I.
II.
Theories of Property
a. Externalities
b. Internalizing the Externality
c. Property rights are often on a collision course with the rights of others
i. Look at the goals the court is trying to reach
d. Tragedy of the Commons
i. Everybody owns everything
e. Tragedy of the Anticommons
i. Everything is private property
f. Bundle of sticks (most important)
i. Not all sticks are present in every bundle, but mere absence of
some sticks doesnt mean the absence of ownership rights
ii. Fee Simple Absolute having all the sticks
iii. Bundle of sticks you can take one out but the others are still
there
iv. Right to include
v. Right to exclude*
1. Issues of trespass, adverse possession, housing
discrimination
vi. Right to transfer/ sell
1. Real estate transactions, rule against perpetuities
vii. Right to use
1. Landlord/tenant, nuisance law
viii. Right to destroy
Acquisition
a. Adverse possession - COAH Continuous, Open/Notorious, Actual
& Hostile!
i. Three most common ways to obtain AP
1. Mistaken belief
2. Possessor encroaching on neighbors boundary
3. Possessor trying to take over someone elses land
b. Elements (all gauged objectively how a reasonable person would
treat the land)
i. Entry = actual possession of at least part of the property (unless
you actually enter true owner will not know you are acting
inconsistent with his rights)
1. Must occupy most of the land, not just a small piece
2. Notice to owner, has to be physical
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e. Disabilities
i. Statute doesnt run against the true owner; tolls the SOL and
cannot be tacked.
1. Infancy
2. Insanity
3. Imprisonment (not in MD though)
ii. To benefit True owner must have the disability at the time of
entry of the AP
f. Adverse Possession of Chattel
i. Discovery rule
1. Cause of Action will no accrue until the injured party
discovers facts that will form a basis of a cause of
action
ii. Must have
1. Hostile
2. Actual
3. Visible
4. Exclusive
5. Continuous
g. Acquisition of Property Other Than by Voluntary Transfer
i. Discovery & Conquer
1. Two people cant have the same property interests
2. You cant sell/give more than what you have
3. All property has a chain of title (that will trace back to
the government)
4. You cannot sell/give more than you own
5. Also remember that discovery only gives the right to
conquer you have to do something to the property after
you discover it to gain possession of it
ii. First in time, first in right (Indians v. Government Case)
1. But what is means to be first is highly situational
2. European nations discovered the land and the first
discoverers have the exclusive rights to that land
3. The Indians had the right to use the land, but not possess
the land
4. The Europeans could extinguish the Indians right to use
but only by purchase or conquest
5. However, the Indians abandoned their right to use by
moving off of the land
a. Pros
i. Promotes peace because once discovered ,
property is off limits
ii. Certainty
iii. Administrative ease
iv. Encourages investment and development of
the land
v. History vested rights create reliance and
expectations
b. Cons
i. Arbitrary decision
ii. People may take more than they can use
(anti-environmental)
iii. Gives effect only to one notion of property
iv. Relies on power those who get there first,
get land
iii. Lockes Labor Theory
1. You can only acquire property by doing some type of
labor on it. The labor is putting everyone else on notice
that the property is yours.
iv. Capture (first in time)
1. (Fox Case) the first person to gain actual possession
of a wild animal by killing or restraining it so that there is
no reasonable possibility of escape has the property
rights to that animal. The rule of capture mortal
wounding required. Mere pursuit is not enough. You must
inflict a death wound.
a. Suggest that mortally wounding or trapping the
animal would be enough as well
b. This holding gives peace and certainty even if not
fair
c. Dissent suggests that this will discourage people
from hunting foxes if efforts will go to waste
d. Same with Fugitive Resources
e. Oil a field split between two properties, the
seconds propertys only recourse to pump the oil
faster than his neighbor. But the oil will be used up
quicker.
ii.
Finder
2. Lost/mislaid doctrine
a. Even a thief has superior title to those who come
back later even if thief got wrongfully they
would still have superior claim
b. Lost = accidently parted with and the finder of that
item will have the best claim of title to that item
c. Mislaid = item intentionally placed down then
unintentionally forgotten. In that case, if you find
it, the true owner will have the best title to a
mislaid item.
d. Abandoned = the finder of the item gets the actual
title because no one else has better title
i. Abandoned property owner knowingly
relinquishes all rights in property and finder
gets actual title and no one has better title
e. Found in a private home = will go to the
homeowner they will have best title compared to
everyone but the actual owner.
f. There is a subtle difference between lost and
mislaid
i. Lost means that owner left it somewhere
unintentionally
ii. Mislaid means that owner left it somewhere
intentionally and forgot to come back for it
iii. Goals of finders law: return items to true
owner, honesty, and expectations
iv. A person who has mislaid their property is
more likely to return to the shop to reclaim
it, therefore we want to keep it at the shop
iii.
iv.
Gifts
a. Requirements
i. Intention to give as a gift
1. Can be shown by words, deeds, letters, etc.
b. Delivery of the item being gifted
i. Actual
1. Law prefers this and often requires it.
c. Constructive
i. Handing over a key. (only ok when gift is too big
and is impossible to physically hand over
d. Symbolic
i. Handing over something that symbolizes the
property like a writing
e. Acceptance of the gift (usually implied and often
forgotten). Courts assume this unless its rejected.
General rule is: If a property can be handed over, it
MUST be
a. Serves anti-fraud function
g. Gift Causa Mortis (made in contemplation of
death)
i. Must have Intention AND Delivery
h. Gift Inter Vivos (gift made during life)
i. Deliver a Future Interest without actual
possession (painting case intent for the
future was good enough)
III.
Freehold Estates
a. You can only transfer what you have or less than what you have
b. Numerus Clausus Principle cannot create new types of estates; they
must fall within the types already in existence or are invalid
i. We are talking about the ownership/possessory interest in real
property and NOT the actual property item!
ii. The person who has the possessory interest has the bundle of
sticks
iii. Ownership and possessory interests can be different and
overlapping
iv. Pay attention to the vocabulary used
v. Will not change because lawyers like the fact that they are the
only ones that understand it they can make money off of it
c. Vocabulary
i. Words of purchase who is getting the land (O to A)
ii. Words of limitation for how long
1. And his/her heirs (FSA)
2. And the heirs of his/her body (fee tail)
3. For life (life estate)
4. For ___ years (term of years)
d. Estates in Land & Future Interests
i. Remember if you are alive, you have no heirs
e. 4 present possessory estates:
i. Fee Simple Absolute (FSA)
1. Largest, most comprehensive property right (Ultimate)
2. You have all the sticks in the bundle (biggest bundle)
3. Language:
a. O to A
b. Common Law: O to A and his heirs
4. Living people have no heirs, therefore while A is alive his
heirs have no interest in land, present or future
5. Any estate that is not a FSA will have a present interest
(Present interest is the unrestricted right to the immediate
use, possession, or enjoyment of property or the income
therefrom) and a remainder (remainder definition) (that
adds up to a FSA)
6. You can sell, devise, inherit, mortgage, etc.
7. FSA Lasts Forever no end point
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f. Future Interests
i. Possibility of reverter
1. Arises when an owner carves out his estate a
determinable estate. It is a future interest remaining in the
transferor or his heirs when a fee simple determinable is
created.
ii. Reversion
1. Reversion is an interest that is leftover in the owner when
he carves out an estate lesser than his own estate
2. Reversions are retained interests and are all vested in
transferor (NOT contingent)
3. Transfer must be:
a. 1) Vested AND
b. 2) less than the original estate
iii. Right of Entry
1. Arises out of an estate subject to condition subsequent,
whereas the owner retains the power to cut short or
terminate the estate, then the transferor has a right of
entry.
g. Third Partys Future Interests
i. Remainders (Always say remainder to what?)
a. A remainder is a future interest that sits around and
waits patiently until the termination of the
preceding possessory estate. The remainder than
moves in to possess as long as there is no condition
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4. Contingent Remainder/Precedent
a. It is given to an unascertained person (or unborn
person), or
b. It is made contingent upon some event occurring
other than the natural termination of the preceding
estates (basically subject to a condition precedent).
i. Contingent remainder in
ii. Unascertained person OR condition
precedent
c. Alternative contingencies
d. Remainders go into possession immediately after
the current estate is up if time passes, even a day
= executory interest
e. READ CLAUSE BY CLAUSE BEFORE
COMMA CONTINGENT REMAINDER,
AFTER COMMA VESTED
f. Always remember if A does not have children yet
they are contingent***
5. A future interest in a transferee that must, in order to
become possessory:
a. Divest or cut short some interest in another
transferee (shifting executory interest); OR
b. Divest the transferor in the future (springing
executory interest)
c. Its a future interest following an estate subject to
an executory limitation.
d. Executory interest in ..
i. Shifting take from grantee
ii. Springing take from grantor
iii. If vested -> next is executory interest
e. MUST SAY WHAT YOUR INTEREST
ATTACHES TO
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h. RAP http://legaldictionary.thefreedictionary.com/rule+against+perpetuities
No interest is good unless it must vest, if at all, not later than
twenty-one years after some life in being at the creation of the
interest
Modern: can you come up with a scenario where the interest could vest
outside of the 21 year period after someones death?
If yes, the interest is invalid as of today.
CREATE, KILL, COUNT
Look at the conveyance
Only people we care about are the A, B, Cs of the
conveyance (lives in being at the creation of the interest)
Create imaginary kid
a. The rule strikes any interest that does not vest within 21 years after
the end of life that exists at the time the property is granted. The
offending clause will be stricken from the deed. Rule strikes out any
interest that does not necessarily vest or fail with 100% certainty
within 21 years of the life currently in existence. The Rule considers
all aspects, no matter how crazy (fertile octogenarian and unborn
widow).
b. Remember: Each interest created must be tested separately. Just
because one interest satisfies the rule doesnt mean all of the interests
satisfies the rule. The validating life can also be different for each
interest.
c. REMEMBER: You measure the validity of the deed TODAY when
the deed is signed.
d. PICK A LIFE; GIVE THEM A KID; KILL THEM OFF & SEE
WHAT WILL HAPPEN IN 21 YEARS.
e. Policy to Prevent:
i. Furthering alienability of property
ii. Furthering productivity of property
iii. Preventing undue concentration of wealth
iv. Prohibiting excessive dead-hand control
v. Prevent uncertainty
f. Only applies to:
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i. Contingent Remainders
ii. Executory Interests
iii. Vested Remainders subject to open
1. A class gift is not vested in any member of the class until
all members have vested, all or nothing rule.
g. Four Step of RAP
i. Determine which future interests have been created
ii. Identify the conditions precedent to the vesting of the suspect
future interest (what has to happen before the future interest
vests)
iii. Find a validating life
iv. Ask: Will we know for certain, within 21 years of the death of
the validating life, whether the future interest will vest?
Example: O transfers a sum in trust for A for life, then to As
first child to reach 21. A is the validating life. You can prove
that any child of A who reaches 21 will necessarily reach 21
within 21 years of As death. The remainder must vest or fail
within this period; it cannot possibly vest more than 21 years
after A dies. The remainder is valid.
Example: O transfers a sum in trust for A for life, then to As
first child to reach 25. A has no child age 25 or older. There is
no validating life; the contingent remainder is void. You cannot
prove that As first child to reach 25 will do so within 21 years
after As death.
h. Validating life
i. Could be anyone, but should be someone connected to the deed.
A child in the womb is considered to be alive for this rule. The
validating life must be alive at the time of conveyance. The key
is that to be a validating life, a person must be someone who
can affect vesting or termination of the interest.
ii. A validating life can be anyone and be named (The Rockefeller
Heirs) in a saving clause, but must be alive at the time of
conveyance.
iii. At the validating lifes death, the 21 year clock begins ticking.
At the end of that period, the life will vest or it will fail.
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i. Class Gifts
1. Class Gifts: The all or nothing rule. A class gift is not
vested in any member of the class until the interests of all
members of the class have bested. A gift that is vested
subject to open is not vested under the RAP. For a glass
gift to be vested under RAP, the class must be closed
(that is, each and every member of the class must be in
existence and identified), and all conditions precedent for
each and every member of the class must be satisfied,
within the RAP period.
2. Gifts to groups of unascertained people like children or
grandchildren. They are contingent because they are
subject to open. Even a transfer that is vested but subject
to open, then RAP does not consider it vested. Since you
could have a smaller share than expected its a
contingent remainder. This is an all or nothing rule for
class gifts
3. Rule of Convenience Equitable doctrine. Under this
rule, transfers to classes may be treated as closed (and
therefor not subject to open) if any member of the class
can be vested (can take now). This ROC cuts off the new
entrance of the class/recipients of transfer.
j. RAP Danger Signs
i. The condition is not personal to someone
ii. There is an identified age or time period of more than 21 years
iii. An interest is given to the generation after the next generation
(ie: grandchildren)
iv. A conveyance requires that holder survive someone who is
merely described rather than names (e.g. the unborn widow)
v. An identified even that would normally happen well within 21
years, but might not
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Concurrent Estates
a. Several people own the same property at the same time (this is not an
absolute interest, but rather a concurrent interest)
b. Policy important for economic development
i. Protect family from creditors
ii. Pooling resources together to gain a property interest
c. Joint Tenancy
i. 2 or more people w/ equal ownership of property
ii. Language: Rights of survivorship
iii. Share is transferable inter vivos
1. JT may sell/transfer their estate w/o others
knowledge/consent
2. Estate is NOT devisable or descendible b/c of right of
survivorship
iv. Applies to joint bank accounts
v. 4 unities (right to survivorship must be expressed in deed to
create JT)
1. Time take at same time
2. Title same title (same deed for house)
3. Identical - equal shares
4. Possess right to possess the whole (50/50 still roam
about the 100%)
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iv.
v.
vi.
vii.
viii.
ix.
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V.
Leasehold Estates
a. Landlord/Tenant law
i. Fair Housing Act
1. Know what you can and cannot discriminate against
2. Sexual Preference/Age/Political Affiliation are not
prohibited by Act
3. Unlawful to advertise for the sale or rental of a dwelling
that is
4. Small landlord renting basement you can discriminate
but not in your ad (policy is you have a right to choose
who is in your home)
b. 4 Leasehold Interests
i. Tenancy for years/term of years
1. Three Futures
a. Lease for a fixed period of time (if you know
termination state at start than its this lease
b. Notice is not necessary by definition you know
when ending
c. Statute of Frauds does apply greater than 1 year
has to be in writing
ii. Periodic tenancy
1. Leasehold interest that continues for successive or
continuous intervals until notice of termination
2. Can arise by implication in three ways:
a. Land is leased w/ no mention of duration, but
provision is made for the payment of rent at
regular intervals
b. An oral term of years that violate the SOF creates
an implied periodic tenancy
c. Holdover: if L elects to holdover a T who has
wrongfully stayed past the conclusion of the
original lease, an implied period tenancy arises
d. To terminate must have notice and notice must
be equal to half length of period.
i. If 1 year you need 6 month notice
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6. Constructive eviction
a. Constructive eviction is the landlords interference
with the tenants enjoyment of the premises such
that the tenant has no choice but to vacate.
b. Substantial interference: Ts use & enjoyment
must be substantially interfered b/c of some act or
failure to act attributable by L
c. Notice: T must give L notice of the problem and L
must fail to act w/in a reasonable time
d. Goodbye: T must vacate the premises w/in
reasonable time after L fails to correct the problem
iv. Duty to satisfy implied warranty of habitability (residential
only)
1. Not waivable too fundamental (any attempt makes
lease a nullity)
2. Standard: premises must be fit for basic human habitation
a. May be supplied by housing code of independent
judicial conclusion
v. Ts Options if Warrant of Habitability is Breached (residential
only remember!)
1. Move: T can move out and terminate the lease
2. Repair & deduct: by statute, many states allow T to
make the repairs himself & then deduct the costs from
future rent
3. Remain: T can remain in possession & sue L for
damages
4. Reduce Rent: T may reduce rent in an amount equal to
the fair rental value of the premises in view of the defects
5. Note: Ts who do this normally need to put withheld rent
in Escrow to show good faith
vi. Standards premises must be fit for human habitation
1. Remedies for Breach:
a. Tenant can move
b. Repair & deduct
c. Remain (and sue landlord later)
d. Reduce rent (use escrow account for good faith)
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e.
f.
g.
h.
i.
VI.
Land Transactions
a. Every conveyance of RE consists of a 2-Step Process:
i. 1. The land K, which endures until Step #2
ii. 2. The closing, where the deed becomes the operative doc
1. 4 Items to Consider for K for Sale of Land
a. Statute of Frauds
b. Sellers Duty to Provide Marketable Title
c. The Sellers Duty to Disclose Defects
d. The Sellers Implied Warranty of Quality
b. Land K
i. Land K & SoF (in writing, signed by the party to be bound)
ii. Statute of Fraud Requirements:
1. Must be in writing
2. Signed by the party who is to be bound (aka the party we
are suing)
3. Describe the RE and terms
4. State the price
a. Specific price if set; or
b. Refer to price and method which will be ussed to
fix it
iii. Exceptions to Statute of Fraud Requirements:
a. Part Performance
i. Allows enforcement of oral agreement when
particular acts have been performed by one
of the parties to the agreement
ii. Only available if the Buyer takes physical
possession of the land AND:
1. Buyer pays all or part of the purchase
price
2. Buyer makes valuable improvements;
or
3. shows he would suffer irreparable
harm if the K is not enforced
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b. Estoppel
i. Enforcement or an oral agreement to prevent
some sort of justice
ii. Only applies when:
1. An unconscionable injury would
result from denying enforcement of
the oral K after one party has been
induced by the other seriously to
change his position in reliance on the
K; or
2. When unjust enrichment would result
if a party who has received a benefit
of the others performance were
allowed to rely upon SoF
iv. Equitable Conversion
1. Equity regards as done that which ought to be done, once
the contract is signed. So buyer is deemed the owner of
the land subject to the condition that he remit the balance
of the purchasing price at closing.
2. If the property is destroyed in the gap between the K and
the closing, through no fault of either party, the buyer
bears the risk of loss unless the K states otherwise
v. Implied Promises
1. Marketable Title (this is implied)
a. Title that is free from reasonable doubt
i. That means:
1. Title free from lawsuits and threat of
litigation
2. Standard: reasonable person standard
3. Public restrictions will make title
automatically unmarketable since it is
easily discoverable (via public
records)
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VII. Deeds
a. Deed procured by fraud:
i. VALID BUT VOIDABLE by the grantor in an action against
the grantee, but a subsequent bona fide purchaser from the
grantee, who is unaware of the fraud, prevails over the grantor
ii. Only applies to purchasers
b. Remember a forged Deed is void
c. However, the grantor whose signature appears on the deed prevails
d. ONLY applied to purchasers (not people who inherit land or receive it
as a gift)
i. Essential Elements of the Deed
ii. Grantor
iii. Grantee
iv. Words of grant
v. Description of the land involved
1. a deed MUST contain a description of the parcel of land
conveyed that locates the parcel by describing its
boundaries
vi. Signature of the grantor
vii. Attestation or acknowledgement (sometimes)
viii. Consideration NOT required (but you should include it)
1. should state that some consideration is being exchanged,
but you do not need to defend exactly how much
e. Types
i. General warranty deed
1. Best and most expensive deed
2. Warrants title from 6 defects, even if the defects arose
before or after the grantor took title
ii. Special warranty deed
1. Warrants only against Grantors own acts but not the acts
of others
2. Contains all or some of the covenants covered in General
Warranty Deed
3. Warrants only defects which arise during the grantors
time of holding title
4. Not liable for any defects which arose before the
grantors ownership
5. Basically, Grantor is saying that he has not created or
suffered a defect during his own ownership period
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g.
h.
a.
a.
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IX.
35
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2. Implication
a. When there is a particular use that occurs on a
parcel of land that should survive the division of
the parcel
b. Courts will imply an easement from that prior or
existing use if:
i. The use was apparent at the time of the
division; and
ii. The parties expected & intended that the use
would survive division b/c it is reasonable
necessary to the now dominant tenements
use & enjoyment
3. Necessity
a. This is the landlocked setting at the time the land is
split up
b. An easement of right of way will be implied by
necessity of the grantor conveys a portion of his
land w/ no way out, except over some part of
grantors remaining land
c. Must be NECESSARY not just convenient
4. Grant (Deed of Easement)
a. Note, the SoF applies since an easement is a
property interest in land
b. Therefore, if the easement is to last over 1 year, it
has to be in writing (the writing is known as a deed
of easement)
v. Assignability of Easements (can happen sometimes)
1. An easement appurtenant transfers automatically with
the dominant tenement
2. Doesnt matter whether it is even mentioned in the
transfer
3. An easement appurtenant transfers automatically with the
servient tenement UNLESS the new owner is a bona
fide purchaser with no notice of the easement
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7. Merger
a. If B can cross over As land via easement, later B
buys As land, they merge and easement is
extinguished.
b. The easement is terminated when title to the
easement and title to the servient tenement become
vested in the same person
8. Prescription
a. An easement can be terminated when the servient
owner interferes w/ it in accordance w/ elements of
AP
c. License (far different than easement)
i. Parking at Garage
ii. Not subject to SoF
iii. Unlike an easement, a license is freely revocable at the will of
the licensor
iv. Length of license depends on purpose for which it was granted
v. It is a mere privilege to enter anothers land for some narrow
purpose
vi. Ex.: newspaper carrier, ticket holder, parking garage patron
1. License is Revocable in Two Ways:
a. When the license is coupled w/ an interest
i. Ex. O grants to A the right to take timber
from Blackacre, owned by O: A has an
interest (getting the timber) & an irrevocable
licenses to enter the land & take the timber
b. Estoppel
i. Applies to bar revocation when the licensee
has invested substantial money or labor or
both in reasonable reliance on licenses
continuation
d. Covenants (Remedy = Damages)
1. Promise to do or not do something in relation to the land
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i. Real Covenant
1. A real covenant is one that is capable of running with
estate in land
2. It is able to bind the successors to the originally
contracting or covenanting parties
3. A real covenant must be in writing and satisfy the SoF
4. An equitable servitude, does not always have to be in
writing it can be implied
ii. Restrictive (most covenants fall under this category)
1. A promise to refrain from doing something with the land
2. A promise to refrain from doing something relating to the
land
3. Ex. Promising not to build a store on my property
iii. Affirmative
1. A promise to do something related to the land
2. A promise to do something related to the land
3. Ex. I promise to maintain in good repair our fence, pay
condo dues, etc
iv. Parts
1. Burden (servient tenement)
2. Benefit (dominant tenement)
v. Running w/ land
a. Both Horizontal & Vertical privity are required for
the burden to run.
1. Horizontal privity (required for the benefit to run)
a. A the time of obligations/promises, it was all part
of a single parcel of land
b. Focus is on the relationship between A & B
c. They must have been in succession of estate when
they entered the agreement (privity of estate)
d. This simply means that there was some sort of
Real Estate transaction (grantor-grantee, landlordtenant, mortgagor-mortgagee, debtor-creditor) or in
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2. Vertical privity
a. Whether the original owner or subsequent have the
same estate
b. Focus is on the relationship between A and A-1
c. Must be non-hostile
d. (basically means that there cant be vertical privity
if land is acquired via adverse possession)
vi. Requirements for whether the Covenant will run with the land
1. Writing Original promise must be in writing
2. Intent - original parties must have intended that the
promise would bind successors
3. Notice
a. A-1 must have had some form of notice of the
promise when he took
b. Actual: A-1 was literally & actually informed of
the existence of the covenant
c. Inquiry: the lay of the land should have informed
A-1 of the covenant
d. Record: Public records should have informed A-1
of the covenant
4. Touch & concern Promise must touch and concern the
land
5. Privity
vii. Requirements for whether the Benefit will run with the land
1. Four elements:
2. 1. Writing: original promise must have been in writing
3. 2. Intent: original parties must have intended that the
benefit would run
4. 3. Touch & Concern: promise must affect the parties in
their legal relations as landowners; must pertain to the
land
5. Vertical Privity ONLY
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EMINENT DOMAIN
1.) Defined. Eminent domain is the government's Fifth Amendment power,
made binding on the states by the Fourteenth Amendment, to take private property
for public use in exchange for just compensation.
2.) Explicit takings. Explicit takings are overt acts of governmental
condemnation. For example, government comes knocking on your door and says,
We're sorry. But we must condemn your beloved Blackacre to make way for a
public highway. If, after notice and an opportunity to be heard, the taking is
deemed constitutionally permissible, the government must pay you just
compensation for its taking.
3.) Implicit or regulatory takings. Here, a private landowner claims that a
government regulation, although never intended to be a taking, nonetheless has the
same effect. The given regulation has significantly compromised that property
owner's reasonable, investment-backed expectations.
There are several tests that the U.S. Supreme Court has developed to assess
when a governmental regulation has gone so far as to be deemed a regulatory
taking:
A.) The categorical taking. This occurs when the given regulation works an
economic wipeout of the landowner's investment. For example, you buy land in
North Carolina for development. Three months later, the government imposes a
ban on development, to protect the beachfront. Note that you have not been the
target of an overt act of governmental condemnation. You still own the property.
You just cannot do anything with it. Hence, you argue that the regulation is an
implicit or regulatory taking, requiring that just compensation be paid to you. You
will succeed. The governmental ban or moratorium has worked a categorical,
wholesale deprivation of value to you.
B.) The reasonable return test. If the landowner is left with a reasonable
return on his investment, even in the presence of the governmental regulation, a
taking has not occurred. For example, you own Grand Central Terminal. The City
of New York now determines that Grand Central is to be designated a landmark,
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within the scope of the City's Landmark Preservation Act. That statute precludes
you from building atop the Terminal. You argue that the statute is a regulatory
taking. It has sufficiently diminished your investment-backed expectations. You
will lose, so long as you enjoy a reasonable return on your investment even
with the burdens of the landmark designation. Thus, if you can still operate the
Terminal productively, leasing out its existing space, for example, your glass is still
somewhat full.
C.) The diminution in value test. The diminution in value test is the flipside of the reasonable return coin. Now, instead of asking how full the glass is, ask
how empty it is, as a consequence of the given government regulation. For
example, Pennsylvania enacts a statute that precludes subsurface coal mining, in
order to avoid further harm to the land. Coal mining companies claim that the
regulation goes too far. It has worked too significant a diminution in value to them.
They may prevail, on the basis that the glass is nearly empty.
4.) Remedies for the regulatory taking. If the landowner succeeds with its
implicit taking claim, government must either compensate the owner or terminate
the regulation and pay the owner for damages that occurred while the regulation
was in effect. Hence, even temporary takings are compensable. 5.) Exactions.
Exactions are those amenities that government seeks in exchange for granting
permission to build. For example, suppose that you are a developer seeking
permission to build a 200unit residential development in the town of Utopia. The
town tells you that it will grant you the requisite permit if you agree to provide
several new streetlights, a small park and wider roads. Government, in other
words, is seeking exactions from you. As you might imagine, exactions are
inherently suspect. Left unchecked, they could become tantamount to takings
without just compensation. To protect against governmental abuse of power,
exactions must pass constitutional scrutiny. Government's demands must be
reasonably related, both in nature and scope, to the impact of the proposed
development. If they are not, the exactions are unconstitutional.
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ZONING
1.) Defined. Zoning is an inherit power of the state, derivative of its police
powers. We allow government to enact zoning ordinances to reasonably control
land use, for the protection of general health, safety and welfare.
2.) The variance. The variance is the principal means to achieve flexibility
in zoning. A variance is permission to depart from the literal requirements of a
zoning ordinance.
There are two kinds of variance: the area variance and the use variance.
a.) The area variance: The area variance deals with problems of compatible use
but ill-fit. The proponent of an area variance must satisfy both prongs of a twoprong test. She must demonstrate:
i.) undue hardship that has not been self-imposed; and
ii.) that the grant of the variance will not work diminution to neighboring property
values.
For example, A wishes to add a glass-enclosed front porch to her home. To do so,
she needs an area variance. Otherwise, her premises will be in violation of the
township's minimum setback requirement, which is a zoning ordinance that
requires that all homes be situated a certain minimum number of feet away from
the front curb. A's proposed addition presents a problem of illfit. She must petition
the township's Zoning Board of Adjustment for an area variance. To succeed, A
must demonstrate undue hardship. For instance, perhaps her child suffers from
respiratory maladies, and the pediatrician has indicated that the glass enclosure will
help to abate those ills. Additionally, in fairness to the neighbors, A must show that
the variance, if granted, will not adversely affect surrounding property values.
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b.) The use variance. The use variance is harder to obtain than the area variance.
The use variance has its proponent seeking to depart from the list of uses that are
permitted in a given zone. For example, A wishes to build a convenience store in a
district zoned exclusively for residential purposes. To succeed, A must obtain a use
variance from the Zoning Board of Adjustment. The use variance is granted only in
the presence of very exacting special circumstances.
3.) The nonconforming use. The nonconforming use is a once lawful, existing use
that is now rendered nonconforming because of a new zoning ordinance. This now
nonconforming use cannot be eliminated all at once, unless just compensation is
paid. Otherwise, its wholesale elimination would be tantamount to an
unconstitutional governmental taking without compensation. For example, A has
long operated a brickyard in the township of Utopia. Today, the township enacts an
ordinance prohibiting the operation of all junkyards. The township's enforcement
of that ordinance to shut down A's operation would be tantamount to a taking,
warranting the payment to A of just compensation. To escape the takings
conclusion, some jurisdictions provide for amortization. Defined by statute,
amortization is the gradual elimination, or the gradual phasing-out, of the now
nonconforming use.
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