bus.law L9

Property Laws  -

Define and govern rights and protections related to the ownership of property (real or personal property)

These laws provide for the right of the owner to use, profit from, sell, transfer, protect, alter, abandon, or even destroy the property.

Real Property -

Land and those objects permanently attached to land

Personal Property -

All property which is not real property

Real property

is the land, everything that is attached to the land, and all the rights of ownership, including the right to possess, sell, lease, and enjoy the land.  

can be classified according to it’s general use as residential, commercial, agriculture, industrial, or special purpose.  In order to understand if you have the right to sell your home, you need to know which rights you posses in the property

The 2 most Common Types of ‘Estates in Real Property’ are:

free hold

non-freehold

Freehold -

Those in which there is ownership of the real property.

Non-freehold -

Those that involve the leasing, but not ownership of the real property.

Fixture -

Object permanently attached to land/real property

Deed -

Legal document that provides for and memorializes the conveyance or transfer of property or rights from one person to another.

Title Abstract -

legal document that provides a summary of deeds and other documents that establish the ownership history of real property.  Commonly referred to as a Chain of Title.

Gift –

A property can be gifted to another person

Inherit –

When an heir inherits a property through a will, or probate, it is considered a gift.

Mortgage -

Secured loan on a parcel of real property

Mortgage -

Secured loan on a parcel of real property

Debtor -

Person that owes money

Lease -

Temporary Transfer of a right to possess – but not own – such items as property, goods, and services

Leasing of Property -

These ‘Estates in Real Property’ are not inheritable and exist without any actual ownership of the real property.

landlord

The person that owns real property to be leased

tenant

Person who is leasing from a landlord

Tenancy for Years -

Contrary to the name, the term for this type of tenancy does not have to be in years.  It can be for any number of days, weeks, or years, or any other stated period of time

These agreements must have a definite and fixed duration stated in the lease, after which the agreement automatically terminates.

Periodic Tenancy -

May be known as a period-to-period tenancy

These agreements have an indefinite duration, as the term of the lease renews automatically if neither party notifies the other of the intent to terminate the tenancy.

Tenancy at Will -

Also known as an ‘Estate at Will,’ has no fixed time period, term, or stated duration.

•This type of tenancy remains in place as long as both the landlord and tenant agree and may be terminated at any time – at will – by either party by giving notice to the other.

Tenancy at Sufferance -

Created when a tenant remains in possession of real property beyond the duration specified in the lease agreement without any legal right to do so or consent of the landlord

•Having initially entered and taken possession of property legally and lawfullydifferentiates the tenant from a common trespasser, as a trespasser enters illegallyand remains unlawfully on property

Waste -

The unreasonable or improper use of real property by a person who has legal possession of the property.

Voluntary Waste -

This occurs when the tenant intentionally acts with the result being damage to the property, such as intentionally breaking a window or damaging woodwork.

Example:  Tenant’s son throws a baseball through his bedroom wall creating a hole in the wall.

Permissive Waste -

Exists when a tenant fails to act to prevent damage or harm to the real property, either physically or financially.  The failure to exercise reasonable care is a form of negligence that causes waste.  (Fails to prevent damage)

Example:  Failure of the tenant to report a broken water pipe that then floods the basement and damages a furnace

Ameliorating Waste –

Occurs when a tenant makes unauthorized improvements, renovations, or alterations to the property, even if those changes increase the value.  

Example:  Tenant builds an inground swimming pool.  Property owner may have had plans to build a storage building in the location where the tenant built a swimming pool.

Leases may be Terminated by:

•Performance

•Agreement

•Breach of Contract

•Impossibility of Enforcement

Time of performance -

A lease states when performance occurs and must be followed.

Tender of performance complete and satisfactory –

The duties, responsibilities, and obligations of the landlord and tenant must be fulfilled to have Performance. If they are not, this indicates a Breach of Contract or Breach of the Lease.

Tender of payment –

The Tenant must fulfill their financial responsibility to satisfy the Tender of Payment.

There are 3 factors to determine whether Performance has been Accomplished:

• Time of performance

• Tender of performance complete and satisfactory

• Tender of payment

A Tenant may not commit any of these 3 Wastes:

• voluntary

• permissive

• ameliorating

Novation –

The substitution of a new party for one of the original parties to a contract.

Breach of Lease –

When Tenant or Landlord is not meeting their obligations or responsibilities in the lease.

2 Events that can lead to the Impossibility of Enforcement –

• Destruction of the Property

• Death of Tenant

Destruction of the Property -

If subject matter essential to the    performance of a contract is destroyed through no fault of the parties,    the    Lease is discharged.  The contract cannot be discharged if an event occurs    that can be anticipated.

Death of Tenant -

Contract is impossible to perform if it can be    demonstrated the contract requires the special skill or talent possessed by the deceased or incapacitated person (by tenant, not landlord)

Tangible Personal Property -

A person can physically hold and possess Tangible Property, and in most cases, it can be moved.  This contrasts with real property because real property is fixed and unmovable.

Intangible Personal Property -

An item of individual value that cannot be touched or held

includes any item of worth that is not physical in nature but instead represents something else of value.

In addition to intellectual property, rights exist in such items as stocks, bonds, software programs, telephone services, and utility services like gas and electricity.

mislaid ; intentionally

Personal Property is considered to be ____ if the owner ____ let the property out of their possession with the intent to recover it but later forgets to retrieve it or forgets where it was placed.

lost ; involuntarily and unknowingly

Personal Property is considered to be ______ if the owner has ______ let the property out of their possession and does not know where it is located.

Bailment -

Delivery and transfer of possession, but not the title of another’s personal property (not ownership), under agreement

Bailor -

Person (or party) who delivers and gives up possession, but not the title, of personal property in a bailment

Bailee -

Person (or party) who acquires possession and control over, but not the title (not ownership), of another’s personal property, under agreement.  

To establish a Bailment Relationship Requires 4 Elements:

• Delivery

• Acceptance

• Purpose

• Temporary

Delivery -

The Bailor must deliver the property to the Bailee so they can carry out the activities for which the transfer is being made.  Actual physical delivery is not always necessary.

Acceptance -

The Bailee must knowingly accept delivery of possession and control over the property.

Purpose -

The possession granted to the Bailee must be for some specific purpose

Temporary -

In a Bailment, the possession and control must be Temporary, with the property ultimately being returned to the Bailor.

Delivery and Acceptance of Property can be -

• actual possession

• construction possession

Actual Possession –

Necklace is in my control/possession

Construction Possession –

Necklace is on the deceased

Constructive Possession =

Constructive Custody

Actual Physical Custody=

Physical Possession.

3 Levels of Care to Prevent Loss or Damage to the Property that are commonly used in the legal community:

Solely benefit the Bailor = Low Duty of Care

Solely benefit the Bailee = High Duty of Care

Are beneficial to Both Bailor and Bailee = Reasonable Duty of Care

Solely benefit the Bailor =

Low Duty of Care

Are beneficial to Both Bailor and Bailee =

Reasonable Duty of Care

Gratuitous Bailments

Bailments that solely benefit the Bailor are often called ______, as the Bailee receiving the personal property is in many cases doing something as a favor to the Bailor.

Solely benefit the Bailee =

High Duty of Care

Bailment Solely Benefits the Bailor
Gratuitous Bailments

The Bailee receives no compensation, payment, or other thing of value, and their Duty or Level of Care against loss or damage to the property would therefore be minimal or low

Example:  Mike asks his neighbor Sam if he would allow him to    store his motorcycle in Sam’s shed for the winter for free.  If Sam    agrees, he would have a very Low Duty of Care because there is    no benefit to him.  The Beneficiary of this Bailment is solely    Mike.

#2 Bailment Solely Benefits the Bailee

Bailments that solely benefit the Bailee hold the Bailee to a High or Extraordinary Duty of Care to prevent damage or loss of the personal property.

Example:  If Joe borrows his neighbor Bills’ snowblower and Bill receives no compensation, payment, or other thing of value in exchange, Joe has a High or Extraordinary Duty of Care against any loss or damage to the snowblower.

#3 Bailment Benefits Both
Bailor and Bailee

Bailments that benefit BOTH parties exist when the Bailee receives some form of compensation from the Bailor in exchange for performing some service or thing of value for the Bailor.

•In these cases, the Bailee will be held to a Reasonable Duty of Care.

   Example:  The funeral director (Bailee) is receiving monetary    compensation (a benefit) for providing funeral services, including    visitation hours; and in giving the funeral director possession and    control over the necklace, the family member (Bailor) has    benefited by having the necklace displayed on the decedent for    the funeral services.

Special Bailments -

Require the Bailee to exercise an Extraordinary or high Degree of Care

Common Carriers serve as _____ to take possession and exercise control over the personal property of _____ for the purposes of transportation and delivery to others. 

Bailees; Bailors

Common Carriers have a Reasonable Duty to Protect:

•Passengers

•Property

Strict Liability – sometimes known as Absolute Liability –

that allows these entities to be held liable for any loss or damage to personal property without the need to prove the act that caused the loss or damage was either intentional or negligent.

Insurance -

System to share the risk of loss among a group of people.

Risk -

Prediction concerning potential loss based on knowledge or unknown facts

Insurance Policy –

Contract where a party (the Insured) shifts the risk of financial loss to a Risk Bearer (the Insurance Company) for a fee.  

Policy -

Written Contract of Insurance between the Customer (Insured) and the insurance company (Insurer).

Premium –

Cost for the Insurance

Parties to an Insurance Contract include:

•Insurance Company/Risk Bearer/Insurer

•Customer Purchasing the Insurance/Insured Customer

Underwriter –

Professional who evaluates and analyzes the risks involved in insuring people and assets. Insurance Underwriters establish pricing for accepted Insurable Risks. The term Underwriting means receiving remuneration for the willingness to pay a potential risk.

Insurance Agent

who deals directly with an Insurance Company

Insurance Broker

who operates independently and offers insurance from any one of the numerous insurance companies operating in a particular state

Beneficiary –

Designated person the Insurance Company agrees to pay a certain sum on the policy to when the Insured dies.  

Term Life Insurance Policy -

Insurer assumes the risk of the death of the Insured for a specific time with no cash surrender or value. Term of the policy may be anywhere from 1, 5, or 10 years, or until the Insured reaches the age of 65 or 70.

Whole Life Insurance Policy -

Covers an Insured for life and accumulates a cash surrender value.

Universal Life Insurance Policy -

Combines features of both Whole Life and Term Life Policies.

Commercial Property Insurance -

Protects the funeral home facilities and business property against loss from vandalism, fire, water, and wind damage

Auto Insurance -

Protects the business and staff members in the event of a motor vehicle accident.

General Liability Insurance -

Covers a funeral home in the event a lawsuit or claim is filed alleging personal injury or property damage.

Umbrella Insurance -

Extra insurance that provides protection beyond existing limits and coverages of other policies.

Worker’s Compensation Insurance -

Pays the cost of medical care for funeral establishment employees injured in the workplace or suffering a work-related illness.

Funeral Director’s Professional Liability Insurance -

Professional malpractice insurance is also referred to as Errors and Omissions Insurance.  This pays for providing a legal defense, court costs, and any judgments obtained against a funeral director or a funeral establishment.

Insurance Contract -

An Insurance Policy that follows all the same general rules of a contract. regulated by state

Effective Date -

Date coverage begins on an Insurance Policy, and an insurance company will only process a claim after a formal written policy has been issued

Binder –

A written temporary Insurance Policy

Face Value -

An insurance policy is issued for a stated dollar amount the insurance company will pay for a loss.  In the case of a life insurance policy, it may be known as a death benefit.  The higher the face value of an insurance policy, the higher the premium (cost).

Coinsurance Clause –

Provisions that set limits on the payment for a loss or claim.  Standard in fire insurance, homeowner policies, and health insurance

Incontestability Clause -

Restrict the ability of an insurance company from contesting statements made in an application for insurance after a specified period, such as 2-3 years.

Anti-lapse Clause -

Under this clause, an insured has a grace period to pay the overdue premium before the policy is canceled

Appraisal Clause -

If an insurance company and an insured cannot agree on the amount of a loss covered under a policy, or the value of any property lost, this clause allows for either party to demand an appraisal or estimate prepared by an impartial third-party.

Arbitration Clause -

Provides for disputes between the parties to an insurance policy to resolve the dispute by arbitration instead of a civil claim or lawsuit.

Multiple Insurance Policies -

If an insured has multiple insurance policies covering the same property and the amount of coverage exceeds any loss, many policies require the loss be shared proportionally by all the insurance companies.

Defenses Against Payment to the Insured -

An insurance policy is subject to any defense that can be raised in a contract action, and there are other defenses available specific to an insurance contract, including:

Fraud of Misrepresentation

Lack of an Insurable Interest

Illegal Actions

Fraud of Misrepresentation -

If it can show the policy was obtained by fraud, it may be a valid defense to prevent payment on a claim.

Lack of an Insurable Interest -

If an insurance company can show an insured did not have an insurable interest, it would be an absolute defense to a claim, and the policy would be considered void from the time it was issued.