt
Tenant at will can become periodic tenant
Must pay rent and if landlord accepts it for a few months then become
periodic tenant despite lease that doesnt meet statute of frauds
Tenant at will can even become fixed tenant
Part-performance doctrineif tenant or landlord get to point of
significant detrimental reliance (i.e. pays rent, makes improvements to
property or landlord makes business arrangements based on the tenants
rent) then bar of statute of frauds comes down and party trying to
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If do leave run risk that ct may find covenant of quiet enjoyment not
breached and then will owe back rent even though not living there
Barash v. Penn Term Real Estatehigh rise building rents to lawyer
who wants it open 24/7. LL says will air condition during the day but
tenant alleges that LL has agreed to circulate fresh air on evenings and
weekends. He claims absence of fresh air is violation of covenant of
quiet enjoyment and refuses to pay rent. Hes arguing that it is partial
actual eviction bc he didnt leave the premises.
o If lease specifically said LL agreed to circulate fresh air then
clear violation of that covenant
o Lease didnt specifically say that and court found that if
anything, constructive, not actual eviction took place and since
P didnt leave premises he had no cause of action
o Even if had left might not have been found to breach covenant
o Cant contract against covenant of quiet enjoyment in residential setting and probably not
in commercial either
Duty to operate
o Can be explicit or implied though courts usually dont read in implicit duties to operate
LL obviously want duties to operate them bc get percentage of rent (if in
percentage lease) and if tenants have duty to operate they will bring in more
revenue which affects other tenantsplus if they fail to operate LL want ability
to evict them bc affects whole center
o Anchor tenants generally able to avoid duties to operate because they are in control of
leases most of time though in outlet shopping centers often see duties to operate
o Signs that there is implied duty to operate
Nominal fixed rent and low threshold for percentage rent
o Signs there is not implied duty to operate
Express language
Parties contemplated idea and did not put it in lease
o Remedy when tenant with duty to operate
Injunctive reliefforce tenant to operate its store in compliance with lease
Two hurdles to getting injunctive relief
o Must prove remedy at law inadequate
Possible that legal remedy is inadequate bc too hard
to ascertain damages from loss of anchor tenant
o Administration difficult
Hard to get injunctive relief because hard to
administer the reliefno way of knowing whether
store is making good faith effort to operate
why should taxpayers be enforcing ten more
years of lease?
Counterargument is that administration/supervision
not so necessary because anchor tenant doesnt want
to ruin brand name by operating poorly even if only
in one storeif force to operate has incentive to
operate well
Cases mixed on whether get injunction to compel express duty to
operate
Injunctive relief may be more efficient from courts perspective bc if D
really doesnt want to comply he can buy out the P even though P in
power position
o Injunction thus gets liquidated to money amt as opposed to
having two week trial for damages
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i. Security Deposits
Security deposits
o How much can LL demand?
o Does security deposit trump claims of other creditors?
Come before IRS, mortgage, other creditors
o What if LL sells building during term of lease
Is cause of action against original or new LL or are both liable
o Interest on security deposits? Not usually but sometimes
o CA statute
a) only with residential real estate
b) Security deposit used for damages beyond ordinary wear and tearright to
impose ordinary wear and tear on premises
Can be used for cleaning of premises ONLY if tenant doesnt return in
as clean condition as when got itmust be less clean then when went
into possession
c) Security deposit cannot be more than value of two months rent
This does not prohibit advance of payment of 6 months if lease is 6
months or longer
o Could mean have right to pay 6 mo in advance
o Could mean have right to pay security deposit of up to 6 mo in
advance not more
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LL sues
o Tenant subleases or assigns
No assumptionsT2 generally has benefits and burdens that touch or concern
property but not those that are separate from the property (i.e. rent does pass but
giving LL a bath does not)
Assumptionsif T2 assumes the lease then he is liable on EVERY burden on
lease not just those that concern and touch the land bc puts T2 in privity of
contract as well as privity of estate
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Landlord sells
Tenant now has duty on covenants that touch and concern lease to LL2 but not
on other covenants
i.e. no duty to bathe LL2 if that was in lease bc different person but T
still has duty to bathe LL bc privity of k
o LL sells and tenant subleases or assigns
If assumed the lease, T2 has burden of everything in lease to L2
If didnt, just burdens that touch and concern land
Tenant sues
o Tenant subleases or assigns
LL had duty to repair to tenant and duty to bathe him he now has duty to repair
but not duty to bathe bc doesnt touch and concern land
o LL sells
LL2 has duty to repair bc covenant to repair runs with the land
o LL sells and tenant subleases or assigns
Benefit runs to T2 and burden runs to L2 so L2 has duty to repair to T2
Obligations of T and T2 when assignment to T3
o Obligations of T2
If T2 has signed assumption then liable to LL even after assigns to T3 and even
before he took on the assignmentboth before and after his privity of estate
(though may try L to agree no past obligations exist)
If same thing happens WITHOUT assumption (T leases to T2 who leases to T3)
then T2 ONLY has privity of estate and once he assigns to T3 he has NO
liability to L
Thus ONLY T is liable for T3s default if T2 didnt assume lease
o Obligations of original T
Original tenant is still liable if T3 defaults on rent even if T2 assumed lease so
LL can go after either T or T2joint and severally liable
Unless:
if LL and T2 changed terms of lease in such a way that prejudiced the T
(made lease worse by raise rent, longer terms) original T not liable
o If change made lease better then T still liable
Sometimes after assignment LL will let T off hook (i.e. if assignee has
stronger balance sheet than original tenant) but short of that still liable
Gerber v. Pecht5 year lease to Pecht. Pecht assigns with permission to
Moscowitz. He in turn assigns to Christensens without consent. Christensens
default on rent. Gerber sues Moscowitz.
Is Moscowitz liable for Christensens default?
o Interprets lease from Pecht to Moscowitz as assumption even
though didnt directly say that
If there was no assumption on Ms part then would
not have been liable
o Says that between Pecht and Moscowitz Pecht is surety and
Moscowitz is principle debter (Gerber is creditor)
This labeling does not mean Gerber can only sue one
or other of themlabeling them this way has no
impact on LLhe can pick and choose who is liable
Court says Gerber can go after either Pecht or assignee Moscowitz first
whatever he pleasesand both P and M liable
o Though f Gerber and M had changed terms of lease that made
lease worse for tenant then P would not have been liable at all
bc no longer same lease
o Relationship between T and T2
o
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Court said it did NOT touch and concern lease because benefited ONLY LL
once got insurance money LL had no obligation to rebuild the property so fact
that benefit was one sided led court to find no obligation
This analysis makes sense but belies general rules today
e. Termination of Lease
Eviction
o Notice of termination (for PERIODIC tenancies only) must be effect to terminate and
give an effective date that is at least 30 days after the notice is receiveddisagreement
among states and no maj opinion
One opinion
if notice not within 30 days must send new notice with 30 days before
eviction otherwise notice is invalid and tenant never officially evicted
thus not considered unlawful detainer and only liable for rent didnt pay
during holdover
Davidson v. KennyDavidsons have one year lease with Kenny who
holds over so now month to month. Davidsons want to terminate lease
even though he pays the rent. Draft letter saying leave premises by
September 30 but letter doesnt get into tenants hand until September 6
so not 30 days notice. Kenny doesnt leave until December 9.
Davidons bring this action for the rent not paid for October, November,
half of December
o since not sufficient and in minority state, Kenny effectively
never evicted so just liable for single rent he never paid, not
considered unlawful detainer
other opinion and restatement agrees with this one
if notice not within 30 days eviction period is effective for next rental
period so tenant liable for the unlawful detainer damages starting that pt
Usually unlawful detainer is worth double the rent from day of eviction
until action leaves
o When is notice required?
Notice is required in periodic leases but not in fixed tenancy leases because
there is a specific end date which automatically terminates the lease
o Proceedings/self help
When tenants holds over LL has three options as learned before and one of
them is to treat tenant as trespasser
LL used to be able to use self help to evict trespassing holdover tenants but now
we have FED or unlawful detainer statutes which allow for summary
proceedings
Summary proceedings are usually quick way to get rid of tenant and
were created to disincentivize LL use of self help
o Lindsey v. Normet said summary judgment statutes NOT
unconstitutional even though cant bring every counterclaim
because they were created to limit self help and be efficient so
not unreasonable that limited defenses can be brought
In CA
o 48 days until judgment of eviction
o tenants used to not be allowed to bring counterclaims but now
tenants may bring the important implied warrantee of
habilitability and the covenant of quiet enjoyment
o judgment is limited to 25k even in comm settings so comm LL
usually go to superior court
o there is right to jury trial but usually waived
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7. Easements
a. Nature, Types, Creations
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99% of easements created by contractin this section we deal with contracts that were oral in
nature or otherwise do not meet statute of frauds and court must decide whether or not the k valid
o In contrast if was just a license can be oral bc do not have to meet SOF
Easements by k are governed by statute of frauds bc usually longer than 1 year which means must
be in writing and have certain key elements
o part performance doctrinebar of Statute of frauds lifts if easement holder makes
payments, possession or improvements on land
o estoppel reliancedont need to prove discrete acts of part performance pointing towards
existence of kjust need to document reliance such that would be unjust not to have
easement
Ricenbow v. Krauseclassic implied easement case but court treats as easement
by kHannah asked Knutsen in 1901 if could have easement across his land for
water. He said said. Oral conversations turns into irrevocable easement
between two new owners in 1950.
Knutsen intended to grant oral easement but doesnt meet statute of
frauds
o Part performance? Could argue Hannah installing drain is part
performance but at best this allows evidence into court, still
doesnt prove k
o Estoppel reliance? Court says this theory applies and that
Hannahs reliance upon oral license makes it an easement bc
otherwise would be unjust
This case could be viewed instead as estoppel to revoke license, not
actual irrevocable easementunsure of which is really is
o Result would be the same even though license EXCEPT
If govt condemned land licensee would get nothing
whereas holder of easement would get something
Durationrevocable license only lasts as long as
drain is there whereas easement would continue
regardless of use
the way the court views the relationship has significant affect years
later bc everything really points to this not being an easement
o ct seems very influenced by long use but court instead could
have viewed it as Hannah taking advantage of Knutsen
(easement lowers his value of land)
Floating easementseasement that isnt in particular place (like power line where just say goes
above some part of land)
o can render title unmarketable and lets buyer out when discover it bc can ruin plans for
building
o most floating easements not huge problems bc once prior floating easement is physically
located easement holder must release claim from land then landholder has clean title
o Berg v. TingCahill, Hansen and Young want to subdivide property. Bergs are against
it but agree if they get an easement. Cahill then sells to Tings. Tings dont get any
documents about easement on their land, probably bc title insurance company made a
mistake.
Bergs lose, court says no easement
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c. Easement by Implication
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Campbell asserts BFP doctrinehe argues that was on notice that there
was septic tank but not that Aerie was using it even after reasonable
inspection
Court says that since Campbell not put on notice of the easement by
reasonable inspection or recording of deed there is no easement by
implication
Aerie could have tried to argue easement by prescription (AP) but it
was not open and notorious bc not apparent
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Less predictable
Not so necessary to use all land in environmental age
then taking issue usually must ask whether easement is taking land and deserves
compensation whereas intent approach makes it just a bargain between parties
Hurlocker
Bank told Hurlocker there was problem with access and he bought it
dirt cheap because of itdidnt pay FMVthis suggests bank did not
intend to create easement
This isnt greatest of intent but suggests no easement intended
o Half states now allow party who needs easement to condemn an easement through
servient estate
Means dominant estate owner only has to pay FMV, servient owner cant extort
Gives power of govt to private individual
FMV is diff between value of lot with and without easement so difference is
condemnation award
but still must be placed in way that doesnt interfere with servient
Example: c/o owns one tract of land with public road next to it and on other side no road at all. If
c/o conveys the landlocked portion to another party then because that land is landlocked and bc
conveyance creates landlocked condition that party gains easement by necessity
o If c/o retains the landlocked parcel there is easement by reservation bc of strict necessity
instead of by grant so can come into being with either grant or necessity
o Not a quasi easement bc no easement there before the split
Easement by prescription
o Literally means pre-writing
o 99% of time think about it as adverse uselike AP
o 1% of time think of lost grant theoryassumes that long time ago there was a written
easement that has been lost but it was there at some point
Theory is that if used land long enough that belonged to someone else must be
bc it did belong to them at some point
this theory is pretty much dead but once in a while reference to fiction of lost
grant is still made
only still affects act of protest by underlying owner
protest strengthens AP claim bc makes more adverse to true owner
protest in prescription claim has opposite effectstops continuity and
prevents easement by prescription bc suggests that there is no lost grant
even in absence of lost grant theory public policy suggests that protest
should stop adverse use or possession bc may result in fewer lawsuits if
protest is enough to stop clockputs burden on wrongdoer (AP or
user) to keep the clock going instead of owner to stop the clock by
initiating a lawsuit
o prescription can cause birth AND death AND change in scope of easement
if servient owner blocks easement for length of statute of limitations and
dominant owner allows it then may be death of easement by prescription
Can also expand easements by prescription, meaning adverse use which would
otherwise be surcharge but met all elements of prescription that would become
expansion by prescription
Glenn v. Pooleused road for years, widened it, and ct said increased
scope by prescription
Requires same elements as adverse possession of land
o Intent
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e. Extinguishment of Easement
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if building there for statute of limitations then servient owner may take
back easement by prescriptiondeath of easement by prescription
i.e. dominant owner sees servient owner plant crop in easement and allows it
then may be estoppel
but probably only estopped to assert easement for the life of the crop
short life of estoppel may lead court to find estoppel because not as
hard to find short time as long term estoppel bc becomes closer to
abandonment
Abandonment in Rails to Trails area
Railroads had both fee simple absolute and easements
Hard for railroads to acquire fee simples in some states (MO) so if not
successful in acquiring fee simple title, stuck with easement
But some conveyances for right of ways for railroads are viewed as fee
simples, not easements a RR right of way
If abandoned, easement is owned by individual la ndowners so RR tries to say
not abandoning it bc still using for RR purpose
still used for transportation
o but some courts have said this is remotely connected to RR
purpose
railbankingsave for later RR use
o but some courts have said too nebulous, not really being used
for that
Courts have said not RR purpose thus abandonment and then taking for trails
Landowners losing one of their bundle of rightsto exclude others
But did the landowners really have right to exclude others when RR in
control of the easement? Not really because if RR had exclusive
easements then they had the right to divide the easement, not the
landowner and we dont know whether the easement is exclusive or not
Glossameyer v. USRR gave easement to state govt by Rails to Trails
act. Underlying owners of land sue, say easement was abandoned thus
belongs to them, not state.
o Landowners argue easement not used for original purpose
Trials not same as RR
but state says
still used for transportation
o but different form than before
railbankingmay be used later for RR
o but court says too nebulous a
conceptjust a hypothetical
o if no RR purpose in hiking and biking trail, court says this
federal statute works a taking and the landowners must be
compensated
o thus RR still own easement in this case, not landowners or
local govt
But the Rails to Trails has survived in other states
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o
o
o
o
o
o
o
o
b. Marketable Title
74
even if say that will only give quitclaim deed at time of closing that
will NOT negate the promise of marketability whether express OR
implied
ONLY express rejection of it will negate it
minority approachmerely providing for quitclaim deed is an implicit rejection
of implied covenant of mtkability bc seller only promising to give what own,
nothing else
bad public policy bc buyer is forced to close even if finds out
unmarketable
o Buyer may choose to waive marketability requirement but must be explicit
o Doesnt mean perfect title, just free from reasonable doubt
o Mergeronce transaction closes the title merges into the deed so can no longer argue
that title not marketable after closing
Buyer may sue for any number of reasons (damages, specific performance, even
just remorse)
Marketability problems
o break in chain of title
may mean seller doesnt own titlemost serious objection
example: say A conveys to B conveys to C then separate deed from N
to S who plans to sell to Lcant find anywhere that C conveys to
anyone else so break in title between C and N
o at worst this may mean C still owns property and S trying to
sell
o at best (99% chance) S really owns land and person who C
sold to just forgot to record the deed
o also may be that S owns title through AP if S and N in privity
with each other and 15 years together
o but AP renders title unmarketable anyway in majority opinion
so this doesnt solve the problem
why? lawsuit about marketability of title btwn S and
L cant decide whether AP is present or not bc C is a
party to the lawsuit and is missing from this action
civil procedure
C cant be bound by judgment not a party to so unless
she is party to lawsuit AP does not cure unmktability
Though odds are S owns doesnt make it marketable
if AP is the reason S owns the title
Longer back the break in the chain, more likely to ignore it
o encumbrances
more common objection than break in chainencumbrances render title
unmarketable unless type that buyer has agreed to take subject to
any claim by third party again the real estate
mortgages
o buyer may want to take over mortgage so not unmarketable
o most of time when mortgage on property does not render
unmarketable bc will be paid off with proceeds of house sale
o but mortgage by third party does render it unmarketable
easements
judgment liens
o when debtor gets judgment entered against her, that judgment
becomes lien on any land debtor has on ANY land in county
where recordedeven may be in entire state
restrictive covenantsCC and Rs
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Miscellaneous
Encroachmentsif neighbor encroaching on land renders title unmarketable but
must discover before the closing
Marketability v. insurability
o Most ks require marketability, not insurability but if only insurability then buyer cant
get out so long as insurer will cover it even if not mtkable bc agreeing to less sound title
o
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c. Financing
78
for some reason back in 80s Fannie and Freddie decided they would not
buy loans from lenders who charge prepayment penalties
o may be that wanted to appear reasonable to consumers and
didnt think ahead to dramatic drops in rates
o congress then said S&Ls could act like banks and lend for any reason bank could loan
take restrictions off them to help them
some of them did fine but a lot of them shut down again because of
incompetence and fraud
didnt have reservoir of cash like banks did so made bad loans
Govt came in in late 80s and created RTC resolution trust corporation to sell off
the assets of the thrifts, many at low prices
o Secondary market became very important in 90smade mortgage mkt liquid
Banks or thrifts lend to homeowners
Take the money and keep the safest loans (ARMs) and sell the others to
the secondary market Fannie, Freddie and Ginnie Mae
Fannie Mae, Freddie Mac used to be govt owned corporations and in
70s privatized and are now two of largest corporations in world (though
still fed connection bc govt appts board, lower lending rates)
o Those orgs then sell to investors across the world
o There is big push to regulate them or private them completely
and create new corporations
Mortgage bankers lend to homeowners but
They dont hold any of the loans in their portfolios
Sell them to secondary market within 60 days
Purchase/Financing Example
o cash transaction buyer will deliver check for asking price less deposit to seller
conventional financing buyer will get mortgage (80% LTV) so buyer gives another 60k
down to seller and note worth 240k to the seller for 300k purchase
lender may then sell loan on secondary market
they dont get enough money from savers to hold all of the loans so sell to
Fannie or Freddie and then have enough cash to loan money
o They borrow at low rate bc quasi govt and buy mortgages from other
banks
o they either save money or sell them piecemeal to the public all over
world who are essentially financing our home mkt
o public buys them bc think secure money BUT those companies are no
longer govt and not certain that govt would bail out
unconventional loans are insured by the govt (FHA, VA) and allow almost no down
payment
borrower pays premium for insurance through addl interest (bc usually dont
have cash)
private lenders also allowing zero down payment loans now
o some use private mort insuranacePMIs
o others dont even use itrisky loan
Ginnie Mae (govt entity) buys FHA and VA loans and sells them to public just
like Fannie Mae didinvestors especially like these bc underlying loan insured
by FHA and then GMgovtinsures again
If interest rates drop dramatically homeowners may prepay w/o penalty and then
investors take $ back when dont want it yetwant to stay invested
Seller financingcommon during times of high interest rates
Lot of buyers cant qualify for loans when interest rates are very high
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In order to sell homes sellers would take back mortgage themselves bc otherwise
too hard to sell their homeprefer to get 300k at their own financing than 280k
at a regular mortgage
o If mkt rate 17% gives loan to buyer at 14%
o Usually short term mortgage with balloon so lump sum due after time
(would be crazy to do 30yrneed to get cashed out at some pt)
o buyer hopes lower interest rate so then refinances and has enough cash
to pay off the lump sum
o Elderly people liked it bc got down payment plus income every month
in form of mortgage payment
But when seller does own financing not getting stated purchase price bc if she
was cashed out could have put the money in govt bonds and made more than on
mortgage, instead has to wait till balloon payment to get cashed out and loses on
money could have made at higher interest rate
Buyer gets two mortgages
Second mortgage more risky bc wiped out if first mort forecloses
Sellers sometimes takes on second mortgages bc riskier, higher interest rate than
first so
Parents as well do this bc if just give money there might be divorce and parent
doesnt want money split
Buyer takes over loan
When interest rates rise buyer wants to take over lower priced loan and may
even be willing to pay higher price
o dont have to be veteran to take over VA or FHA loan
Due on sale clause may disallow this on some mortgages
d. Foreclosures
80
Lenders could now collect interest but could no longer take over
possession because that was just in absence of interest option
Current state of foreclosure
o What causes foreclosures
Divorce, unemployment, illness
Anti deficiency rule in CA may encourage foreclosures bc no personal liability
If have 200k house and 300k mortgage then may just want to leave and
stop making payments
o This happened a lot after the earthquake where people who did
not have earthquake insurance lost much value on house and
still have big mortgage on it
BUT credit system pushes in the other directiononce have bad credit
hard to get any other mortgage
Sometimes may be worth the risk if have a lot of cash and dont need
new mortgage
o Foreclosure sales routinely yield less than FMV
Cant inspect property same way normally could
Homeowner could allow inspection bc might increase price but usually
upset that being foreclosed so dont
Similarly if rational could have tried to sell house selves but dont
Have to be sold in one day no matter what
Wont yield same as in normal transaction
Statutory redemption
Up front costs of title research bc seller not promising marketable title
o Mortgage starts with signing promissory note plus debt
Cannot have valid mortgage without promissory note and debt
can have promissory note without a mortgagejust an unsecured debt
Some states are still title states and thus give lender legal title with mortgage
which comes from the old notion of lender taking possession
Most are lien theory where lender only takes title once foreclosure
happens
o Default occurs
Acceleration clausemortgagee can demand balloon payment for full amt once
mortgagor defaults but NOT before due to statutory redemption
Statutory redemption
o Normal statutory redemption
Until valid foreclosure sale debtor has equity of
redemptionright to pay late and any agreements
waiving or limiting right to foreclose at a public sale
are illegal and clog equity or redemption
o Post statutory redemption
after foreclosure sale that is end of story in 60% of
states
in other states have post sale redemption3 months
to a year to pay the purchaser for what ever they paid
at foreclosure saleNOT just mortgage owed
foreclosure buyer will bid less bc essentially
only get fee simple defeasible since
mortgagee has right to re-enter
but could argue they might try to bid more
bc then less chance mortgagee might be able
to take it back
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But mortgagor takes surplus from all of the combined mortgages if any
Purchaser at foreclosure sale should put himself into shoes of original owner of
house at the instant before the mortgage in question signed (assuming all tax
liens paid bc those are senior to first mortgage)
Lender is at an advantage at the sale bc they get their mortgage back as a credit
so dont have to put up nearly as much cash
If lender is owed 100k and bids 100k gets 100k credit and pays nothing
Uniform non judicial foreclosure actif different mortgagees agree then money
from sale will be used to satisfy all mortgages on property and there need not be
any real foreclosure sale, just a private sale. If any of parties does not agree
have auction sale away to try to get highest possible price.
Example:
first mortgage in favor of Wamu for 100k
second mortgage from BofA for 60k
o BofA should check value of house and determine whether
there is equity beyond mortgage
o Want to make sure FMV of real estate will equal or exceed
sum of two debts160kbc come in behind first if default
Mort 1 defaults
o Pricethe most purchaser should pay is FMV because Wamu
will be paid off by proceeds and BofA debt will be wiped out
o Say sale price=175kpay off mort 1 and 2 and mr gets 15k
o Say sale price=140kpay off mort 1 and 40k to mort 2 and
nothing to mr
Mort 2 has right to deficiency judgment against mr
and try to go after his other assets
o Say sale price=75kpay 75k to mort 1 who will then get
deficiency judgment against mr (if NOT in CA) for 25k, mort
2 will get deficiency judgment against mr for 60k as well (he
can get deficiency judgment bc not purchase money mortgage
second mortgage)even if in public sale where usually
cant get deficiency judgment mort 2 can still get judgment on
note
Mort 2 defaults (may default first bc drop in property value will affect
mort 2 first)
o Pricemost should pay is FMV LESS value of mort 1
because that will be paid off first even though mort 2
forecloses first
In shoes of original mortgagee bc when take out
second mortgage already have first mortgage
New purchaser will take over mort 1 or pay it off
o Say FMV=175k, then shouldnt pay more than 75k
o Say FMV=140, then shouldnt pay more than 40kthat 40k
will go to mort 2 who will have deficiency judgment against
mortgagee for 20k
o Say FMV=110k, then should pay no more than 10k and mort 2
will get deficiency judgment for 50k
o Say FMV=90k, then should pay NOTHING bc net worth less
than zerothough possible mort 2 will buy it back and make
payments on mort 1
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If contract violates SOF does not make k void, just means neither party
can enforce the k by specific performance or damages
o k may have validity for other purposes
o if have oral earnest money k, then close the deal the
transaction is valid once closedfact that earlier oral agmt
does not matter
o even if never closed and no valid k, there still may be tort
action bc of interference with k even if oral kvalid for that
purpose
o part performance doctrinesome oral ks get enforced if can
satisfy PP and take out of SOF
Or written but no missing any of the requirements below
identification of land
o though again, not enough in Berg v. Ting even though knew
plot of land and gen area of easement
o generally street address or my farm (if only have one farm)
is enough though some courts require legal description of land
by reference to US survey
by reference to official subdivision
metes and boundssimply calling distancesthese
can be frustrating bc sometimes never closejust
three sides of rectangle
price
o if seller financing then terms of mortgage must also be
reasonably complete
dont need date of closing
o court will read in reasonable time for closing
signed
o normally SOF says signed by party to be charged meaning the
party against whom seeking enforcement (defendant)
o some statutes say it has to be signed by vendor/seller but
problem is that vendor seeking enforcement can sign it any
time before lawsuit so makes no sense
leg probably assumed buyer usually sued seller but
not necessarily
o initialing may be enough for signature bc courts generally very
liberal
o but now we have esignatures and those can be enough
can just typing ok really be enough? May be
o part performancelifts statute of frauds and allows in evidence of oral agmt to come into
court
evidentiary theory
requires payment, possession, improvements
this theory argues these are unequivocal evidence that a sale of land
took place and thus should weigh all evidence equally
o this doesnt make much sensecould be evidence just of lease
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under this theory the evidence can be used by EITHER party so if seller
wants to prove PP by buyers actions this theory is preferable (Pierson)
Roundy v. Wanerparents convey by deed house to their daughter and
son in law. Classic example of why if we didnt have distinction
between equitable and legal title would be easy case. Everyone
concedes daughter and son in law have legal title but not equitable bc
parents still live in the house and plan to redeed to parents later. Only
deeded to younger couple in order to get second mortgage bc they
couldnt get it themselves. So Waners dont have full title but they do
have limited ability to pass title to other people if new people were
BFP. Falling out, Roundys say they want their title back. Daughter
counterclaims that court should recognize that they have the real title
because in oral agmt the Roundys agreed to deliver real title to Waners
if they paid off the mortgage and repaired the house.
o Waners thus have payments and improvements but no
possession
Waners argue not only paid off mortgage but paid
mother otherwise
Repaired houseimprovements
Sold house to move closer to parentsclear reliance
o Court says they relied upon them thus they get land
Burns v. McCormackBurns live in Boston area and have oral deal
with elderly man wherein they agree to care for him and he will give
them house when he dies. They sold their house and business and
moved in with him. When dies, other relatives say house is theirs.
o Court uses equivocal evidence theory
Says moving and providing service is not
unequivocal evidence of land k
Not even possession bc lived there with man, not
alone
So Burns never get to say what oral agmt was
Court probably thinking since man cant tell his story
not fair for the Burns to tell their story
Pierson v. Garnerowner of commercial building who enters into oral
k to sell building to dentist. Dentist moves into building and pays 10k
down. Dentist modifies building. Dentist moves out. Seller brings
motion for specific performance, wants price of land, not just damages
bc that remedy inadequate. Wants to force dentist to pay for building.
o This case is different bc usu buyer uses PP to prove k existed
but here seller
Evidentiary theory would be easier to use here bc not
as dependent on who did the actions as reliance
theorycan say dentists actions would be enough in
combination with his allowing those actions to prove
k existed
estoppel reliance theory
requires payment, possession, improvements
under this theory these requirements are actual evidence of reliance
this theory can only be used by the party claiming part performance
o Piersonseller can still argue his case in a reliance state but
must argue that by allowing buyer to do certain acts he relied
Giving up other purchasers
Bought another building
Moved to another city
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1) Warranty deed
o Covenants to protect buyers after closing
o Includes PRESENT and FUTURE covenants
In many states carefully spell out five or six covenants
But some states (WA) say can have warrantee deed without saying much
Warranty deeds may just say conveys and warrants for warranty deed
o Full warranty deeds make sellers very liable so understandable why sellers dont want to
convey full warranty deeds
2) Limited warranty deed
o Only protects buyer with respect to things grantor did to title, not anything that previous
owners might have done to titledont go all the way back
o Again may be specific or may just be in language like bargain and sale deed or grant
deed
In CAlimited warranty deed is custom, called grant deed
not mandated, just custom, but bc everyone gives it then almost everyone does
o can only sue with defects the grantor created, not earlier defects
o contains ONLY present covenants in CA so cant sue any earlier grantors
3) Quitclaim deed
o Only conveys that the buyer has in the land but doesnt promise has anything
o Makes no warranties whatsoeverbuyer beware, rely on title insurance or examination,
not seller
o release, remise and quitclaim
Present covenants
o 1) Seisinseller saying I own the title and there is no break in chain
o 2) Right to conveyalmost irrelevant bc if own have right to convey but aimed at times
when seller is using agent to convey
o 3) Covenant against encumbrancestracks marketability encumbrances
o Third party claims against land
Easements, mortgages, liens, leases, restrictive covenants, zoning law if there is
a present violation but NOT building codes bc nothing to do with title
To find easement by reservation is literally to attack ones warranty deed bc then
coming back and saying warranty didnt mean what it said
o Statute of limitations on present covenants start to run on day deed is delivered and
usually runs about six years
o Who may be sued
Only Ps immediate grantor
Covenants dont run with land
Examples
o A conveys WD to B with a floating easement then B conveys WD to C
C cant sue A for damages in reduction of value on present
covenant bc can only sue B
o A conveys WD to B with floating easement then B conveys QC to C
Now even worse bc cant sue B bc no liability
o But VERY small number of cases allow C to sue A (assuming SOL
hasnt run) regardless of whether B conveys WD or QC to C
Theory is that when B QC to C he assigns his right to sue A
What constitutes a breach?
Failure of title or existence of an encumbrance when deed is delivered
Future covenantsunlike present covenant they DO run with the land so can sue earlier party if
the breach of warranty first happened with that party conveyed
o Covenant of warranty and quiet enjoyment used to be separate but now treated as one
Track three present covenants
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Further assurances
Only one of five/six warranties that can be enforced by anything other than
money/specific performance
Aimed at if there is problem with title and grantor can cure it court will compel
grantor to execute document to make title good if it is within his power
o Court order for specific performance for further assurances
Who can be sued
Any predecessor in title of plaintiff who gave a future covenant (usually by
WD) so long as problem w/title existed before that predecessor conveyed
Examples:
o A conveys WD to B who conveys QC to C who conveys WD to D
Suppose D is evicted by APwho can he sue?
Obviously C bc SOL just begins to run after eviction
Cannot sue B bc only conveyed QCcant be held
liable by immediate OR remote grantees to QC deed
o Unless in that same minority of states where
the QC is said to assign all rights
D can sue A IF AP had taken place before that point
cant hold anyone responsible before problem
existed
Brown v. Lober assuming different scenario:
o Suppose coal company bought land and didnt realize the third party
ownership
Could sue Brown on violation of covenant of warranty of
quiet enjoyment if evicted
Could also sue Lober bc future covenants run with the land
What constitutes a breach?
an evictionoriginal owner takes back property
or constructive eviction
o threat by paramount title holder
o grantee buys from, surrenders to or settles with paramount title holder
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Original owner never came back nor did Brown pay off that
owner
Limits on recovery
o How much grantor received for land
No built in inflation rider or value for improvements on land
o Actual lossif not damages by encumbrances, no damages
o But can look to more than one deep pocket to get damages (150k from A, 50k from B)
Estoppel by deed
o If grantor convey defective warranty deed purporting to give all interests then later
acquires that interest then he is estopped from denying that title transferred
o Does not apply to QC deed bc making no representation of now or the future
o MortgagesA gets mortgage from B then turns out she has no interest in landif later
gets it then mortgage effective
o Example: Assume after Brown conveys to Lober one of his relatives dies and he gets the
rest of the title that he didnt have before now must give to Lober
e. Recording Acts
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f. Torrens system
93
Title insurance popular in Canada now bc torrens offices got slower and slower at issuing title
o Outsourcing benefiting us bc deals done in US without even looking at records
Title insurance now pervasive in US
o Prior to closing
EMC
Executory period
Escrow system
Preliminary title report
o Buyer usually has 5-10 days to examine the report otherwise
waive all objections to title
Says who owns property, encumbrances that title ins
co found against property
Must request documents about particulars like
encumbrances in order to read them
o If buyer does nothing and close then week after closing title
insurance property will send agreement to new owner and
these same pages will appear as exceptions to coverage
Closing
Tile insurance used to be very pro title insurance company
o Didnt protect against some of the most important risks such as
Encroachments
Location
Boundary and area
Public or private easements unless disclosed of record
Rights or claims of person in possession not recorded (APunder constructive
notice of those under recording acts)
Mechanics liensunder constructive notice of them and not protected from
them unless workers have always recorded their liens
o And also has exceptions for actual defects that title report found
o But if buyer demands it ins co will provide coverage with usu not that much more
premium to seller (seller pays for buyers title ins in CA bc is custom but diff in other
states)
New title insurance gives very good coverage
o Covers the following if recorded
Leases
Contracts
Options
Forgeriesvery common esp if forged release of mortgagesomeone else
claims right from forgery
Easement (any kind)
Except for those already in the title report incorporated by reference
Lien
Unrecorded mechanics lien incurred before or after policy date
Forced divisions of property
Forced moving of structures bc encroaches on other property (though deductible
amt here if involves fence but full coverage if house)
Forced moving of structures bc encroach on easement or setback line even if
they are in the exceptions section
Existing improvements or modification made to them are damaged bc of
extraction of minerals or waters from land even if rights to that mineral or water
are in the exceptions section
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9. Restrictive Covenants
95
Everyone in the subdivision has had their rights violated and too hard to add up
the damages
Relationship btwn restrictive covenants and zoning law
o The more restrictive of the two governsmust comply with both
Unless for some
o Houston only has restrictive covenants, no zoning
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97
98
o
o
Some cts say no one has right to enforce restrictions against other
owners
But most say can bring the litigation and if seems like subdivision
meant to be one common plan then bound by common plan
o Argument is that physical configuration of subdivision puts
him on constructive notice of RC on other deeds and make
him abide by it as well even though he may have paid more
for his lot bc no restrictions
Conveyance informal restrictive covenants
A owns lots 1 and 2, sells 2 to B with restrictive covenant on it
No conveyance informal restrictive covenants (horizontal privity issue)
A owns lot 1, B owns lot 2 and no conveyance at all and A and B get together
and execute bilateral agreement where both agree to limit use to single family
dwellings then record the document which says binds and benefits A and B
Courts often didnt enforce these bc said no privity btwn A and B and
some jurisdictions still like this
o Restrictions not created incidents to conveyance of real estate
o No money damages
Equity courts say can get injunctive relief so long as other party is on
noticedont care about horizontal privity
o So this only comes up if someone selling for money damages
but not in equity for injunctive relief
o Generally bound so long as have notice
iii. End of Restrictive Covenants
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though others still say the restrictive covenants remain which may result in some
lots without restrictions and some with it and that may also result in destruction
of regular character of neighborhood then no more res restrictions at all
o prescriptioncan one destroy restrictive covenant by prescription just like easement?
i.e. if house is in sideyard restrictive covenant for many years can argue the
restriction dies after a certain time? No cases on this but once damages statute
expired essentially destruction of prescription
kind of like laches bc P is at least barred from bringing equitable action but can
still damages BUT once even damages action gone almost like prescription bc
cant bring any actions
some judicial defenses to restrictive covenants also destroy the restriction (but not all)
o these do NOT destroy restriction, just keep one person from bringing suit or defend D
unclean handsif P has violated same or similar covenant cannot seek equitable
relief against another person from violating that covenant bc must come to
equitable court with clean hands
court may find that the Ps violation is not the same bc it is more minor
or not similar qualitatively or quantitatively
o Pietrowski v. Dufranelarge subdivision, single family,
residential. Defendant accused of building detached garage
when already had attached garage. Restrictions in essence say
only get one garage. Next door neighbor (Pietrowski) put D
on notice from day 1 that they were violating restrictive
covenants.
Court said no unclean hands even though P had also
violated covenant bc she also had built in her
backyard but hers was tool shed, not same as addl
two car garage
Waiver or acquiescenceif allow neighbors to consistently violate similar
covenant then either waived right to enforce of acquiesced right to enforce and
prohibited from bringing an action
Sort of like EP concept of selective enforcement
o Pietrowskiagain court says other neighbors violating the
covenant in a much more minor magnitude than the Dufranes
Lachesused to be called equitable statute of limitationsabout unreasonable
delay
Laches can bar a P from bringing an equitable restrictive covenants
action must faster than statute of limitations
If statute of limitations on restrictive covenants (for bringing only
damages action) is 6 years then laches restriction (for equitable action)
may be much less
o Even two years may be considered unreasonable delay bc
allowed person to build, spend money, etc.
Estoppelinvolves P doing something affirmatively to mislead defendant
i.e. P in Pietrowski says what a beautiful garage, then brings action bc
led person to rely on their words
sometimes distinction between estoppel and laches is minor bc saying
nothing may be either laches or estoppel
Pietrowski doesnt meet laches or estoppel bc asserted her rights from
day 1
Often laches and estoppel results in people going to court to avoid
having that defense brought up so ends up incentivizing litigation when
a letter would do
innocence as defenseif D subjectively knowingly (not constructively) violate
the restriction then court may automatically order injunction for P but if instead
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D was innocent then court applies balancing approach as to which party has
been hurt more and may or may not issue injunction
only applies to sideyard restrictive covenants?
Often D will just slice the violation off from the building to avoid
having to pay damages to whole neighborhood
o Once he slices it off no one else has cause of action but if pays
damages then owes it to everyone
o Much easier to pay off P as a result of encroachment than
violation of restrictive covenant like in this case bc have
everyon suing
But some do destroy the covenants
Changed circumstances
To prove changed circumstances must either
o Prove that that the residential character of the neighborhood
no longer exists
Destroys the major restriction in the covenant which
is single family use, residential purposes only
o Have wholesale changes to surrounding area or to the
subdivision itself
If surrounding area becomes commercial then that
may destroy residential restrictions in subdivision
o Pietrowskicourt says fact that everyone has sheds on yard
does not destroy res nature of neighborhood thus does not
destroy all residential covenants (though uses word
abandonment really talking about changed circumstances)
o i.e. if many people in neighborhood are running business out
of their homes then could say change in residential character
of neighborhood
abandonment
To prove abandonment only need prove that
o Result is only that the single covenant is void, not all of the
covenants related to residential use
o Pietrowskieven arguing the garage restriction abandoned
would probably fail bc other peoples sheds not same as
garages
o i.e. a lot of covenants used to say no TV antennas on roofs but
one could argue that wholesale disregard as to that (if assume
satellite dishes same as TV antennas) then ct may find that
particular covenant abandoned by wholesale violation but does
NOT change residential character of neighborhood
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