Ch. 7 The Property System

What is property?

legal right to exclude others from resources that are originally possessed or acquired without force, theft, or fraud

property is absolute but not ___

infinite

Bundle of Rights

1. right to exclude

2. right to possess

3. right to use

4. right to sell

5. right to control

6. right to gain income

property is the foundation of the ____

free (private) market

Private Property System

state recognizes and enforces an individual’s right to acquire, possess, use, and transfer scarce resources

If the goal is to increase the amount of limited resources, which framework is better?

private property system

Real Property

land and interest in land (includes buildings)

Personal Property

all moveable resources

Tangible Property

things one can touch

Intangible Property

nonphysical things such as intellectual property

Defining land

land ownership consists of more than the surface of the property

Air Rights

owner of real property possesses the air above the land to the extent that you can use and occupy that space

Subsurface Rights

landowner ownes the liquids, gases, rocks, and minerals beneath the land

Rule of Capture

if the materials originate on another property and naturally flow to your property, you are allowed to take it out and capture it

Using machinery to pull resource’s from a neighbor’s land is okay, as long as the machine doesn’t physically touch the other property (physical trespass)

True

Fixture

moveable objects that have been attached to the real property, and becomes one with it

Fee Simple Estate

maximum estate allowed under law

Fee Simple Absolute

gives property with no condition

Fee Simple Defeasible

giving property but attaching conditions on it

Life Estate

grants an ownership in land for the lifetime of a specified person

Reversion Interest

if the land reverts to the original grantor upon the death of the grantee

Remainder Interest

if the property goes to someone other than the original grantor upon the grantee’s death

Future Interests

reversion and remainder property interests

Life Estate Holder is entitled to

the full use and full enjoyment of the property (includes rights to rent/profit)

Life Estate holder is responsible for

property taxes and upkeep (i.e. repairs)

Leasehold Estate

property rights granted to tenants by a landlord

can’t waste the land/reduce the value

Concurrent Ownership

more than one person owns the property

Joint Tenancy

must be equal, rights of survivorship, can be partitioned

Tenancy in Common

can have different shares, no rights of survivorship, can be partitioned

Easements

right of someone other than the owner to cross over land or use the land

Natural Easement

when you buy a land that is landlocked

Negative Easement

when you are asking the adjacent land owner to not to anything on their property that would negatively impact your property

Easement by Prescription

you have to use their land openly, wrongfully, and continuously

Bailments

goods placed into another’s possession to be returned in the future

Bailor

owner of the personal property

Bailee

temporary possessor of the object

Key Question for Bailments

Is the possession intentional?

for the sole benefit of the bailor

slight duty of care

mutually beneficial

reasonable duty of care

for the sole benefit of the bailee

high duty of care

Contract Rules

control the way owners make agreements to exchange resources in the property based legal system

Property Acquisition

exchange, possession, adverse possession

Rule of first possession

first person to reduce previously unowned things to possession, becomes their owner

Abandoned Property

first person to reduce abandoned thing to possession owns it

Lost items

finder become owner by reducing item to possession and following a statutory procedure

Mislaid things

must be given to the owner of the premises where the item was mislaid

Adverse Possession

provides ownership of land under state statute when the possession is:

1. open and notorious

2. actual and exclusive

3. continuous

4. wrongful

5. for a prescribed period of time

Difference between easement and adverse possession

easement by prescription: right to USE property for a specific purpose

adverse possession: giving OWNERSHIP to this new person, exclusive element

Confusion

occurs when fungible (identical) goods are mixed together

If confusion occurs by honest mistake:

owners hold a proportional share of the confused goods

What if the confusion was intentionally wrongful?

give 100% of the proceeds to the innocent party

Ask during Confusion: Was there a record kept

a. if yes, split according to what the written records state

b. if not, split equally between all notes

Accession

Something that is added

Law of accession

when people apply efforts to any raw materials and change its nature into finished products, they own the finished products

Gift does not take place until the donor:

intends to make the gift, delivers the gift by physical transfer (keys count as instructed delivery)

Testamentary gift

gift through will, not complete until donor’s death, have to prove it’s a valid will

Title

document registered with the state for certain types of personal property that represents ownership

Deed

document of title that transfers ownership of land

Warranty Deed

promises the grantee that the grantor has good ownership and the full power to convey it

Special/Limited Warranty Deed

limits the liability of the grantor/seller, does not hold the grantor liable for what happened prior to their ownership

Quitclaim Deed

makes no guarantees other than that the grantor surrenders all claim against the land

What happens when a deed is NOT recorded?

How do I know if it was conveyed to you? Attorney will still thin it belongs to the previous owner

Security Deed

pledge of real property to secure repayment of a loan, used in GA

Deed of Trust

similar except that the deed is in favor of a trustee, not used it GA

Land Sales Contract

owner sells land to buyer but retains title until purchase price is paid

Foreclosure

process by which a creditor exercises its secured property interest when the obligation owed to them is not satisfied, usually in the form of a public sale

Deficieny

balance owed by the debtor to the creditor

Right of Redemption

allows mortgager to get back land upon payment of the full amount of the debt, including all interest and costs

artisan’s lien

arises when someone contributes parts/services to personal property and is not paid

mechanic’s lien

arises when someone contributes materials/services to real property and is not paid

Public Nuisance

arises from use of land that causes inconvenience or damage to the public

Private Nuisance

unreasonable use of one’s property to cause substantial interference with the enjoyment or use of another’s land

What is a variance?

Something that is going to allow you to use the land in a way that is not currently permitted by the zoning ordinance

EX: wanting to run a business out of your home

Zoning

i. Laws that divide counties into use districts designated residential, commercial, or industrial

ii. Zoning limits the use to which land can be put to