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Two Treatises of Government, Locke Labor Theory of Value o Private property exists because of labor - Not only do you own land b/c you work it, but if people own land individually it will work out better for society, b/c ppl will improve land they own. Is the ownership of land by individuals justified as opposed the ownership of all land by all mankind. Some Fundamental Legal Conceptions as Applied in Judicial Reasoning, Hohfeld o Hohfeld's analysis began by distinguishing right (or claim) from liberty (or privilege), power and immunity, and defined them through three corelatives, i.e. duty, liability, and disability. He arranged these fundamental legal concepts in terms of Jural Opposites and Jural Corelatives. What Is Property, Halper o Property right - the right to use or to decide who uses it; this power is not absolute Limited by zoning laws, taxes, nuisance, police power Is it really property if someone else can tell you how to use it? Yes. State will define, to a degree, how you can use your property. But, they can't go so far as to make the use totally impractical as to make no use. Gov't cant limit your property to such a degree that you cant use it, but it can take it away as long as it justly compensates you Foundations of property associated with agriculture. Better individually owned, because you'll pay better attention to it; take better care if its your own. Cant keep all income derived from property - property is taxed State say who owns what, but not entirely. Part of the reason why property rights exist and are enforceable is not only because the state says so, but also because most ppl respect them. Must have custom and popular approval. o Ownership is not a single right, but a bundle of rights of which the important attributes are the right to use, the right to exclude others, and the right to exploit the income potential of the property (all of which are limited). You share the property with the state, and to a degree with the rest of the community. Toward a Theory of Property Rights, Demsetz (Duk 35-45) o Gets to concept of property by virtue of value. Native Americans around Quebec - they hunt for food, and gather. They dont care about who owns what. Then Europeans come over and want animal fur. Then they start killing animals and start selling to Europeans. Then, riches of the forest gain a value, and becomes important because they can get more than their food from it, and it becomes property. This is how property starts. Property is derived from the fact that it has value (may have very limited application) o Demsetz tells us: an owner of property gains his rights by virtue of communal consent. Halper doesnt totally agree with this, but partially true only. Halper says we need both state and community consent. Community - now can be whole world (communication & technology); in the past only small area due to lack of communication over large distances - they were isolated. The idea of community is broader, and the idea of the consent of the community is also much broader. Property rights arise from negotiation and agreement. Halper disagrees. Europeans didnt negotiate with natives in the Americas, they take over the land through violence. o Private property v. public property (halper) If you have individual responsibility for something, you will probably do it, if you will be punished for not doing it, or rewarded for doing it. Communal property is not good; creates externalities Less efficient to have communal ownership, and more efficient to have individual ownership Summa Theologica, Thomas Aquinas o The attributes of property - 2 principle attributes;

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You will tend to take care of private property if you think its yours; where there is a communal property, each individual would shirk his responsibilities. The desirability of private property - a more peaceful state happens if everyone is content with his own. Quarrels arise more frequently where there is no division of the things possessed. o Aquinas derives his view directly from scripture - so to abuse your property, Aquinas would say would be sinful. b/c God gives earth to all, and you shouldnt abuse (Aquinas' view) Utilitarian Theory o Private property is said to nourish individuality and healthy diversity: It "performs the function of maintaining independence, dignity and pluralism in society by creating within which the majority has to yield to the owner. Whim, caprice, irrationality and 'antisocial' activities are given the protection of the law." Important function of property rights is to promote economic efficiency. What is Property, Proudhon o Property is theft! Proudhon is an anarchist; believes structure of govt bad. o He doesnt like the idea of property He says your allowed to use stuff, but not gain from its use because of law that doesnt allow it. He refutes the natural rights theory; o Cicero - Roman lawyer talks about property. You go to the theatre, and there are lots of open chairs. Empty chairs are communal property and you can move into them. You might individually buy a seat, but the seats not used are communal property. Proudhon criticizes this - he says if he buys a seat, his communal rights are limited to that seat. He cannot allow himself to overstep to other seats. Rights of the community vastly outweigh rights of the individual The Right to Include, the Right to Exclude o Notion of property as a relationship among people that entitles so-called owners to include (permit) or exclude (deny) use or possession of the owned property by other people. Both rights (to include and exclude) are necessary and sufficient conditions of transferability. o Jacque v. Steenberg Homes, Inc. Facts: Pl denied Df permission to cross over his lands to deliver a trailer. Df crossed anyway. Rule: Every person has a constitutional right to the exclusive enjoyment of his own property for any purpose which does not invade the rights of another. Rule: The private landowners right to exclude others from his or her land is one of the most essential rights of property. o State v. Shack Fact: Pl denied Df (govt workers) access to his land to render services to farmworkers. P had the right to keep his work free from interference, but he had no right to isolate his farm workers from the outside world. Right to exclude is not absolute. Non-owners have a right of access to property based on need or on some other important public policy Property rights limited to avoid injustice Acquisition by Discovery o Who is first in point of time is stronger in right. -Maxim of Roman Law o Johnson v. M'Intosh Facts: Indian tribe wants to sell some of its property (land). Sells land to x. Then state sells the same land to y.

HISTORY WILLIAM II. Both Romans & Celts had influence in England:

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Celts owned property in common, and tribes had leaders. Romans come and institute a system of private property ownership. In the clash btwn the 2, private property wins, and the leaders end up privately owning the property. So now England is a mixture of Celtic and Roman ideas of ownership. Beginnings of Modern property rights during the Anglo-Saxon period Next come the Anglo-Saxons and the Jutes (Germanic tribes mostly) - they invade England, and take a lot of it over. Germanic tribes tend to own property in common, but not completely (like condo you have to own something individually to have access to communal property). Then Vikings come - they pillage and steal at that time (thats how the culture was). Some were Danes, and some Norwegians. Alfred the Great (King of Wessex) victorious over the Danes. Alfred doesnt kill all the Danes, and told them they could live under their own law. So all living in peace until descendants of Alfred (about 100 years later) start killing Danes. Danes from Denmark (Sweyn and son Canute) come to England to defend the Danes. Victorious over West Saxons, and Canute accepted as king of England. o Ethelred actually has claim to throne,but he dies, and Canute marries Ethelred's widow. But Ethelred's sons are still alive and want to fight Canute. Ethelred's sons: Edward the Confessor and Alfred Atheling. Edward the Confessor (grows up in Normandy - Frenchman) Canute (King of England, Denmark and Normandy) dies. But before he dies, he divides England in 3 parts, Earldoms. When Canute dies, many rivals for his throne. Many of them die. Ultimately, Edward the Confessor becomes King and reigns for a while, but not so interested in being King, he is very religious. Godwin gains a lot of influence over Edward. Godwin becomes so powerful, he begins to challenge Edward. Edward then turns to Normandy military (William I) for help & they are victorious over Godwin. Since Edward has no sons, he promises throne to William. o Godwin very powerful, and when Edward dies, Godwin's son Harold becomes King of England. William in Normandy with big army ready to invade England. Norwegians also ready to attack England. o Norwegians land in England (east) and Harold goes to fight them. Harold victorious over Norwegians, who sail away and dont come back. o Normans (led by William) land in south of England. Harold goes to South and meet Normans at Hastings. Battle of Hastings changes the history of the world. 1066 - William I (the Conqueror) becomes king of England. says all land in England is his o Many descendants of Canute trying to get throne, so William becomes ruthless, and wipes out rivals for the throne (out of 70 Saxon lords, he kills 68). o Takes 70 of his henchmen (knights) and made then tenants in chief. They are holding it for the king. They need to provide soldiers for the king (safety) and food After 1070, the Norman system of property ownership takes effect o Now we have a "pyramid" society, and we begin to see the origins of the American law of property (which is nothing without the king. Without the force to protect it, it means nothing. People gave up rights of property for safety). Hierarchy of land ownership: William owns all land and grants land to 70 knights vassal of the Pope On top, you have the soldiers (knights) - directly on top is the tenant-in-chief o They are granted land (through subinfeudation) o Everyone owes services to someone above him, as well as part of their harvest. Next to the knights, you have priests - Church big player in medieval society In the middle, there is the mense-tenant (pronounced mean-tenant) At bottom, you have the tenant-in-demand o Tenants holds lands. Tenants closest to king are called tenants-in-chief. o lord, who owns the fief. Lord has servant and villains (peasants) to till the soil, and some villains soldiers (at the bottom of the ladder)

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English people need security, and gives themselves to others for that security. So, they accept William b/c they need him for safety. This system worked because it provided food and security to the populace. Doomsday Book - great survey of all landholdings in England executed by William I Describes the landholdings, and landholding relationships. Very valuable document. It forms the basis of the real estate law we practice today

FEUDALISM LANDED ESTATESI. Feudal Tenures and Services Military service o knight service where tenant had to provide king with fighting men for 40 days/year After a while, king accepted money (scutage or shield money) instead of services & hired mercenaries. So tenants under military function become country gentlemen instead of knights o Grand sergeantry - splendid court like, pageantry for knights Economic tenure see incidents below o Socage is what evolves into the fee simple. All these relationships are personal relationships btwn the lord and the tenant. Nobody owns anything except the King. All you have are grants in land called tenure. You have rights as a landholder, but not a landowner. You cant sell it; your children cant inherit it. o Forfeiture - If tenant breached loyalty to lord, or refused to perform royal services, land forfeited Religious tenure o Frankalmoign - providing king/lords who gave lands to church with prayer & salvation Unfree tenures - lords lands held by peasants (villeins) who worked the land o Their rights to the land were custom, and set forth in records. Became known as copyholds. Copyholds later lost idea of servility and becomes another form of landholding. copyholds - evolves to an equivalent to a fee simple Socage is very diff from copyhold - a grant that stems from a royal grant. Different from copyhold b/c it derives from custom, not royal grant Socage becomes alienable and inheritable at a much earlier stage Incidents Economic tenure (Socage) Homage & fealty- tenant under homage bound to do nothing to injure lord or land; vice vera Warship - lord (not mother) takes custody of minor's land until minor comes of age o The guy who dies is a knight, and cant perform any services since he's dead. So he gets profit on being a guardian of the ward. Has to pay lord again to get the landholding. Marriage - approval by lord. Source of revenue, as approval given for a price. o He can stop men from getting married too (originally over widows and daughters) o Seniorage - you can sleep with tenant's wife on the first night of the marriage Aids - lord could require financial or other aids from tenants (magna carta limited this to 3 things) o Ransoming of lord from his captors o Knighting of eldest son o Marriage of eldest daughter Relief - lord's permission for the heir of a deceased tenant to continue the tenancy. Fixed by payment, and another source of revenue. Scutage - king sells right to these lords not to be a knight, and buys knights Going to concept of paying money, and holding land in exchange (Evolution of the country gentile) However, they cant get out of grand sergeantry (ceremonies). o Carrying a banner - participating in a grand ceremony (which are very important, significant) Avoidance of Feudal Incidents Substitution - either through lord's consent & homage to lord from new tenant, or through subinfeudation

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Primogeniture (only oldest son inherits patrimonial tenancy) - eliminated risks to fulfillment of feudal obligations that sharing of tenancies among multiple heirs posed Grant in mortmain - transfer land to church or someone who is incapable of fulfilling feudal obligations. Person would then still live on the land. So widespread, it was banned by the Magna Carta. Tensions between King and Nobility Henry I (Williams son) Establishes royal courts - sometimes lord of manor very unfair, and also very dangerous to the king. Henrys daughter marries Geoffrey of Plantagenet (from France). Plantagenet family rules for several centuries until Plantagenet female heir marries a Tudor. Writ of Assize Novel Desseisn - King creates an institution where judgment made by 16 ppl (a jury) o Before, disputes were settled by combat - the adversary system : Trial by Combat o This is a tremendous blow to the power of nobility o Starts a system, that evolves into our own property system King Richard (Henry Is grandson)- Edict of toleration of the Jews o Jews allowed into England - b/c so they can lend money to Christians o Edict has rules on how and when debts can be collected o You get something called mortgage - where you lend money against land King John (Richards brother)- reigns for a long time; doesnt get along with the barons (who are very strong) o Barons dangerous b/c theyre getting a lot of money from incidents o Creates Magna Carta - very significant - The fairness of the judicial system starts here o Only aids now - ransom, daughter's marriage, and son's knighthood. Other services gone. 1290 (King Edward I - John's grandson) - Statute gets passed to create the estate called the fee tail o Out with Subinfeudation (delegating duties to someone under you) Bothers the king - they seem to be getting away with not performing their feudal duties b/c king is not getting money (plus barons for same reason dont like)

LANDED ESTATESI. Socage evolves to fee simple In feudalism, a tenant had a status as a tenant of the fee or a tenant for life. Status then becomes estate Rise of the fee simple estate - b/c of heritability and alienability o Fee simple estate, while still in early middle ages, still has services attached to it (not free): Its forever - longer than you live, can't be taken away, except by power of eminent domain Rights of inheritance - still there is a tax that goes to the baron Under socage, you could inherit, but had to pay a transfer tax (first up to the lord, then later becomes customary, but you still have to pay) So much money going to barons, they are gaining a lot of power You can borrow money against the estate (mortgage) You can buy and sell it Other types of feudal estates become part of fee simple o Fee tail - estate with an attempt to keep estate within the blood family - conveyance to person & heirs of his body o Before fee tail, there was a conditional fee - property which if conveyed outside family, you would lose it The Fee Tail - an estate of inheritance in real property which cannot be sold, devised by will, or otherwise alienated by the owner, but which passes by operation of law to the owners heirs upon his death. Rich families wanted to make land inalienable - so the land stays with the family, passed down through inheritability, and cannot be transferred (keep land, power & money in the family). In 1258 they enacted the De Donis Conditional which changed the Fee Simple to the Fee Tail. After enactment of De Donis, barons had a lot of power & overwhelmed the king (War of the Roses). Great families had developed in the fee tail a secure land base from which they could challenge the king.

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Edward IV - Taltarum's Case 1472- King challenges undermines barons' power from fee tail Created the means by which a tenant in tail would "bar the entail" - by bringing a collusive lawsuit known as a common recovery, the fee tail tenant in possession could obtain a court decree awarding him a fee simple, cutting off all his rights of his issue and extinguishing any reversion or remainder. (Alienability) Fee tail tenant thereby became the sole owner Seizin - Fee simple, fee tail and life estate are freehold estates. At common law, a freeholder has seisin Seisin - possession of an estate of land o Livery of seisin - ceremonial transfer of the land; a deed, a particular happening in a day The grantor and grantee come together, with witnesses, the grantor takes a piece of soil, and ceremoniously hands it to the grantee. It's the literal handing over of land. Inheritance of a Fee Simple (Hierarchy) Heirs - persons who survive the decedent and are designated an intestate successors under the state's statute of descent. No living person has heirs. Issue - includes all further descendants (like grandchildren) Ancestors - if no issue, parents take as heirs Collaterals - all persons related by blood to the decedent who are neither descendents nor ancestors Escheat - is a person dies without heirs, property in feudal times went to overlord; now goes to state

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LIFE ESTATEI. Introduction - Tenant holds estate for his life only. Upon death of tenant, land goes back to grantor English focused on leaving land to their heirs o Alternative - leave estate to wife for life with a remainder over to your children (while life estate is in existence, the fee simple estate is called a remainder) o Wife can stay for life, children get fee simple; Useful - If wife remarries, doesnt go to those children, only to heirs of your body You can sell a life estate, but the grantor only has it for the life of the grantee. Then would go to the person who owns the remainder. Probably wouldnt want to buy a life estate. No one can inherit your life estate Alienability- The capacity for a piece of property or a property right to be sold or otherwise transferred from one party to another. Restraints on alienability- withholds from the grantee the power of transferring his interest Objections to restraints on alienability o Makes property unmarketable o Land not available for best and highest use (land cant be used to its optimum) o It perpetuates a concentration of wealth o Discourage improvements and discourage loans. Unlikely to invest money if you cant sell it; cant get mortgages White v. Brown o Facts: Jessie Lide died, and left a will that states, "I wish Evelyn White to have my home to live in and not to be sold." o Court says it was a fee simple. Ambiguous, so the court looks at the surrounding circumstances. The court decides that a person wouldnt want to make a will where his home would be sold and its assets split up for the heirs to share. Most likely they would want the home to stay in the family, so they gave White the fee simple. Presumption of fee simple rather than life estate, unless clear intent that its a life estate. Valuation of Life Estate and Remainder Figure out how many years are left on the life estate (# years life expectancy); future, present value You can mortgage it, if there's someone willing to lend you the money o Life estates can be measured by the life expectancy of the person who has it.

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Law of Waste - becomes relevant when two or more ppl have right to possess property at the same time (concurrent), or consecutively. A should not be able to use the property in a manner that unreasonably interferes with the expectations of B. Designed to avoid uses of property that fail to maximize the property's value Affirmative Waste (voluntary acts) Changes you make to the property that can diminish future interest Permissive waste (failure to act) Negligence - failure to take reasonable care of the property o You have to pay taxes - if you dont and property goes to state, then you're liable to remainderment for waste o Insurance - Duk says you dont have to carry property insurance if you're a life tenant. Halper says: If there is insurance on the house, and house burns down, life tenant will keep the proceeds. Remainder gets the property, but not insurance proceeds. You have to require that insurance proceeds be used for improvement purposes for the damaged house. You want insurance for the 100% replacement cost of the building, specify the insurance co., etc. Point is you want to do a thorough job to protect the remainder Baker v. Weedon o Facts: Decedent leaves his 3rd wife Anna his farm for life with a contingent remainder to her children or if no children, to his grandchildren from previous marriages. Anna never has any children. Anna is old now and destitute, and she cannot run the farm, so it has no use to her, and she wants to be able to sell it because she needs the money now to live. Also, the farm is now worth a lot of money, and is increasingly gaining value. So, if Anna continues to hold it, there will be economic waste b/c she is not using it to full potential. However, the remaindermen dont want the farm to be sold yet b/c they see that the value is increasing. o Economic waste if Anna holds, it but remaindermen stand to substantially lose interest if land sold prematurely. Court uses necessity test & requires best interest of all parties to be considered. o Rule: Court will only force a sale if in the best interest of ALL parties with interests in a life estate, otherwise life tenant and remaindermen must agree Why create a legal life estate In drafting a life estate - you can give life tenant power to sell or mortgage a fee simple Sale - circumstances might change so that a sale of the property is advantageous. The life tenant cannot sell a fee simple unless all other persons having an interest in the property consent or a court of equity orders sale and reinvestment of the proceeds Lease - it might be advantageous for the life tenant to lease the property for a period extending beyond the life tenant's death Mortgage - if the life tenant has no capital of her own, she may be unable to improve the property without borrowing from a bank and giving the bank a mortgage on the property. A bank ordinarily does not lend money if the security is a life estate rather than a fee simple. Waste - the life tenant may want to take minerals out of the land or cut timber or take down a still usable building. The actions may constitute waste, entitling the remaindermen to an injunction or damages. Insurance - the life tenant is under no duty to insure buildings on the land, If the life tenant does insure buildings and the buildings are destroyed by fire, the life tenant has been held entitled to the whole proceeds and the remaindermen nothing. Life estate (Halper's view vs. Duk) Duk mentions that the significant principle is that you cant use your property that would interfere with the expectations of the remainderment. Halper says remainderment cant expect anything, but there is a relationship. Duk has some reasons for not loving life estates; o Will render the title unmarketable - Halper says it wont if life is long enough, you can at least mortgage & lease it, and many of the problems associated can be fixed by having insurance o You cant sell it - Halper says not such a terrible thing, b/c its given to you to live in Duk talks about a way out - life tenant can get power to sell property, but proceeds must be divided with the remainderment (using the present worth formula) Duk recommends trusts - don't do life estates, instead do a trust o Trust - a lot of flexibility; lay it all out in trust instrument, and trustee figures it out

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LEASEHOLD ESTATEI. Leasehold Estate Nonfreehold Estates Ground lease is a lease of a piece of land - Tenant will normally build a building, either for his own use or use by others where he becomes a landlord. Ground lease landlord agrees to a mortgage whereby the proceeds go to the tenant. Subordinated ground lease - if tenant doesnt pay lease, owner can get proceeds The Term of Years - A term of years is an estate that lasts for some fixed period of time or for a period computable by a formula. A term must be for a fixed period, but it can be terminable earlier upon some happening of some event or condition. o b/c its for a fixed period of time, no notice of termination is necessary to bring the estate to an end. o Duk says it can start in a certain date and end on a certain date. Halper says not necessarily true No tenant is willing to pay rent until property is available for use. Then term really starts. If you have to build a building, term may not exist for years You do start the term, but not necessarily the obligations or rights of tenant for years afterwards The Periodic Tenancy - Is a lease for a period of some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination. (month-to-month, year-to-year) o If notice is not given the period is automatically extended for another period o Creates an issue: if you really have a year to year tenancy, and you holdover after 1st year is up, you'll probably get caught up into another year o Month-to-month - very useful; more flexible, mobile The Tenancy at Will - This is a tenancy of no fixed period that endures so long as both landlord and tenant desire. Its a tenancy at will if lease provides that one party can terminate it, it is necessarily at the will of the other too. Modern statutes ordinarily require a period of notice Garner v. Gerrish o Facts: Lease said "tenant has the privilege of termination of this agreement at a date of his own choice." Landlord executrix tries to get tenant out saying the lease created a tenancy at will. o Court rejects that a tenancy at will is created. The lease simply granted a person right to tenant to terminate on date of his choosing. Otherwise, it would violate the intent of the parties. A lease agreement that grants tenant the sole right to terminate creates a "determinable life tenancy" for the tenant. The Tenancy at Sufferance: Holdovers Arises when a tenant remains in possession (hold over) after termination of the tenancy. In this situation, landlord has 2 options: o Eviction (plus damages), or o Consent (express or implied) to the creation of a new tenancy Crechale & Polles, Inc. v. Smith o Facts: Lease was for 5 years. At the end of the lease, tenant proposes a month to month arrangement, but landlord refuses. Despite this refusal, tenant stays past the end of lease and submits a check for a month. Landlord cashes the check. The following month, tenant submits another check for one month's rent, but landlord refuses to accept it. Instead, landlord brings suit against holdover tenant for value of a one-year lease. o The landlord first requested that tenants vacate the premises, but he failed to pursue the remedy for eviction. Then, he accepted the payment for the month after the lease termination, so he implied that he accepted to the lease extension on a month-to-month basis.

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DEFEASIBLE FEE SIMPLE

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A fee simple may be absolute - it cannot be divested nor will it end if any event happens in the future (not terminable). Default is fee simple absolute. If intention is to create a fee simple defeasible, you have to say so. Defeasible fee simple fee simple (forever) but may come to an end if event occurs Fee simple determinable - will end automatically when a stated event happens, & revert back to grantor. o Language must state that the event will terminate the fee simple. It has to say the land is being granted on a condition, or until an event occurs. Traditional language: "to A so long as", "to A until", "to A while", or language stating that upon an event the land is to revert to the grantor. o The future interest that is created in a fee simple determinable is called a possibility of reverter. Fee simple subject to condition subsequent - does not automatically terminate but may be cut short by grantor's re-entry after a stated event (preferred by courts, b/c forfeiture is optional) o The language will say the transferor has the right to re-take the property if the stated condition occurs, but unlike fee simple determinable, it is not automatic. Traditional language: "to A, but if X happens", "to A, upon condition that if X happens", "to A, provided, however , that if X happens". o The future interest that is created is called a right of entry (or also known as power of termination). Mahrenholz v. County Board of School Trustees o Facts: Grant of land to Df with condition that "this land to be used for school purpose only; otherwise to revert to Grantors herein." Uses it for school purposes, then just for storage. o The court held that the language "for school purpose only" showed intent to grant the land to the school only as long as it was needed, thus it was a fee simple determinable. Legal Consequences from classifying estate as fee simple determinable vs. subject to condition subsequent o Transferability of the future interest - At common law a possibility of reverter and a right of entry descended to the heirs at death of owner of the interest, but neither was transferable during owner's life b/c they were not thought of as "things. Modern trend is that they are both thought of as "things," and are transferable inter vivos. However, some states still follow common law rules, and interests are not transferable inter vivos Diff btwn them; possibility of reverter is transferable but right of entry is not; or Merely attempting to transfer a right of entry during life destroys it o Statute of limitations starts running on The possibility of reverter by the grantor when the determinable fee ends. The right of entry until grantor attempts to exercise the right and is rebuffed (or reasonable time) o Difference between conditions imposed by the grantor in creating defeasible estates and covenants (promises) made by a grantee If a condition is breached, the land is or may be forfeited to the holder of the future interest A covenant is a promise by the grantee that a specified act will or will not be performed. If a covenant is breached, the promisee may sue for an injunction or damages. Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano o Facts: Grantor (Df) conveys property to Pl; clause with reverter o 1st Clause - "property is restricted for the use & benefit of the [lodge], only; valid, creates a defeasible estate; a fee simple subject to condition subsequent, so title will automatically revert back to grantors if land ceases to be used for lodge purposes. nd o 2 clause - and in the event the same fails to be used by the [lodge] or in the event of a sale or transfer by the [lodge] of all or any part of said lot, the same is to revert to the [grantors] herein, their successors, heirs or assigns." It prohibits the sale or transfer of the land under penalty of forfeiture, so it is an absolute restraint on alienation and is void. Common law does not permit restraints on alienation. o Court says the clauses are severable b/c of language, so 1st part can survive on its own. It's a defeasible estate; fee simple subject to condition subsequent Notes on Alienability

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City conveys property to Railroad, as long as land used as site for RR's headquarters only. Court said this was an indirect restraint against alienability b/c it had the practical effect of "affecting marketability adversely" by unreasonably limiting the class of persons to whom it may be alienated. Most restrictions are valid and enforceable, unless it effectively restricts alienation of the land to other grantees. o Court can hold a condition unreasonable and void if it is capricious and imposed for spite or malice. Condemnation of Defeasible Fees and the Valuation of Defeasible Fees and Reversionary Interests Gov't takes land through it eminent domain power (condemnation). But, land is a fee simple defeasible. Gov't has to pay fair market value. o Majority view: holder of fee gets everything; holder of revisionary interest gets nothing b/c it is considered to remote and contingent to be capable of valuation. o Rest. Of Property: if the defeasible fee would probably not end in a short period of time (not counting the condemnation), fee owner gets everything. City of Palm Springs v. Living Desert Reserve o Facts: McCallum conveys property to the City. It was a fee simple in the land subject to condition subsequent, where condition is that its used as Desert Reserve & Equestrian center, and if condition met, would go to Living Desert. City decides it would rather use the property as a golf course, and brought a condemnation action against Living Desert (the revisionary [future] interest holder), claiming that the power of termination (the right of entry) was not compensable, b/c the possibility of meeting the condition was too remote. o The fact that the city owned the present possessory interest in the land, the action of condemnation makes the violation of the condition imminent. Living Desert gets fee simple. Ink v. City of Canton o Facts: heirs conveyed land to city with condition that it be used solely as a park. The state then condemned that land to be used for a highway. o According to the general rule, the holder of the fee gets the fair market value of the property when the gov't condemns the property. If the possibility of reverter (by violating the condition) is too remote, the grantors (heirs) would get nothing, b/c the city would most likely never cease to use it as a park. The problem is that the city would get the fair market value of the land, when they rec'd it as gift, and the heirs (grantors) get nothing. Another issue is the value of the land. There is no market for land used solely as a public park, so it has no value. But then the state would be condemning the property, and not have to pay for it. o Court says they will not follow the rest rule. They instead awarded the city the value of the land as restricted for use as a public park and subject to forfeiture (which is almost nothing b/c it has no value). The heirs were awarded the difference btwn that amount and the value of the land as a fee simple absolute.

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DEFEASIBLE LIFE ESTATEI.Defeasible Life Estates - Not really common anymore; enforceable, but not encouraged by the law. Past - widow left a defeasible life estate in will, with the condition that its forfeited if she remarries. o Now - a widow may renounce the will, and claim her share of outright ownership instead May violate the common law rule against restrains on marriage - the common law favors marriage o In determining whether a proviso violates the common law rule against restraints on marriage, ask whether the proviso has the purpose: Of coercing abstention from marriage - the provision is invalid "to A for life, but if A marries, then to B" - Has purpose of penalizing marriage Of providing support until marriage, without any desire to hinder marriage - then provision will be upheld "to A for life so long as A remains unmarried, then to B" - Has purpose of supporting A until she remarries, not to discourage marriage

Life estates could be terminated before someone's life ended (not anymore, but used to 500 years ago)

FUTURE INTERESTS INTROI.Future interest - confers rights to the enjoyment of property at a future time By doing this the testator controls inheritance of the land Future interest is either a remainder or a reversion. o Interests retained by the transferor, (reversionary interest goes back to grantor) Reversion Possibility of reverter Right of entry (or power of termination) o Interests created in a transferee, (Remainder - future estate that doesnt go back to the grantor): Vested remainder Contingent remainder Executory interest Future interest gives legal rights to its owner (its not merely an expectancy). o Owner of a future interest can: Sell or give away the remainder Can enjoin the present possessory owner from committing waste Sue 3rd parties who are injuring the land or are claiming the title hostilely Future interest does not entitle its owner to present possession, but it is a presently existing interest that may become possessory in the future.

FUTURE INTERESTS IN THE TRANSFERORI. Reversion- is the future interest left in the grantor when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires O grants land "to A for life," the land would revert back to O or his heirs at A's death. The right to future possession is called a reversion. Lesser estate depends on hierarchy of estates which is, in order of greater to lesser: o Fee simple, Fee tail, Life estate, Term of years Reversions are retained interests, which may remain vested in the transferor. When a reversion is retained, it may or may not be certain to become possessory in the future: o Certain to become possessory - Ex. O conveys to A for life. When A dies, it goes back to O, or his heirs (they will have possession of the interest they held). o Not certain of becoming possessory - O conveys to "A for life, then to B and his heirs if B survives A." O has a reversion in fee simple that is not certain to become possessory. If B dies before A, then O entitled to possession at A's death If A dies before B, O's possession is divested on A's death and will never become possessory. At common law a reversion was transferable during life and descendible and devisable at death, and remains so today. Possibility of Reverter - Arises when an owner carves out of his estate a determinable estate of the same hierarchy Right of Entry - When an owner transfers an estate subject to condition subsequent and retains the power to cut short or terminate the estate, the transferor has a right of entry

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FUTURE INTERESTS IN THE TRANSFEREEI.Introduction - A remainder is a future interest that at the end of the preceding possessory estate, the owner of that future interest gets possession if it is then vested.

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Cannot be retained by the transferor; interests only created in transferees. There doesnt have to be a certainty of future possession, only that it is possible. o If at the time the interest is created, there is no possibility that it will become into possession of the owner of the future interest when the prior estate terminates, then it is not a remainder. Vested Remainder - A remainder is vested if It is given to an ascertained person; and It is not subject to a condition precedent (other than the natural termination of the preceding estate). A remainder may be indefeasibly vested - Meaning that the remainder is certain of becoming possessory in the future, and cannot be divested o if O conveys to A for life, and then to B +heirs, B (or Bs successor) will clearly be entitled to possession upon As death. A vested remainder may not be certain of becoming possessory. It can be vested subject to being divested o Ex: "to A for life, then to A's children." A has one child, B, so B has a vested remainder because B is ascertainable. But, A may have no other children in his life, and B could die before A, so the vested remainder is not certain to become possessory o Remainder vested subject to open or vested subject to partial divestment o A remainder created in a class of persons can still be vested, as long as one member is ascertained, and there is no condition precedent. So for example, if you say, "to A's children," and A has no children yet, this is unascertainable, and so it is not a vested remainder. Here it would be a contingent remainder. But, if A has at least one child, then since one member is ascertained it is vested, and if A has more children, then they are also entitled to the remainder, even though they didnt exist when it was created (they were then unascertainable). It is open to later-born children. If A never has any children, reverts back to grantor. Contingent Remainder A remainder is contingent if: o It is given to an unascertained person; or Ex. "to A for life, then to B's heirs," but B is still alive. The remainder is contingent here b/c B's heirs cannot be ascertained until B dies (you can't have heirs if you're still alive, only heirs apparent) o It is made contingent upon some event occurring other than the natural termination of the preceding estate Ex. "to A for life, then to B + heirs if B survives A" condition precedent - B + heirs can only take possession if B survives A If B doesnt survive A, who gets possession then? - goes back to grantor + heirs, unless there's an alternative contingent remainder Alternative Contingent remainder Ex. "to A for life, then to B + heirs if B survives A, and if B doesnt survive A, to C + heirs" - Alternative - if the condition that B survive A is not met, then it goes to C + heirs. B here has fee simple subject to divestment, C has a shifting executory interest which will become possessory only by divesting B's remainder Historic Differences between vested and contingent remainders - Law has a preference for a vested remainder (if an instrument is ambiguous, will be interpreted as a vested remainder) A vested remainder becomes possessory once the preceding estate ends. A contingent remainder cannot become possessory so long as it remains contingent. At early common law, a contingent remainder was not assignable inter vivos (b/c thought of as merely a possibility of becoming an interest). Now, mostly, can transferable inter vivos. Vested remainders have always been transferable during life and at death. At common law, contingent remainders were destroyed if they did not vest upon termination of a preceding life estate; vested remainder not destructible in this manner Contingent remainders subject to the Rule against Perpetuities; vested remainders not. History of Executory Interests: Statute of Uses

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Prohibitory Rules prior to 1536 (in Common Law) o No shifting future interest - No future interest could be created in favor of a transferee if the interest could operate to cut short a freehold estate. Reason for the rule - O could not create a right of entry in a stranger, which a shifting interest resembled. o No springing future interest - No freehold estate could be created to spring up in the future (out of the grantor). Reason for the rule - a freehold estate could not be created unless a feoffment with livery of seisin took place on the land. The Rise of the Use (this is prior to 1536): Common law courts vs. Equity Courts o The common law courts adjudicated title, declaring who had rights in land Law courts - the feoffment w/ livery of seisin created a fee absolute in X They refused to compel the uses, to hold the land for benefit of A o Chancellor (equity court) did what conscience required by enforcing personal duties. Chancellor didnt pay attention to law courts; only did what needed to be done in good faith and morally right. So, here developed in equity a protected interest known as the "use" (benefit). Feoffment to uses : Shifting - Ex: O goes on the land and enfeoffs "X + heirs to hold to the use of A + heirs, but if A inherits the family manor, then to the use of O's second son B + heirs." [feoffment to uses] o The Chancellor enforced this duty. He couldnt change the title of the land (under law courts jurisdiction), but he could coerce the legal owner by threatening him with imprisonment. o Bargain and sale deeds Ex: Suppose O and his grantee did not want to go out to the land (maybe too far away) and perform livery of seisin. So instead, O sold property to A for 50, and gave a bargain and sale deed to "A + heirs" Law courts - b/c no feoffment w/ livery of seisin, legal title and seisin were still in O. But here, the chancellor would enforce this and require O to hold legal title for the benefit of A Benefits of raising a "use" o Before 1540, land couldnt be devised by will, but you could get the equivalent of a will by "uses" It avoided feudal incidents (taxes), so it became very popular Avoided the feudal incidents, which were paid through inheritance, not conveyance. So even though you're conveying property to heirs, they would still have gotten it through inheritance, but no feudal incidents are paid Abolition of the Use o Henry VIII began to run short of money after his break with Rome. So, he resolved this by restoring feudal revenue, which had been depleted through the prevalence of uses o In 1536, Henry VIII pushed the Statute of Uses through Parliament in order to dispense with the evasive devise of the use. Statute of Uses - Converted all equitable estates that were created through "use" into legal estates. o The Statute of Uses created two new future interests: shifting and springing executory interests. This made it legal to do what formerly could only be done equitably. Modern Executory Interests - a fee simple subject to an executory limitation - a fee simple that upon the happening of a certain event, is automatically divested by an executory interest in the transferee. Shifting executory interest - Divest or cut short some interest in another transferee o Always follows a defeasible fee o Ex: If O conveys property To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs; here, B has a shifting executory interest, and A has a fee simple subject to this shifting executory interest. Springing executory interest - Divest the transferor (the grantor) in the future o If O conveys property To A, if and when he marries; here, A has a springing executory interest, and O has a fee simple subject to this springing executory interest. The executory interest may be created to follow a defeasible fee, rather than a possibility of reverter or right of entry . o Possibility of reverter or right of entry can only be created in the grantor/transferor

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THE TRUSTI. The Trust - Allow settlors to arrange their assets in ways that maximize flexibility in property management as well as transfer wealth to future generations. The trustee holds legal title to the trust property and manages that property for the benefit of the beneficiaries, who have the right of beneficial enjoyment of the property o trustee has the power to sell trust assets and reinvest the proceeds in other assets o Net income of the trust is paid to the beneficiaries o Upon termination of the trust, the trust assets as they exist are handed over to the designated beneficiaries, free of the trust. Trustee is the legal owner (they hold the legal fee simple), but subject to equity court, which enforces trustee's duties to beneficiaries. Beneficiaries hold equitable interests Trustee is a fiduciary - so subject to stringent duties in managing trust property; o Duty of loyalty - trustee must act for the exclusive benefit of the beneficiaries Benefits of the trust: o Spendthrift trusts - protect the beneficiaries interest by making them inalienable Rules against restraints on alienation dont apply to beneficiaries' equitable interests Duk says more reliable than gifts/sales of property with life estate, etc. o Proposes the trust as a useful instrument to overcome other difficulties o Problem with trusts - not all trustees are competent or honest. But most are good. o You can use the trust to minimize the federal estate tax when the spouse passes away

DESTRUCTION OF CONTINGENT REMAINDERSI.Rules Furthering Marketability by Destroying Contingent Future Interests We dont want land made inalienable. Since it's possible to do this with contingent remainders, executory interests, etc., judge made new rules to obstruct making land virtually inalienable. o Contingent remainders tend to make land unmarketable The Rules that destroy contingent interests and make land more marketable: o Destructibility of contingent remainders (abolished in most states) o The Rule in Shelley's Case (abolished in most states) o The Doctrine of Worthier Title (abolished in most states) o The Rule against Perpetuities - very important, still used. Destructibility of Contingent Remainders - A remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate Common law judges are distrustful of contingency and the feudal system (livery of seisin). They wanted to preserve the system that they had. If the remainder is still subject to a condition precedent when the preceding estate terminates, the remainder is wiped out, and the right of possession moves on to the next vested interest. o Ex: O conveys property to A for life, then to B and her heirs if B reaches 21. o If at A's death B is under 21, B's remainder is destroyed. O now has the right of possession. Also, a life estate could be terminated before the life tenant's death by forfeiture or merger. The life tenant had the power to destroy contingent remainders whenever he wished. o Ex: O conveys property to A for life, then to B and her heirs if B survives A o A conveys life estate to O; the life estate merges into the reversion, destroying B's contingent remainder. O gets a fee simple, not a life estate from A (see doctrine of merger) Doctrine of merger (still in effect today) provides that if the life estate and the next vested estate in fee simple come into the hands of one person, the lesser estate is merged with the larger o Ex: to A for life, remainder to B + heirs. o If A conveys life estate to B, the life estate and the remainder merge. B gets a fee simple.

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The destructibility doctrine did not apply to executory interests or contingent remainders in trust o The exemption of executory interests is why judges developed the Rule against Perpetuities Important element - the rule against restraints on alienation. (RAP takes care of it now) The Rule in Shelley's Case - Under this rule, if an instrument creates a life estate in land in A, and also creates a remainder to A's heirs (unascertained, so its a contingent remainder), and the life estate and remainder are both legal or both equitable, then it becomes a remainder in fee simple (vested remainder in A). The rule converted the contingent remainder into a vested remainder. That's all it did! Then the Doctrine of Merger may come into play: o Ex: Conveyance to "A for life, then to A's heirs" The Rule gives A a vested remainder in fee simple. A's life estate then merges into the vested remainder, leaving A with a fee simple in possession. The land is immediately alienable by A and not tied up for A's lifetime. But, the life estate cannot merge into a vested remainder in fee simple if there is an intervening life estate, blocking merger If grant is to heirs of body, same rule, but it becomes a fee tail. Reason for this Rule: Overlord gets relief when underlord dies; overlord doesnt get relief if underlord's heirs own property The Doctrine of Worthier Title - The rule provided that where there is an inter vivos conveyance of land, with a limitation to the grantor's own heirs either by remainder or executory interest, no future interest in the heirs is created. Instead, a reversion is retained by the grantor. Since the grantor is trying to convey an heir the same estate in land that the heir would take under the laws of inheritance, the heir would be adjudged to have taken title to the land by inheritance rather than by the conveyance, because descent through the bloodline was held to be "worthier" than a conveyance through a legal instrument. In this way, tax evasion was prevented (feudal tax through inheritance, not conveyance) Ex: O conveys property "to A for life, then to O's heirs." o Without this doctrine, there is a contingent remainder in favor of O's unascertained heirs o Under this doctrine, though, that contingent remainder doesnt exist. Instead, O has a reversion (after A's life estate terminates, goes back to O. If O is not alive, then to O's heirs through inheritance). The doctrine also furthered alienability - O could convey a reversion, but since O's heirs are not ascertained, they couldnt convey the future interest The Rule Against Perpetuities The Common Law Rule - Compromise btwn families who were concerned about securing land from incompetent children, and the common law rule of alienability. Judges basically created this rule, saying that they can understand that a father knows the capabilities and the living members of his family, and from the father's informed judgment, say that they want to restrict the alienability of the land given to incompetent children. However, there was no way for the testator to know anything about unborn children, so there was no reason to impose this restriction. Therefore, the compromise was that the father was permitted to control the land as pertains to living members only, so a time limit was imposed. Mechanics of the Rule o Only applies to interests that are not vested at time of conveyance (future interests). These are: Contingent interests Executory interests Also, Class gifts (this is a special case) o Then, determine whether the interest might not vest within the perpetuity period of "lives in being plus 21 years" You must prove that a contingent interest is certain to vest or terminate no later than 21 years after the death of some person alive at the creation of the interest. If you cannot prove that, the contingent interest is void from the outset. The person's life that you are using to determine this is called the validating life. Validating Life: o The preceding life tenant

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o The taker or takers of the contingent interest o Anyone who can affect the identity of the takers o Anyone else who can affect events relevant to the condition precedent Ex: "for A for life, then to A's first child to reach 21" o A is the validating life. You can prove that any child to reach 21 will necessarily do so within 21 years of A's death. It is certain to vest or fail within this period In searching for the validating life, we ask whether there is with respect to a given person an invalidating chain of possible events after the interest's creation. It's what might happen, doesnt matter what actually does happen. If what might happens is that the interest remains unvested following that person's life plus 21 years, then that person can't be the validating life. All possible events, no matter how unlikely are taken into account. Examples: o The fertile octogenarian - presumes that anyone, even an octogenarian - that is, a person between 80 and 90 years of age - can parent a child, regardless of gender or health. "To A for life, and then to the first of A's children to reach 25 yrs" A at time is 85. In applying the rule, you would argue that in her 86th year, A could have a child, and in her 87th year, all her other children could die, and she dies at 88. B/c the interest wouldnt vest within 21 years of A's and all her other children's death (they all form the lives in being), it makes to gift void. Instead, after the life estate is over, there's a reversion. The precocious toddler - assumes a living person is fertile at birth The unborn widow - because who is a widow cannot be determined until the spouse dies, the law will assume the possibility that he marries a woman not born at the time a gift was made Ex: "for A for life, then to A's first child to reach 25" o There is no validating life; the contingent remainder is void. You cannot prove that A's first child to reach 25 will do so within 21 yrs after A's death Class Gifts - a special case under the RAP o "all or nothing" rule holds that if a gift to one member of the class might vest to remotely, the whole class gift is void. o For a class gift to be vested under RAP, the class must be closed (when gift is created, every member of the class must be in existence and identified), and each member of the class must be satisfied with the perpetuities period Ex: "A for life, then to A's children," and A has one living child B The remainder is vested subject to open, but it is not vested under the RAP until A dies and all of A's children are then in existence and identified. But because the remainder beneficiaries will be ascertained at A's death, the remainder is valid. Future Interests in Transferors: Executory Interests Following Defeasible Fees; and Options o Future interests retained by transferor (reversions, possibility of reverter, right of entry) are not subject to the RAP. They are treated as vested as soon as they arise. Example: if you have a future interest retained in the transferor: O conveys Blackacre "to the School Board so long as it is used for a school" School has a fee simple determinable, and O has a possibility of reverter. Exempt from RAP. However, if the future interest in retained in transferee: O conveys Blackacre "to the School so long as it is used for a school, then to A + heirs" A's executory interest violates RAP b/c it will not necessarily vest within A's lifetime, or within 21 years after A's death. When an interest violates RAP, it is struck out and the remaining valid interests stand. The Symphony Space, Inc. v. Pergola Properties, Inc. o Facts: Pl purchased a property (far below market price), and as part of that transaction, Df retained an option for the exclusive right to repurchase the property. The option allowed the holder to exercise the

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CO-OWNERSHIP: CONCURRENT INTERESTSI. Coparseny - not that important; never took hold in the American colonies and was eliminated At common law under the system of primogeniture the eldest son was the heir. If a decedent only had daughters, the daughters took as coparsenors Tenancy in Partnership (discussed later) Tenants in Common Have separate but undivided interests in the property o The interest of each is inheritable and may be conveyed by will or deed o There are no survivorship rights between tenants in common. o Each tenant in common owns an undivided share of the whole Ex. T conveys property to A and B. A and B are tenants in common. o If A conveys his interest to C, then B and C are tenants in common o If then B dies intestate (without a will, so this is the default), then B's heirs and C are tenants in common Joint Tenants Have a right of survivorship By common law, joint tenants together are regarded as a single owner o In theory, each owns the undivided whole of the property. When one joint tenant dies, nothing passes to the surviving joint tenant(s). The decedent's "share" is still part of the whole, but the decedent's share is extinguished. The other joint tenant all collectively are one owner, free from the decedent's stake. The Four Unities - Since joint tenants are seised together as one owner, common law insisted that their interests should be equal in all respects. So the four unities were essential: o Time - the interest of each joint tenant must be acquired or vest at the same time o Title - all joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint tenancy can never arise by intestate succession or other act of law. o Interest - All must have equal undivided shares and identical interests measured by duration o Possession - Each must have a right to possession of the whole. After a joint tenancy is created, however, one joint tenant can voluntarily give exclusive possession to the other joint tenant. The unity of possession is essentially to a tenancy in common as well; none of the other 3 unities is though. If these 4 unities don't exist, a joint tenancy is not created. Instead a tenancy in common is created. o Some jurisdictions have statutes that abolished the requirement of the 4 unities, and instead, if you explicitly say a joint tenancy is created, it is. If the 4 unities exist when it's created, but are later severed it turns into a tenancy in common. o So joint tenants can change their interests into a tenancy in common by mutual agreement destroying one of the four unities. o If they can solve their problem by mutual agreement, any one of them can bring an action for partition. o Also, one joint tenant can convert interest to tenancy in common unilaterally by conveying their interest to a 3rd party (destroys unity of time). Tenancy by the Entirety - can be created only by husband and wife All 4 unities are required, plus the 5th - the unity of marriage Surviving tenant has a right of survivorship Husband and wife are considered to hold as one person at common law

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Therefore neither one can defeat the right of survivorship by conveying to a 3rd party. Only a conveyance by both together can do so o Neither one acting along has the right to judicial partition of property Divorce terminates tenancy by the entirety because it terminates the unity of marriage ( a requirement) o As a default, the parties usually become tenants in common Presumptions At common law, presumption was for joint tenancies over tenancies in common Today, however, the presumption is reversed o Ex: "to A and B as joint tenants and not as tenants in common" - this will create a joint tenancy o However, if you say "to A and B, jointly" it may not Courts have thought this may indicate an intent to create some type of concurrent estate, but not necessarily joint tenancy. Some states require an express provision for survivorship to create a joint tenancy Ex: "to A and B as joint tenants with the right of survivorship" Conveyances to husband and wife o Common law presumed an intention to create a tenancy by the entirety, absent some clear indication to the contrary. This presumption still has a lot of force today. More of Joint Tenancies Avoidance of Probate - joint tenancies btwn husband and wife is the practical equivalent of a will, but at the joint tenant's death probate of the property is avoided; therefore, they are very popular. o Probate - the judicial supervision of the administration of the decedent's property that passes to others at the decedent's death. They are costly, and property may be tied up for a while. o Joint tenant avoids probate b/c no interest passes. The decedent's interest extinguishes at death, and the survivor's interest continues on the whole without the participation of the decedent. A joint tenant cannot pass her interest in a joint tenancy by will. The joint tenant's interest ceases at death. o This has important consequences for creditors. If a creditor acts during a joint tenant's life, the creditor can seize and sell the joint tenant's interest in property, severing the joint tenancy. If the creditor waits until after the joint tenant's death, the decedent's joint tenant interest has disappeared, so there is nothing the creditor can seize. o But, this does not control federal estate taxation Congress (looking at reality) provides that when a joint tenant dies, his share of the jointly held property is subject to federal estate taxation. If the joint tenants are husband and wife, one-half is subject to taxation. However, no taxes are paid b/c any amount of property that passes to surviving spouse qualifies for marital deduction and passes tax-free. Instances where court might ignore the unity of interest: o In certain situations this makes no sense, and since this is justifiable only on historical grounds, courts may ignore it in situations where it counts. Ex: A and B take title as joint tenants. A furnishes 1/3 of purchase price and B 2/3, intending that when they sale, the proceeds will also be split up the same way if sold during their joint lives, then a joint tenancy will be created, and a court will divide the proceeds according to their intent. Severance of Joint Tenancies Riddle v. Harmon o Facts: Husband and wife purchased land, taking title as joint tenants. Before she dies, wife decides she doesnt want husband to get her interest, so she could dispose of her interest by will. She grants a deed to herself for interest, to terminate the joint tenancy & create a tenancy in common. o A joint tenancy can be severed by 1) voluntary conveyance, 2) partition proceedings, 3) involuntary alienation under an execution, or by 4) any other action which operates to sever the joint tenancy Each tenant has the right to convey his or her separate estate by way of gift or otherwise w/out the knowledge or consent of the other joint tenant to terminate the joint tenancy. If one of the unities is destroyed (interest here), it becomes a tenancy in common.

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Harms v. Sprague o Facts: Two brothers (decedent & Pl) held land as joint tenants. The decedent (without the Pls knowledge), mortgages one of the properties and becomes a co-debtor on a mortgage with Df. Decedents will devises everything to Df. o Court held that joint tenancy is not severed when less than all of the joint tenants mortgage their interest in the property. Since John's interest is now extinguished, any lien against it has been extinguished as well.

CO-OWNERSHIP: MARITAL INTERESTSI.During Marriage (The Fiction that Husband and Wife Are One) In the English marital property system, man and wife considered one person. At the instant of marriage, wife moved under her husband's protection or cover. He had right to possession of her property during marriage. This right, jure uxoris, was alienable by the husband and was reachable by his creditors. In exchange for all this, and a marriage vow to obey her husband, the wife rec'd the benefit of the husband's support and protection. By the 19th century, all common property states had enacted Married Women's Property Acts. They removed the disabilities of coverture (cover of wife's property during marriage), gave a married woman, like a single woman, control over all her property. This gave wife legal autonomy, and protected her property from her husband's creditors. But domestic duties of wife still existed. Sawada v. Endo o Facts: Car accident, Endo found liable, Sawada awarded $25k. Endo had a property held in tenancy in the entirety with his wife. They then conveyed the property to their sons, but they still lived there (they no longer held any title). Looks like they conveyed the house so that creditors can't get it, and that amounts to fraud. Sawada asks for conveyance to be set aside, and to seize the property. o Rule: Husband and wife do not have separate divisible interests in property held in tenancy by the entirety. o Rule: Married Women's Property Act - says a wife's property is protected from husband's creditors. Can't go after assets of one spouse for the debts incurred by the other. o Conclusion: The basic rule is that a tenancy in the entirety estate is not subject to the claims of creditors of one of the spouses during their joint lives. Therefore, Sawada could never actually seize the property anyway (b/c can't take wife's property, and their ownership is not divisible), it was not fraudulent for them to give it away. US government can reach the interests of a debtor-spouse who owns tenancy-by-the-entirety property IRS is the one creditor that can reach the interest of a debtor spouse in tenancy-by-the-entirety property. o In U.S. v Craft, court said that while state laws delineates what rights a taxpayer has in property the government seeks to reach, federal law determines whether those rights qualify as property within the meaning of the federal tax lien statute. o So it doesnt do away with the Sawada rule, gov't ability to take property is based on the federal tax lien statute, and also for civil forfeiture (if property used for illegal drug transactions, govt can take it away). But what if one tenant is innocent and one guilty - we shouldnt take away the innocent tenant's interest, but we also can't divide it b/c they both own the whole. So what the court has done is that the only forfeitable interest is the guilty tenant's survivorship interest.

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CO-OWNERSHIP: THE COMMUNITY PROPERTY SYSTEMI.Introduction - Now it's really for married couples that own the property as "community property." The fundamental idea is that earnings of each spouse during marriage should be owned equally in undivided share by both spouses. The basic assumption is that both husband & wife contribute equally to the material success of the marriage, and so each should own an equal share f property acquired during the marriage by their joint efforts. Community property includes earnings during marriage and the rents, profits, and fruits of earnings. Whatever is bought with earnings is community property.

Separate property (not community property) - acquired before marriage and property acquired during marriage by gift, devise, or descent. o In some states income from all property (incl. community & separate), is community property. In other states the separate property retains its separate character. o Property acquired or possessed during marriage by either spouse is presumed to be community property. Strong presumption - hard to prove otherwise. Just because a deed says it's separate is not controlling. Otherwise a spouse could just convert earnings into separate property (by buying something with earning from community property). In most states spouses can convert the character of their property by written agreement (& in some states by oral agreement). So if both agree community property can become separate property & vice versa. If marriage terminated by divorce, some states require equal division of community property. Other states allow divorce courts to make an equitable division of community property.

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CO-OWNERSHIP: RELATIONS AMONG CONCURRENT OWNERSI.Partition - the privilege of each co-owner to transform a concurrent estate into estates held in severalty. This action is available to any joint tenant or tenant in common; NOT for tenants by the entirety. Preference for partition in kind (dividing the property) over partition sale (selling & dividing up proceeds). But sometimes partition in kind is not possible, so courts allow partition by sale under certain circumstances. o Reason for preferring partition in kind: sale of one's property w/o his consent is an extreme exercise of power warranted only in clear cases. Partition by sale should only ordered when 2 conditions are satisfied: o The physical attributes of the land are such that a partition in kind is impracticable or inequitable; and o The interests of the owners would be better promoted by a partition by sale Delfino v. Vealencis o Facts: Plaintiff and defendant own property as tenants in common. Plaintiff and defendant own an undivided 99/144 and 45/144 interest, respectively. Plaintiff wishes to partition the land by sale, and defendant (who runs a garbage disposal business on the land) wants a partition in-kind. o Practicability of physically partitioning the property - in this case only 2 owners. o Does it promote best interests of parties? - looks at the consequences of doing each to decide this: This court says there was not enough evidence of hardship caused to Pl by doing a partition in kind that would warrant them to do a partition by sale instead. Plus, Df would be forced to surrender her home, her business, and possibly, her livelihood. Notes on Partition in kind vs. Partition by sale o Duk says this case doesnt have a big following, and most courts favor partition by sale o Ark Land Co. v. Harper - Property owned by family for almost a century. Ark bought 2/3 of property from family members, but rest wouldnt sell it to Ark. Ark wanted partition by sale so they could in the end buy the whole thing, and said that partition in kind would ass several mm in costs for their building plans. However, court said partition by sale would work hardship on family b/c of emotional attachment to land, and money alone cannot compensate. Just b/c economic value of property as a whole would be less if partitioned in kind is not sufficient in cases of longstanding ownership + emotional ties. o Johnson v. Hendrickson - decedent's property passes to widow & 2 children. Wife remarries, and when wife dies her share passes to her widow & 2 children from that marriage. 1st marriage children dont live there; they want partition by sale. 2nd marriage children & husband live there and want partition in kind. Court said b/c the value of the land when divided would be less than as a whole, we should do partition by sale. Court didnt give any weight to the fact that 2nd marriage guys actually live there & also own a property adjacent.

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Gray v. Cotts - one of 4 cotenants argued he should get a specific piece of land adjacent to his home. Court says no, just divide it up into 4 parcels of equal value, then cotenants should draw lots to determine who receives which parcel. Again, court doesnt care about a cotenant acquiring the land adjacent to another property he owns. Sharing the Benefits and Burdens of Co-ownership - May enter into agreement concerning their rights & duties with respect to use, maintenance, and improvement of the property. But if not, there are independent rules. Spiller v. Mackereth o Facts: Parties own a building as tenants in common. When a lessee vacated, Df used structure as a warehouse. Pl then demands Df either vacate half of it, or pay rent on half. Df didnt, and Pl sued. o Rule: 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. o Since no agreement to pay rent, court looks to see if there is evidence of an ouster. Ouster used loosely in cotenancy cases to describe 2 distinct fact situations: The beginning of the running of the statute of limitations for adverse possession o Basically, the finding of an ouster in the adverse possession cases is a claim of absolute ownership and a denial of the cotenancy relationship by the occupying cotenant The liability of an occupying cotenant for rent to other cotenants. o Where the occupying tenant refuses a demand of the other cotenants to be allowed into the use and enjoyment of the land (claim of ownership unnecessary here) o Not adverse possession b/c Df acknowledges the cotenancy relationship. This case involves the cotenant's liability for rent; to be ;liable he must have denied his cotenants the right to enter. There can be no denial unless there is a demand or attempt to enter. Simply requesting the occupying tenant to vacate is not sufficient b/c occupying cotenant holds title to the whole and may rightfully occupy the whole unless the other cotenants assert their possessory rights. Swartzbaugh v. Sampson o Facts: Mrs. Swartzbaugh (Pl) and her husband own land as joint tenants. Husband leases part of property to Sampson (Df) to be the site for a boxing ring (lessee has exclusive possession), despite Pl's outspoken opposition. Pl never signed joined in the lease. Pl eventually sues to cancel lease. o Rule: Unity of possession: Each tenant owns an equal interest and each has a right to possession of the whole. A joint tenant can only recover the right to be let into joint possession with his cotenant. He cannot eject his cotenant in possession. Usually, you cant get rent from cotenant for occupancy or profits derived. However, you may compel the tenant in possession to account for rents collected from third parties. The act of one joint tenant without express or implied authority from or consent if his cotenant cannot bind or prejudicially affect the rights of his cotenant. o No ouster here - lessee has no right to adverse possession or by prescription to land from landlord. Also, she never demanded to be let into property. o If cotenant did not join in the lease, then she is not bound by its terms, so she still has the right to the enjoyment & use of that property. So if she demands to be let in, and is refused, she can recover (see Spiller liability of an occupying tenant for rent to other cotenants). o Where a tenant has leased a joint property without consent of his cotenant, and places lessee in possession. Basically, he is merely giving his lessee the right he had been enjoying. The lease is valid; can't be canceled. o Rules from this case: A conveyance of a lease by one joint tenant to a third party does NOT sever a joint tenancy. Joint tenant has the right to lease his interest to a third party without the consent of other joint tenant. Accounting for Benefits, Recovering Costs - Each owner has a right to an accounting of profits made from the property. This is b/c the concurrently owned property can yield benefits to cotenants but also give rise to expenditures (taxes, etc.)

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Rents an Profits - Cotenants who collects from third parties rents and other payments arising from the coowned land must account to cotenants for the amounts received. Absent ouster, accounting is usually based only on actual receipts, not fair market value. Taxes, mortgage payments, and other carrying charges - A cotenant paying more of these expenditures has a right of contribution from the other cotenants, at least up to the amount of the value of their share in the property. Also, the cotenant paying more than his share is credited for the excess payments in an accounting or partition action. o However, if the tenant who has paid taxes or interest has been in sole possession of the property, and the value of use & enjoyment he has equals or exceeds such payments, there's no action for contribution from the others. Necessary Repairs - cotenant making or paying for them has no affirmative right to contribution from the other cotenants in the absence of an agreement (Reason: b/c whether such expenditures are justified are too uncertain for the law to settle). But, cotenant gets credit for reasonable repairs in a partition or accounting action. Improvements - same thing, cotenant has no right to contribution, but also no credit given in accounting or partition actions. o However, the interests of the improver are to be protected if this can be accomplished w/o detriment to interest of other cotenants. But we look only to the value added by the improvements, and not the actual cost of them.

CO-OWNERSHIP: CONDOS & CO-OPSI. Distinguishing the Structure of a Condominium from a Coop Condos- own apt yourself, but lobby of the building is owned in common with everyone else Co-op is different - owned by co-op corporation, it owns everything. o YOU own a leasehold estate. You own: o A proprietary leasehold estate o a stock in the co-op corporation o You dont actually own any real estate A lot riskier to own co-op than condo o If co-op corp defaults on mortgage, you lose everything even if you paid. o You make sure the co-op corp owns the building. You dont own anything, so your shares are based on the assets of the corp. Make sure the corp has these assets. o Co-op lease - they will include a forfeiture provision - which they probably wont enforce unless you cross them. If you dont pay a co-op fee, it becomes a lien against your property, which might ultimately result in a foreclosure Advantage of co-op o When you pay the mortgage, you can borrow more money again (like for improvements) o Always will have a mortgage. When one runs low, they'll take out another one o Less down payment o You cant do this in a condo In condo - they increase common charges to fund improvements Ultimately, once a certain # of apts are sold, sponsor will turn over control to board of directors (if co-ops), or condo assn (if condos). Condo assn not nearly as powerful as board of directors Risk - During good times, coops and condos have about equal risks, but during bad times, there's a big diff o Co-op - 100 ppl own coop together. Half dont send monthly payments. Only way to preserve what you have is by putting up the other half (putting up double), just to keep it. Many resemblances to tenancy in common and joint tenancy o In condo - if half the ppl dont pay, you still keep your property, no forfeiture of the building, only no improvements made b/c no money coming in to fund the improvements Condo owner more likely to survive when there's a down turn in the economy

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Sponsor - the guy who conceives of the idea, either builds the building, sells units in it, or he's buying an existing building, and as quickly as possible, getting rid of existing tenants and re-selling. o To get rid of existing tenants Get eviction plan - you need approval of certain % of the tenants Non-eviction plan - cant evict anyone; most plans are non-eviction plans If you buy out enough ppl, other may lose rent control rights Offering plan is what you get - you can hang the sponsor on the offering plan (sue him for fraud) o You describe the building o Describe the financial foundation of the building (what you paid for it, paid for renovations, etc.) o Then you describe the procedure by which a person can buy a unit o Explain what the monthly carrying charges are o Will be vastly diff in a condo and co-op In co-op charges include your mortgage, real estate taxes, and maintenance Condo only maintenance o Not bound by these numbers. The carrying charges may be higher (or lower - but less likely) o What you can get (definite) out of offering plan is the % of common charges (the proportion you pay of total share) o Co-op owned by corp, and run by board of directors Functions of a Condominium Declaration: Five types of property Individual living unit Side walks and landscape - common elements, each owner has an undivided interest Parking spaces or semi-private lawns assigned exclusive control. Not wholly individual nor entirely common Recreational facilities may be owned by the developer and leased to condo Common elements of structures, i.e. common walls and roofs of joined townhouse style codos. Origins of the Cooperative Movement Robert Owen History o Marries rich, goes to work for father-in-law, proves to be a good manager. o Provides a living wage, provides housing and does not steal it back at the company store. o Jeremy Bentem friend and philosopher, noteworthy theories on capitalism. o Word of Owenss store reach a bunch of weavers in Rochdale, who decide to get together and form a store of their own. They organize it as a coop. Each owner gets one vote, regardless of the amount of capital contributed. (the capital contribution does determine share of profits). This starts the coop movement. Common Interest Community Associations Introduction o A collection of individual rights related to individual home ownership that are similar to Condos. o Developer would have drafted a set of CC&Rs Covenants, Conditions and Rules that will govern the way the members of the community will live. By buying into the community, a party contractually obligates him/herself to live by the community rules. Infractions are punishable by a fine which can result in a lien in the event of a failure to pay. The community association often provides some services, i.e. road maintenance, snow removal, ect. o Streets within the community are often common property of the community. They are not public roads, they are privately owned. Nahrstedt v. Lakeside Village Condominium Association, Inc. o Facts: homeowners assoc has a covenant in the rules against pets; Pl has pets and is repeatedly fined for the pets; Pl sues for declaration that the covenant is invalid as applied to her. o The enforceability of a restrictive covenant on the ownership of pets should be tried to determine whether the restriction was reasonable as applied to the particular facts of the challenging homeowner Mulligan v. Panther Valley Property Owners Assn. o Facts: Gated community that decided they would establish a rule prohibiting tier 3 sex offenders from living in the community.

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When a community decides to establish a set of rules they can generally make up any rules that they want as long as the rules dont result in prohibited discrimination.

CO-OWNERSHIP: PARTNERSHIPSI. Covenants of a limited partnership Power of a limited partner tends to be constricted so that he agrees with the limited partners that they can get involved in some decisions (not always true, but may happen) General partner has a lot of power o Only person in the limited partnership that has unlimited liability b/c of power, may be crooked and defraud partners Unlimited liability - all assets are open to attack. This was a serious problem: Ended this a while back - now a general partner of which there was limited liability b/c it was a corporation. This is a tax problem - then this type of partnership has to be taxed like a corporation So now under, some circumstances, sometimes taxed as corp sometimes as partnership Now tax law lets you choose if you want to be taxed as one or the other o Partnership dont pay taxes o For real estate businesses, corporation tend to be avoided Limited partner has only limited liability How do you start a limited partnership? Write a partnership agreement. What do you need? o Statement that forms the organization o Give it a name and a term o Can last forever, but usually dont. May not want it to last forever b/c that is an attribute of a corp, and having this attribute, this would be a thing that would make it taxable as a corp. although now you can choose how you want to be taxed. o Title of agreement should be concise. Ex: Partnership Agreement, Date o Purposes of the partnership Largely irrelevant, b/c unless you limit the partnership to specific purposes, the limited partnership can do anything o Tell who are the parties - who's involved? o Introduce the subject - tell the story What the deal is all about Identify the premises Limit liability to the one premises o Say who gets what Not every partner has to be equal to all the others - what share does each get? Layers of clauses - Should be organized so that things that relate to each other are near to each other. When you arrange things, you begin to understand the logic to the deal, and the clauses then make sense. o 1st layer Every clause has an "address" o 2nd layer Obligations of the partners All partners have an obligation to contribute capital Time and attention of the partners o 3rd layer Some people get compensated for work

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As a matter of law, you don have to be compensated, so to get paid, it must be in the agreement You may get paid a fixed amount depending on accomplishing goals. May be percentage Compensation for administration, and also in getting goals accomplished (development partnerships) o 4th layer - Then go into causes dealing wi