Property Outline

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OUTLINE DETAILS: Author: Anonymous School: University of Colorado School of Law Course: Property I Year: Fall, 2001 Professor: Collins Text: Property, 4th Ed Text Authors: Dukeminier
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Possession 1. General a. First In Time basic notion of property law i.Legal Doctrine & Instrumental Ends 1. Precedent promotes productivity 2. Possession protects expectations 3. First in Time, ownership promotes certainty, predictability ii.Capture of Wild Animals iii.Finding Property b. Bailments Created when one person gives temporary possession of their property to another. c. Adverse Possession 2. First In Time: a. Ownership is title, legal right to property b. Possession is proved by showing physical control and the intent to exclude. i.Possession is easier to prove than ownership c. Constructive Possession: a person is in constructive possession when the law treats him as if he were in possession although he is not or is unaware of it. d. Why the law protects possessors: i.Possession is an efficient way to prove ownership ii.Protecting possession preserves peace and order by preventing a stronger person from ousting a possessor. iii.Protecting possession facilitates trade iv.Gives effect to the expectations of a person who has asserted a right in a thing v.In the case of capture of wild animals, it rewards persons for making a useful item available to society. vi.Possession is an easy and efficient way of allocating resources 3. Rule of Capture a. Rule of Capture i.To gain ownership of a wild animal, a person must have physical possession ii.Majority Rule Certain control 1. Mere pursuit does not give rights to the animal. The one who captures the animal gets it. It encourages the pursuer to capture it as quickly as possible. The rule of capture is a killing machine. Directly follows the first in time rule. iii.Minority Rule Reasonable prospect of capture a. Pierson v. Post: Man kills a fox while another man is in pursuit of it. 2. Policy: Rule of capture is easier to administer that a rule that protect pursuers. The court reasoned that they would be flooded with disputes. Importance of certainty and preserving peace. iv.Interference of a noncompetitor: 1. A person cannot maliciously prevent another from capturing wild animals
in the pursuit of his trade. A person can lure the wild animals off of the owners land but cannot scare them away. a. Exception: When the other person engages in the same occupation. i.Keeble v. Hickeringill: the defendant shot his rifle near the plaintiffs duck pond to scare away the ducks, the court found trespass. ii.Rational Soli: Land owner has constructive possession of animals ferae naturae on their land. b. The court values the beneficial use of land and competition to increase the efficient capture of wild animals. c. Schoolmaster Hypo: a schoolmaster can try to lure students to his school but he cannot scare students from attending the competing school. d. Since the rule of capture wants animals captured, Keeble also seeks to ensure that the ducks are captured and not lost to either party. v.Custom: 1. Title to a wild animal is acquired when the hunter apprehends the animal in accord with custom. 2. An exception to the rule that the captor must have physical control over the animal is in the case where custom is more effective at getting animals killed. If the killer of the animal makes marks of appropriation, he gets it. a. Ghen v. Rich: Chance finder of a whale carcass has no rights to it. The killer of the whale has the rights. b. Note: This argument is wrong, the rule of capture is a killing machine vi.Relativity of Title 1. T trespasses on Os land and captures a wild animal and takes it to his own land. T1 trespasses on Ts land and takes the animal. a. T has a claim against T1 for return of the animal. b. O has a claim against both T and T1 for return. c. The party with superior title has a claim against all who have an inferior title. 2. Rule of increase: if a domesticated female animal goes onto a neighbors property, take up with a neighbors animal, baby belongs to female animals owner. 3. Wild Animals a. Wild animals with a habit of returning these animals continue to belong to the captor while they roam at large. b. Escaped wild animals the captor loses possession of these animals if they do not have a habit of returning. vii.Fugitive Resources 1. Oil and gases under common law they are attributed the elements of wild animals because of their fugitive nature. Gases that are part of another element are considered to be part of that element. a. They belong to the owner of the land and are part of it so long as
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i.they are on or in it and ii.subject to his control; iii.but when they escape or go into other land, the title of the formal owner is gone. b. Amoco v. S. Ute Indian Tribe: the court rules that CBM gas was not reserved with the coal rights and therefore the right to the gas belongs to the land owner and not the coal right owner. 2. Underground storage: the rules of trespass dont generally extend to underground storage. The idea is that the underground storage does not interfere with the owners use of the land. (Hammonds v. Central Kentucky. P 38.3) 3. Groundwater: a. English Rule a landowner over an aquifer could freely draw from it without regard to the effect on neighbors. Rule of Capture. b. American Rule rule of reasonable use, is also a rule of capture, but it says that wasteful uses of water are unreasonable and therefore unlawful. c. Modern Rule extraction is generally governed by legislative and administrative programs. viii.Demsetz Theory of Property Rights Property rights specify how a person may be benefited or harmed in their use of property and who must pay to modify peoples actions. 1. Primary function of property rights is to guide incentives to create a greater internalization of externalities. a. Externalities: those harms or benefits to that do not affect the actor i.They are a function of transaction costs and encourage the misuse of resources b. Internalizing: enables the actor to experience the harms or benefits that he creates 2. Transaction costs: the deals people make have costs, and can block efficient transfers because of (1) free riders, (2) hold outs, (3) high negotiation costs, and (4) high policing costs. 3. Idealized forms of Ownership a. Communal Ownership: high degree of externality because costs are borne by the community not solely the actor. b. Private Ownership: internalizes many of the external costs associated with communal ownership because the owner attempts to maximize the propertys present value by taking into account alternative future benefits c. State Ownership: no discussion. ix.Utilitarian view of Property Rights: Dominant Theory: 1. Hume: Our own self-interest promotes our adherence to property rights. If there were an unlimited supply of goods no property rights would arise. 2. Bentham: Property consists of an established expectation x.Generally, property rights seek to promote the efficient use of resources. xi. Friedman: Private property is essential to political freedom. Alienability
promotes political freedom. xii.Coase Theorem Wealth v. Efficiency: if transaction costs are zero, markets will shift resources to their most efficient use. But if transaction costs are high and an owner uses a resource inefficiently, that resource will remain in it inefficient use. 4. Remedies of a Possessor a. At common law . . . b. Replevin suit for recovery of chattel c. Trover suit for damages d. Conversion: i.The plaintiff must establish an actual interference with her ownership or right of possession. e. Trespass i.Punitive damages may be awarded for an intentional trespass 5. Acquisition by Creation a. Right to the exclusive use & enjoyment of ones creation i.Majority view holds that it is not the courts role to determine and extend copyrights; it is the job of legislature. To do so would be to interfere with monopolistic policies. 1. The court will not make copyright law but will only seek to enforce those laws already established by the legislature. 2. A persons property is limited only to the chattels that embody his invention; others may imitate at their leisure. 3. Cheney v. Doris Silk: Cheney sought to prevent Doris from copying its designs; the plaintiff could not get copyright protection through the copyright office so it sought protection through the courts, pg 60. The court found for Doris. a. Unless the common law or the paten or copyright statutes give protection from appropriation, a persons property interest is limited to the chattels which embody his creations. b. This case highlights two competing goals of property rights: i.to encourage the efficient creation of property ii.to encourage the efficient use of property iii.value of creation v. value of efficient use of property 4. It is fair to claim that an item is like the original but unfair to claim that the imitation is the original. Smith v. Chanel, Inc. pg. 63 ii.Minority View - First in Time We must allow those who first came upon an idea, or chased a fox, to have exclusive rights to that idea, otherwise people will cease to generate ideas because the wont be able to protect them. International News Service v. Associated Press: pg.62 1. This argument is really the moral argument that Its not fair, disguised as a utilitarian argument. b. Persona as Property: i.Property interests include name, likeness, and other aspects of ones identity. 1. When a distinctive voice of a professional singer is widely known and is
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deliberately imitated in order to sell a product, the sellers have appropriated what is not their and have committed a tort. Midler v. Ford Motor Co, pg 64.8 2. Vanna White had a cause of action against a company that created a robot resembling her based on the claim that she has a marketable celebrity identity value that the firm used for commercial profit. Vanna White v. Samsung Electronics Co., pg 65.1 6. Physical Personal Property: a. Moore v. UC Regents: the court decides that this case is really an issue of social benefits v. individual rights, leaves this decision to the legislature. (Plaintiff claims that since the defendant used his tissue to develop a cell line, he should have some right to cell line. Charges conversion) i.Majority Rule: 1. A doctor has a duty to disclose the extent of his research and economic interests in a patients body parts. Human body parts are not property such that they can be converted. a. No precedent allows a court to hold that a person has property rights to their cells. b. Ones property rights do not extend to an exclusive right to our cells and bodily fluids. c. Consideration is placed on weighing social interests of medical research with the individuals rights. d. Court says that the legislature should decide if the individuals property rights extend this far, but the court will not do it. e. A patent is an authoritative determination that a cell line is the product of invention. f. Some states limit a persons control over excised cells and thus restricts some of the rights ordinarily attached to property. ii.Minority View: 1. The contention that a persons cells are not her personal property is against our belief system that the body is the expression of a unique person. Many limits are placed on what a person may do with her personal property, such as transfers, gifts, etc. This type of limit should apply to the cells and tissues also. P 77.4 2. It is inequitable and immoral that a party should be enriched at the expense of another. While the person who has been deprived of the benefits of their cell line. 7. Right to Exclude i.Property owners have a right to exclude intruders/trespassers from their property. 1. Jacque v. Steenberg Homes: Landowner refused to give permission to mobile home transporter to cross his land. Defendants crossed his land anyway, but caused no property damage. The plaintiff sued for trespass under state law and won. Court said we will protect property rights that private landowner shouldnt feel that they must take the law into their own hands. pg. 86.5 2. Exceptions:
a. When the property is a public place b. In the case of renters/lessors c. Migrant workers in need of federal services, NJ Trespass Law i.State v. Shack: Farmer wanted to keep legal aide worker from discussing the legal concerns of a migrant worker who lived on his property. Farmer sued for trespass. Supreme Ct of NJ said that (1) farmer opened his land up by allowing other people to live on it (2) federal govt set up legal aide clinic to help migrant workers, if the aide workers cannot consult with the workers the clinic is useless. pg. 87.7 3. Right to exclude must be balance against a persons right to access property based on a need or important public policy. b. Bundle of Property Rights: Right to Possess (Pierson V. Post) Right to Transfer (Moore V. UC Regents); **Right of Alienation** Right to Use (Demsetz Article) Right to Exclude (State V. Shack) These rights are limited and not absolute! 8. Subsequent Possession a. Finders General rule: an owner of property does not lose title by losing property. Os rights persist even though the article has been lost or mislaid. i.A finder has rights superior to everyone but the true owner. ii.To get possession a finder must 1) have physical possession, and 2) intend to own the item. iii.Conditions that affect the rights of the finder 1. Finders status a. customer, tenant, guest, employee, trespasser, snoop 2. Finders behavior a. acts as a true owner 3. Place of the find a. public or private, underground or terrestrial 4. Condition of item a. lost, misplaced, abandoned iv.Armory v. Delamirie: Boy finds jewel and jeweler takes the jewels claiming that it wasnt the boys anyway. Court says the finder, Armory, is the owner and the boy is compensated the full value of the jewel. pg 100 1. Prior possessor has a right to the property against all but the rightful owner. 2. The court determined damages by the most expensive jewel that could have been used. 3. A suit by the true owner against the defendant would be maintained although the would have had to pay twice. a. Bailor party who owns the rightful possession of a good. b. Bailee the party who takes possession of the good for the bailor. He had a duty to care for the good until the bailor returns as
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agreed. v.Absentee Owner - Hannah v. Peel finder is the lessor of a house owned by the defendant. The plaintiff turns over brooch to police & police give brooch to defendant. The plaintiff sues for replevin (return of the thing) and wins. 1. Rules: a. First finders claim is good against the subsequent finder. b. A person possess everything attached to or under his land. c. A person does not necessarily possess everything that is unattached to the land. vi.Policy considerations 1. Will the true owner come along? We want to try to help rightful owners and promote the way that will return the property. 2. Will the finder disclose the find? We want to make policies that encourage the finder to disclose the find, that is why the finder takes if the true owner doesnt come along. vii.Two innocents: If F1 innocently found a jewel and O comes to claim it. F1 may have a better claim than the careless O. (Winkfield Doctrine pg 101.9) 1. Exception: if O can show that item was stolen, O will win even if F1 is innocent 2. Court requires that the plaintiff prove prior possession, not ownership. Prior possession is easier to prove. b. Caveat: Finder doesnt get possession when: i.Item isnt lost but misplaced 1. McAvoy v. Medina: the plaintiff found a pocketbook left in the defendants store. The plaintiff claimed possession by finders rights but court said it is in best interest of the true owner to let the defendant take possession if and until the owner returns for it. It wasnt lost as in Armory. a. Favors the accidental finder, not the snoop. ii.Item is underground: The possessor of land is generally entitled, as against the finder, to chattels found on the land. (S.Staffordshire: p.107.5) 1. Also see, Elwes v. Brigg Gas: A person has lawful possession of objects found under or embedded in the soil on his land even if he doesnt have any knowledge or the existence of the objects. a. Buried property belongs to O. iii.Finder is working for employer iv.Finder is a trespasser v.Finder is a bailor c. Policy reasons for finders law i.Induce good behavior by finders ii.Help owners get property back iii.Get goods into lawful circulation, hot goods are worth less iv.Deter violence, theft v.Simple, predictable rules vi.States create their own laws regarding finds 1. Paset v. Old Orchard Bank & Trust: The plaintiff found cash in a safety
deposit room at the bank. The court made her a temporary custodian and vested the ownership in her. a. Induced good behavior by giving the property to the finder b. Assists true owner because she will return to the bank to claim money. 9. Adverse Possession based on 1623 statute that quieted title after 20 years. a. Ask: i.Is there intent to take ownership? (Maine doctrine v. French, Color of Title) ii.Is there permission by the true owner? b. Requirements: OCEAN i.Open & Notorious ii.Continuous for the statutory period iii.Exclusive & Hostile iv.Actual Entry c. Actual entry i.Cannot be shared with the owner or the public. 1. Must be exclusive and of such a nature that the community would think that the adverse possessor is the true owner. ii.The statute of limitations begins running upon the initial trespass where there is a taking of possession of the land. 1. Whether entry is caused by mistake or intent, the true owner is ousted from possession. pg.141.3 2. Manillo v. Gorski: The defendant believed that she owned the property she built on. iii.Minority view, see the Maine doctrine d. Open and Notorious i.True owner must have had knowledge or should have had knowledge of the actual encroachment, so that she could defend her rights. 1. Manillo v. Gorski: The defendant encroached 15 inches onto the plaintiffs land. Whether plaintiff should have noticed the encroachment is a question for the jury. 2. Statutes some states have codified the requirement of adverse possession a. VanValkenburgh v. Lutz: Under NY statute one must show that for at least 15 years, they actually occupied the land under a claim of title. The court held that a garden, shed, encroachment, and housing of junk was not sufficient occupation to get adverse possession. b. Colorado if you pay taxes and have color of title, the statute of limitations drops to 7 years. e. Adverse & under a claim of right (hostile) i.Hostile Possession must be without the owners consent 1. Claim of Title a. State of mind is irrelevant (French v. Pearce: Majority view) b. Good faith claimant, I thought I owned it (American view) c. Aggressive trespass, I thought I did not own it and I intend to take it. (Maine Doctrine)
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f.
g.
h.
i.
2. There is a possibility of awarding the aggressive trespasser but making the possessor pay the former owner market value. Continuous for the statutory period i.Requires only the degree of occupancy and use that the average owner would make of the property. 1. Ewing v. Burnet: Gravel pit was used by the adverse possessor, he paid taxes on the land. pg. 131 ii.Tacking: The current possessor can tack the prior possessors adverse use if the prior and current possessors are in privity, and/or if they have a good faith transfer. 1. Adverse possessors must use the property as the true owner would use it. a. Howard v. Kunto: The defendant bought title to property that was different from the property that was represented by the sellers and actually occupied. The plaintiff sued to remove him from the land but the defendant was allowed to tack the occupancy of prior possessors to gain adverse possession. i.Opposite of Kunto view: Baylor v. Soska: Tacking is not permitted unless disputed parcel is actually described by the deed as the land conveyed. pg. 147 Color of Title and Constructive Adverse Possession i.Normally the possessor acquires title only to the portion of the property actually occupied. ii.Claim of Title: one way of expressing the requirement of hostility or claim of right on the part of the adverse possessor. iii.Color of Title: a claim founded on a written instrument or a judgment or a decree that is for some reason defective and invalid. 1. In some states, color of title is required to get adverse possession. 2. Under color of title, the statute of limitations may be different. iv.Constructive Adverse Possession under Color of Title: If a claimant goes into actual possession of some portion of the property under color of title, he is deemed to be in adverse possession of the entire property described in the instrument. Adverse possessor is in constructive adverse possession of the part of the tract he does not actually possess. Exceptions to Adverse Possession Rules: i.People with disabilities toll the statute of limitations until the disability is removed. 1. The disabled include: a. Children b. Insane c. Imprisoned 2. Typically courts make an exception to the statute of limitations for persons with disabilities but the disability must exist at the time the adverse possessor enters. 3. Most statutes provide that a person has an additional 10 years after the disability is removed in which to bring an action. Adverse possession and chattel
i.Chattel. 1. Traditionally all of the elements for adverse possession must be present. 2. Some courts held that you had to openly display the artwork (chattel) to fulfill the open and notorious requirement. 3. Modern courts apply the discovery rule to the open and notorious requirement. a. The statute of limitations begins to run when the injured party discovers, or by reasonable diligence could have discovered, the wrong. i.OKeefe v. Snyder: The plaintiff sued the defendant for her paintings when she discovered them stolen. The defendant claimed title through adverse possession since he had had them longer than the 6-year statute. The court held that the statute tolled until the plaintiff discovered the theft. b. Solomon Guggenheim Foundation v. Lubell: NY court determined that it is inappropriate to burden true owners, potential purchasers are required to investigate art. c. Autocephalous Greek Orthodox Church of Cyprus v. Goldberg & Feldman: The defendant bought mosaics in an open market in Geneva, turned out the artwork was stolen and the defendant lost the work. j. Government: There is no adverse possession against the government. 10. Gifts a. To make a gift of personal property, the donor must transfer possession (hand over the property) to the donee with the manifested intention to make a gift to the donee. i.Both Intent and Delivery are required. ii.Major issues: threat of fraud v. desire to carry out the donors wishes 1. Intention and delivery must be present for delivery requirement to survive. a. Intent: The donor must intend to pass title immediately; a promise to give a gift in the future is not a gift. b. Delivery will survive when: i.The handing over of the object makes it vivid and concrete to the donor the significance of the act performed; ii.The act in unequivocal evidence of a gift; iii.Delivery of the object to the donee gives the donee prima facie existence in favor of the alleged gift. 1. Manual 2. Constructive delivery is handing over a key or some object that will open up access to the subject matter of the gift. a. Newman v. Bost: The owner, on his deathbed, gives his housekeeper the key to all the furniture in the house. The key opens a desk containing an insurance policy. The court says that she gets everything opened
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by the key but that there was no constructive delivery of the insurance policy because it was physically deliverable. pg. 170 3. Symbolic delivery is handing over something symbolic or the property given. a. Gruen v. Gruen: when some interest is transferred at the time of a gift, with additional interest to be transferred at a later date, symbolic delivery will be sufficient. b. Evidenced by livery seisin: owner passing a clod of dirt signifies a gift. 4. Prof. Mechem says the delivery requirement survives because: a. it makes it vivid and concrete to the donor, the significance of the act, the wrench of delivery, b. it is unequivocal evidence of a gift, and c. it gives the donee prima facie evidence in favor of the alleged gift. 2. A gift cannot be revoked once it is given iii.Gifts can be given both upon impending death, causa mortis, and while the donor is alive, inter vivos. a. Courts are reluctant to enforce gifts causa mortis because of the opportunity for fraud. b. A valid inter vivos gift, usually irrevocable, i.3 elements: 1. Intent by the donor to make a present transfer, and 2. Actual or constructive delivery of the give to the donee, and 3. Acceptance by the donee a. Acceptance is presumed for a gift of value. b. Gruen v. Gruen: The court found that the father intended to make a gift of a painting to his son while retaining a life estate. That he constructively delivered the painting via a letter; and that acceptance was presumed because the painting was valuable. 11. System of Estates a. Questions:
What type of estate do we have?
What is left over when it ends? 12. Estates - Generally a. An estate is an interest in land that is or may become possessory, defined by the length of time it may endure. i.Seisin an important concept in feudal times, a person is seised if (1) he holds a freehold estate and (2) either has possession of the land or a tenant holds possession from him.
1. A landlord has seisin, a tenant has possession b. Types of Interests i.Present Interest ii.Future Interest iii.Co-ownership or co-tenancy iv.Leaseholds c. Types of Estates i.Freehold 1. Fee Simple has the potential of enduring forever 2. Life Estate will necessarily end at the life of a person a. In case of an ambiguous conveyance i.Common law presumed a life estate ii.Modern law presumes a fee simple (every state presumes a fee simple) ii.Leasehold 1. Term of years may endure for any fixed calendar period 2. Periodic tenancy endures from period to period until the landlord or the tenant gives notice to terminate 3. Tenancy at will - so long as both the landlord and tenant desire d. Estates are created using appropriate words in a deed or will. i.Words of limitation describe what type of estate is created. e. Every estate can be classified as a possessory estate or as a future interest. i.Possessory estate gives the holder the right to immediate possession ii.Future interest does not entitle the owner to immediate possession but it will or may become a possessory estate in the future. f. Heirs people who take from an owner who dies intestate. No one is an heir to a living person, but an heir is determined upon death. A living person has heirs apparent. g. Issue synonymous with descendants and includes children of children, etc. h. Ancestors by statute, parents take as heirs if there is no issue i. Collateral all persons related by blood to the decedent, who are neither descendants nor ancestors. j. Partial Intestacy: every state has a rule against partial intestacy 13. The Fee Simple a. Fee Simple Subject to a Covenant the covenant is not a condition on the owners title to property, but the grantor may recover for a breach under a contract remedy b. Fee Simple Absolute absolute ownership i.Future Estates: None ii.Language Creating: 1. To A and his heirs 2. To A, his heirs and assigns 3. To A iii.Duration: Unlimited iv.Transferability: By Deed, Will, or Intestacy v.A Fee Simple Absolute is presumed unless language indicates otherwise. 1. White v. Brown: The decedent created a holographic will passing title to her home to White, To live in and not to be sold. The court had to
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decide if the testator meant to convey a life estate or a fee simple. a. Presumption against partial intestacy, assume full testacy whenever possible: i.The applicable Tennessee statute said that without clear evidence of an intention to convey a lesser estate, an instrument is read to convey the entire interest of the testator. b. Common law presumption is a life estate unless it is clear that the testator intended to pass a fee simple. c. In modern law, every state has a statute that presumes a fee simple and a rule against partial intestacy. i.In White, the court interpreted the language as an intent to restrain alienation of the property and declared the language void as a matter of public policy. ii.Some restraints on alienation are void but some are okay if they are reasonable; see Restraints on Alienation below. d. Dissent: the language clearly and unambiguously conveys a life estate, therefore the court does not need to look to the statute for the rules of construction. The dissent may have been attempting to keep the property in the family line. c. Defeasible Estates -- upon the happening of some event the possessor of the fee simple loses, or may lose, the property. i.Under common law the future interest of these estates could not be passed by will or through testate succession; it could only pass to heirs. 1. However, it could be passed to possessory interest holders. ii.Non-Defeasible Estates 1. Estate Absolute (fee simple, life estate, or term of years) 2. Sometimes a court will interpret conditional language to be an expression of wishes and not a condition to holding the property. 3. Look at the language to determine if its a wish or an actual condition 4. Presumption is for Subject to a Condition Subsequent instead of a Determinable Fee iii.Estate Determinable (Fee Simple, Life Estate, Term of Years) 1. If the condition occurs the estate is automatically cut short, in favor of the grantor. 2. Future Estates: Possibility of Reverter 3. Language (of Duration) Creating: a. As long as b. Until c. While 4. Duration: potentially unlimited, so long as the stated even does not occur. 5. Transferability: By Deed, Will, or Intestacy a. Marenholz v. County Board of School Trustees: A determinable fee is created when the language indicates that the grantor is giving a fee simple only until a stated even happens. Such as when an
Interest
instrument uses language that states upon the happening of some event the land is to revert to the grantor. i.Common law rule: the right of re-entry and the possibility of reverter for the condition broken are neither alienable nor devisble; they are only inheritable. ii.Modern rule: many courts today allow the sale of these future interests. iii.Adverse possession 1. The statute of limitations starts running on the possibility of reverter as soon as the determinable fee ends. 2. The statute of limitations starts to run on a right of re-entry when the grantor attempts to exercise their right and is rebuffed. The statute is tolled until the grantor exercises the right of re-entry. a. Some states say the statute begin to run when the condition occurs. iv.Subject to Condition Subsequent (Fee Simple, Life Estate, or Term of Years) 1. If the condition occurs the grantor has the power to retake the estate. 2. Future Estates: a. Right of Entry b. Power of Termination 3. Language (of Condition) Creating a. But if b. Provided that c. However d. also look for Re-entry Language 4. Duration: Potentially unlimited, so long as the stated even does not occur 5. Transferability By Deed, Will, or Intestacy
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Reversion Right of Reentry Estate Present Future Vested Possibility of Reverter Nonfreehold Vested InIndefeasibly Grantor Subject to Open
Remainder Contingent Interest Absolute Executory In Freehold Subject SubjectGrantee to Divestment to Executory Limitation Subject to Condition Subsequent Determinable
Fee Simple
Life
14. Life Estates has the potential duration of one or more human lives a. Every life estate is followed by a future interest. b. A life estate that is defeasible upon marriage is general invalid as against the public policy as a restriction on marriage. c. Future Estates: i.Reversion in Grantor ii.Remainder in grantee or devisee other than life tenant. d. Language Creating: i.To A for life ii.To A for and during his natural life iii.To A until he dies iv.To A for the life of B (life estate pur autre vie)
e. Duration: For the life of the grantee, or life of another if it is pur autre vie. f. Transferability: By Deed Only and Transfer Only Effective Till Death of Devisee g. Equitable intervention: a court may intervene and order the sale of an estate in which there are future interests, i.in order to preserve the estate from waste or deterioration, or ii.if it is in the best interest of all the parties. 1. Baker v. Weedon: The plaintiff had a life estate granted to her by her husband. She was poor and the land was valuable so she sought approval from the court to sell the land for her support. The court held that if the parties cannot agree on a mortgage of the land they should sell it to cover the plaintiffs reasonable needs. 2. A trust would have been a better vehicle for Mr.Weedon to use. See Trusts below. iii.If the parties are incapable of consenting to the sale, the court may consent for them. 15. Waste the central concept is that a party should not be able to use the property in a manner that unreasonably interferes with the expectations of the future possessors. a. Depends on the term of interest: the greater the interest, the less likely a party is to exploit and the party is allowed more freedom in using the property in question. More likely to use as the true owner would. b. There may be waste if: i.Taxes cannot be paid on the property ii.Deterioration c. Affirmative waste: voluntary acts causing waste d. Permissive waste: failure to act causes waste e. Injurious Acts: acts that substantially reduce the value f. Economic waste: novel theory if land is not being maximized economically, it may be wasteful. 16. Restraints on Alienation a. 4 main objections to restraints on alientation: i.Makes property unmarketable ii.Perpetuates concentration of wealth by making it impossible for the owner to sell and consume the proceeds iii.Discourages improvements to land iv.Prevents owners creditors from reaching the property, effecting hardship on creditors who rely on the property in extending credit. b. Disabling restraint: withholds from the grantee, the power to transfer her interest i.Per 2nd Restatements: An absolute restraint of a fee simple is void. ii.The restatements also allow a partial restraint, if under the circumstances, it is found to be reasonable in purpose, effect, and duration. 1. A restraint on a life estate that lasts for a life is more reasonable. c. Forfeiture restraint: if the grantee attempts to transfer her interest, the property is transferred to another person. d. Promissory restraint: provides that the grantee promise not to transfer her interest. i.Valid and enforceable under contract remedies. e. Ask
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i.What is the duration of the restraint? the longer, the less likely to enforce ii.What is the reason for the restraint? 1. charity v. commercial business 2. look after someone v. spite iii.How does the restraint limit marketability? how many buyers a prohibited iv.Is it a direct or implicit restraint? direct restraints are less likely to be enforced f. Odd Fellows v. Toscano: The action is brought by the plaintiff to quiet title. The court finds that the conveyance of property to the Odd Fellows, For the use of Lodge 82 was not invalid and was a fee simple subject to a condition subsequent. (pg. 240) i.Conditions that restrain alienation are void if they are repugnant to the interest created. ii.When ambiguous, the presumption is in favor of an estate subject to a condition subsequent. iii.When construing a deed, the intention of the grantor should be ascertained by the words employed and the surrounding circumstances. iv.Rule of the Dead Hand we are less solicitous of Toscanos wishes because they are dead and the world is for the living. v.Restraint on the sale of property, direct or implicit restraint because it clearly restricts the possessor from selling the property. vi.Restraint on the use of property, indirect or implicit restraint because it effectively restricts the possessor from selling the property. g. Falls City v. Missouri Pacific Railway (pg. 245): Plaintiff conveyed land to the defendant as long as it was used for division headquarters, or else to revert back to the city. The court ruled the reverter provision was invalid as a restraint on alienation, adversely affects marketability. i.Distinguished from Odd Fellows because the railway is not a charity and we are not interested in encouraging these types of gifts. ii.Social Policy: we encourage charities by encouraging gifts to them. 17. Future Interests a. Reversion i.Only follows a life estate or a contingent remainder ii.Only lies in grantor iii.One can have a reversion even though it isnt certain ever to become possessory iv.If it is at all possible that owner could repossess the land, the owner has some sort of future interest. v.A reversion coupled with a possibility of reverter are considered together only as a reversion. b. Possibility of Reverter i.Arises only in the grantor out of an estate determinable ii.Generally devisable by will, in some states it also devisable by deed. iii.Many state statutes limit the period of time during which fee simple estates can be made determinable. iv.Always subject to a condition precedent c. Right of Entry, Power of Termination i.Arises in grantor only out of fee simple on condition subsequent ii.Devisable and descendible, but at common law it is not transferable by deed.
1. Under common law it may not be created in a transferee 2. However, many states have statutes establishing the ability to transfer by deed. iii.Always subject to a condition precedent d. Remainders i.It must be created at the same time and by the same instrument that creates the prior estate; however it may follow even if the prior estate is subject to a condition subsequent, but if the future estate only takes on the condition subsequent it is an executory interest. ii.A remainder may never follow a fee simple defeasible. 1. It generally follows a life estate or a leasehold estate. iii.It must not have the capacity to cut short other estates 1. The subsequent possessor must take possession on the natural termination of the prior estate. iv.There must be no built in time gap. 18. Is your remainder Vested or Contingent? a. Is the taker unascertainable? or b. Is it subject to an unfulfilled condition precedent? i.Look for: an unborn person, an unascertained person, other condition precedent 1. Also, if words of condition precede the name of the taker whos interest is contingent, then it is a condition precedent. 2. But, if punctuations separate the condition and the taker it is probably a condition subsequent (vested remainder). c. If yes, it is a Contingent Remainder. d. If no, it is a Vested Remainder i.If the taker is unascertainable or the remainder is subject to an unfulfilled condition precedent it is a Contingent Remainder. 1. The remainder is subject to a condition precedent that is not subject to a condition subsequent of a prior estate. 2. These remainders were destructible under common law and a few states still destroy them. a. Destruction of Contingent Remainders: Common law rule if a contingent remainder did not vest at the termination of the prior estate, the remainder was destroyed and never took effect. Also followed in a minority of states. b. Common Law favors vested remainders 3. These remainders must fail or vest on or before the termination of the preceding estate. If it fails to do so, the remainder is destroyed. 4. The only thing that can follow a contingent remainder is another contingent remainder and/or a reversion in O. 5. There must always be a vested interest to support the contingent remainder when it is created, in case it fails to vest. ii.Vested Remainder: If the taker is ascertainable and not subject to a condition precedent. 1. Indefeasibly Vested Remainders it is absolutely certain that the devisee will take
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2. Vested Remainders Subject to Divestment the devisee may not take upon the happening of some event. a. For these conveyances, read between the commas: i.To A for life, then to B, but if . . . Commas indicate that Bs estate can be divested. 3. Vested Remainders Subject to Open generally these are class gifts a. To A for life, then to the children of B i.As long as B has at least one child the remainder is vested and as long as B is alive it is subject to open. (The fertile octogenarian) iii.Grays Rule: If the condition is incorporated into the gift, it is a condition precedent and the remainder is contingent, but if after the gift, a clause is added divesting it, the remainder is vested subject to divestment. 1. Contingent: To A if A survives B. 2. Vested: To A, but if A does not survive B iv.Two Helpful Rules 1. If the first future interest is a contingent remainder in fee simple, the second future interest will also be a contingent remainder. 2. If the first future interest is a vested remainder in fee simple, the second future interest will be a divesting executory interest. 19. Executory Interests *If there are more than 2 parties to a transaction look for an executory interest, otherwise an XI does not exist. a. An executory interest must: (2) i.take effect in someone other than the grantor ii.divest a prior possessory estate or a vested future estate. b. It often follows a defeasible fee estate c. Most (all) of these interests are contingent d. To A so long as, xx condition xx, but if condition is satisfied then to B i.A has a fee simple subject to executory interest because the remainder is in someone other than the grantor. ii.B has an executory interest because it cuts short As interest. Trusts 20. Trusts Generally A trust is a fiduciary relationship in which a trustee manages the property for the benefit of the beneficiaries. a. One person (trustee) is the legal owner of the trust, and the others (beneficiaries) are the equitable owners of the same property. i.The trustee holds legal title to the property subject to equitable rights in beneficiaries. ii.The person who creates a trust is the settlor, or trustor. iii.The trustee must use the degree of care, skill, and prudence as would be exercised by a reasonably prudent person in managing his own property. Two of the most disputed duties in trusts are: 1. The duty to make the trust productive 2. Invest property in a prudent fashion, and 3. Earn a reasonable return of income
iv.The duty to give undivided loyalty to the beneficiaries 1. Trustee cannot reap personal advantages from his position, and 2. She must not put herself in a situation where a conflict of interest is possible. v.If the trustee breaches these duties, she is personally liable b. Statue of Uses To A for the use of B is no longer applicable 21. Spendthrift Trusts The settlor of these trusts imposes a valid restraint on alienation a. Provides that the beneficiary cannot transfer his interest voluntarily in anticipation, and b. Creditors cannot reach it for satisfaction of their claims. i.Broadway National Bank v. Adams: The defendants creditors attempted to attach anticipatory income from a spendthrift trust. The plaintiff attacked the trust as invalid because of the restraint on alienation. 1. The court held that the nature of the beneficiary of a spendthrift trust never has a right to alienate the income or the principal so the common law restraint on alienation does not apply here. 2. English law a beneficiarys interest in a trust is liable for the beneficiarys debts. 3. American law since a beneficiary has a limited interest for life in trust income this interest cannot be validated. a. The court follows the American law but notes that the ruling does not mean that the income cannot be attached but that it cannot be attached in anticipation. Thus, once the income is received, the credit can attempt to levy that income. 22. Destroying Contingent Remainders (pg. 282) a. Contingent remainders were obstacles to alienation, they came up with several rules to destroy contingent remainders b. Destructibility of Contingent Remainders (pg. 287) i.Rule: A remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate. If the remainderman is not ready to take seisen when it is offered, he is wiped out and seisen moves on to the next vested estate. ii.Merger when A conveys a life estate to B, merge and B has a fee simple. iii.Destructibility of contingent remainders is now abolished. iv.Modern rule: Where an interest is for the benefit of a child, the child will be treated retroactively as in being from the time of conception, if the child is later born alive. c. Destru Rule Against Perpetuities this rule has been replaced by statute in almost every state. *Applies only to contingent remainders & executory interests. 23. Rule Against Perpetuities generally a. Common law rule 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. J. Gray i.Strikes down contingent interests that vest too remotely. ii.The Rule is a command of law that is to be remorselessly applied, it is not subject to negation by countervailing considerations of public policy. Central Delaware v. Greyhound.
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b. An interest, if it is to vest at all, must vest within 21 after some life that existed at the time of the creation of the interest. c. Validating or Measuring Life: can include the preceding life tenant, the taker or takers of the contingent interest, anyone who can affect the identity of the takers or the condition precedent who is alive at the time of the conveyance. d. A class does not vest until the class closes and all conditions precedent are satisfied. i.The rule applies if there is any possibility of vesting outside of the prescribed time period. 1. The fertile octogenarian: if the measuring life is over 80 years old it creates the issue of the fertile octogenarian. We generally consider that this person could bear children until death but that seems impossible. 2. The unborn widow: if an interest is transferred, to A for life, then to As widow for life . . . the problem created is that As current wife could die and A could remarry. This means that his widow may be unborn. e. Applied to contingent remainders, future interests subject to open and executory interests. i.A fee simple subject to a condition subsequent is immune to the RAP. f. Charitable Exception: exemption to the rule if both the possessory estate and the future interest are in charitable organizations. g. Gifts to Classes: A class gift is not vested in any member of the class until the interests of all members have vested h. Does not apply to future interests in the grantor nor vested remainders i. Wait-and-See Doctrine i.We can wait-and-see whether a contingent interest actually vests within the perpetuities period, if it does it is valid; or ii.We can wait-and-see for 90 years, it replaces the common law perpetuities period with 90-years. j. Brown v. Independence Baptist Church: In a minority opinion the court held that a remote interest in a determinable fee reverted to the testator and then to the testators heirs a listed in the residual clause. A majority opinion would strike the language gifting the residual interest and the estate would go to the testators heirs. This opinion is highly criticized because it assumes that the testator died twice, once to pass the determinable fee and a second when the condition is broken and the property reverts to the dead testator and to the heirs stated in the will. i.A proper charitable trust would have avoid these problems k. Central Delaware Authority v. Greyhound Corp.: Plaintiff moves to void a right of repurchase clause. The defendant had a right of repurchase if the plaintiff failed to use the land for public use. i.R4394: where language and circumstances of conveyance of a fee simple estate are susceptible of two constructions under one creating a power of termination and under the other an option to repurchase, the option to repurchase is preferred. ii.An option is not vested and is subject to the Rule, while a power of termination is not subject to the Rule. l. Reformation of Invalid Interests: i.Many states have adopted policy that the courts are authorized to reform interests violating the RAP so as to carry out most closely the intent of the transferor
within the perpetuities period. Concurrent Interests 24. A grant or devise to two or more people creates a tenancy in common unless an intent to create a joint tenancy is expressly declared. 25. Concurrent Interests a. Principles of concurrent ownership i.Presumption of a tenancy in common ii.Right of surviorship, re: joint tenancy iii.Severance iv.Effects of Unities b. Types of concurrent interests: i.Tenants in Common 1. Elements: a. Unless stated otherwise, a tenancy is common is presumed. b. Presumption is that each tenant owns an equal share but you can show otherwise, intent and % contribution.. c. Each tenant has an equal right to possession of the whole d. Tenants interest passes to heirs at death e. Partitioning: the tenants can petition the court to divide the property among them. f. No survivorship rights g. Alienability, tenant can sell, give, devise, or otherwise dispose of her undivided share, as if she were the sole owner. ii.Joint Tenancy 1. Distinctive characteristic: JT has a right of survivorship 2. Ask: Is the language good enough? a. Note: Some judges dislike JTs because it deprives heirs of their rightful inheritance and deprives creditors 3. The four unities are essential to a joint tenancy. At common law, these unities must exist to create a joint tenancy. 4. They are: a. Time: Each interest must be acquired or vest at the same time b. Title: Tenants must acquire title by the same instrument or by a joint adverse possession c. Interest: Tenants must have equal undivided shares and identical interests in duration d. Possession: Each tenant must have a right to possession of the whole. This is the only unity that is essential to the Tenancy in Common. 5. Severing a JT: The joint tenancy will become a tenancy in common if: a. Any of the unities cease to exist. b. A joint tenant conveys her interest to a 3rd party c. Nothing passes at death, the estate simply continues to the surviving joint tenant(s) 6. Partition: a. Tenants can petition the court to partition the land into separate
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parts or sell it an divide the proceeds. 7. Husband and Wife going out of favor a. Where property is conveyed to a husband and wife, the court prefers to presume a JT instead of a tenancy in common. i.However, under common law the court presumed a tenancy by the entirety 8. Probate: a. A joint tenancy is the practical equivalent of a will because of the right of survivorship b. A joint tenant cannot pass her interest by will because her interest ceases at death. c. However, the interest is subject to federal estate taxation at the joint tenants death. 9. Unequal Shares: a. Under common law if the tenants held unequal shares they could not have a joint tenancy. b. Under modern law courts are less strict about the unity. In most states, if the tenants hold unequal shares the courts will find a joint tenancy and divide the interest based on share percentage. iii.Tenancy by the Entirety is only created in husband and wife. 1. Followed in less than half of the states. 2. It requires the four unities, plus a fifth marriage (see Joint Tenancy). 3. Under common law, the parties hold as one person a. Neither can defeat the right of survivorship by conveyance to a 3rd party. b. Neither has a right to partition 4. Divorce terminates the tenancy and the parties become tenants in common. iv.Community Property c. Presumptions: i.If an instrument conveying an interest in land is ambiguous, 1. American modern law presumes a tenancy in common, it is usually dictated by statute. 2. American common law presumes a joined tenancy, but this presumption has been abolished by statute or judicial decision 3. English common law presumed a joint tenancy because if lessened the dividing of land into smaller parcels ii.Language creating 1. Joint Tenancy: To A and B as joint tenants and not as tenants in common, a. Ask: Is the language good enough? b. Some states require that the language include an express provision for right of survivorship, in these cases it is necessary to say, To A and B as joint tenants with the right of survivorship c. Colorado requires only the intent to form a JT d. Destroying a Joint Tenancy:
i.Each tenant has the right to destroy the JT without the consent or knowledge of the other joint tenant. 1. Policy: promotes alienability of property ii.Severing one of the unities destroys a joint tenancy. iii.A lease for a term does not sever, although some jurisdictions hold that a lease does sever. iv.A severance as to one, is not a severance as to all 1. Conveyance by A results in the severance of the joint tenancy only as between A and the other joint tenants, creating a tenancy in common while the other remain as joint tenants. e. Using a Strawman to Satisfy the Time Unity: 1. Under common law: the only way to create a joint tenancy was to transfer ownership to a strawman, then this person would re-convey it to the original owner and other tenants. To get the Time element of unity. a. Under modern law, the court no longer requires that the tenant use a strawman, but the owner may make the conveyance to herself and others to create . 2. In Riddle v. Harmon the court considers whether a person must use a strawman to destroy a joint tenancy. Common law requires that the tenant use a strawman, but the court finds that this requirement is outdated and no longer necessary and holds that the defendant destroyed her joint tenancy by conveying her interest as a joint tenant to herself as a tenant in common. a. The court notes that there are still ways to create an indestructible right of survivorship: i.Create a joint life estate with a contingent remainder in fee to the survivor ii.tenancy in common in fee simple with an executory interest in the survivor ii.Mortgages: In Harms v. Sprague the court decided that if one tenant mortgaged his interest in the property it did not sever the joint tenancy. The court held that a mortgage is a lien and not a conveyance of title, the unity of title is maintained. In this case, the death of the tenant who mortgaged the property extinguished his interest in the property along with the lien. 1. Harms will cause lenders to inform all joint tenants, usually husband and wife, about mortgages. 2. A joint tenancy is not severed when one joint tenant executes a mortgage on his interest in the property since the unity of title is preserved. 3. Lien Theory Today, it is just a conveyance of an interest-security and is not a full conveyance and does not sever a. Turns on policy reasons, we dont want institutions to loan to only one of the joint tenants, all joint tenants must be party to a loan for it to be valid on the death of one of the tenants f. Joint Tenancy Bank Accounts i.The agreement with the bank is not controlling the court will look at intent 1. Standard joint accounts are joint tenants with rights of survivorship
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(JTWROS) a. However, depositors usually intend something like a convenience account. ii.In determining which type of account, JTWROS or a convenience account, the courts will look for the purpose of the joint account iii.At death: 1. True Joint tenancy a. The owner intends to make a present give. 2. Convenience account a. No change in ownership; the joint tenant should only have the right to draw on the account to pay Os bills and not have survivorship rights. 3. Will Substitute, JTWROS a. At death the joint tenant gains ownership, but before death, the joint tenant only has survivorship rights. iv.If a lot of property/money is involved, the court will look for strong proof of the owners intent. 1. Newton County v. Davison: O gave A right of access to safety deposit box containing $324K; 2. In Allen v. Gordon parents deposit money into bank account listing their son on the account. When one parent died, the other claimed entire amount, the court agreed since the son made no deposits. 26. Relations Among Concurrent Owners a. Partition is a right of co-owners i.equitable action ii.relatively flexible iii.the court may decide to partition in-kind or sale. 1. Common law presumption was for a partition in kind keeps property in the family line. 2. The modern courts are split as to whether to presume a partition in sale or in kind a. A court may partition in sale when there are too many conflicting interests and an in-kind partition would severely affect the value of the property. Johnson v. Hendrickson. (pg 346) b. Contracts not to partition i.Undue restraint on alienation maybe void depending on the terms ii.Consider the duration and purpose iii.If a valid restraint, this is the only instance where a court cannot partition c. Delfino v. Vealencis: The plaintiff moved to partition in sale but the defendant requested a partition in kind. The court considered the number of competing interests, the defendants home on the property, and the effect on property value of a partition in kind. The court found for the defendant and ordered an in-kind partition. i.A house usually goes to the one occupying it, improvements go to the improver. ii.A partition by sale should be ordered only when 1. the physical attributes of the land are such that partition in kind is impractical or inequitable; and
2. the interests of the owners would be better promoted by a partition by sale. iii.In Johnson v. Hendrickson the court held that a partition of the land would be materially less valuable than the proportionate proceeds from the sale of the property. iv.Modern practice is to sale the property, either because all the parties prefer a sale or the court feels it is the fairest way to divide the interest. d. Rent from Co-tenants: Generally, co-tenants in possession are not liable to the other cotenants out of possession for the value of his use of the property, unless: i.There is an agreement to pay rent, or ii.Ouster, occurs when: 1. There is a threat of adverse possession; or 2. The occupying tenant denies the other a right to possession. iii.In Spiller v. Mackereth: One cotenant was using the property, the other cotenant sent a letter, vacate or pay rent. The cotenant is possession did neither. The plaintiff demanded payment from the tenant in possession she did not demand equal use and enjoyment of the property, she might have gotten further with that request. Since the occupying tenant did not deny her the right to enter the court found that there was no ouster. 1. In the absence of an agreement to pay rent or an ouster of a cotenant, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. 2. Minority view - holds the occupying tenant liable for rents after a demand to vacate or pay. This view is based upon the opinion that there is less of a chance of litigation. 3. Outser: a wrongful dispossession or exclusion of some from property. e. Leasing the Property: i.Common law if one co-tenants leases the property to another party, without his co-tenants consent, it effectively severed their concurrent interest. ii.Modern law exception 1. Ordinarily, one co-tenant does not have a right to possess property to the exclusion of the other but leases are an exception to this rule. a. Since each co-tenant has a right to possess the entire property, a lease merely passes the to the lessee, the lessors interest for the period of the lease. However, the lessor can only give as much as his own interest, i.e. he could not sell his co-tenants interest. iii.Swartzbaugh v. Sampson: [no prize fighting because women and liquor follow] The plaintiffs husband entered into a lease with the defendant. The plaintiff protested and attempted to have the lease cancelled. 1. Each joint tenant has a right to convey, mortgage, or subject to a mechanics lien an equal share of the joint property.(Does not sever). 2. Each joint tenant has equal right of possession and so a lessee has the same right to possession as the lessor. 3. One cotenant cannot adversely possess against another unless the ouster is extremely great. 4. The court upheld the lease and asserted that the plaintiff could have received some type of recovery under:
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Expense Taxes, Mortage, Ins. Necessary repairs Improvements
Action (partition, acctg, contrib., waste) Any Partition, Accounting None, value to improver
a. Partition either by sale or in kind b. Ouster plaintiff attempts to occupy and is prohibited by the defendant, c. Accounting plaintiff sues her husband for rent received, or d. Contribution tenant in possession pays taxes, mortgage, insurance f. Accounting for Benefits, Recovering for Costs i.Rents and profits: a co-tenant who receives rents and other payments on the property must account to the co-tenants for the amounts received. ii.Taxes, mortgage, insurance: a co-tenant who pays more than her share of taxes, mortgage, insurance is entitled to contribution from the others, up to the value of their share in the property. 1. However, a co-tenant in possession and the value or use he has enjoyed meets or exceeds such payments cannot maintain an action for contribution from the other co-tenants. iii.Repairs & improvements a co-tenant making necessary repairs has no right to contribution from the other co-tenants in the absence of an agreement. 1. Cotenant does receive credit for reasonable repairs in a partition action.
27. Termination of Marriage by Divorce a. Three Stages of Marital Property i.During 1. Community, joint tenancy, tenancy by entirety ii.Divorce 1. Under common law nothing happens (need a separate conveyance to sever); property remained the property of the spouse holding title. a. Today alimony is support for a limited period of time until the spouse can enter the job market and become self-sufficient. 2. Equitable distribution replaced the common law in every state. a. Under this rule the courts decide how to divide property based on equitable principles. The court may consider the duration of the marriage, vocational skills, health, age, employability, etc. iii.Death 1. Right of survivorship, avoid probate 2. If under will, there are rules: level of disinheritance b. When dividing marital property the court selects from 3 methods: i.Restitution or recission ii.Lost marital property iii.New York rule iv.Colorado Rule
c. Marital property is all property acquired by either spouse subsequent to the marriage, except for: i. By gift, bequeath, devise, or descent; ii.In exchange for property acquired before marriage; iii.Acquired after a legal decree of separation; iv.Excluded by a valid agreement of the parties. d. Is a graduate degree marital property? i.Restitution: In re Graham: The court defined property as something that has an exchange value or has a value on the open market. It held that a graduate degree does not have those elements but that it is personal to the holder.(Colorado Rule) 1. Although the spouse was unable to recover through the marital property rule, she could recover through restitution, in that her contribution of financial support during the education of the spouse should be considered in awarding her maintenance. a. Dissent: the graduate degree is marital property; furthermore the court would not have awarded maintenance to the plaintiff because it will only award to a spouse who is unable to support herself. ii.Reimbursement alimony: in some circumstances a supporting spouse should be reimbursed for contributions they made to the spouses successful professional training. Reimbursement should cover all financial contributions to the former spouses education, including: household costs, educational costs, school travel expenses, etc. Mahoney v. Mahoney, pg. 385 iii.Obrien v. Obrien: the court agreed that a husbands medical license constituted marital property and awarded the wife a portion of the value of the enhanced earning capacity afforded by the license. iv.In Elkus v. Elkus the court held that enhanced celebrity status and career is marital property subject to equitable distribution. A marriage is an economic partnership to which both parties contribute. The husband worked as the plaintiffs voice coach and sacrificed his career to further the plaintiffs; 1. The court found that the defendants contributions were direct and concrete; and that the nature and intent of the contribution should be considered, not the nature of the spouses career, when determining whether something is marital property. v.New York Rule: Treats professional degrees and licenses as marital property. The degree is valued in terms of lifetime learning capacity of the spouse. If a spouse then remarries the income is also included in the second marital estate, effectively counting the income twice. Landlord-Tenant Law 28. Types of Leasehold Estates a. Term of years i.For a fixed calendar point of beginning and ending ii.The calendar dates for the beginning and ending of the lease period are ascertainable b. Periodic Tenancy i.For a fixed period of time until either the landlord or the tenant gives notice of termination.
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c. Tenancy at Will i.Lasts only as long as the landlord and tenant desire ii.Ends automatically at the death of either party or on the transfer of the property d. Indefinite Lease Terms i.Garner v. Garish: The defendant leased a house from Donovan under the terms that the defendant could terminate the lease at his leisure. The court must decide if the language gives the defendant a determinable life tenancy or a tenancy at will. The court holds under the restatements that a determinable life tenancy was created because it explicitly grants the tenant a right to terminate. 1. At common law, under livery of seisin, if a lease was at the will of the lessee it was also at the will of the lessor, the result was a tenancy at will 2. Restatements the modern law has abandoned livery of seisin and the restatements adopt the view that the language in the lease created a determinable life tenancy. 3. Rule: If intent is unclear, we will use the common law pigeonholes. If clear, we will follow the intent of the parties. e. Holdovers i.Holdover Doctrine, under common law a landlord confronted with a holdover tenant had 2 options 1. Eviction, plus damages, the tenant then becomes a trespassor 2. Consent, either implicit or implied, to the creation of a new tenancy and either a. Hold the tenant to another lease term, not to exceed 1 year i.As a month to month tenant ii.Under a term tenancy, as allowed by statute 1. For agricultural leases, a year-to-year holdover was very normal. 3. Generally courts try to avoid finding a holdover, if they do they usually find a month-to-month tenancy. ii.Crechale & Polles v. Smith: 1. At the end of the lease term, the plaintiff notified the defendant that he would not extend the lease. The defendant remained on the premises, effectively as a trespasser, but irregularly paid the plaintiff rent. When the defendant finally vacated the building the plaintiff attempted to hold him liable for another lease term. 2. The court ruled that a landlord who holds a tenant as a trespasser cannot change his mind an elect to hold him to another lease term. 3. The court held that by accepting the defendants first holdover months rent, the plaintiff effectively agreed to a month-to-month extension of the lease. 29. Leases Generally (Conveyance v. Contract) a. Conveyance: A lease creates a possessory interest in land and therefore creates property rights. A tenant typically acquires the right of exclusive possession and the landlord can reenter only if the tenant breaches a covenant. b. Contract: Involves promises between the landlord and tenant. The parties may allocate risks, expenses, and duties. The promises are mutually dependent, if one party does not
perform the other is excused from performance. i.A court can invoke more liberal contract in place of conservative property law to find for a favored party. c. Statute of Frauds Leases greater than one year are subject to the statute of frauds d. Form Leases Trade economical efficiency for fairness to both parties 30. Delivery of Possession a. English rule the landlord must deliver actual possession of property. (Majority view) b. American rule the landlords duty is only to deliver the legal right to the premises. (Minority view) c. The English rule is more efficient because the landlord is in the better position to avoid problems than the new tenant. i.Hannan v. Dusch: a court following the American rule held that the landlord does not have to deliver physical possession of the property only the right of possession. The new tenant has a cause of action against the trespasser but not the landlord. d. Lease clauses the excuse the landlord from liability for failure to deliver possession. i.Seabrook if the new tenants landlord drafted the lease, the tenant is bound ii.Hartwig the failure must be reasonable iii.Fox Paper the court found the provision unconscionable 31. Subleases a. Sublease v. Assignment under common law, if the tenant subleased anything less than her entire interest in the estate; if she subleased the entire leasehold it was an assignment. Under a sublease the original lessee retains a reversion in the property. i.Assignment establishes privity between the landlord and the assignee, so the assignee is personally liable for the rent. ii.A sublease establishes no privity between the landlord and sublessee so the landlord cannot sue the sublessee directly. iii.The less common approach is to examine the intention of the parties. 1. Ernst v. Conditt: The court held that the language used in a transfer document is not conclusive as to determining if a transfer is a sublease or an assignment. The subleased land from the original tenant under terms that used the language sublet and sublease. When the defendant defaulted on rental payments he claimed that the plaintiff did not have a cause of action because he only had a sublease and that only the original lessee was liable. The court found that since the original lessee transferred his entire interest to the defendant, the transfer was an assignment. 2. Assignment a. common law rule: if the instrument purports to transfer the lessees estate for the entire remainder of his term, it is an assignment, regardless of the form or the intent of the parties b. All of time assignment 3. Sublease a. common law rule: if the instrument purports to transfer the lessees estate for less than the entire term, it is a sublease, regardless of the form or the intent of the parties. 4. Modern rule: in determining conveyances, the intention of the instrument
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alone will determine the outcome, determined from the language of the instrument in light of the surrounding circumstances. 5. Privity of Estate: a. Transfer of leasehold interest is a property transaction; the price is the rent; deeding the leasehold tenancies carries with it an obligation for rent; privity of estate is the legal relationship that arises from the transfer. 6. Privity of Contract: a. In modern times, we have leases with promises, bound to pay rent on promises. In Ernst the court ruled based on privity of estate, even though it said privity of contract. iv.Rule: L T T1 (Assignment) 1. L sues T for rent, L wins 2. T remains obligated even if T doesnt promise to remain obligated. 3. As T, must get landlords consent and agreement to get off the hook v.Rule: L T T1 (Sublease) 1. L sues T1 for rent, T1 wins 2. L can only collect from T, no rights against T1 vi.Commercial Lessors Duty to Act in Good Faith A landlord is permitted to restrict the alienability of the leasehold. 1. Kendall v. Ernst Pestana: City leased to Perlitch, who subleased to Bixler. Perlich transferred reversion of interest to Pestana, D. Now Bixler want to assign to P and D says no. The lease states that a written consent of the lessor is required for P to assign his interest. D denies because he wants the extra rent. The court holds for P and says that consent can only be withheld in certain cases. a. Majority rule the lessor can refuse to consent to a proposed assignment without any reason b. Minority rule the lessor must have a commercially valid reason for denying an assignment. c. Common law rule: Lease is freely alienable, but contractual restrictions on the alienability of leasehold estates is restricted. d. Policy considerations: restraint on alienation, implied covenant of good faith and fair dealings i.The Restatements adopt the minority approach. 2. Dumpors case In cases where the property is transferred: L T1 T2 T3; Dumpors case holds that if the landlord agreed to the transfer to T2, he agreed to all subsequent ones. a. Most modern leases have anti-Dumpors clauses 3. How to say no as a landlord, no matter what, and get extra $ a. Mention rent specifically, say absolute objection, negate reasonableness stand, and must show freely negotiated the terms of the contract. b. Premature Termination i.If a landlord exercises a power to forfeit the primary lease because of a breach by the tenant, the landlord is entitled to possession against sublessees and assignees.
ii.If the original tenant surrenders the primary lease, the rights of the sublessees and assignees remain intact. 1. Surrender here, I give up, terminates the lease provided that that the landlord accepts the tenants offer. If it is accepted the lessees liability for future rent is exterminated but not for accrued rent or breaches of other covenants. 2. A landlord accepts the surrender by retaking possession. 3. A standard lease will include a surrender clause that allows a landlord to relet premises without accepting the original tenants offer of surrender. c. Anticipatory breach i.In the cases of Ernst and Crechale the landlord waited until the original lease term expired to sue for lost rent. 1. Common law a landlord could only recover rent that was actually lost. 2. Anticipatory breach doctrine, if adopted by the state, the landlord can sue for lost rent, past, present, and future. Tenant in Default 32. Tenant in Possession a. Ask: Does the tenant have a right to possess? And if so, by what means? b. The most common instances where a landlord has a right of possession are: i.When the lease term expires ii.The tenant fails to pay rent c. Eviction: i.Judicial Process ii.Self-Help 1. Common law, a landlord can use self-help to retake leased premises if: a. He is legally entitled to possession b. The means of reentry is peaceable i.Actual violence is not required to there to be a forceful retaking changing the locks in the tenants absence is not peaceable, but forceful. 2. Modern law, a landlord must always resort to judicial process to enforce his right of reentry. a. Berg v. Wiley The court held that although the lease contained a reentry clause the landlord could not resort to self-help to retake the property. b. Some jurisdictions allow self-help in commercial leases but prohibit it in the case of residential leases. c. If lease specifically entitled landlord to self-help: i.Under contract law the clause would probably be enforceable. ii.Under Berg, self help is not available. 3. Public policy discourages people from taking the law into their own hands. iii.Distress for rent: Another common law remedy that is still allowed in some states is the remedy of distress for rent. It allows a landlord to seize the tenants property and retain it until payment of overdue rent, all without judicial process. d. Summary Proceedings: ejectment, eviction, self-help
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i.Depending on the jurisdiction, summary proceedings can be a quick and efficient means for recovering possession. It generally requires only a few days notice and limits the issues subject to litigation. ii.The law in economics view is that landlords will raise rents to compensate for their losses should eviction proceedings be necessary. 33. Tenant who has Abandon Possession a. Mitigation of Damages i.Contract Law View (majority view): a landlord has an obligation to make a reasonable effort to mitigate damages when a tenant has surrendered and abandoned the premises prior to the expiration of the lease. (Universal rule) 1. The landlord has a duty of good faith and fair dealing in attempting to mitigate damages. 2. If landlord attempts to mitigate but relets at less than the original amount, the original tenant may be liable for the difference. 3. Some courts will find that the cost of reletting: advertising, cleaning, etc. is chargeable against the original tenant. 4. With Anticipatory repudiation we can award present value damages. ii.Pre-modern view (minority view): a landlord is not under a duty to mitigate damages caused by a defaulting tenant. (New York rule) iii.Sommer v. Kridel: In a decision that demonstrates the courts trend to apply the principles of contract law rather than pure property law to contract leases, the court adopted the minority view and held for the defendant. 34. Landlords Remedies and Security Devices: a. Old rule says no mitigation is required, no decent policy reasons. i.Landlord may be forced to take a loss by adding the apartment to vacant stock. b. States regulate when and why a landlord can withhold a security deposit. i.To get around the legislation, landlords use other devises to protect themselves, such as: 1. Consideration, or a bonus for execution of the lease 2. Advance rent 3. Rent Acceleration c. Colorado statute gives tenants specific rights to recover security deposits. d. Tenants can sue to recover their deposits in small claims court. Landlords Duties; Tenants Rights, and Remedies 35. Habitability of the premises a. Disputes between landlords and tenants arise in 2 ways: i.The tenant might wish to vacate or stay but pay less rent. ii.The tenant might be injured by allegedly defective premises and claim damages against the landlord in a tort action. b. Under common law the landlord did not have a duty to furnish habitable premises, the tenant took the premises as is. i.However, under tort law, if there were defects or hidden dangers, he was under a duty to disclose the defect. c. Quiet enjoyment A tenant has a right to quietly enjoy the premises. The landlord cannot interfere with the tenants use of and enjoyment of the premises. i.Covenant of quiet enjoyment is implied in every lease,
1. when it is breached, constructive eviction may be used as a remedy. ii.At common law, unlike other breaches, this covenant was considered dependant and a material breach of it excused the tenant from his responsibility to pay rent. It can be breached by actual or constructive eviction. iii.Old rule the tenant can abandon if the landlord commits a legal wrong, making the premises uninhabitable. iv.New rule under Reste, goes further and states any act or omission, including repairs, is a breach of the implied terms. This adds a warranty idea: when you sell, you warrant that it is a fair average place, obligation to leasee of reasonable goods, decent repairs. 1. Actual eviction If the landlord evicts a tenant, the tenant may treat the lease as breached and terminate it; he no longer has to pay rent. 2. Requires physical expulsion or exclusion from possession, c.f. constructive eviction is where the landlord interferes with the tenants enjoyment of the property. 3. Partial eviction a. Partial Eviction: i.Traditional rule: if landlord evicts from part, the tenant can remain on the premises and is off the hook for all rent, until the landlord restores the entire premises to the tenant. ii.Restatements: the tenant only receives partial rent abatement. 4. Constructive eviction The tenant may treat the lease as terminated and vacate the premises if the landlord causes substantial interference of the tenants quiet enjoyment of the property; the tenant is no longer liable for rent. The theory is that the landlord has interfered with the tenants right of possession. Any act or omission by the landlord or someone in his control that renders the premises substantially unsuitable for the purpose for which they are leased or which substantially interferes with the beneficial enjoyment of the premises, is a breach of the covenant and constitutes constructive eviction. a. Elements of Constructive Eviction are: i.A substantial interference with the tenants use and enjoyment of the premises 1. Reste Realty Corp v. Cooper: regular flooding of the basement was substantial interference. a. However, a tenant can waive the interference if he is aware of it at the signing of the lease. ii.The tenant must give notice to the landlord and allow him time to cure the defect. iii.The tenant must vacate within a reasonable time iv.The interference must be the fault of the landlord, he must act or fail to act to the tenants damage. b. Risks of invoking constructive eviction i.If a breach is found, it may not be substantial enough, T is
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still on the hook for rent. c. Alternatives to vacation: i.The tenant in Reste could have decided to stay in possession and sue for damages, or ii.Repair and deduct costs, this remedy is not available under constructive eviction but it may be made available under statute. 5. Historically the only duty of the landlord was to convey the leasehold. a. Tenant must pay rent b. Tenant cant commit waste c. Landlord must leave tenant in peaceable possession d. The Illegal Lease (pg. 518) i. If a lease violates statutory prohibitions it is illegal and unenforceable 1. The rule does not apply if the code violations happened after making the lease 2. Minor technical violations will not render it illegal 3. The landlord is entitled to reasonable rental value of the premises given their condition 4. The tenant can withhold rent and still avoid the landlords action for eviction 36. Implied Warranty of Habitability (pg. 519) a. Common law: i.Caveat Lessee, the landlord does not have a duty to keep the premises in repair once the tenant moved in. Any contractual agreement of additional duties of the landlord was independent of the lease. ii.Exception to caveat lessee 1. Latent defects 2. Common areas 3. Carefully executed repairs 4. No fraudulent lies 5. Abate nuisances 6. Additional promises made in the lease. iii.Reasonable Expectations: 1. In Reste the court did not cite any of these court-made duties; but if found a general breach of quiet enjoyment by considering the tenants reasonable expectations. a. It held that the tenant is entitled to the benefit of her bargain. b. Implied Warranty of Habitability. i.Common Law: 1. Caveat lessee; the tenant took possession regardless of the premises state of disrepair. Landlords only covenant was to deliver possession. 2. A contractual covenant to repair was considered independent from the rent agreement. ii.Modern Law: There is an implied warranty in the rental of any residential dwelling unit that the landlord will deliver over and maintain, throughout the period of the tenancy, premises that are safe, clean, and fit for human habitation.
1. Covers all latent and patent defects 2. Violation of the housing code is evidence of a prima facie breach. 3. The exact application varies from state to state but the tenant can avoid the lease or withhold the amount of repairs from the rent. 4. Consistent with public policy the implied covenant cannot be waived by the tenant. 5. Before suing, the tenant must notify the landlord of the defect and allow a reasonable time for correction. 6. Residential leases are treated as contracts because of the inability of urban tenants to make effective repairs and the tenants inferior bargaining position. 7. Commercial leases: some courts have extended the warranty to commercial leases. iii.How do we assess habitability? 1. Some courts use the housing code; 2. Other courts use the fit for human habitation standard. If the defect impacts the tenants safety or health it is probably a breach. 3. For amenities, use the Reste rule giving the true benefit of the bargain. iv.Hilder v. St. Peter: The court held that when a landlord breach the implied warranty the tenant was allowed to remain on the premises and receive reimbursement for rent. 1. No Waiver - the warranty of habitability cannot be waived nor can the tenant assume the risk of patent or latent defects. v.Remedies for Breach 1. Terminate lease a. Damages may be relocation costs, and FMV of lease 2. Continue lease and recover damages a. Damages usually are a rent reduction, see Measuring Damages 3. Continue lease and use rent to repair a. Damages, none really the tenant pays for repairs in stead or rent 4. Continue lease and withhold rent a. After giving notice a tenant might place rent in escrow until default is eliminated. The is no case law granting this judicial remedy. vi.Measuring Damages 1. Hilder, the difference between the value of the dwelling as warranted and the value of the dwelling as it exists in its defective condition. 2. Majority, adjust the agreed rent amount by the % of the loss of use a. Damage = Rent * % reduction in usability 3. Minority/Restatement, Damage = Lease rent (1-(ma/mh)) where a. ma = market rent for apartment up to code b. mh = market rent for apartment as is i.This is expensive and requires expert testimony vii.Donna Klein v. 33rd Avenue Corporation: handout 1. The law of contracts doesnt address the necessity of an implied warranty. It allows people to contract for sub-standard housing; to enforce the public policy there needs to be some public policy.
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2. The problem of affordable housing for poor people is make worse because the implied warranty of habitability pushes up the costs of housing. 37. Retaliatory Eviction a. Common law gave landlords unlimited freedom, upon proper notice, to terminate periodic tenancies and tenancies at will. b. Modern law forbids retaliatory action by landlords i.Interference with statutory rights frustrates legislative policy underlying the housing code ii.Interference with judicially created rights courts have extended tenants protection when the complain about violations of the warranty of habitability iii.Interference with constitutional right freedom of speech. Court will not usually rule on retaliatory evictions based on constitutional grounds. c. Proof of motive burden of proving retaliatory motive is on the tenant. 38. Landlords Tort Liability a. Under common law a landlord was liable for tenant injuries if he negligently breached the duties involved with quiet enjoyment and constructive eviction. b. Under modern law a few jurisdictions have imposed a general standard of care on landlords under all circumstances. California held landlords strictly liable for latent defects but later reversed itself. i.Regardless, a majority of courts fail to impose strict liability nor do they recognize a general duty of care on the part of the landlord. 39. Tenants Duties; Landlords Rights and Remedies a. Duty to Pay Rent generally an independent obligation. b. Duty to Repair i.The tenant has a duty to make ordinary repairs and keep the property in the same condition as at the commencement of the term, ordinary wear and tear is excepted. c. Duty not to Damage the Premises i.The tenant has a duty not to commit waste, the tenant cannot trash the place d. Duty not to Disturb Other Tenants e. Duty not to Use for Illegal Purposes Problem of Affordable Housing 40. Housing Codes a. Not a helpful remedy b. Corruption, code is a device by which people make standard for themselves, not highly effective 41. Chicago Board of Realtors v. City of Chicago: a. Posners thoughts on the economic consequences of rent control. b. Some economists think that the warranty of habitability is ok, but often rent control is not favored. c. Results: i.Landlords are more picky about the tenants they choose and tend to favor higher income tenants; ii.It benefits the middle class more than the poor iii.Generates competition for good tenants.
Public Policy Issues 42. Promote marriage 43. Promote alienability of land 44. Limit waste Rent controls; Economists are opposed to rent controls because it decreases incentives to build new apartments, causing rents on existing apartments to rise. Rent controls & implied warranties of habitability favor middle class tenants as opposed to poor/lower class tenants. Rent controls make it very difficult to evict a tenant. Therefore, landlord has an incentive to pick tenants who are not likely default or ones who are likely to leave. Breadth, is the key technique of legal analysis, over depth
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