PROPERTY, POSSESSION, AND OWNERSHIPCONCEPT OF PROPERTYPrivate Property

Occupation theory – occupation or possession of a thing justifies legal protection of that thing Labor theory – moral right to ownership and control things through labor Contract theory – “private property” is the result of a contract between individuals and the community Natural rights theory – “natural law” dictates the recognition of private property Social utility theory – law should promote maximum fulfillment of human needs and aspirations; legal

protection of “private” property better promotes thisSunstein

Without substantial private property, cannot have democracy More money in private sector center = weaker government Stronger belief in private property = stronger disagreement with central government

Bundle of Rights Bundle of rights or expectations in tangible or intangible things that are enforceable against third parties,

including the governmentRight to Possess/Occupy

FSA mostly just applies to surface of the ground Limits to FSA possession:

o Zoning ordinanceso Restrictive covenants aka private zoning

Right to Use In CA, CC&Rs (covenants, conditions, and restrictions) Zoning limits Law of private nuisance (common law version of zoning)

o Person who owns RE can’t use land in such a way as to unreasonably interfere with neighbor’s use of RE

Right to Exclude Limitations

o Police/health official warrantso Businesses have to adhere to public accommodation and discrimination statutes

Jacques v. Steenberg Homes SH trespasses on J’s land J brings action for trespass, wins because as possessor, he has the right to exclude

Right to Alienate/Transfer See unreasonable restraints on alienation section

Right to Destroy Can’t destroy historical RE/national landmarks

Legal vs. Equitable TitleLegal Title

Legal relief = damages Legal courts created new forms of specific relief so legal remedies would become an adequate remedy at

law Equitable Title

Specific performance and injunctions Only grant equitable relief when there is an inadequate remedy at law Equity: debtor’s real interest (difference between value of the land and amount of mortgage against it) Equitable title in a property is thought to be “real” title

ADVERSE POSSESSIONElements of Adverse PossessionStatute of Limitations

CA is 5 years + must pay taxes

Some states are 20 years Most states are 10 years

Actual Possession Engage in acts associated w/ possession of RE

o Have to use land in reasonable manner compared to other land in the vicinity Actual possession depends on the context

Open and Notorious TO supposed to benefit from O&N because it puts TO on notice If TO has actual notice, doesn’t need O&N TO must be able to notice that something prejudicial to his interest is going on if he was there

Chaplin v. Sanders Sanders used part of Chaplins’ land for their trailer park Sanders gave actual notice, so court didn’t need to decide O&N but

o Court said O&N satisfied anyway because residents treated land as their own Court also decided hostile/state of mind issue – claimant’s subjective intent irrelevant

Exclusive Sharing ownership w/ TO defeats exclusivity

Continuous W/o significant interruptions Various ways TO can interrupt continuity

o Bring ejectment action – establish that AP is trespassingo Action to quiet title – remove cloud on TO’s titleo Permission offered and accepted

Permission by TO means AP is on property under, by, or through TO and not in AP Significant absence would interrupt continuity and cause the statute of limitations to start all over again

Hostile/Adverse State of mind question Claim of right/moral

o NELSON likes this oneo Good faith belief the land is yourso Can’t be a knowing thief

Immoral/Maine Doctrineo Knowing wrongdoer

Amoral/Connecticut Doctrineo Intent to possess property as one’s owno Good or bad faith motivation is irrelevant

Nonpermissiveo If permissive, no APo If non permissive in any way, APo Very few courts use this

Joseph v. Whitcombe NY hippie case Occupy house for 15 years Whitcombe’s had no claim of right

Factors Affecting Adverse Possession ClaimsTacking

APs must be in privity with each other in order for predecessor’s possession to benefit the successor’s possession

Privity:o Written deedo Intestate successiono Wills

o Oral transfer Very hard to prove Depends on the context – who the parties are and what their traditions are

Color of Title Some sort of writing (doesn’t have to be true or valid) that purports to say the holder has title Debate over state of mind: if holder of title knows it’s false, it’s not a claim of right under the moral

position If you have color of title, you can expand the area under which you can claim AP to more than what you

actually possess Some states decrease the statute of limitations if AP has color of title

Legal Remedies Ejectment

o Available to person who is out of possession and asserts a better right to possession than the current possessor

o Owner records decree of ejectment to establish that current possessor is a trespasser Trespass

o Another person enters upon owner’s land or otherwise disturbs owner’s possession of land w/o permission or consent

o Successful claim entitles P to actual damages resulting from trespass and to injunctive relief against future trespass

o Punitive damages may also be awardedJustification and NotesTwo Versions

Whole hog APo tract of land with TO and APo AP possesses for long enough period of time so AP claims he owns the whole property as against

the TO Boundary line disputes

o More commono Two TOs with encroaching land

Future Interests AP takes the land as he finds it so can only acquire title against those who have the current right of

possession Mortgages are similar to future interests because if foreclosure occurs, the title passes to someone else

AP and Government Can’t claim AP against sovereign/government owned land

o Assume gov is incompetent and need to protect them against their own incompetenceo Hurts public/taxpayerso Hard to satisfy O&N requirement when you’re saying the gov land belongs to the whole publico Small gov. entities in some states can lose land through AP

Government can obtain title against private landowner through APAP in California

Have to satisfy elements of AP AND pay taxes on the land in CAo There are ways to get around the tax requirement

Tax Increase Theory Encroacher gets property assessed and pays taxes on new value Therefore, paying taxes on the encroached AP property

Easement by Prescription Theory AP can get an easement to use the surface but you don’t get FS title AP not paying taxes, but uses land through an easement

AP of Chattels Usually with regard to tangible chattels O&N hard to satisfy Passage of time more meaningful Apply replevin statute

o Carries a statute of 4-6 yearso When does statute of limitations start

When chattel is taken is too pro-thief Courts choose to start statute of limitations when location is known by TO who has been

engaged in due diligence trying to find it

LOST AND ABANDONED PROPERTYClassifications

Abandonedo Owner no longer wants to possess it and voluntarily gives up all right, title, and interesto Belongs to finder of property against all others, including former owner

Losto Owner unintentionally and involuntarily parts with property and does not know where it iso Typically use the Armory Rule to determine who it belongs to

Mislaido Owner voluntarily puts property in a certain place and then overlooks or forgets where the

property iso Finder of mislaid property acquires no rightso Right of possession belongs to owner of premises on which the property is found, against all

others but the TOo Property found in the scope of employment goes to the employero Assumption that TO may eventually recall where he placed it and return for it

Treasure troveo Coin or currency concealed by owner – usually means buriedo Must be oldo Belongs to finder against all but the TOo Policy arguments (NELSON thinks these are silly)

Wants to get coin back into circulationo Don’t want to give property to trespassers so most courts will try to find the property as mislaid

Unowned Property – No TO Exists

Otay Water District OWD builds dam, floods private property OWD gets easement by prescription to use the surface of the flooded land Can’t get AP because they didn’t pay taxes

Lost/Mislaid – TO ExistsArmory Rule

Finder of lost property prevails as to all but the TO Caveats

o Only applies to lost, not mislaid propertyo Doesn’t deal with questions of competing finders

Finder #1 loses it, Finder #2 finds it Court says Finder #1 wins as against #2

Special Relationship Cases Such as safety deposit boxes and banks, etc Property should go to premises because there is a special relationship between the premises and the people

on them that makes it likely the TO will returnFinders Statutes

Encourages or requires finder to take object to some county office and deliver possession of the chattel to the government

Government advertises finding of the chattel which theoretically gives TO notice Typically 1-2 years of notice phase

o If TO never shows up, finder gets the propertyo Cuts off title in TO

Incentive is to encourage disclosure: if the TO doesn’t show up, finder gets to keep it; if TO does show up, finder gets reward

Benjamin v. Lindner Aviation Benjamin finds money in wing of airplane owned by bank through foreclosure sale Court ignores finders statutes and gives the money to the bank as owner of the “premises” on which it

was found, in this case an airplaneChappell Case (distinguishes from Benjamin)

US seizes car from drug dealers, finds money in it, takes the money, sells the car Chappells buy it, mechanic fixing it up finds more money in it (doesn’t belong to him because he is an

agent of the Chappells) US says they own the money Court rules the money is abandoned, not mislaid because drug dealers aren’t going to return for the car First to possess owns abandoned property

o Chappells were first to possess because the US didn’t even know about the money when they had the car

Outlier Cases

Popov v. Hayashi Ball = abandoned property Ball bounced out of P’s glove H got physical possession Maybe P wins if you use some form of constructive possession P had pre-possessory interest that compromised H’s claim of full possession Court couldn’t make up its mind so ordered the ball sold and the proceeds split evenly NELSON thinks P got the shaft and no one got any justice

Pierson v. Post: First to Possession Post in pursuit of fox – fox goes up a tree Pierson shoots the fox and takes physical possession Actual v. constructive possession

o If it’s actual, Pierson clearly winso If it’s constructive, Post might be able to win

Court ruled that “hot pursuit” was not enough and gave it to PiersonPolicy Implications

Worried about slippery slope argument Don’t want to discourage active participation

Hannah v. Peele Finder prevailed even though item was found in a residence Owner had never used the house as a residence Current tenant (British army) never used it as a residence

Danielson Chicken Coop Farmer/landowner asks boys to clean chicken coop Boys find gold coins in the ground Farmer gives boys 5¢ and they get mad Nelson’s analysis

o Property is mislaid/embedded and found within the scope of employmento Farmer is landowner so he should get the property even though he’s a jerk

Court’s analysiso Used the Armory Rule – finder of lost property prevails

TrespassersAnderson v. Gouldberg

Anderson (trespasser) unlawfully cuts down trees, takes them to a saw mill Gouldberg steals logs from a saw mill A sues G for value of lumber Two clear wrongdoers, court holds for A – the first wrongdoer/possessor

Virgin Islands Case Edwards burglarizes Hammel’s house and steals jewelry E arrested, jewelry ends up with US gov Not all the jewelry belongs to Hammel but the court awards him all the jewelry as last known possessor Court cites A v. G – slightly different because E was the only wrongdoer in this case

Law of Salvage Maritime law Salvor raises sunken vessel/takes goods off of it Gives that person a lien on the vessel

o Court determines what the value is of the salvage operation Salvor gets to collect that money by selling ship or goods at public auction If lien is not paid by owner, lien will be foreclosed If it’s unowned, courts apply common law of finders – Armory Rule If ship is not in open waters, ship being embedded in the land means government is a possessor and gov

wins a lot of those cases as being prior/first possessorPublic Policy Arguments

Encourage disclosure of a find so that TO is most likely to get it backo Stronger the rights of the finder to prevail would encourage more disclosureo Want to reach a result most likely that the TO will ultimately acquire the chattel

Pervasive policy to discourage trespassing Ought to reward hard work and initiative Want a result/analysis that creates clarity and predictability (want to know what the law is) Want to avoid violence

Nelson’s Helpful AdjectivesGoods or the Thing

Lost – favors finder Mislaid – favors landowner, or whoever controls possession of the land Hidden/buried – favors landowner, another way of saying it might be mislaid Embedded – definitely favors landowner (even if he doesn’t know it’s there)

o Courts are moving away from treasure trove designationo Doesn’t mesh with rules of fair playo Invites trespasser

Abandoned – automatically triggers first possessor (sometimes landowner, sometimes not)

Unowned – triggers first to possessPlace/Location of the Find

Private v. public The more private, the stronger the equities favor the landowner The more public, the stronger the equities favor the finder The more the land is open to the public in general, the weaker the landowner’s claim is

o Inviting people onto the landnot trespasserso Expectation of owner who is opening land up to the publicreasonable owner wouldn’t expect to

acquire an ownership interesto Implicitly giving up property rights by inviting people in

Place where finder or TO has a special relationship to the owner of the premiseClaimant

TO Prior possessor – normally favors prior possessor (esp. if abandoned) Loser (of the property) – usually prevails if TO or PP Landowner in possession – owns FSA and in possession of the land

o Very strong positiono Still might lose

Tenant in possessiono Clearly mislaid, doesn’t go to findero Depends on how long tenant has been there

Employer/employeeo Can’t just use a “but for” argument – focus on whether employee is in the scope of employment

Agent of the finder – favors the finder Trespasser – almost always loses

o Might win in the states that have treasure trove doctrine Invitee/licensee

o Can’t use trespasser argument

ESTATES IN LANDEstates vs. Non-Estates

Estates: interest in land that is or may become possessory Non estates:

o Easement: interest in land that is non possessory Right to use someone’s land but not to possess it De facto possession

o Perpetual easement: gonna stay there pretty much forever

PRESENT ESTATES IN LAND (look at E&E again)Name of Estate Language Used to Create

EstateName of Future Interest

Who Gets Future Interest

How does Estate Terminate

Fee Simple Absolute (FSA)

• to A and his heirs• to A (modern version)

none n/a cannot terminate; duration is unlimited

Fee Simple Determinable (FS-D)

• to A so long as…• to A until...

possibility of reverter

the grantor automatically upon occurrence of condition

Fee Simple on Condition Subsequent (FS-CS)

• to A on condition that…• to A but grantor may

reenter if...

power of termination or right of reentry

the grantor grantor must take action after the occurrence of the condition

Fee Simple Subject • to A so long as…and executory interest someone other automatically upon

to Executory Interest (FS-SEI)

then to B• to A until…and then to

B

(EI) than grantor occurrence of condition

Fee Tail • to A and the heirs of his body

• to A and the heirs of his body, remainder B

Remainder if so stated, otherwise reversion

third party if so granted, otherwise, grantor

by the death of the holder of the fee tail with no surviving bodily heirs (lineal descendants)

Life Estate • to A for life• to A for life, remainder

to B• to A for the life of X

remainder if so stated, otherwise reversion

third party if remainder is granted, otherwise the grantor

death of the life tenant (or of the measuring life, if different than the life tenant)

Fee Simple Absolute Potentially infinite duration or uncertain duration Freely alienable, devisable, inheritable Conveyance may not contain any express language of defeasance

Fee Simple Presumption Statutes Applies to fees of either infinite or uncertain duration Unless language clearly indicates otherwise, a deed or conveyance creates FSA

Woods v. County Woods granted land for memorial hospital and county stopped using it as a hospital No FS-D was created because deed lacked limiting language and particular circumstances under which

FS-D might expire No FS-SCS was created because deed did not clearly state an intent of the grantors to retain discretionary

power Court goes through checklist of title options and decides FSA

Fee Simple DefeasibleFee Simple – Determinable

“so long as,” “but if,” “until,” or “reverts to O” Language of duration and specific provision for automatic termination on occurrence of contingency Rents and profits

o Original grantee becomes a trespasser and is liable for rents and profits if condition is meto Liability accrues when condition is met

Fee Simple – Subject to Condition Subsequent O has future interest in the right of entry or power of termination

o Gives O discretion to exercise it Language of condition and express provision for discretionary right of entry No right to rents or profits until grantor exercises right of entry

Fee Simple – Subject to Executory Interest Typically not used much today because it violates Rule against Perpetuities Future interest in third party that gives title automatically on occurrence of condition

Restrictive Covenants and Precatory Interests Restrictive covenant

o Contract/promise with no effect on the titleo Could be an enforceable promise that could result in injunction or damages but doesn’t affect title

Precatory interestso Merely expresses a wisho Not legally enforceable

Waiver of Right of Entry and Possibility of Reverter Right of entry much easier to inadvertently waive by not doing anything in a reasonable amount of time Most courts say possibility of reverter not capable of being waived because it’s automatic

Giving permission may waive possibility of reverter Could convey possibility of reverter to present possessor to effectively give them full ownership

CA Statute on FS-DFS-SCS Every FS-defeasible is an FS-SCS and there is no FS-D in CA Any deed restriction that created a determinable estate is good for only 30 years Grantor can renew it for another 30 years Helps TO defeat AP

AP and Defeasible Fees

FS-D means AP SoL runs as soon as condition is met FS-SCS means AP SoL runs when grantor exercises right of entry Reason for CA statute

In re 88 Acres Harringtons gave land to town in FS-D Town used it wrong, Harringtons wanted it back Waited too long, title came back to them automatically and so town had been in AP and it was theirs

Fee Tail/Fee Simple ConditionalFee Simple Conditional/Fee Tail

OA and the heirs of his body Basically the same thing in the US Effectually a series of life estates Not devisable or generally inheritable because property passes from one generation to the next under the

terms of the fee tail grant Historically a way to keep the property in the family line and avoid conveying FSA Courts have created disentailing devices

o Mechanisms where heirs could create FSAo Basically uses a straw man

Fee Tail in US No fee tail in CA so OA and heirs of his body is FSA Some states recognize fee tail but also recognize disentailing devices Some states use Fee Simple Conditional MO, KS, and a few other states have hybrid fee tail

o Life estate in A and remainder in FSA in A’s surviving issueo Can never be sure there will be surviving issue of A until A dieso Still used in rural areaso Mechanism to keep property in the family for as long as possibleo If A has no surviving heirs, reverts to Oo No one gets FSA until A dies

Life Estate LT has right to possess, to rents and profits, and to use and enjoyment LT does not have power to exercise dominion (to treat land as if he is actually owner in FSA) Conflicts of interest may occur between LT and future interest holder Life estate pur autre vie is inheritable People don’t usually buy and sell life estates bc they would need to get a physical exam of the person who

owns the life estate to see if it’s worth their time and money Sometimes life estates are transferred involuntarily via foreclosure and execution sale

o Buyer at execution sale will own life estate measured by first owner’s life Life estate defeasibles exist where O would have future interest of reversion AND possibility of

reverter/right of entry

Red Bluffs Case Last time CA courts enforced a determinable fee Krafts granted land to Red Bluffs in FS-D and brought action for right of entry Were actually outside SoL but no one brought that up so they got the property back

Leaseholds See section on landlord-tenant relations

FUTURE ESTATES IN LAND (add info from E&E)Future Interests in GrantorName of Interest Characteristics Example

possibility of reverter follows FS-D or other determinable estate

• to A so long as the land is used as a residence

right of entry/power of termination follows FS-CS or other estate on CS • to A but if land is not used as residence, I may reenter and retake possession

reversion follows an present interest that is not D or CS

• to A for life• to A for 10 years• to A and the heirs of her body (fee tail)

Possibility of Reverter Follows FS-D or other determinable estate Vests automatically

Right of Entry Follows FS-SCS or other estate on CS Grantor must take some action to retake possession

Reversion Follows a present interest that is not D or CS Follows natural termination of preceding estate Catch all phrase and the most common

Name of Interest Characteristics Example

remainder must comply with four rules of remainders

• to A for life, then to B

executory interest does not comply with one or more of the four rules of remainders

• to A for life, and one month after A’s death, to B

• to A so long as the land is not subdivided, and if it is, then to B

• to A for life, but upon A’s death or divorce, to B

• to B, to take possession upon B’s 21st birthday

Future Interests in Third PartyRemainder

Must comply with all four ruleso Must be created at same time and by same doc that creates prior estate(s)o Must follow a freehold estate but cannot follow FS (usually life estate or term of years or fee tail)o Must not have capacity to cut short a prior estate

Must take possession only on natural termination of prior estateo Must be no built in time gap between termination of prior estate and taking of possession by

remainderman May create an estate in any interest (FSA, FS, life estate, etc)

Executory Interest Use the test for remainder By process of elimination, if it’s not a remainder, it’s an executory interest Typically follows interest in some form of FS-defeasible

Restraints On AlienationExpress Unlimited Restraints

Pretty much always bad Disabling – totally unenforceable; means the grantee can’t transfer at all Forfeiture – grantor attempted to create a defeasible estate in grantee that is subject to right of entry on

condition of alienation Promissory – grantee covenants not to transfer

Express Limited Restraints Valid if justified by legitimate interests of the parties

o Balance utility of purpose served by restraint against injurious consequences likely to flow from its enforcement

Alby v. Banc One (prodigal niece and nephew) Combines FS-D with restraints on alienation Albys grant land to Brashers (niece and nephew)

o Automatic reverter limited to lifetime of Albys – forfeiture restrainto Did not prohibit FSA conveyance

Court decided their restraint was reasonable because it was limited in time and didn’t completely restrict transfers

Title flew back to Albys as soon as Brashers took out a mortgage Banc One was negligent in not examining title

Restrictions on Life Estates Courts generally uphold broad restrictions on life estates bc they’re limited in time Disabling restraints are bad even on life estates; forfeiture restraints are ok

Restrictions on Leaseholds Promissory/forfeiture restraints on leaseholds are ok Not FS and only last as long as the lease term

PROTECTION OF FUTURE INTERESTSLaw Of Waste

Usually an interest in life estates when life tenant and future interest holder are at odds Not seen as much in leaseholds bc there are already provisions in the lease regarding waste Holder of present interest not supposed to unreasonably damage holder of future interest Owner of defeasible fee only charged for waste in limited circumstances bc his interest may go on forever Future interest holder may collect damages or issue an injunction

Voluntary Waste Result of affirmative action by life tenant Some types of acts permitted

o Cut down some treeso Open mine doctrineo Doctrine of emblements

Ameliorative Waste “Waste” that will make the property more valuable

Brokaw v. Fairchild Brokaw wants to tear down father’s residence and build profitable apt building Father’s grant mentioned “my residence” multiple times Future interest holders didn’t want apt buildings Court decided that grantor’s intent was for building to remain a residence so Brokaw couldn’t tear it

downMelms v. PBR

PBR believe they own the property next door in FSA, but they really have a life estate pur autre vie Tear down big mansion next door bc everything around it is industrial Melms sues PBR for damages for tearing the house down PBR made rational mistake and has no liability for damages because tearing down the house made the

land more valuablePermissive Waste

Failure to act when you have the duty to act

Default rule: life tenant should maintain property as he found it, by keeping it wind and water tight, less reasonable wear and tear

Life tenant has obligation to preserve the principalo Cap on how much life tenant has to spend – reasonable or actual rental value of property

(whichever is greater) Typically remainderman insures the property but life tenant can too Life tenant must pay taxes on whole FSA If there is preexisting mortgage, life tenant is obligated to pay interest on the mortgage (but not the

principal) If grant includes “w/o impeachment for waste”

o Life tenant doesn’t have normal obligations of repairo Absolves life tenant from payments except in situations of outrageous conduct

Grantor can specify what life tenant’s obligations are and are notRemedies and Time Value of Money

Damages (after the waste occurs)o Determine what was fair market value in FSA before and after the waste

If court determines fair market value lost was 200k, has to consider time value of moneyo Need to know A’s life expectancy and actuarial tables to determine what B (remainderman) gets in

the future Contingent future interest holders can bring injunction actions unless possibility of their interest vesting is

very remote Higher the interest ratelower one’s obligation if payment is in future BUT lower the lump sum in the

present as well

CONCURRENT INTERESTSCONCURRENT ESTATESJoint Tenancy

Created by deed or will “Right of survivorship and not as TinC” Survivor owns property in FSA JT is a will substitute – a way to pass real estate without going through probate

o Cannot sever or change JT by the use of a will, no matter if it’s pre or post creation of JT If OA, B, C as JT w/ right of survivorship and AR

o B and C are still JT to each other and R is TinC w/ 1/3 interesto Right of survivorship effective between B and Co When R dies, her 1/3 interest will go though her estate

In JT each person has an equal share and only natural humans can own in JT (not corporations)Severing Joint Tenancy

Classic way to sever JT is a deed to a third party which converts interest to TinC Deeding to third party can be secret, no notice needed to other JTs

The Four Unities Traditionally, JT had to satisfy these but courts have been moving away bc they’re too formalistic Some courts now look at intent to sever If any unity is broken, JT severed Time: JTs have to have gotten interest at the same time

o A cannot convey deed to himself and another in JT bc then they didn’t get the interest at the same time or by the same document

Title: JTs must have derived interest from the same doc/instrument Interest: JTs must have same percentage of interest Possession: JTs must have right to possess the whole thing

Buying and Selling Property Execute an earnest money contract when buying property Equitable conversion

o Seller signs contract, seller’s interests converts to personal property in the right to receive the purchase price as the major interest

o When buyer signs contract, buyer gets equitable titleo Seller’s title converts to legal title when buyer signs

Buyer puts up 5% of purchase price to show they are earnest Executory period occurs where buyer does diligence Closing

o Buyer receives deed conveying all seller’s interest to buyer so buyer gets legal and equitable titleo Seller gets paid in fullo Buyer gets financing from some lender and delivers mortgage to lender

When buyer or seller dies between contract and closing, it’s a big deal for severabilityo Formulistic approach

Severs JT by signing earnest money contract A’s interest is legal title, B’s interest is legal and equitable so it destroys unity of title and

timeo Intent approach

Reaches same result – severs JT bc A clearly intended to get rid of his interestPhillips v. Nyhus

Business partners owned property in JT and jointly enter earnest money contract to sell property Phillips dies while in executory period Formalistic approach says JT was not severed bc interests are still consistent with each other Intent approach means you would need to know what they were going to do with the money So Phillip’s interest from the sale went to Nyhus, not Phillip’s estate

Albro v. Allen Carol and Helen are JTs w/ full right of survivorship (non severable JT in MI) Carol enters unilateral earnest money contract to sell interest to Kinzer Court says Carol has right to transfer property BUT Kinzer will only get a life estate measured by

Carol’s life + her right of survivorship

Porter v. Porter Right of survivorship does not arise out of marriage relationship – absent either an express intent to sever

or actions inconsistent with the continuation of JT, a divorce judgment alone will not sever JT Formalistic approach: divorce created TinC, H gave up right to possession Intent approach: intent is not to sever, agreement was only temporary

Tenancy in Common Don’t need equality of interests

o Fraction of interest is relevant when determining shares of rent Each person has the right to possess all the property No right of survivorship, interest passes by will or intestate and forms new TinC with other tenants Alienable inter vivos and devisable/inheritable upon death Unity of possession is the only applicable unity If they can’t get along, look at partition

Jones v. Shannon W lives in house, H agrees to make mortgage payments Property to be sold in reasonable manner and proceeds to be split evenly H marries W2 and deeds half his interest to W2 before he dies Courts use intent approach in divorce case to decide intent of divorce was to create a severance W and H owned house in TinC after divorce so now W and W2 own house as TinC W2 can seek partition in court ordered sale

Partition Split of concurrent estate when parties can’t get along

Can be in kind (physical split) or by sale (monetary split) Physical partitions don’t work when you have improved real estate (house or building on the property)

because you can’t split up a house Partition by sale goes to the highest bidder TinC with highest fraction of interest most likely to buy property bc he would owe less Partition also available for JT

Restraints on Alienation and Promissory Restraints Multiple co-Ts can put promissory restraint on partition Promissory restraint on partition does not restrict alienation so not as severe as restraints on alienation Each party can sell their own interest but they can’t have a partition by sale and force the others out Alienation would be if each party could alienate the entire property, but here each party can only alienate

their own interest A restraint on alienation would be a promise not to transfer the property voluntarily or involuntarily (but it

might get upheld if it’s reasonable in terms of time)Owelty and Allotment

Oweltyo Only relevant for partition in kindo Hard to split land up equally in valueo Pay the party whose land is less valuable

Allotmento No sale of the land at allo Not partition by sale or in kindo If court believes one co-T should end up owning the land, court will determine value of fractional

interest and give it all to the T they like and that T pays off all the others in their fractional amounts

o Functions like a deed transfer

Tenancy by the Entirety (doesn’t exist in CA) Valid only between married couples and not severable Has all four unities + unity of marriage Protects H and W against debts and claims against an individual spouse

o Helps you shelter assets from creditors H or W can’t convey interest without the other’s consent

o No secret conveyances allowed States with pure TbyE: MA, NY

o One T cannot act to bind the othero Both H and W have to sign notes and mortgages

Crowther v. Mower Traditional severable JT between Mr. and Mrs. C Mrs. C’s lawyer sends Mower (her son) a letter with two deeds granting property to Mower Two issues

o If Mrs. C dies before Mr. C, Mower should record the deeds ASAP Don’t want Mr. C to get Mrs. C’s interest by right of survivorship

Ark Land v. Harper A&B don’t want to sell their land to ArkLand but the other co-Ts already did ArkLand wants it bc there’s coal under it Presumption was partition in kind – to overcome it, party who wants partition by sale (ArkLand) must

show:o Property cannot be conveniently partitioned in kindo Interests of one or more parties will be promoted by the saleo Interests of the other parties will not be prejudiced by the sale

A&B will get more money for it if it’s a partition by sale Economic value of property is not exclusive test for determining whether to partition in kind or by sale

o Court must consider that interest of all TinCs

o If Mr. C dies first, contract the lawyer Suggesting they would hide the deeds so there’s no public record of severance of JT That way Mr. C’s interest goes to Mrs. C by right of survivorship

Delivery of deed severs JT anyway (don’t even need to record it) so Mower gets Mrs. C’s interest by will

However, in CA, deed must be recorded (see below)CA Statute on Secret Conveyances

Can sever JT by deed or other written doc Might not want to use deed if you don’t want to give any interest to third party, you’re just looking to cut

off right of survivorship Requires that you record deed before death in CA to sever JT Deathbed exception:

o Don’t have to record deed or written instrument before death if deed is written no earlier than 3 days before death and third party records it no more than 7 days after death

Soap Opera Deathbed Case Doc says Kenneth and Diane are H and W in JT They break up, K keeps the house and gets new gf, Donna K delivers deed to G (granting his interest to Donna and severing JT) 7 days before his death On the day of K’s death, G goes to record but doesn’t get it done in time before K dies Death bed exception doesn’t apply and Diane owns the whole house bc recording was too late and JT

was never severedCoraccio v. Lowell (MA)

H and W own property in TbyE H takes out unilateral mortgage and bank forecloses; W says mortgage invalid Court holds it’s a valid mortgage that can proceed to sale BUT

o Court suggests purchaser at sale doesn’t get current possessory rightso Purchaser would get contingent right of survivorship

Similar to NonSeverable JT in Some States Some states treat TbyE like nonseverable JT (like in Albro v. Allen) Each T could act unilaterally to give mortgage or deed or sell his interest to a third party Creditor can get judgment against unilateral debt and have execution sale H can destroy his ownership but not W’s Third party would only get H’s interest

o Life estate pur autre vie and right or survivorship

Mortgages Mortgage provides security for a loan (see real estate sale section)

Title Theory Lender gets legal title until loan is paid off Mortgagor keeps equitable title Ruins unity of title, so JT severed under formalistic approach

Lien Theory Most states are lien theory states (including CA) Legal and equitable title remains with debtor One JT getting a mortgage does not sever JT bc he still has legal title

Brant v. Hargrove (AZ) AZ is lien theory state Court decides deed of trust falls under lien theory just like mortgages do so unilateral mortgage by one

cotenant did not sever JT N&A own as JT and both sign mortgage to Brants All mortgage transferred to Brants was a lien so N&A did not sever unity of title A’s interest goes to N on A’s death so Brant can get mortgage settled on full value of the property bc

court decides A’s signature was forged and it was a unilateral mortgage

Deed of Trust

Debtor (O)trustee who holds for benefit oflender/beneficiary Leads to non-judicial foreclosure so it’s easier to foreclose than a mortgage

Intra-Tenant DisputesRemedies

Accounting (equitable remedy)o Cause of action by out-T against in-To Out-T is not in possession but wants to get what he’s owed (like if in-T is renting it or something)

Contribution (equitable remedy)o Cause of action by in-T to get out-T to pay his share of (taxes, mortgage, etc)

PartitionRental

In in-T collecting rents, out-T has right to ½ rent or ½ fair market value If in-T is splitting rent and out-T isn’t contributing, in-T can get contribution against out-T

Improvements In-T can’t get contribution for improvement to which out-T did not consent Court will allow improving in-The benefit of that improvement in partition sale

Commercial Real Estate If in-T is operating business and not a landlord and not paying anything to out-T then out-T has right to ½

the fair market rental value as if it were being rented outEsteves v. Esteves

Parents have ½, son has ½ as TinC Son moves out and they agree to sell the house, but disagree on how to split up the proceeds Parents made mortgage and tax payments + lived in the house for 18 years Son gets ½ fair rental value but also needs to pay ½ contribution

Carr v. Deking J and G own as co-T G signs lease with D; J not happy and sues D to have lease declared invalid Court declares lease valid and the proper remedy would be partition, not ejectment If partition:

o Lease could be wiped outo Lease could stand and reversion would be partitioned

Formalistic approach: JT severed bc J has FSA and G has reversion once G enters lease Intent approach: would need to know what happens when lease comes to an end

Wright v. Wright Party who asserts claim of title by AP against co-T has burden of proving not only the usual elements of

prescription, but also at least one of the elements of OCGA – “there may be no AP against a co-T until AP effects an actual ouster, retains exclusive possession after demand, or gives co-T express notice of AP”

Strong presumption against AP when it’s intra-familyo Presumption that son was in possession by permission (unless ouster is shown)

Proving Ouster In most cases, ouster is not a physical act but a co-T who is in exclusive possession and by words or acts

evidences a claim of separate ownership Acts that can give rise to ousters

o Possessors did more than simply make improvements and pay property taxeso Possessors took unequivocal steps which were inconsistent with and exclusive of the rights of co-

Ts not in possession Rented premises to different people Cutting and selling timber

o Acts were open and public to make occupation so visible, hostile, and notorious as to presume notice to the non-possessor

Fiduciary Duty Hypo:

o A and B are co-T and taxes don’t get paido B purchases property at foreclosure sale; kicks A offo Majority rule says co-Ts have fiduciary duty to each other so each co-T had the duty to pay taxeso A can give B ½ of what he paid at the sale to restore A’s ownership

Fiduciary duty limited to when title is derived from one document and co-Ts are related If the debt has nothing to do with the real estate (like it’s for credit cards) then no fiduciary duty exists

COMMUNITY PROPERTY CA and WI by adoption of Marriage Act Money earned by either spouse during the marriage

Wills Can’t cut a spouse out of your will Spouses can’t elect against a will Spouse can will all of separate and half of community property to whoever he wants

Intestate Succession Surviving spouse gets all com prop and a percentage of separate property (or all of it if there are no kids)

Divorce Com prop split 50/50, each spouse keeps their separate property

Control Most states give joint control of all com prop

o Personal property: either spouse may act with respect to outside world on behalf of the coupleo Real estate: one spouse can act unilaterally and convey it to a third party

But third party should always get signatures bc they don’t know for sure whether it’s separate property or not

Rights of Creditors Debts incurred prior to marriagesome states let you take 1/2 com prop and all sep prop Obligations that arise against a single spouse during the marriage

o If incurred for community or family purposecreditors can recover from all sep and all com propUniform Marriage and Divorce Act

Version One: divide marital property into proportions the court deems just Version Two: equitable apportion of all the property, com or sep

LANDLORD TENANTNATURE AND CREATION OF LEASEHOLDSLease

• Conveyance of land (deed) AND promise + obligation (contract)• Not revocable at any time• Self help not permitted

Residential Leases• IWH means L has almost all the duty of repair/maintenance• Governed by URLTA and common law

Commercial Leases• No IWH• T bears all obligation of ownership under net lease• Governed by common law

License• Less than a lease• It’s a contract, but not an estate in land• Privilege to use someone else’s land but not to possess it• Revocable at any time • Shorter length of staylicensee

• Self help permitted for L to take back premises from licenseeStatute of Frauds

• Oral lease cannot be enforced unless it’s for less than a year• Minimum elements lease has to contain to not be oral:

o Name of parties o Rent price o Specify property descriptiono Term (length) of leaseo Must be signed by party to be charged

Part Performance Doctrine• Where parties operate under contract/lease that is unenforceable under SoF, if either party has engaged in

significant detrimental reliance, court might be inclined to take down the bar of SoF• Doesn’t create a contract but says that now the party that wants to enforce can use the oral terms to try to

do so

Tenancy Duration Creation Termination

Fixed Term measured in years (or multiples/divisions thereof)fixed beginning and end date

depending on duration, may need to be in writing according  to Statute of Fraudsoral leases are typically ok for 1-3 year duration

terminates automatically upon expiration of the specified termno notice necessary to terminatepremature death of T or L has no impact (their estates are liable to carry out their duties)

Periodic Tenancy

indefinite for a fixed period that automatically renews until one party terminates the tenancy by giving notice to the other party

may be oral if less than required by Statute of Fraudsif rent is to be paid periodically (first of the month), without specifying a definite end date, courts infer the creation of a periodic tenancy

typical rule is 30 days notice to terminate month to monthmost states say 60 days advance notice to terminate year to yearused to be 6 months under common law

Tenancy at Will

continues only so long as both the L and T refrain from taking any action inconsistent with its continuationno fixed term and no successive periods during which T’s right to exclusive possession of leased premises is assured

taking possession with consent of owner but without any agreement as to fixed term, rental period, or a pattern of periodic rental payments created tenancy at will

any party may terminate tenancy effective immediately without providing advance noticeL’s demand for possession sufficient to end T’s right to possessionT is given reasonable time to vacate premisesdeath of L or T terminates

Tenancy at Sufferance

T has “held over” and remains in possession after the lease has expiredendures until L elects to renew T’s lease or evicts T

preexisting T wrongfully remains in possession after term of lease has expired

L given reasonable time to elect between renewal and eviction

David Properties v. Selk• Old man Selk enters contract to sell land to DP• DP puts down 5k at closing on 50k contract w/ mortgage for 45k• DP stops paying, Selk commences foreclosure• DP says rent that Selk owed for living on the land should be set off against remaining 9k• DP has legal and equitable title• Selk originally TatWill for a 2.5 month lease, but now he is holdover TatSuff• When T holds over unlawfully, L can treat T as trespasser and file claim for ejectment or treat him as

periodic To When T receives demand for increased rent and continues in possession w/o protest, implied

agreement to pay rent is created• Selk can’t foreclose bc the 9k has been paid as rent by allowing him to live there

LANDLORD’S WARRANTY OF TITLE, POSSESSION, AND HABITABILITYCovenant of Quiet Enjoyment

L promises not to interfere with T’s lawful possession More important for commercial leases bc they don’t have IWH Implied CQE is in every lease and every eviction is a violation of CQE Breach of CQE releases T from any obligation to pay rent T has two options

o Stay in leased premises and sue for damageso Vacate premises and treat breach as constructive eviction

Barash Lawyer rents building and air flow sucks B sues L B wants to stay in building and pay no rent until it’s fixed

o Standard remedy under partial eviction L not required to provide 24 hour ventilation bc it’s not in lease B can’t be deprived of something he was never entitled to in the first place so it’s only constructive

eviction BUT he didn’t abandon the premises so he gets nothing Inequitable for B to claim interference with use and enjoyment of premises while he still remained

on the premisesAdrian

Old T holding over, but new T has right to possession Damages: can get difference between FMV and contract rent during that time P wants to sue for lost profits Court follows English Rule

o Implied that L will make the premises open to T’s entry, legally and actually, when the time for possession of the lease arrives

American Ruleo Obligation to deliver legal right to possession but not actual physical property

Actual Eviction Total actual eviction: L excludes or locks T out of premises Wrongful actual eviction breaches CQE and T can sue for damages

Partial Actual Eviction L takes over part of premises and denies T the use of a portion of the premises crucial to the use of the

whole Traditional common law rule is that lease terminates and T doesn’t have to pay rent even if T remains in

possession of part of the leased premises Sometimes T is completely relieved of rent obligation and sometimes only partially relieved Useful to commercial T, not residential

Constructive Eviction L so substantially interferes w/ T’s use and enjoyment or causes or allows inhospitable conditions to persist

that T is justified in vacating premises

T must prove: o L’s wrongful conduct

Common law duties giving rise to wrongful conduct are very limited Can’t make fraudulent representations Must disclose hidden physical defects Duty to maintain common areas

Wrongful conduct usually arises out of not following terms in lease o Caused a substantial interference with T’s use and enjoyment of leased premises o T gave notice to L and allowed reasonable time for L to cure the defecto T vacated property within a reasonable time after giving notice and L failed to cure the problem

L’s failure to maintain basic services to premises often serves as basis for constructive eviction T can sue for difference between contract rent and suitable market rent OR difference between FMV of

other premise and suitable market rent Implied Warranty of Habitability

No IWH for commercial leases At common law, L had no implied obligation to make the residence habitable, only obligated to provide the

space Housing codes changed 60 years ago and spelled out L’s obligation to provide habitable premises Remedy for when constructive eviction is difficult (like for poor Ts with nowhere to go) L promises that premises are fit for human habitation and will remain so throughout the term of the lease Cannot be negated or waived Only applies to physical conditions Makes T’s covenant to pay rent and L’s duty to repair uninhabitable conditions into dependent covenants L cannot evict T who pursues damages or withholds rent based on breach of IWH

Hilder v. St. Peter H signed fixed term lease and provided security deposit Sued L for violating IWH (didn’t exist in VT at the time) Court holds IWH now exists in VT To bring cause of action, T must show she notified L of defect not known to L and allowed a

reasonable time for its correction Could have left premises under existing common law doctrine of constructive eviction

o L violated CQEo BUT this wasn’t available bc she didn’t vacate the premises and continued to pay rent

Remedies for Breach of IWH Since a lease is a contract, standard remedies for breach of contract apply Damages

o T continues to pay rent but sues L to collect it backo Court needs to figure out how much T is owed by measuring damages

Difference between contract rent v. actual value of premises Difference between what premises would have been worth if they had been fully

habitable and their actual condition Withholding rent

o Not necessary to abandon the premises o T must show that

L had notice of previously unknown defect and failed to repair it AND Defect that affected habitability existed during the time for which rent was withheld

Punitive damageso Available in cases where breach is of such willful and wanton or fraudulent behavior

COMMERCIAL TENANT’S DUTY TO REPAIRWaste

T has duty not to injure the value of L’s reversion with two exceptionso T may make changes as are reasonably necessary to use the premises in the way contemplated by

the parties to the leaseo L not liable for damages resulting from normal wear and tear

L can waive T’s liability – “without impeachment from waste” Remedies and damages

o L can receive compensation equal to loss or value OR cost to return premises to prior conditionDuty to Repair

At common law, T took premises with all defects and had to live with ito T had duty to repair and to maintain premises in current stateo No duty to rebuild in case of destructiono No duty to restore from effects of wear and tear

L has some dutieso Responsible for common areaso Responsible for areas under L’s exclusive domain (furnace room, etc)o May be liable to repair known latent defects

Repair clause: T agrees to keep premises in good repair Redelivery clause: T agrees to return premises to L in the same condition Obviously T wants a clause excepting normal wear and tear

Destruction of PremisesTermination of Lease

Under common law, T not released from obligations under lease Most states now put risk of sudden destruction of premises on L In case of improvements, T has option to terminate the lease

Duty to Rebuild At common law, L had no obligation to rebuild after sudden casualty loss Now different jurisdictions deal with it differently

Chambers v. River North Line T rented wharf Ice came down river and destroyed it Repair and delivery clause in lease so T had to repair

Amoco Oil v. Jones Service station burns down, L sues T Court says intent approach (interpret lease according to its plain language to ascertain parties’ intent)

means the language in the clause does not mandate T to rebuild unless they’re at faultHadian v. Schwartz

All else being equal, L should want a triple net leaseo Net lease = all obligation to repair etc is on To Triple net lease = T responsible for all repairs, pay taxes, carry insurance with L as beneficiary

Decided opposite in Brown v. Greeno Held T liable to pay for asbestos removal (most cases make L pay for it)o T’s actions were reason asbestos flaked off, had long time left in lease, lease way more

expensive than removal, and parties had discussed it L says T has to pay for earthquake retrofitting T says retrofitting doesn’t affect the use of the premises as a cabaret so they don’t have to pay Court says it’s ambiguous whether or not the parties agreed that the lessee assumed certain risks, despite

the use of unqualified language so they’re going to apply the six factor testo Relationship of cost of curative action to the rent reservedo Term for which the rent was madeo Relationship of benefit to lessee to that of reversionero Whether curative action is structural or nonstructuralo Degree to which lessee’s enjoyment or premises will be interfered with while curative action is

being undertakeno Likelihood that parties contemplated the application of the particular law or order involved

TRANSFER BY LANDLORD AND TENANTPrivity of Contract vs. Privity of Estate

Privity of contract: R that exists between both parties – L and T are in privity of contract with respect to leased premises

Privity of estate: both L and T have mutual, immediate, and simultaneous interests in the leased propertyo T has right of possession for the termo L has reversion after the termo Allows L to collect rent from T’s assignee even without a direct contract

T1 assigns to T2o L and T2 are in privity of estate but not contract

T1 subleases to T2o L and T2 not in privity of contract or estateo If L violates lease, nothing T2 can do about ito L has no direct rights against T2

T2 assumes main leaseo T2 liable to L for every provision in lease and vice versao L and T2 in privity of contract and estateo Neither L or T2 are liable on personal promises vis a vis T1 even though the promises were

enforceable in the main lease In all these situations, T1 remains liable for every promise in the lease unless L releases him

Real vs. Personal CovenantsReal Covenants

Certain promises in the lease run with the land to bind or burden successors in interest Successors have the right to enforce benefits of the covenant “Touch and concern” promises:

o T pay rento T pay taxeso T or L repair premiseso L provide basic serviceso T not to assign or sublet (or not to do so w/o consent of L)o L to renew lease or convey reversion to T

Personal Covenants Only binds promisor and not any successor

Abbot v. Bob’s U-Drive L leases to Thompson who operates two businesses on the same premise Thompson formally assigns premises to BUD and court says that’s valid Thompson also transfers premises to Continental w/ no formal writing Issue: arbitration clause and running with the land

o Only occurs if transfer is an assignmento If transfer is sublease, issue goes away bc there is no privity between Continental and L so L

can’t enforce promise against Continental as sublesseeo Two important tests

Is promise intimately bound up with the land? Would a reasonable person in the assignee’s shoes believe that the promise bound

and benefited him? Court decides promise to arbitrate touches and concerns the land bc it’s a promise to arbitrate over rent

disputes and rent touches and concerns the landBurton

L leases warehouse to T who leases to T2 T agrees to insure the building, make L beneficiary L sues T2 for damages when building is destroyed and the premium hadn’t been paid Court decides promise to insure does not T&C the land so T2 not liable Promise in main lease would have to have said that the money from the insurance proceeds could only

be used to rebuild on the land in order for it to T&CGerber v. Pecht

Gerber (L) leases store premises to Pecht (T) for 5 years T assigns premises to T2 who assigns to T3 L sues T when T2 and T3 don’t pay rent T is in privity of contract with L still so T can be sued for the rent that T2 and T3 didn’t pay Original T stays in privity unless expressly released by L If T2 had assumed the lease, that would be a personal promise to T to pay rent and T2 would be liable

Riverside Case L leases to T for 60 years T assigns to T2 to T3 to T4 to T5 T5 doesn’t pay and L sues T4 for rent T4 liable for all promises in main lease that T&C the land, but only for the violations that occurred

while he was rentingo Liability does not go backwards or forwardso If T4 had assumed the lease, liability would extend backwards and forwards

Transfer of Tenant’s InterestAssignments

Transfer of the whole of the unexpired term Doesn’t need to be the whole premises Privity of estate exists between L and T2 L’s recovery is against assignee but T is secondarily liable as surety (judgment and satisfaction for rent) Surety: person bound to perform an obligation when person who is primarily liable to do so does not

Subleases Transfer of less than the remaining full term Subletting T retains some interest T2 not bound by covenants in original lease L’s recovery is against original T (judgment and satisfaction for rent)

Landlord’s Consent to Assignments and Subleases Restrictions on T’s alienation seen as reasonable protection of L’s interest and income Forfeiture restraints ok: generic clause that if T violates any provisions, L has right to terminate by reentry Once L consents to first assignment, he has waived his right to object to future assignments Assignments can still be effective without consent bc they still take place L’s recovery is damages for breach of contract

Landlord’s Consent Provisions Growing number of jurisdictions require L to have commercially reasonable basis for withholding consent

to transfer Reasons to restrict

o L wants to know who is on the premises and if that person is credit-worthyo Wants to prevent T from selling land at higher price (allows L to capture bonus value)

Rent recapture provisions: gives L the right to collect all or part of any appreciation in the rent charged to T2

ACS v. Newman T permitted to sublease w/o L’s consent but not assign T enters sublease that ends two days before main lease Court says any length of reversion = sublease

Kendall v. Pestana Perlitch gets 40 year lease and enters 25 year lease with Bixler Perlitch conveys remainder to Pestana Bixler wants to transfer his interest to Kendall Pestana says no bc Pestana is now Bixler’s L L did not have commercially reasonable objection This case has something to do with capturing bonus value as well

Tippecanoe Can’t put another grocery store in Tippecanoe wins bc promise not to lease to other grocery store T&Cs the land so it would violate the

lease covenant

Transfer of Landlord’s Interest Subject to outstanding leases

o Grantor cannot convey more than he haso Transferee does not have immediate right to possession

New owner in privity of estate with T Former L’s privity of contract with T still exists Former L remains liable on personal covenants and secondarily liable on real covenants

TERMINATION OF LEASESLandlord’s Eviction of Tenant in DefaultSelf-Help

• L evicts T for defaulting w/o using judicial process not allowed to use excessive force• Majority rule allows self-help if:

o L has right to repossess leased premises o L’s exercise of remedy is peaceable

• Courts tending to restrict self helpWofford v. Vavreck

SH not a legal form of action in PA so L has to go through legal process Policy : SH increases potential of violence

o Judicial obligation to examine leasehold forfeiture best served by judiciaryo Undermines protections inherent in IWH

If L breaches IWH, T is released from obligation to pay rent, BUT L could use threat of SH to make him pay rent

Harkins• H paying rent by the week to cheap hotel, then stops paying• Hotel uses self-help and court upholds it bc H is licensee

Ejectment• Oust defaulting/holdover T• Can be a long time before final judgment

Summary Possession Statutes• Benefits L

• Unlawful detainer/rent and possession• Gives L a prompt hearing to evict defaulting Ts• L gives notice to T to cure defect or vacate• If T does not cure, L can pursue summary eviction

Tenant’s Abandonment and Surrender Surrender

• Transfers lease back to L (and L accepts)• Subject to SoF but court will find surrender by operation of law if no writing and L acts as if he intends to

treat the lease as surrendered• If L does not accept surrender, should send letter saying the surrender is rejected

Abandonment• T abandons without notifying L OR L refuses to accept surrender• L can treat lease as continuing and do nothing

o L sues T on covenant to pay rento T cannot unilaterally terminate the lease

• Courts are imposing duty to mitigate, so it’s not likely that L will do nothing • L can treat abandonment as an offer of surrender • Acceleration clause

o When T stops paying rent and abandons, L may accelerate all rent due under lease o If no acceleration clause, L might take advantage of anticipatory repudiation

Drost v. Hookey• PL and DT live together as bf/gf• PL wants DT out• Court holds she’s a licensee, not T, so L only needs to give 10 days notice

o DT was not granted exclusive dominion and control• The more you can show that DT was paying rent, the more likely it is that she’s a T• Consideration would make it look more like a lease

Anticipatory Repudiation One party to a contract is in such substantial default that court assumes he will never perform P can treat breach as if it’s anticipatory repudiation of the whole lease Makes present value of all rent due now, assuming no duty to mitigate L collects present value but T stays in possession

Hawkinson v. Johnson Applies anticipatory repudiation to L-T (at least for 8th Cir.) Limited damages to 10 years, not the full 67 left on the lease Court decided damages should not extend so far into the future so as to be speculative

Mitigation• L can relet on T’s behalf

o T remains liable for differences between rento L shouldn’t modify the premises or let them for longer than the original term to avoid accidentally

terminating the lease• L can accept surrender and relet on L’s account

o Should change the terms of the lease slightly so it looks more like a new lease• Not required to give preference to T’s space if there are other available units• L only has to treat the space like he would treat any other space• T has to pay for advertising

Hill Country v. Palisades L used anticipatory repudiation to seek damages from T for all future rent installments In TX, L has duty to mitigate Breaching party has duty to show that L failed to mitigate

o L must make reasonable efforts

SECURITY DEPOSITS Promise to return security deposit at the end of the lease does not T&C the land so as to burden a successor

L unless main lease says that L is required to use the security deposit to cure damages

Garcia v. Thong NM is very pro-T So much damage that it exceeded the security deposit so it didn’t seem worth it to L to send the itemized

letter of damages to T If owner fails to provide itemized list

o Owner forfeits right to hold deposito Forfeits right to assert counterclaimo Liable to T for court costs and attny feeso Forfeit right to assert independent action for damages

CA Statute 2 months rent max Used to compensate L for default, used to cover cleaning costs If L goes bankrupt, T’s claim to security deposit will be prior to any creditors

EASEMENTSEasement vs. Estate vs. License

Easement: non possessory interest that gives you the right to use someone else’s lando Irrevocableo Specially enforceable by injunctiono Generally transferable and capable of being abandoned

Estate equivalentso Perpetual easement = FSAo Easement for life = life estateo Easement for years = term for yearso License = TatWill or TatSuff

License: does not imply interest in lando Mere personal privilege to commit some act on the land without possessing ito Terminable at will of landownero No writing or consideration needed o Can become irrevocable through estoppelo Express easement that fails for some reason becomes a license

Millbrook Hunt v. Smith Hunt got right to hunt foxes on part of the land Smith tries to say it’s a revocable license bc landowner kept absolute right to develop the land and

movethe trailso Obviously not a lease bc it’s not dealing with a specified space

Hunt says it’s for a specified period of time which speaks to an easement but also there is a permanent structure on the land with a lease for 75 years

75 year lease was like consideration for the easement

Definitions Appurtenant easement

o Benefits the dominant estateo When dominant estate is transferred, easement trails along with ito Attempting to separate easement from dominant estate destroys the easemento Has the potential to continue indefinitelyo Constructional preference by courts

Easement in grosso No dominant estate, only servient estateso Benefits a persono Ends at owner’s deatho Cannot pas with title to any land, must be done by an independent act of transfer of the easement

itself

o Must be clear from express grant or surrounding circumstances bc courts don’t like these very much

Affirmative easemento Gives the holder the right to go onto the servient estate for a specific purpose

Negative easemento Gives the holder the right to prevent the possessor of the servient estate from doing some acto US doesn’t like these

Profito Right to remove products from the soilo Appurtenant profit: only in connection with dominant estateo Most are profits in gross

Express granto Usually created by deedo Grantor sells part of her property and grants purchaser an easement over seller’s retained land

Reservationo Grantor sells part of her property and retains easement over part of purchaser’s land o May not be reserved in favor of third party

NATURE, TYPES, AND CREATIONTransferability

Almost always transferable Appurtenant transfers with dominant estate Most states say an easement in gross is freely transferable

Hagan v. Delaware Club Grantor conveyed title to lake and surrounding land to D Grantor retained right to fish in the lake Successors sought to enforce the right to fish in the lake Court held that the right to fish was a personal profit in gross that did not benefit D’s successors

Easement by Estoppel and Irrevocable Licenses When owner of servient estate otherwise authorizes owner of dominant estate to use burdened property for

specific purpose, a license has basically been created Sometimes courts will enforce the license as an easement by estoppel or irrevocable license Three elements must be present

o Owner of servient estate consents to dominant estate holder’s use of servient estateo Servient estate owner knows or should know the dominant estate owner will materially change his

position, believing the permissive use will not be revokedo Dominant estate holder, reasonably believing permission will continue, substantially changes his

position by investing in improvements If courts don’t recognize easement by estoppel bc they’re strictly adhering to SoF reqs, courts will find

irrevocable license Estoppel to revoke a license assumes original grantor granted permission of use by revocable license and

that over the years, party has invested and relied to his detriment on it Easement by estoppel lasts forever Estoppel to revoke a license ends when the use ends

Ricenbaw No express written doc, at most an oral agreement in 1901 for a drain from Ricenbaw’s land over

Kraus’s land Kraus wants the drain off his land Irrevocable easement created by estoppel applies

o Ricenbaw has relied on, repaired, and maintained the drain to his detriment

Insufficient Writings and SoF Governed by SoF so must be in writing “Together with easement over this location” SoF violated if you have a writing but it doesn’t contain all the elements

If you’ve got part performance, you can put people on the stand to say where they want the easement to goMaier v. Giske

3 parcels of land Giske owns west, Maier owns east, Giske cares for parcel south of Maiers M’s driveway goes over their property and G’s property G builds barricade G and son claim easement violates SoF bc it does not describe its location specifically enough

o Claim language “together with” is not sufficiently clear Court says it’s clear bc a registered surveyor could figure it out

Floating Easement SoF does not require description of easement’s exact location as long as it can be located on a specific

servient estate Floating easement does not specify precise location on servient estate which creates title problems If it truly floats and someone builds on the property, easement holder can put it anywhere If use of easement is visible, court will determine location based on that Underlying owner can go to court to force easement holder to locate it

Boyd v. BellSouth BS owned big lot of land and severed it Boyds got one piece of land and wanted to use the driveway to the loading dock BS blocked it Court determined there was an implied easement

o Unity of title existedo BS used the road and it was visible

Stinking Sewer Case (Otero v. Pacheco) Pacheco owns lots and builds houses on them Conveys one lot to Oteros but had a sewage line running from his house across their house so the houses

used the same pipe and it backed up Court found that Pacheco had easement by implied reservation as a result of a reasonable necessity that

continues to exist and most people should realize plumbing is hooked up to something so it was visible and apparent (Nelson disagrees)

CREATION BY IMPLICATION Nothing oral or written about the easement and parties haven’t agreed to anything

Implied from Prior Use (Quasi-Easement) Implied grant: claim by grantee Implied reservation: claim by grantor Quasi bc you can’t create an easement in your own property but that’s essentially what this is Use was in place at the time the single parcel of land was severed or divided into adjoining parcels, leaving

one parcel benefitting the other in some way Emphasizes the parties’ likely intent at the time of severance Must show these elements:

o Unity of ownership is severedo Use was in place before severanceo Use was visible or apparent at time of severanceo Easement is necessary for the enjoyment of the dominant estate

Implied by Strict Necessity Refers to landlocked land Necessity has to be absolute Created when common ownership over two lots is severed Easement ends when necessity ends

Hurlocker Common owner conveys two parcels of land to two different grantees (Medina and Hurlocker) H wants easement by strict necessity over Medina’s land Changed the rule so it’s ok to get easement by strict necessity as long as grantor was the same, not

necessarily a single lot of land divided into two Implication will not be made if it’s shown to be contrary to the parties’ intentions

o Nelson thinks it should be the intent of the grantor and the burdened party

CREATION BY PRESCRIPTIONElements

Actual use – physical presence required Adverse use/state of mind

o If jurisdictions didn’t like easements by prescription they would use claim of right (must believe you had the right to use the land)

o If jurisdictions didn’t care, they would say any non permissive use is adverse O&N/actual notice Continuous and uninterrupted Doesn’t have to be exclusive of TO or other third parties SOL is same as for AP Tacking is allowed

Presumptions Presumption of adverse use

o Puts burden on D to show that use was permissive and not adverseo Policy : maintains the status quoo In a city, TO has burden of proof to prove permissive use

Presumption of permissive useo Puts burden on P to show that use was adverse and not permissiveo Open, unenclosed, rural property

Using the land doesn’t mean you acquire anything Policy : owner of such land is not in a position to detect or prevent others from crossing

over it and might not object bc it doesn’t really affect himo Presumption of permission when adverse user is related by blood or marriage to landowner

Prescriptive Easements AppurtenantPrescriptive Easements in GrossAlternate Theory: Easements by Implied Dedication

Public uses roadway over rural area for years and years and landowner says nothing Landowner has implicitly dedicated the road to the public by allowing use to continue for a long time

Feloney v. Baye F claims he has the right to use the driveway by prescription He’s only used it for 6 years and SOL is 10 Court determines there was a presumption of permission for using your neighbor’s land to turn around Policy: prescriptive easements not favored bc they reward trespassers

Swope (AK Case) Swopes put sign on trail telling people to keep out Trails Coalition brings action to have trail deemed as public easement by prescription Trails Coalition represents the public – it doesn’t have to be continuous use by that organization Court finds easement by prescription exists

Not adverse use, just an indication of intent by landowner to dedicate the road to the public Gion v. City of Santa Cruz

Public goes across Gion’s land to get to the ocean and Gion didn’t do anything about it Government paid for a parking lot over part of it Court held that Gion, by watching and not doing anything, implicitly dedicated easement in the property

to the public CA Statutes negate Gion – can’t have an implied dedication unless you make it express

SCOPE AND INTERPRETATION Delineates the extent of use an easement holder may make of servient estate Surcharge occurs if scope of easement is violated in any way Any easement is capable of being expanded by prescription

Location Must be identified and described at its inception Must remain within located easement or it’s a trespass Expressly located terms of grant or reservation control Implied from prior use/prescription location fixed by use made at severance of start of prescription

period Implied by necessity must be physically located after easement is recognized

Intensity of Use Easement holder can use easement as long as use is reasonably necessary and does not overburden servient

estate Stresses the original parties’ intent Evolves to accommodate reasonably foreseeable changes

Express Appurtenant First look to the language of the easement Evolutionary change (horsetrailercar) not a surcharge bc court presumes there will be a change in the

use of the dominant estate over the yearso Unless you can show it will be revolutionary/substantial change then you have to deal with it

Glom on ruleo Easement granted for one purpose for a dominant estate cannot be used for an additional purpose

or estateBrown v. Voss

P had easement over D’s land Lot A to their Lot B P bought Lot C and decided to build a house over B and C D freaked out and said they couldn’t use the easement P violated the glom on rule but court said it was ok P didn’t change the purpose of the estate and D waited a long time to bring suit

Cameron v. Barton Two issues

o Use of easement changed with techo Use of dominant estate changed

“Passway” is very general term so parties should have foreseen tech changes Unless easement expressly said no one foresees a change, etc etc

Implied Appurtenant No written document and not very likely to occur

Frisco Case Court assumes implied easement Looks at how it was used in the past and whether new use will create surcharge

Easements by Prescription No writing unless someone has gone to court to establish prescription in the past Two issues

o Try to get testimony looking back about how the easement was used when it might have come into being by prescription

o Does the current use surcharge it?MA Case

Pool family had prescriptive easement connecting them to main roadway Started increasing use of the roadway Court determines how Pools originally used it, assumed it was a valid easement by prescription, and

looked at all the changes If revolutionary change goes on long enough, it can expand the easement by prescription

VIOLATIONS (in gross)Assignability

Easement can be gifted, sold, devised, or otherwise conveyed Easements appurtenant run with the land

o Person conveying dominant estate loses easement right to grantee

o Servient estate remains burdened no matter who owns the servient estateo Implicitly assigned with dominant estate regardless of whether or not the deed mentioned it

Commercial easements in gross are always assignable Personal easements in gross are not assignable (unless circumstances or the doc creating the easement

expressly say it is assignable)Divisibility and Apportionment

Original easement holder transfers some rights to third party Look at substantial increase in overall burden Exclusive easements: easement holder has sole right to use easement and sole power to authorize others to

use ito May permit others to use the easement as long as the total burden on the servient estate does not

amount to surcharge or misuse of easement Nonexclusive easements: easement holder has right to use easement but servient owner can authorize

others to use ito Servient owner retains power to decide how many persons can use the easement

Pasadena Case Pasadena installed water pipes in their easement Fee owner grants easement in the same space to D Court holds D’s pipes can go in because it’s nonexclusive so grantor had the right to devise Landowner may make any use of the land which does not interfere unreasonably with easement

MPM v. Dwyer Unless expressly denied by the terms of the easement, servient owner can go to court to force relocation as

long as such relocation would not materially increase the cost or inconvenience the easement holder’s use Goes against majority rule

TERMINATING EASEMENTSMerging

Two separate owners of Lot 1 and Lot 2 (with easement from 1 to 2) both convey land to A A has merged the land so the easement disappears If A conveys Lot 1 to B with no mention of easement, B gets no easement If A conveys Lot 1 to B and mentions the easement, B gets an easement bc it’s renewed If A conveys Lot 2 and doesn’t reserve the easement for himself, would have to show implied easement by

reservation (which is hard)William Bros v. Peck

D owned Lot 1, S owned Lot 2 (express easement over S for cranberry bog) and both deeded land to Edgewood

Edgewood has no easement bc you can’t have an easement in your own land Edgewood conveys S Lot to WB and D lot to Peck Peck gets torrens certificate of title that says Peck owns land in FSA together with the easement WB not subject to easement bc merger destroyed the easement before Peck got title Torrens office shouldn’t have recognized the easement bc the merger doctrine trumps everything

Abandonment Nonuse + affirmative action + some sort of intent

Estoppel to Assert Ricenbaw = estoppel to revoke S owner blocks easement and relies on D owner’s failure to act or statement of approval to his detriment D owner may or may not have intent to abandon but court might say D is estopped to assert the easement Doesn’t necessarily destroy the easement (but as a practical matter it does)

Easement by Prescription

Hickerson v. Bender H had appurtenant easement over B’s land B claims H’s predecessors abandoned but they could only prove nonuse which wasn’t enough BUT H’s predecessors failed to object to obstruction so it’s clearly conduct that’s inconsistent with use

of the easement Court says doing nothing is conduct AND there was AP so easement was terminated

Railbanking and Rails to Trails RR giving up their right of way easements Landowners say RR abandoned easement and can’t convey it Rails to Trails Act

o Interim use as hiking trails not to be treated as abandonment of the easement for RR purposeso Federal statute takes away a state property right the landowner otherwise would have hado Constitutes a taking under the 5th A for which there must be just compensation

When servient land comes under eminent domain (like for RR use) and is then used for an inconsistent purpose, the easement is terminated

Nordhus Family Trust Union Pacific gave up easement then conveyed interest to Trails people Underlying landowners wanted compensation Court determines the possible reactivation of RR use is not enough to constitute RR use within the scope

of the easement

SALE AND FINANCING OF REAL ESTATECONTRACT OF SALEStatute of FraudsWriting

Only needs to include essential termso ID of partieso Description of land to be soldo Words indicating that sale is intendedo Price should be stated (spell out financing agreement)o Assume price will be paid in cash if no evidence to the contraryo Assume closing is in reasonable amount of timeo Description of land can be tricky

Street addresses are usually fine but they can be ambiguous Don’t need

o Date and place of closingo Provisions for apportionment of property taxeso Statement of the type of deedo Notarized acknowledgemento Signature of witnesses

Oral Contract/Partially Written Contract Once you close on an earnest money contract that violates SoF, you can’t undo the whole transaction- it’s

over If earnest money contract is entirely oral, it’s not enforceable BUT Buyer can get his money back (restitution) so to that extent the law recognizes that there is a contract

Part Performance Can allow enforcement with no writing Payment of all or part of purchase price Going into possession of the realty Making substantial improvements Some courts say acts must point unequivocally to contracts for the sale of land

Burns v. McCormick Come live with me on the farm, take care of me till I die, the land will be yours Purchase price = care until death Purchaser seeks specific performance Seller defends via SoF – didn’t unequivocally refer to sale of land Burns tried to show that he relied to his detriment on the agreement

Johnston v. Curtis Valid earnest money contract in writing to sell a house Problem is that modification to contract has to be in writing also Parties agreed to oral modification of purchase price after appraisal Part performance:

o Buyer moved ino Made a payment to the seller

Buyer can recover 10k – difference in sales price with J and what it actually sold forUSE OF DEEDSBryant v. Clark

15 annual installments as balanced at 6% Court says it violates SoF bc it doesn’t specify when and the amount of each installment so it’s

unenforceableTypes of Deeds

Consideration required for enforceable earnest money contract Consideration not required for valid deed bc deed is conveyance, not contract

Warranty Deeds Most common Puts grantor’s personal liability on the line Warrants the deed for himself and all his predecessors Provides the most protection for grantees (assuming grantor has money) “Conveys and warrants” or “grants, conveys, and warrants” Can list encumbrances as exceptions the warranties do not cover

Limited Warranty Deed Grant deed in CA (only contains present covenants) “Bargains, sells, and conveys” “Free from encumbrances done or suffered by grantor”

o Only warranting that grantor hasn’t screwed up titleo Grantor only liable for things he dido Warranty doesn’t extend backwards

Quitclaim Deed Grantor conveying to grantee everything he has but doesn’t warrant anything Government always uses quitclaim deeds

Chase Federal v. Schreiber Old lady conveys deed to conman

o Consideration = love and affection Heirs argue there was no consideration so it’s not valid

o “Love and affection” is only valid consideration between two related parties This case changes the law to say you don’t need consideration at all for a deed Good for charities bc they get land conveyed as gifts all the time

USE OF ESCROWSEarnest Money Contract

Contract in interim period (30-90 days) before closing Preliminary title report: if deal closes, this is the state of title that buyer will get Provision for financing

o Closing contingent on buyer being able to acquire certain type of financingo Buyer can waive financing contingency but if you wind up not getting financing then you’ve

breached the contract and you lose your earnest money

At closing, right of possession and legal title passes to the buyer and the deed is deliveredEscrow

Parties agree to turn over all docs to escrow company Delivery of deed by grantor to independent third party with instructions that it be delivered to the grantee

upon the occurrence of certain stated conditions At closing, escrow company handles payments, delivery of deeds, recording of deeds Grantee pays escrow agent remainder of cash purchase price Escrow agent distributes funds appropriately Policy

o Places person with expertise in the role of carrying out all the necessary sale functionso Avoids inconveniences of face to face closingo Easy way to make sure seller’s title remains clear

Escrow can have relation back featureo Ultimate delivery to grantee can relate back to date grantor places the deed in escrowo Will be valid regardless of grantor’s intervening death or incompetence

SoF considerations – presence of escrow may make the contract enforceableREMEDIES AND REAL ESTATE CONTRACTS

Restitution: return innocent party to status before contract was executed Compensatory: recompense the injured claimant for losses due to breach Performance: effect a result, essentially other than in terms of monetary reparation, so that the innocent

party is placed in the position of having had the contract performed Abatement: buyer asks court to force seller to convey property for less money if property doesn’t have

marketable title over part of itRemedies for Buyer

Seller fails to provide marketable title Damages: loss of bargain rule

o Difference between contract price and actual FMV as of the date of breacho Determining FMV

If seller has agreed to sell to someone else, that price is evidence of FMV Buyer wants to prove property is worth more than contract price

o Traditionally courts measure market value as of the date of the breach Specific performance: seeking order from the court to perform under the contract

o Court can sign deed for nonperforming party that refuseso Equitable remedy bc courts believe that every piece of land is unique/special so remedy at law is

inadequateDonovan v. Bachstadt

Split of authority for when seller is unable to convey marketable title (innocent seller) English Rule: seller not liable for loss of bargain damages

o Buyer is only entitled to return of earnest money American (majority) Rule: seller liable for loss of bargain damages

o Not the buyer’s fault the title was bad Here the court holds buyer will get loss of bargain damages – difference between contract price and FMV

Schwinder v. Austin Bank P was entitled to specific performance bc remedy at law was inadequate P showed they were ready, willing, and able to close the contract but D prevented them from doing so

Remedies for Seller Earnest money

o Assuming valid earnest money contract, seller is allowed to take earnest money but cannot also sue for damages

o Buyer sometimes adds language to EMC saying it is in lieu of all other remedies for sellero Buyer basically owns an option and can walk away and only lose EMC

Loss of bargain rule for damageso Difference between contract price and FMV at the time of breach

o Problematic bc seller needs to prove their house is worth less than the contract price to get damages

Specific performanceo Pretty much just amounts to payment of the purchase price

CONCEPT OF MARKETABLE TITLE Every state has recording office to help buyers determine if they are getting good title Seller promises that title is marketable aka free from reasonable doubt Marketability of title is implied in every contract unless parties expressly provide for otherwise If title is not marketable, it’s a breach by seller and buyer can either get EM back with certain add ons or

sue for damages or specific performance with abatement for value of defect Marketability is main protection buyer has before deal closes Once deal is closed, buyer loses ability to assert title as not marketable (bc he’s accepted it)

Defects Break in the chain of title

o US->Jones…GoodwinLaneNelsono No deed from Jones to Goodwin so nothing to be conveyed to Nelson bc nothing was ever

conveyed from Goodwin to Laneo Goodwin or Lane could establish possession by APo Most states say break in the chain cannot be cured by AP UNLESS you bring everyone into court

to make them a party to the action Unmarketable titles can still be good title

o In most breaks in the chain, title is still good, it’s just missing a deed somewhereo Deed still existed, so you just have to prove it

Marketable titles can be bad if any deed was forged Encumbrances rendering title unmarketable

o Easement o Unsatisfied/existing mortgage or deed of trust o Restrictive covenants (third party claim against the land)o Unpaid taxes (gives sovereign a lien)o Judgment lieno Physical encroachment on (neighboring) land

Buyer can’t get out of contract simply bc he found encumbrances if seller is capable of curing or paying encumbrances before closing OR at closing with money from the sale

Presence of zoning does not render title unmarketable unless there is a current violation of the zoning lawHaisfield v. Lape

H buying land from L Day before closing, H finds that there is restrictive covenant on the land H claims that makes the title unmarketable and wants L to cure the defect Court holds that title is unmarketable and L is in breach

INTRO TO MORTGAGE FINANCING Transfer by debtor/mortgagor to creditor/mortgagee of a real estate interest, to be held as security for the

performance of an obligation which normally is the payment of a debt evidenced by a promissory noteHistory/TypesBalloon Mortgage

Short term mortgage with MR only making interest payments until loan came due If MR could not pay off entire principal, MR had to ask lender to renew the loan or attempt to refinance

with another lender Due on sale clauses: if MR transfers interest, lender can accelerate mortgage so it’s all due

Amortized Mortgage Allows MR to repay loans over many years by making monthly principal and interest payments Monthly payment is set so that only a portion is needed to cover the interest that has accrued since the last

preceding payment Remainder of each monthly payment applied toward outstanding principal balance Interest that accrues each month will be less than the interest in the preceding month

Adjustable Rate Mortgage Permits modification of interest rate during the life of the loan Connects interest rate to external index

Different Actors Originators

o Deals with borrowero Bankso Thriftso Mortgage broker takes your financial info and finds you a lendero Mortgage banker borrows a lot of money short term from banks

Secondary marketso Quasi-governmentalo Fannie Mae and Freddie Maco Preferential rates when borrowing from federal reserveo Securitizers

InsurersForeclosureStrict Foreclosure

No public sale of real estate If you pay off the mortgage, you keep your house If you don’t, you lose it Lenders put in a clause saying “borrower waives right to equity of redemption/right to foreclosure” But foreclosure is debtor’s right so these clauses were invalid clogs CT and VT are the only states that use strict foreclosure

o You have a right to be foreclosed but when the court sets a due date and the borrower doesn’t come up with the money, there is no saving them

Foreclosure by Sale MR gives mortgage to E1 (Chase) for 300k Secured by promissory note/obligation + written mortgage documents Every mortgage contains an acceleration clause

o If borrower misses X number of payments, lender has a right to accelerate the debt so the full amount becomes due

o Under common law, debtor has to tender full accelerated amount to avoid foreclosure Chase forecloses by sale Highest bidder at purchase sale is 225k (shouldn’t bid more than FMV if he wants to get his money’s

worth) MR still owes Chase 75k

o Chase can sue MR for deficiency judgment of the last 75k if MR is good for it and is personally liable

In CA, for 1-4 family dwelling with purchase money mortgages (non recourse aka no personal liability), MR can walk away if property goes underwater bc there is no personal liability - but it will hurt their credit rating

If purchaser had paid 325k, surplus would go to debtorJudicial Foreclosure by Sale

Valid in every state, but only active in about 40% Risk is that it could end up in full blown litigation which could take a while and debtor could continue to

live in house without having to pay for anything CA says you can’t get deficiency judgments unless you foreclose judicially

Power of Sale Foreclosure Active in about 60% of states In CA, also applies to deed of trust

o MRtrusteelender Lenders like this bc there is no right to judicial foreclosure so it’s much shorter from default to sale (6

months or so)

Junior Mortgages Purchaser gets property free of junior mortgages bc valid foreclosure of senior mortgage will wipe out

junior mortgages Junior lenders require higher interest rates bc it is a riskier investment on their part MR gives 300k mortgage to E1 (Chase) which foreclosed and P bought MR also gave E2 a 75k loan Two purposes of foreclosure:

o Get debt paido Put purchaser into shoes of MR as of the period before foreclosure was executed

P shouldn’t pay more than FMV without mortgages If it’s a purchase money loan, E2 can’t get a deficiency judgment BUT if it’s not a purchase money loan and the loan has to do with something other than the purchase of

property, there is recourse – E2 can sue debtor If E2 forecloses first

o Want to put P in shoes of MR before foreclosed mortgage was createdo E1 mortgage was already on property so P should not pay more than FMV less the amount of the

senior mortgage Senior lender has advantage over other Ps at sale bc all other Ps have to be cash buyer

o Lenders can be full credit bidders bc they already came up with the cash when they gave the mortgage

Junior lenders have a claim on surplus from sale of senior lendersPost Foreclosure Remedy for Debtor

Available for 6-12 months after foreclosure in about half the states Mortgage foreclosed, borrower still in possession Borrower can tender to P what P paid at the sale plus accruing interest and taxes

Mechanic’s Lien Anyone who works on real estate to improve it and is not paid has the right to file a mechanic’s lien in the

recorder’s office Payment to general contractor not deemed to be payment to subs

o So if GC doesn’t pay subs, homeowner wouldn’t knowo Homeowner should insist the GC supply lien waivers from all subs

Mechanic has from the date of last work to 3-6 months to file the claim Lien claimant still has time to file claim if you close on a house within the time frame above Becomes problematic when you’re purchasing a new development

RECORDING ACTS Recording is unnecessary as to the validity of the deed (and mortgage) Deed is effective on delivery to grantee, whether filed in public records or not If you don’t record, SP could take title to it SP must pay present value to have protection of recording acts Present value is somewhere between a gift and FMV

Race Recording Statutes NC, LA, DE Whoever records first, wins Very efficient, less to litigate SP just has to pay value and record first

Notice Statutes Focus on fairness/morality – it should make a difference what SP’s state of mind is Leads to more litigation For SP to win, must be BFP for value

o Must pay value and take without notice of prior taker A is unrecorded, B is BFP (paid value and did not constructively or actually know about A) B wins even if he never records and A eventually does B should record though, so the same thing doesn’t happen to him

Paying Value

Excludes mere donees of gifts Recipient of land must give something up in return Value ought to be paid contemporaneously or subsequent to conveyance Timing of payment can be important

o Must have no notice of prior unrecorded instrument at the time the value is paido More complicated with installment contract sale

Notice Actual knowledge of prior taker Constructive notice sometimes applies There are some prior unrecorded interests that cannot be defeated by the recording acts (protected classes) SP is deemed to know about protected classes whether or not they really did know Adverse possessors

o Never record, don’t have to record in order to be protected against SPo If they are in the process of satisfying the elements of AP, that puts SP on notice

There are interests in land that are recognized by law but don’t require written documentso Possible for AP to complete possession, vacate the land (so there’s no notice) and still prevail over

BFP SPo Easements by prescription

Puts TO and SP on notice Doesn’t need to record and can still be used against SP

o Implied easements Needs to be apparent at the time of the split (but see Otero)

o Mechanic’s liens Mechanic just has to record a lien claim and doesn’t have to go to court

Notice-Race Statutes (CA) Focus on fairness/morality – it should make a difference what SP’s state of mind is Leads to more litigation For SP to win, must be BFP If A records before B, B loses even if he is BFP

Mortgage Hypo MR gives mortgage to E1 and it’s unrecorded MR borrows 50k from E2 To trump E1 in CA, E2 has to pay present value (and it has, by advancing 50k)

o No actual or constructive notice of E1o And E2 records so now E2 is E1

When E2 took delivery of its interest, it had no notice of E1Judgment Lien Creditor

States split evenly over whether judgment lien creditor is protected by recording acts When judgment is recorded in any county where debtor has real estate, it becomes a lien on that real estate

at the time it’s recorded MR gives 300k to E1 that’s unrecorded MR gives 40k to JL 50% states hold that JL did not pay present value If there is an execution sale and P is BFP (paid present value) it cuts off E1 if he hasn’t recorded before the

sale or if P doesn’t know about E1 In CA, JL gets benefit of recording acts if they record it (deemed to have present value even though it’s an

antecedent debt)DEED COVENANTS

Come into play when real estate transaction has closed and the deed is delivered but the title is determined to be deficient after closing

Eviction can be constructive or actualFuture and Present CovenantsPresent Covenants

CA present covenant SOL is 6 years from the date of the delivery of deed

Only P’s immediate grantor can be sued Covenant of seisin: promise by grantor that he owns the land although not necessarily free from

encumbrances Right to convey: usually overlaps with covenant of seisin Covenant against encumbrances: promise that title is passing free of mortgages, liens, easements, future

interests in others, covenants running with the land Breach of covenant occurs, if at all, at the time the deed is delivered SOL commences at the time of delivery

Future Covenants Any predecessor in title can be sued Warranty and quiet enjoyment: promise by grantor to compensate grantee if title turns out to be defective or

subject to an encumbrance and the grantee thereby suffers an eviction Further assurances: promise by grantor to execute such future docs as may be needed to perfect grantee’s

title Future covenants run with the land

o Can only be breached by an evictiono Eviction can be constructive or actual

Hypos One

o A gives warranty deed to B, B gives warranty deed to Co C loses title to part of the land through AP or easement or something that renders title defectiveo Under present covenant, C has no recovery against A, only against Bo If given the choice, should sue deeper pockets

Twoo A conveys by warranty deed to B for 100ko B conveys by quitclaim to C for 150k o C conveys to D for 200ko D properly evictedo D cannot sue B bc B has no liability for the titleo D can sue A (remote grantor) on future covenantso Purchase price of A’s deed is the most that can be recovered from A even though the value

increased o D can recover attorney’s fees on future covenants

Brown v. Lober Lober conveys warranty deed to Brown Brown enters contract with coal company but it turns out he only owns 1/3 of the coal Brown sues Lober on the covenant of seisin (Lober didn’t have good title to 2/3 of the coal) 10 year SOL on present covenant had already run so Brown was SOL Then Brown wanted to sue on covenant of warranty or quiet enjoyment bc SOL wouldn’t run until there

had been an eviction (and he’s arguing constructive eviction) The court says that’s BS, there’s no eviction

TORRENS SYSTEM AND TITLE INSURANCETorrens System

MA, IL, CO, MN, and others Purchaser could rely on government for soundness of title Master torrens certificate stays in recorder’s office Nonconsensual liens can be put on the certificate of title without owner’s involvement

o Mechanic’s lieno Judgment lien

Mortgage is a consensual lien so both docs go to the torrens office and the torrens office makes a note on the master certificate

Title Insurance TI’s policy is insurer’s promise that, if the title is not in the condition described by the policy on its

effective date, the insurer will attempt to fix the problem or will indemnify the insured for the resulting loss

Secondary market won’t purchase titles without TI, even in torrens system So a lot of properties are torrens + TI (which gets expensive) Lenders always require title insurance If sold on the secondary market, TI goes along with the sale Involved in every land transaction in CA

Owner’s Policies Not issued as frequently May be paid for by buyer or by seller (more common in West) Generally not assignable

Lender’s Policies More significant economically Secondary markets of financial institutions and mortgage securitizers insist on TI Provides a standardized nationwide means of assuring title Borrower pays premium for policy Fewer exceptions and encompasses broader range of risks Required when buyer will have outside financing Insure everything in the owner’s policy PLUS the priority of the lien Assures the lender that the mortgage it is receiving will have senior status Purchasers on secondary market have the benefit of the lender’s policy Generally assignable

Exceptions General exclusions tend to be put in every policy Schedule B exceptions

o Contained in prelim title report and based on TI’s individual examination of title that the purchaser is about to acquire

o If no one objects, they’ll be in Schedule Bo Depends on specific property in question

CC&Rs (restrictive covenants)o Most people don’t object to title based on CC&Rs because they’re expectedo Have to go through them to see if there’s anything special in there that would make you not want

to purchase the property Objections always go through escrow

TI Obligations TI company has the option to cure the defect once they’re sued If you’re displaced from your real estate, they pay you the full policy amount Most common defects

o Mechanic’s liens bc if they insure against them but the lien is recorded after the policy is issued, that sucks

o Plant search errorso Forgerieso Missing property taxes

New AdditionsLost Grant Theory for Prescriptive Easements

V unpopular Can compare PE to AP or can use lost grant theory Creates a legal fiction Assumes that in theory, in the past, the person using the land had a writing that gave him the right

to use the land but now the writing is gone If underlying owner protests to use bc the writing is gone, it just enhances the notion that use is

adverseEvidentiary Theory and Estoppel by Reliance Theory of Part Performance

Evidentiary theory

o Need to provide evidence for the 3 acts of part performance (payment, possession, improvements)

o Some courts need 2/3 some need all 3o Either party can use acts of performance to their advantageo If SOF is meant to serve as needing writing to evidence the contract, then other forms of

evidence should suffice Estoppel by reliance theory

o Acts of detrimental reliance carried out by party seeking enforcemento Acts of detrimental reliance by seller

Moved out of house and bought another one Unique modifications to satisfy buyer

o Broad range of actions could constitute reasonable reliancePresumption of Permission courts find EbyE or Irrevocable LicensePresumption of Hostility courts find APDisabling Restraints and Forfeiture Restraints in Leases

Disabling: lease is void or terminated if assignment/sublet occurs without permission Not being void or terminated and being limited in scope (like only for assignment, not sublease)

indicate forfeiture restraint Court interprets in favor of alienability

Acceleration Clause and Anticipatory Repudiation Under acceleration clause, premises have to be left open for T

o Can sue for all damages/rental value that T owes up front If not, rely on AR

o Repudiation of lease implies T not going to comply with lease termsDuty to Mitigate

Can’t make sweetheart deals (renting out to friends and family for a reduced price) Can’t treat the property negatively Penalties for not mitigating

o Might not be able to recover at allo Court awards difference in what reasonable mitigation WOULD have brought vs. what

they got If L does nothing,

o Must leave premises as is o May not lease it out

If L rents it out for same price or higher:o Sues T for unpaid rent until new T found

If L sues out for less than original rento Sue T for difference in rent + unpaid rent

Surrender Used if L not going to bring an action to recover against T Rejecting surrender

o Send letter to T stating surrender is rejected and that any action taken is on T’s behalfo Send to last known address to put T on notice

If L enters premise and changes them in any way without sending letter, it would look like an acceptance of surrender

Abandonment of Easement Can be express or implied Implied abandonment requires unequivocal acts which show an intent to abandon Silence + any number of acts (blocking the easement, establishing another easement elsewhere,

failing to maintain the easement) can evidence abandonment

Abandoned easement returns to the SOEasement Surcharge

Look at purpose and quantityEasement by Estoppel or Irrevocable License

With reliance and consistent use, party can acquire easement or license that is essentially irrevocable

Doctrine of Equitable ConversionBuying and Selling Property

Execute an earnest money contract when buying property Equitable conversion

o Seller signs contract, seller’s interests converts to personal property in the right to receive the purchase price as the major interest

o When buyer signs contract, buyer gets equitable titleo Seller’s title converts to legal title when buyer signs

Buyer puts up 5% of purchase price to show they are earnest Executory period occurs where buyer does diligence Closing

o Buyer receives deed conveying all seller’s interest to buyer so buyer gets legal and equitable titleo Seller gets paid in fullo Buyer gets financing from some lender and delivers mortgage to lender