Property

Adverse possession

• Actual possession

  • Exclusive use, meaning you don’t allow others into the possessed area

    • Contrast this with easements by prescription, where the use does not have to be exclusive

  • Actual physical occupancy

  • Leasing by adverse possessor to a tenant satisfies this

• Open and notorious and visible

  • Use the property in a way the true owner would

  • Sufficient to put the true owner on notice if the true owner were to investigate, but true owner need not actually know or see anything

• Hostile

  • Without actual owner’s consent

  • No requirement that the adverse possessor think he is on his own land, or think he is trespassing, or know anything about boundaries

  • With co-tenants, adverse possessor must oust the co-tenant

• Continuous for the statutory time

  • Common law = 20 years; most states now = 15 years

  • If true owner enters or regains possession, time period resets

  • Seasonal use will qualify so long as that’s how the true owner would use the land

  • Tacking of time between adverse possessors is allowed, provided they are in privity (oral transfer is fine for this)

    • Note that the allowance for tacking does not mean that a single adverse possessor can aggregate periods of possession separated by periods of absence; a single adverse possessor must have possession continuously for the statutory duration

For the bar exam, title acquired by adverse possession is unmarketable

Mortgages—equitable subrogation

• A person other than a mortgagor who pays off a mortgage can step into the shoes of the now-paid-off mortgagee

Zoning—variance

Factors to consider in granting the variance:

• Whether P will suffer a hardship without the variance

• Whether variance will harm or damage the neighborhood

• Whether P is at fault or a bad actor

Possession before foreclosure

• Mortgagees may take possession of the property ahead of foreclosure if the jx follows a title theory

  • Mortgagees in possession can intercept rents, etc., but must account for rents and have tort liability

  • Alternatively, mortgagees can try to get the court to appoint a receiver. Must show:

    • Waste is occurring

    • Value of property inadequate to secure the debt

    • Mortgagor is insolvent

Mortgages—transfer by mortgagee (lender)

• Note can get transferred without mortgage, but the mortgage will automatically follow the note

• Methods by which to transfer the note

  • Indorse and deliver to transferee

  • Via a separate document of assignment

    • This route allows you to become a “holder in due course,” provided that:

      • Note must be negotiable in form (to bearer, or to the order of)

      • Original note must be indorsed by named payee

      • Original note must be delivered to transferee

        • Photocopies are not acceptable

      • Transferee must take note in good faith and must pay value for it

    • Holder in due course takes not free of personal defenses but is still subject to “real” defenses

Mortgages—transfer by mortgagor (debtor)

• If grantee signs an assumption agreement

  • At this point, grantee becomes primarily liable and original mortgagor becomes secondarily liable as a surety

• If grantee does not sign assumption agreement

  • Grantee does not became personally liable and mortgagor remains primarily and personally liable

• Due-on-sale clauses

  • These allow the mortgagee to demand full payment of the loan if mortgagor transfers any interest in the property without the lender’s consent

  • These are generally enforceable

Foreclosure—redemptions

• Redemption in equity

  • Any time prior to foreclosure, mortgagor has right to redeem the land, freeing it from the mortgage, by paying the full amount due plus any accrued interest

  • This right cannot be waived in the mortgage itself but can be waived later for consideration

• Statutory redemption

  • Many states give mortgagors the right to redeem for some fixed period of time after the foreclosure

  • Amount to be paid is sale price

Foreclosure—acceleration

• If an acceleration clause is present, upon default the mortgagee can make the entire amount due and payable

Equitable conversion

• Once contract is signed, the buyer is deemed the owner, even if closing has not yet occurred

  • This means that the buyer assumes the risk of loss after signing

Common-interest developments—types of restraints

• If the restrictions are authorized by governing docs:

  • Must have some rational justification

• If the restrictions are not authorized by the governing docs and are just a product of the board

  • The restrictions must be “reasonable” where “reasonable” means that they protect common property

Common-interest development—methods of enforcement

• Fines, penalties, and late fees

• Withdrawing privileges to use recreational or social facilities

• Requiring prior submission of plans

• Conducting reasonable inspections where a reasonable belief of violation exits

• Denying voting privileges on board positions

Condominiums vs. cooperatives

• Cooperative

  • Ownership: A coop corporations owns all lands and buildings

  • Tenants lease their properties from the corporation

    • This means that the corporation make use of restrictions on assignments and sub-leases to restrict transfers of interests

    • But… tenants also own shares in the corporation

  • Mortgages: Any mortgage is held by the coop corporation and individuals are not personally liable on the mortgage

• Condominiums

  • Ownership: Each tenant owns the interior of their individual unit and holds a common interest in the exterior and common elements

    • This means that condo ownership is fee ownership and the usual rule against restrictions on alienations applies

  • Mortgages: Any mortgage is held by individuals and individuals are personally liable on their mortgages

  • HOAs: each condo owner is a member of the HOA

Zoning

• Cumulative zoning: creates a hierarchy of uses; if you can use land for purpose X, you can use land for X and for all higher purposes

• Non-cumulative zoning: if you can use land for purpose X, you can use it for X and for no other purpose

Zoning—non-conforming use

• If a use exists at the time a zoning ordinance passes, but is against the ordinance, it is grandfathered in as a “nonconforming use”

Bona fide purchasers (for recording statute purposes)

• Takes for value

• Without notice

If either of these are not met, then the purchaser is not a BFP and then they are not protected by the recording statute, so then the traditional first-to-record rule applies.

Examples of parties that are not BFPs:

• Judgment creditors

• Donees, heirs, devisees

Security interests—creditor priority

• Earliest mortgage to record is the most senior mortgage

• PMM has priority over any mortgage or lien that arose before it

• Vendor (i.e., seller) PMM vs. third-party PMM

  • Vendor PMM has priority

• Third-party PMM vs. third-party PMM

  • Chronological (later-in-time PMMs lose to earlier-in-time PMMs)

• Modifications to senior mortgages

  • These become junior to junior interests as to the modification

Note: foreclosure extinguishes junior interests but does not affect senior interests

Marshaling

• When a mortgage interest covers multiple parcels, the junior interest may ask for an order of marshaling

• Order of marshaling means that foreclosure against multiple parcels must proceed against parcels with no subordinate interests first

  • This has the effect of insulating/protecting the junior interest

• If multiple parcels with subordinate interests, then parcels with more recent ones are foreclosed upon first

• Marshaling has no effect on priority

Security interests—overview of types

• Mortgage

  • Writing is required, unless buyer delivers deed to lender (mortgagee)

  • Deficiency judgments (suing for any value not recouped upon foreclosure) are available only if:

    • Judicial disclosure, AND

    • The loan was not a purchase money mortgage

• Deed of trust

  • Debtor is trustor, and gives deed of trust to a third-party trustee, who is usually closely connected with the lendor

• Installment contract

  • Like a mortgage except for you get the deed only once the land has been paid off

  • This means the remedies here are forfeiture rather than foreclosure

• Absolute deed/equitable mortgage

  • A sale in form that is a mortgage in substance

• Sale-leaseback

  • Similar to absolute deed, this may be attacked as a mortgage

  • The more it looks like a mortgage the worse; option to repurchase, and low cost to exercise compared to property value at time of exercise also are bad factors

Land sale contracts—implied warranties and merger

• Every contract for sale of land has an implied warranty of marketable title

  • Adverse possession title = unmarketable

  • Other ways title is unmarketable (unless waived by buyer)

    • Mortgages and liens (unless satisfied at closing)

    • Easements that reduce value of property

    • Covenants and options

    • Encroachments

      • Unless small or owner encroached indicates he won’t sue

    • Zoning violations

  • If title not marketable

    • Buyer can sue for rescission, damages, or specific performance

    • Buyer can let the deal close and then seller is no longer liable on the marketability covenant

  • Title does not have to be marketable until the closing date

  • Note on liquidated damages: these are allowed, but should not be more than 10% of the sale price and should be reasonable in light of anticipated and actual damages

• Contract governs until time of closing, and deed becomes the operative document thereafter

  • Any obligation in the covenant is deemed discharged unless its repeated in the deed

  • If covenants are breached…

    • Title issues, damages = min(purchase price, cost to defend or perfect title)

    • Encumbrances, damages = min(amount paid - value of land with encumbrance, cost of removing encumbrance)

  • At closing, obligation to pay and obligation to convey title are concurrent conditions

Deeds—general requirements

Requirements:

• Identify parties

• In writing

  • Signed by grantor (the grantee does not need to sign the deed in order for it to be effective)

    • Note that the distinction here between deeds on the one hand and contracts governed by SOF on the other: contracts memorialize a promise and must be signed by the party to be charged, whereas deeds represent transfers of title

  • Witnessed or notarized

• Adequately describes the property (must be unambiguous)

  • Description is sufficient if it provides a good lead as to identity of the property

  • Parol evidence admissible to clarify property identity

• Contains words of intent (“grant” is enough)

• No consideration required

• Seal and attestation/acknowledgement also not required

Deeds—delivery, special situations

Special situations:

• If grantor retains an interest or conditions passage of title on something other than delivery—note that here there is no third-party involved

  • If no delivery, then title doesn’t pass

    • But, title will pass if there’s a delivery and no recording; recording is not required

  • Express condition of death of grantor creates a future interest

  • Conditions not contained in the deed drop out

• If grantor gives the deed to a third party

  1. Grantor gives deed to third party, with no conditions, to give to grantee, delivery satisfied

  2. Grantor gives deed to third party, now with conditions, to give to grantee

     • Condition is not grantor’s death

       • Grantor can retrieve deed before condition, but if they don’t, then delivery will be effective as of the date of actual delivery

     • Condition is grantor’s death

       • Grantor generally cannot retrieve the deed, unless grantor made clear that it was not her intent for the deed to be operative immediately as a future interest—e.g., if the conditional statement is, “Give it to X upon my death, but also return it to me if I ask,” there will be NO present transfer because there’s NO present intent to transfer

       • Delivery is effective upon the initial grant (note: this means it will sever any joint tenancies), and acceptance will “relate back” to the same date of delivery

         • Exception: if there’s an intervening BFP or a surviving tenant in a joint tenancy, courts typically will not apply the “relations back” doctrine

       • Exception: when instructions are to deliver to A only if A survives O, no valid delivery

  3. In a commercial transaction, transfer to third party (escrow) with a condition will still satisfy delivery (if condition is met)

     • Parol evidence admissible to show conditions and terms upon which a deed was deposited with the escrow

     • Grantor has right to recover deed b/f condition is satisfied

     • Condition not satisfied means title doesn’t pass, even if grantee is in possession of deed

Deeds—delivery, basic requirements

Requirements:

1. Intent to transfer, via words or actions

   • Strong presumption of intent if: deed is recorded, acknowledged before a notary, or grantor physically delivers deed to grantee

   • Parol evidence admissible to prove this—but note: if deed given directly to grantee, parol evidence is not admissible to show that delivery was conditional

2. Acceptance by grantee

Effect: Title passes to grantee immediately upon delivery and thus is not revocable

Note: if the grantee is not alive at the time the deed is delivered, the deed is deemed to have a deficiency in naming the parties, and thus is void.

Types of deeds

• Quitclaim

  • Conveys whatever interest the grantor actually has, but has no covenants regarding that interest

• General warranty

  • Warrants against all defects in title, and has six covenants

  • Present covenants—breached at time of conveyance

    • Seisin: grantor warrants that he owns what he purports to own

    • Right to convey: grantor warrants that he has the power to make conveyance (i.e., that passing title alone is enough)

    • Against encumbrances: grantor warrants there are not mortgages, liens, easements, or use restrictions

      • Majority rule is that this covenant is breached even if the buyer has notice that there are encumbrances

  • Future covenants—breached in the future

    • Warranty of title: grantor promises to defend should there be any lawful claims of title asserted by others

    • Quiet enjoyment: grantor promises grantee will not be disturbed in possession by any third-party lawful claims of title

    • Further assurances: grantor will do whatever future acts are reasonably necessary to perfect title

• Special warranty

  • Same as general warranty, except for they cover only claims involving the grantor

• Estoppel by deed

  • If a grantor purports to convey property she does not own, and then later acquires title to it, that acquisition will inure to the benefit of the grantee

  • This applies to warranty deeds, but not to quitclaim deeds

Title insurance

• If owner takes it out: protects the owner and owner’s successors by operation of law (heirs, devisees, next of kin), but does not run with the land to subsequent purchasers

  • It does, however, continue to protect the buyer even after the buyer conveys the title to someone else

• If lender takes it out: follows all assignments of the mortgage loan

Devise by will

• General rule: property can be conveyed by will

• Specific terms

  • Ademption—X has willed a property to Y, but the willed property is no longer part of the estate. Y is out of luck and gets nothing.

  • Exoneration—X has willed a property to Y, but the property has an encumbrance. X’s estate will pay off the encumbrance so that Y takes it free and clear. (Unless X indicated a contrary intent.)

  • Lapse and anti-lapse—X wills to Y, but Y dies before X. The bequest fails, though many states have anti-lapse statutes that allow Y’s heirs to take.

Recording acts—types

• Recording act types

  • If no recording act » “first in time, first in right”

  • Pure race statutes: first to record wins

  • Pure notice statutes: a subsequent purchaser who takes for value and without notice—this is a bona fide purchaser—prevails over a grantee that didn’t record prior to the conveyance

    • Will have language like, “without notice thereof” (the “unless the same be recorded” in “without notice thereof unless the same be recorded” does not turn this into a race-notice statute; that’s just standard notice statute language)

  • Race-notice statutes: a subsequent purchaser who takes for value and without notice—this is a bona fide purchaser—prevails over a grantee provided that they record first

    • Will have language like, “without notice thereof” plus “first recorded”

Recording acts—methods of notice, who notice protects, and notice requirements

• Notice methods (what matters is notice at the time of conveyance)

  • Actual—buyer has actual subjective knowledge

  • Inquiry—buyer is in possession of facts that would lead a reasonable person to make further inquiry

    • Quit claim deed is not sufficient to generate inquiry notice

    • If the grantor’s deed is unrecorded, that will put buyer on inquiry notice

    • If the grantor’s deed makes reference to unrecorded instruments, that will put buyer on inquiry notice

    • Possession: buyer is charged with knowing anything that an inspection of the property would reveal and with anything a possessor would have disclosed if the buyer inquired of them

  • Record (constructive)—when the prior interest was properly recorded within chain of title

    • If a prior deed is in a grantee’s chain of title, that will suffice for record notice—so, e.g., if A deeds an easement to B, and records it

    • “Wild deeds” do not lead to constructive notice. Wild deeds are recorded but in such a way that a reasonable searcher of the grantor-grantee index would not disclose the recording

    • Defective chains of title are one cause of wild deed—so, if a sale hasn’t been recorded in the chain of title, a BFP will not be charged with record notice of it

• Who is protected and who isn’t

  • Recording acts protect bona fide purchasers (this includes mortgagors, provided they satisfy the conditions—take for value, without notice)

  • They do not protect donees, heirs, and devisees, since these parties don’t take for value

• Requirements for “valuable consideration”

  • Not just nominal; must be of substantial pecuniary value

• Shelter rule

  • Anyone who takes from a BFP can stand in the shoes of the BFP and prevail against any entity against which the BFP would have prevailed, even if they had notice

Freehold estates—fee estates

• Fee simple absolute: absolute ownership of potentially infinite duration

• Fee tail: allows an owner to keep property in the family; lasts only as long as there are lineal blood descendants of the grantee. Virtually abolished.

• Fee simple defeasible: a property conveyance subject to a limitation; these “terminate” (get cut short) rather than “expire” (which is why remainders never follow defeasible fees)

  • Fee simple determinable

    • Automatically terminates at occurrence of a specified event

    • Upon termination, reverts to the grantor (“possibility or reverter”)

      • The possibility or reverter can be transferred by inter vivos gift or devised by will, and will pass to heirs

    • Language: so long as, during, while, until, unless

  • Fee simple subject to a condition subsequent

    • Has the potential to terminate an estate upon the occurrence of a specified event, but termination is not automatic

    • Grantor retains right of reentry, but they must exercise it for it to have effect

      • The right of reentry cannot be transferred intro vivos, but can be devised and does pass to heirs

    • Language: but if, provided that, upon condition that

    • If the granting language lacks a reservation of right to entry, courts will not construe the grant as a fee simple subject to condition subsequent and might construe it as an easement or covenant or even a fee simple absolute

  • Fee simple subject to an executory limitation

    • Automatically terminates preceding estate upon occurrence of a stated event, but the estate passes to a third person rather than reverting to the grantor

    • The third-party holds an executory interest, subject to RAP

Note: granting language that is ambiguous between fee simple determinable and fee simple subject to condition subsequent will generally be construed as fee simple subject to condition subsequent.

Freehold estates—life estates

Life estate: an interest that last for the lifetime of a person

• Life estate pur autre vie: indexed to the lifetime of a third party

• Upon termination, lead to a reverter if the interest returns to the grantor, or to a remainder if the interest goes to a non-grantor transferee

• Defeasible: like a fee simple defeasible, life estates may terminate if a limiting event occurs

• Conveyable: life estates are conveyable, but not beyond the life to which they are indexed

• Waste: life tenants have a duty to refrain from committing waste on the property

  • Affirmative waste

    • Generally not allowed to consumer or exploit resources on the property

    • Exceptions

      • As necessary for repair and maintenance

      • If expressly given the right to exploit in the grant

      • When prior to the grant the land was used in exploitation

      • When the land is suitable only for such exploitation

  • Permissive waste

    • Life tenant must make repairs and pay carrying costs

      • Required to pay interest and taxes

      • Not required to pay principal

      • For special assessments on property

        • If special assessment runs longer than life estate, cost is apportioned between life tenant and holders of future interests

      • No obligations to insure

      • No liability for third-party torts

    • Exception:

      • Life tenant responsible for carrying costs up to either rents received or, if occupying the property, its FMV. This means that if the land is unproductive and not occupied, the life tenant’s responsibility for carrying costs is zero

  • Ameliorative waste

    • Life tenant allowed to substantially alter or demolish buildings if

      • Market value of future interests is not diminished, AND

      • One of:

        • Remaindermen do not object

        • A substantial and permanent change in the neighborhood conditions has deprived property in current form of reasonable productivity or usefulness

Restraints on alienation

• Types of restraints

  • Disabling: prohibit any transfer

    • Always void

  • Forfeiture: attempted transfer results in forfeiture of interest

  • Promissory: attempted transfer breaches a covenant

• Fee simple

  • Total restraints are void

  • Discriminatory restraints are void

  • Partial restraints for limited time and for reasonable purpose may be ok

• Generally prohibited for public policy purposes:

  • Restraints on marriage

  • Provisions involving separation or divorce

Types of future interests

• Fee simple determinable leads to possibility of reverter (in the grantor)

• Fee simple subject to a condition subsequent leads to a right of reentry (in the grantor)

• Life estates lead to a reversion (in the grantor)

• Life estates lead to a remainder (in the transferee, who is not the grantor)

  • Remainders always follow life estates (since fee tails have been abolished) and thus never follow fee simple

  • Classic example: “To A for life, then to B.” A has a life estate. B has a remainder. Why? Because when A’s life estate expires, the estate naturally passes to B, and this is provided for within the same instrument

  • Types

    • Vested: in an ascertained person and not subject to a condition precedent

      • Fully transferable

    • Vested subject to open: a vested remainder created in a class of persons (e.g., brothers), but is subject to diminution (since other may become entitled to it)

    • Vested subject to total divestment: a vested remainder that might be defeated by some subsequent condition

    • Contingent: in an unascertained person or subject to a condition precedent or both (RAP)

      • Fully transferable

    • Alternative contingent: there are two contingent parties and both have the capacity to take it over, pivoting on a condition, e.g., “to A for life, then to B and his heirs if B marries C, otherwise to D”

• Fee simple subject to an executory limitation leads to executory interest (in the transferee) (RAP)

  • Shifting executory: cuts short prior grantee’s interest, shifting the interest from one transferee to another

    • Fully transferable

  • Springing executory: follows a gap or divests a grantor, such that possession springs from grantor (who is holding the interest in the interim) to a grantee

    • Fully transferable

Rule Against Perpetuities

Two framings:

• Negative framing: no interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.

• Positive framing: an interest is void if there is any possibility, however remote, that the interest may vest more than 21 years after some life in being at the creation of the interest.

Breaking it down:

• “Must vest” = the interest becomes possessory, an indefeasibly vested remainder, or a vested remainder subject to total divestment.

• “If at all” = interest doesn’t have to vest within the perpetuities period to be valid; e.g., many contingent remainders never vest because the condition precedent to their taking isn’t met

• “Lives in being” = some life in being at the time the interest was created, so long as the life is somehow connected with the vesting of the interest

General requirements and notes:

• Clock begins to run when the interest is created

• Applies only to interests that are not vested when they are created.

  • Applies to: contingent remainders, executory interests, options in gross and rights of first refusal, class gifts, powers of appointment

  • Doesn’t apply to: vested remainders, reversions, possibility of reverter, right of reentry

• Most states have adopted a wait-and-see approach, whereby they wait to see if an interest will vest too remotely, and void the interest only if the vesting turns out to be too remote in fact

• Common practice is to include a savings clause, something like “if interest has not previously terminated, it will terminate 21 years after the death of the survivor of XYZ”

Exceptions:

• Charity-to-charity transfers

• Vested interests

• Reversionary interests

Joint ownership

• Joint tenancy

  • Characteristics

    • Equal rights to occupy

    • Ownership in equal shares

    • Rights of survivorship

  • Creating them

    • Requires the four unities—unity in Time, Title, Interest, Possession—plus express right of survivorship

      • Time = created at the same time

      • Title = created by same instrument

      • Interest = parties have interests of same type and duration

      • Possession = interests give identical rights of enjoyment

  • Effect of liens on interests

    • If the creditor forecloses, that will sever the joint tenancy; if not and the joint tenant with the lien against their interest dies, then the lien will be extinguished

  • Destroying them

    • Can be done unilaterally by sale or transfer, including by inter vivos gift

    • Cannot be done via will, i.e., devising doesn’t destroy the joint tenancy

    • Mortgages

      • Lien theory (majority): mortgage doesn’t sever

      • Title theory (minority): mortgage does sever

    • Leases

      • Courts are split

• Tenancy in common

  • Characteristics

    • Equal rights to occupy

    • No rights of survivorship

    • Unequal ownership shares acceptable

    • The presumed default

• Tenancy by the entirety

  • Joint tenancy for spouses

  • Not recognized in community property states

  • No unilateral action can encumber the property or convey it

  • Severable by death, divorce, or mutual agreement only

Rights and responsibilities of co-tenants

• Possession and use

  • Each co-tenant has the right to possess and use the whole property

  • No tenant has the right to exclusively possess any part of the property

• Accounting

  • No duty to account to others for rental value of land used

  • No duty to account to others for profits derived from the use of land unless:

    • He exploits the land and reduces its value (e.g., mining), OR

    • Derives rents from third parties

  • Taxes and mortgage interest:

    • Co-tenants are responsible for their proportionate shares

    • Co-tenants may seek contribution for amounts paid in excess of their share, but there’s not automatic contribution right

    • Co-tenants have no right of reimbursement of contribution for improvements; they do have a right of contribution for necessary repairs

• Partitioning

  • Available to joint tenants and tenants in common

  • Options:

    • In-kind = divides the tract into parcels

      • This is the preferred one

    • Sale and division of proceeds = what it sounds like

• Duty of fair dealing

  • Acquisition by one co-tenant of title that will affect other co-tenants’ interests—e.g., buying the property in a foreclosure sale—will be deemed an acquisition on behalf of the other co-tenants as well, meaning that the purchasing co-tenant must give the other co-tenants a reasonable amount of time to purchase their interests from the purchasing co-tenant

Class gifts

• Closure (rule of construction): the class closes when some member of the the class can call for a distribution on her share of the class gift

  • When a will makes the outright gift

    • Class closes at the testator’s death, unless there are no class members then

    • If no class members at testator’s death, class stays open such that all after-born persons who come within the class designation will be included

Fixtures

Common ownership:

• Intent is the controlling factor—did the owner intend that the chattel become part of the property? Factors that go into intent include:

  • How essential article is to the use of the premises

  • Manner in which it’s attached

  • Amount of damage that removing it would do

  • How adapted it is to the property, e.g., carpets with custom-cut shapes

Landlord-tenant relationships (divided ownership):

• If an agreement exists as to what is intended to become a fixture, that controls

• Otherwise, if removal of the chattel doesn’t cause un-repaired damage, then the tenant can remove the fixture

• Aside: accession = intent of tenant to make something a permanent part of the real estate

Effect of something being a fixture or not:

• If something is a fixture, then if there’s a mortgage, it applies to all fixtures (absent an agreement to the contrary), meaning that any foreclosure on it must go through the usual foreclosure process and is subject to priority considerations

• If something isn’t a fixture and secures debt, then it isn’t subject to mortgages and can be foreclosed upon (really, repossessed) ahead of any existing mortgage

Landlord tenant—types of tenancies

• For years—for a fixed period of time

  • SOF writing required if for more than one year

• Periodic—automatically renewing in fixed periods, e.g., monthly

  • Written notice of 30 days required to terminate

  • Can be created by implication

• At will—for no fixed period of time

  • Can be created by implication

• At sufferance—when a tenant wrongfully holds over past expiration date

  • Landlord can either:

    • Evict

      • Forcible entry typically not allowed

    • Hold tenant over to another term as with periodic tenancy

      • Commercial leases longer than one year » yearly period

      • Commercial leases one year and shorter » whatever period rent was due on

      • Residential leases » monthly, or possibly weekly if renting a room by the week

      • Holdover is inapplicable if:

        • Delay is not tenants fault (e.g., severe illness)

        • Lease is a seasonal lease (e.g., summer cottage)

Landlord tenant—landlord remedies

• Tenant in possession and fails to pay rent

  • Evict or sue for rent

• Tenant abandons

  • Majority position is that the landlord must mitigate damages

  • Tenant’s liability depends on whether there’s been surrender

    • Yes surrender, tenant not liable for any rent going forward

    • No surrender, tenant remains liable for difference between promised rent and fair market value or between promised rent and rent from re-letting, for both past rent and future rent

  • Surrender details

    • Landlord resumes possession for herself, definitely surrender

    • Landlord accepts keys and offers to relet for tenant, not surrender by itself

Landlord tenant—tenant defenses, implied covenant of quiet enjoyment

• Landlord covenants that he, or anyone with superior title, won’t interfere with tenant’s use and enjoyment. Breached by:

  • Constructive eviction

    • Landlord breached a duty, typically the warranty of implied habitability

      • Premises must be virtually uninhabitable for their intended purposes because of substantial interference by landlord or those acting on his behalf

    • Tenant gives notice

    • Landlord fails to respond

    • Tenant actually moves out in a reasonable time

    • Effect » terminates lease

  • Actual eviction

    • Effect » terminates lease

  • Partial actual eviction

    • Occurs when the tenant is excluded from only a part of the premises

      • If excluded by landlord, tenant may withhold all rent

      • If excluded by third party, may without rent corresponding to value of excluded portion

    • Effect » rent relief (see bullets just above)

Landlord tenant—tenant defenses, warranty of habitability

• Applies to residential leases only

• If breached, tenant may:

  • Terminate lease and move out

  • Make repairs and deduct from rent

  • Pay reduced rent

  • Pay full rent, remain, and sue for damages

Landlord tenant—duties of tenant re waste

• Affirmative waste: tenant liable for affirmative waste (intentional or negligent damage to premises)

• Permissive waste: but tenant has no duty to make substantial repair or keep the property in good repair

  • Tenant does have a duty to make ordinary repairs

• Ameliorative waste: tenant is obligated to return property in same character as he received it, so changes that increase the value of the premises are likewise forbidden

  • Exception

    • Change increases property value

    • Performed by long-term tenant (eg 25 years)

    • Reflects a change in nature and character of neighborhood

Landlord tenant—tort liability

Common law—six exceptions to the rule that a landlord has no liability to make the premises safe:

1. Duty to disclose latent defects; once disclosed, tenant assumes risk

2. Exercise reasonable care over common areas

3. Liable to injuries to members of the public if:

   • Knows or should know of dangerous condition

   • Has reason to know tenant will admit public before landlord repairs condition

   • Landlord fails to repair condition

4. Furnished short-term residences (three months or less)

5. Negligent repairs

6. Landlord contracts to repair

   • If landlord covenants to repair, liable to tenant for failure to repair or for negligent repair

Modernly... landlord are held to have a general duty of reasonable care

Landlord tenant—tenant duties overview

• Duty to repair

• Duty not to use premises for illegal purposes

• Duty to pay rent

Landlord tenant—landlord duties overview

• Duty to deliver possession

  • Majority rule: deliver actual possession

  • Minority rule: give legal right to possession

• Quiet enjoyment

• Implied warranty of habitability

• Retaliatory eviction

Landlord tenant—duties of tenant re rent

• At common law, rent is due at end of the leasehold term

  • But, leases usually specify a different time, e.g., start of month

• Accrual: tent does not generally accrue, but most states have statute that allow tenants to prorate rent if lease terminates before originally agreed upon date

• Deposits:

  • Landlord may not retain it beyond recoverable damages

  • Generally limited to one month’s worth of rent

  • Generally required to be put into interest-bearing accounts

Landlord tenant—assignment vs. subleases and what they mean

• Lease interests are transferrable unless otherwise agreed upon

• Assignment—transfer of entire interest of remaining lease term

  • New tenant is personally liable to the landlord, because of privity of estate

  • Old tenant is personally liable to the landlord, because of privity of contract

• Sub-lease—transfer of less than entire interest of remaining lease term

  • New tenant is not personally liable, because no privity of estate

  • Old tenant is personally liable to the landlord, because of privity of contract

• Covenants against assignments and subleases

  • These are strictly construed against landlord, so, e.g., if it prohibit assignment, it won’t be read to prohibit sublease

  • If landlord knows of assignment and doesn’t object, will be deemed to have waived covenant

  • If waives right to one transfer, waives right to all transfers unless reserves the right to avoid future transfers at the first one

  • Majority rule is that refusal to allow assignment need not be reasonable; minority rule is that it must be reasonable

Easements—basics

• What is it: right to use the land of another

  • Affirmative: give easement holder the right to do something (e.g., use a driveway)

  • Negative: prevent the landowner from doing something on his land (e.g., developing a building that blocks view)

• Types:

  • Appurtenant—benefit is provided to a parcel of land, and there must be two parcels involved

    • Dominant estate = the one that benefits

    • Servient estate = the one that is burdened

  • In gross—benefit is provided to an individual

Easements—how to create them

1. Express, in writing in a deed or will

   • SOF applies, and writing should meet all the format requirements of a deed: writing, identify parties, identify land, have granting language

   • Can be done by reservation of grantor (where grantor passes title but reserves right to do something with the land). Here, the reservation must be to the grantor, not to some other party

2. By implication from prior use

   • Land was originally one parcel

   • Land is severed into multiple parcels

   • Use of property existed prior to severance

   • Easement is reasonably necessary to dominant land’s use and enjoyment

3. Easement by necessity

   • There was common ownership of a parcel or parcels

   • The common owner sold a part or a whole of one parcel

   • The sale deprived the buyer of access to a road or utility line

   • Note: prior use not required

4. Easement by prescription (similar to adverse possession)

   • Actual use

   • Open and notorious

   • Hostile

   • Continuous for statutory period

   • Note: cannot be used on public lands or to acquire a negative easement

5. Easement by estoppel

   • When servient parcel allows use of property such that it’s reasonable that a user will substantially change their position in reliance on the belief that permission will not be revoked

Easements—scope

• Court assumes easement intended to meet present and future needs (e.g., a road may be widened to accommodate wider cars)

• Increased and excessive use not permitted

  • If use exceeds scope, the proper remedy is an injunction (rather than terminating the easement)

Easements—maintenance and repair

• Servient not required to maintain or repair

• Dominant owner has implied right to maintain and repair, unless both estates make use of the easement, then costs are apportioned

Easements—transferring them

• Servient estate transfer

  • The easement passes with the land—even if not mentioned in the deed—unless purchaser is a BFP with no notice

• Dominant estate transfer

  • Appurtenant: passes automatically

  • Gross:

    • Not transferrable unless for a commercial or economic purpose

Easements—ending them

END CRAMP

• Estoppel: easement holder assures servient estate that easement won’t be used, and servient estate changes position in reasonable reliance on that assurance

• Necessity: easement by necessity ends when necessity ends

• Destruction of servient land

• Condemnation of servient estate by eminent domain

• Release in writing

• Abandonment action: easement holder demonstrates by action (words are not sufficient) an intent never to use easement again

• Merger: the two estates come under single ownership

  • Note: for this to work, the single owner must own both estates in fee simple. So, if the owner owns one in fee simple and has a life estate in the other, merger does not take effect

• Prescription: adverse, continuous interruption of the easement

Easements—a general approach

• What kind is it?

  • Affirmative or negative

  • Appurtenant or gross

  • If appurtenant, identify the servient and dominant parcels

• How was it created?

  • Writing, necessity, prescription, estoppel, prior use

Real covenants—burdens running with the land

WITCH VaN

1. Writing required b/w original parties

2. Intent that the promise apply to successors

3. Touches and concerns the land

   • Restricts use of the servient parcel in some fashion

4. Horizontal and vertical privity

   • Horizontal = privity between original promising parties (landlord/tenant, developer/purchaser, servient/dominant parcels with existing easement, grantor/grantee when deeding property)

   • Vertical = successor is now the holder of the entire interest

5. Notice

   • Actual, inquiry, constructive

   • If no notice to subsequent purchaser (BFP) then subsequent purchaser will take free and clear

Real covenants—benefits running with the land

1. Writing required b/w original parties

2. Intent that the promise apply to successors

3. Touches and concerns the land

   • Increases use or enjoyment of dominant parcel in some fashion

4. Vertical privity = successor is now the holder of the entire interest

So—more or less like burden running with land, but no notice and no horizontal privity

Real covenants, damages available

• Monetary damages

Restrictive covenants, damages available

• Injunctive relief

Equitable servitudes, aka restrictive covenants

Requirements:

1. Writing

   • Exception to the writing requirement—servitudes implied from common schemes:

     • Applies only to negative covenants

     • Requirements

       • Common scheme

         • At time of first sales, developer must have a plan that all parcels be developed within the terms of the negative covenant

         • May be evidenced by a recorded plat, general pattern of prior restrictions, or oral representations made to buyers

       • Notice (on the part of subsequent purchasers)

         • Actual, inquiry, or constructive

2. Intent that the promise apply to successors

3. Touches and concerns the land

   • Increases use or enjoyment of dominant parcel in some fashion

   • Restricts use of the servient parcel in some fashion

4. Notice (to subsequent purchaser)

   • Inquiry, actual, constructive

Note: no privity requirements.

Equitable servitudes, aka restrictive covenants—enforcement

• If the covenant is silent as to who it benefits, then any neighbor in the subdivision can enforce it

Profit

• Entitles the holder of the profit to enter the servient estate and remove soild a product of the land

• Created and terminated like easements

License

• Right to use land for some specific purpose

• Revocable at will and is only a privilege rather than interest in the land

• Oral agreements produce licenses rather than easement—though these can turn into easements by estoppel, if there is detrimental reliance

Riparian rights—watercourses

• Riparian doctrine

  • Majority rule is that any tract held under unity of ownership is riparian if tracts are contiguous and any one of them fronts water

  • All riparian landowners have riparian rights and none can use water so as to deprive others of their riparian rights

    • Reasonable use theory: use, diversion, pollution, etc. must be reasonable. Factors include

      • Purpose

      • Destination

      • Extent

      • Pollution

      • Whether use alters flow

  • Natural vs. artificial uses

    • Natural (necessary for daily sustenance of humans) > artificial

    • Upstream users can take all they need for natural use, but can’t take any for artificial use unless everyone has enough for natural use

• Prior appropriation doctrine

  • Permit required for use and priority determined by permit date

Riparian rights—surface waters

• Usage: owner can use as much as he wants

• Capture: fine to capture surface water (dam, rain barrels) as much as you like

• Restricting flows and diverting flows—four theories:

  • Reasonable use

    • Growing trend

    • Balance utility against harm

  • Common enemy

    • Surface water is a common enemy and any owner can build dikes, etc. to get rid of it

  • Natural flow

    • Landowner must accept natural drainage, cannot divert surface water on land of another, and cannot alter rate or manner in a way that would injure others

Riparian rights—groundwater

• Reasonable use doctrine

  • Exporting ok so long as no harm to others

  • Use on property virtually unlimited

• Appropriative rights doctrine

  • Like prior appropriation theory but for groundwater

Rights to lateral and adjacent support

Landowners have rights to receive necessary lateral and subjacent supports

• Lateral = adjacent soil

  • Strict liability if excavation leads to collapse on neighbor’s property

  • If there’s a building on the neighbor’s property, then must show that the land would have collapsed absent the building; otherwise, the suit is in negligence

• Subjacent = soil underneath