UGA LEGL2700 Chapter 7

The Property System

The property system is…

driven primarily by state law

Property

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

Property laws are absolute because

the owner has the ultimate legal right to exclude others from their resources and call upon the state or courts to protect that right

property rights are not infinite because

the protected uses and boundaries of that property have legal limits

State planning approach

how your assets, land, and homes are managed, taxed, and passed down depends heavily on the laws of the state where the property is located

Private property approach

a legal and philosophical framework centered on individual ownership, the right to exclude others, and clear demarcation between personal/real assets and public domain

Property is central to society’s achievement of

• promoting incentives (letting you own what you get)

• establishes conditions for capital formation

• makes resources easily divisible

2 divisions of property

1. real property (land and interests in land)

2. personal property (all moveable resources)

real property

real estate law

personal property

• tangible: things you can touch

• intangible: things you can’t touch

property boundaries in the physical world

land ownership consists of more than surface of the property

air rights

• The right to control, use, and build into the usable space directly above the surface of the land

• can be sold separately from the property

• air above the property that is usable by the owner

subsurface rights

• Definition: The right to everything located beneath the earth's surface, down to the center of the planet.

• Resources included: Minerals, oil, natural gas, coal, precious metals, and underground water.

• can be sold separately from the property

• must provide means to access subsurface

fixtures on land

A land fixture is any item of personal property that becomes permanently attached to real estate and is legally treated as part of the land. Put it in the contract!

2 dimensional descriptions

a deed: a signed, written legal document used to transfer the ownership of real estate or property from one person to another

Surface water rights

legal entitlements to use water from above-ground sources such as rivers, lakes, streams, and ponds, rather than direct ownership of the water itself

2 types of surface water rights

1. Riparian rights

2. Prior appropriations doctrine

riparian rights

(eastern seaboard) grants landowners whose property physically touches a natural water source—such as a river or stream—the legal right to use and access that water, so long as they don’t starve or harm downstream users

prior appropriations doctrine

(western seaboard) the first person to take water from a source and use it for a beneficial purpose gets the first right to keep using it

rule of capture

the first person to capture a fugitive, migratory natural resource (such as groundwater, oil, or gas) from beneath the ground becomes its absolute owner

Coastal Oil & Gas Corp. v. Carza Energy Trust et al., 268 S.W.3d 1 (Tex. 2008)

• hydraulic fracturing for natural gas

• The Texas Supreme Court reversed the lower court, ruling that natural gas captured via subterranean migration—even if induced by artificial fracturing—is protected by the rule of capture. Allowing trespass liability for fracking would disrupt oil and gas development and conflict with Railroad Commission regulations

• common law: landowners have the right to capture whatever water under their property regardless of how it effects neighboring wells

Briggs v. Southwestern Energy Production Co., 224 A.3d 334 (Pa.2020)

• The Pennsylvania Supreme Court ruled in Briggs v. Southwestern Energy Production Co. (224 A.3d 334, 2020) that the traditional rule of capture—which shields energy companies from liability for draining oil or gas from beneath neighboring land—still applies to hydraulic fracturing ("fracking")

Types of ownership freehold estates (ownership interests in real property)

• fee simple

• life estate

• leasehold estate

• concurrent ownership

fee simple

• represents the maximum estate allowed under law

1. Fee simple absolute

2. Fee simple defeasible

fee simple absolute

• involves no limitations or conditions attached

• owner has the maximum legal rights and powers to posses, use, and transfer the land

fee simple defeasible

• may have a condition attached to its transfer

• subject to condition subsequent: is a type of property ownership where a grantor gives land to a new owner, but attaches a specific condition. If that condition is broken, the grantor has the right—but not the automatic obligation—to take the property back

• subject to executory interest: a type of defeasible fee. When a stated condition happens, the property automatically transfers to a third party rather than reverting to the grantor

life estate

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

• measured by the life of a specific person

• once that person dies, the property can do one of two things:

  • revert back to the original grantor (reversion interest)

  • go to someone else as designated by the original grantor (remainder interest)

• the person enjoying the life estate has a present interest, while the reversion interest or remainder interest has a FUTURE interest

leasehold estate

property rights granted to tenants by a landlord

concurrent ownership

more than one person can own the same property

• tenancy in common (TIC)

• Joint Tenancy (JTWROS)

Tenancy in Common TIC

• as many as you want

• a form of shared property ownership where two or more people or entities hold title to a single piece of real estate

• no rights of survivorship

Joint Tenancy with Rights of Survivorship

• only 2

• a legal form of co-ownership where two or more people own an asset together. If one owner dies, their share automatically passes to the surviving owner

specialty applications of property

• easements

• bailments

easements

the right to cross over land

• Easement by registration

• natural easement

• negative easement

• easement by prescription

• utility easement

Easement by reservation

a legal right that a property seller (the grantor) keeps for themselves when transferring ownership of a piece of land to a buyer (the grantee)

Natural easement

• describes the normal, inherent duties and rights landowners have regarding natural conditions—such as the natural flow of water, pollution prevention, or lateral support from adjacent land—rather than a granted right to physically use someone else's property

• subservient and dominant

negative easements

a legal restriction that stops a property owner from performing specific actions on their own land that would otherwise be lawful, in order to protect the interests of a neighboring property

easement by prescription

• only an easement, you don’t own anything, you just have access to it

• is a legal right to use another person’s private property without their permission, acquired through long-term, open, and continuous use

utility easement

a legal right that lets a utility company or local government access and use a specific portion of private property to install, maintain, repair, or replace public infrastructure (such as electricity, water, gas, sewer, and communication lines)

bailments

goods placed into another’s possession to be returned in the future without transferring ownership; intentional possession

bailor

the owner of the object

bailee

possessor of the object

What to do if you have a RAP problem

hire the best property lawyer in the state in your budget

Acquiring resources through exchange

the most common way to acquire a resource

5 ways to become a lawful owner

1. contract rules

2. rule of first possession

3. lost items vs. mislaid items

4. adverse possession

contract rules

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

  • allow for owners to commit legally to future exchange of resources

  • enable an owner to sue another if agreements in the future are broken by one of the owners

rule of first possession

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

lost items

personal property unintentionally left by the owner

• finders keepers, first to find it keeps it

mislaid items

personal property intentionally placed down and then forgotten

• the owner of whatever property it was placed down upon gets it, in case the original owner comes back to get it

adverse possession (squatters rights)

(not to be confused with easement by prescription)

Provides ownership of land under state statute when possession is:

• open and notorious

• actual and exclusive

• continuous

• wrongful: permission obliterates this

• for a prescribed period of time

favors adversely possessed land because the property owner slept on their rights

Title to government property can’t be adversely possessed

Acquiring resources through confusion

• occurs when fungible goods are mixed together so that individual owners can no longer distinguish or identify their own property

• Owners hold a proportional share of the confused goods if the confusion occurs by honest mistake

  • if its nefarious, the bad actor only gets back what they can definably prove is theirs

• the rules for untangling depend on the circumstances of the tangling

fungible good

an identical or interchangeable good

doctrine of confusion

illustrates importance of boundaries to the concept of property

Acquiring resources through accession (law of accession)

• accession: something that is added (value)

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

Acquiring resources through gift

• Donor who owns something gives it to a donee, who becomes the new owner

• the gift does not take place until the donor:

  • intends to make the gift

  • delivers the gift by physical transfer to the donee

testamentary gift

gift made through a will

title and property registration

• two protections: type of deed and registration statutes

title

ownership represented by a physical document registered with the state for certain resources

deed

• document of title that transfers ownership of land

• 3 types

  • warranty deed

  • special warranty deed

  • quitclaim deed: zero guarantee

warranty deed

a legal document that transfers real estate ownership from a seller (grantor) to a buyer (grantee) while guaranteeing that the property has a clear title

special warranty deed

a legal document that transfers real estate ownership while limiting the seller's guarantee. The seller (grantor) promises that the property title is clear only from any defects, liens, or encumbrances that occurred during their own period of ownership. They make no promises or guarantees about what happened before they owned the property

quitclaim deed

a legal document that transfers whatever interest a property owner (the grantor) has in a piece of real estate to another person (the grantee) without providing any warranties or guarantees about the validity of the title

security interests

two principle types are security interests in land & secured transactions

Security interests in land

• mortgage

  • 2 parties

• deeds of trust

  • 3 parties (lender, borrower, trustee)

• land sales contract

secured transactions

• UCC article 9

• governs how lenders use a borrower's personal property as collateral to guarantee a debt

recording statutes

• mortgages and deeds of trust must be registered in a recording office

• provide notice of security interest to potential buyers and lenders of the land

foreclosure

• a legal or non-judicial process where a mortgage lender seizes and sells a property because the borrower has stopped making payments

• creditor must go through the court system to ensure that procedures are properly followed

deficiency

Balance owed by the debtor to the creditor-mortgagee

right of redemption

allows mortgagor to get back land upon payment of the full amount of the debt

Secured transactions

• personal property, not land

• involves a creditor who has made a loan to a debtor who agrees to give the creditor a security interest in collateral

• must have an attachment to collateral

• must attach and perfect

Article 9 of the UCC

• uniform commercial code

• set of laws that protects security interests

Attachment

• occurs when

  • secured party has given value

  • debtor owns the collateral

  • security agreements provided

perfection

• arises when a security interest is attached and creditor has taken all proper steps required by article 9

• the step a secured party takes to make their security interest official and public, protecting it against competing claims from other creditors, lien holders, and bankruptcy trustees

• whoever perfects first gets it (unless there are line cutters like artisans and mechanics liens)

financing statement

filed to perfect a security interest under article 9

artisans liens

• personal property

• a legal right that allows a craftsperson, mechanic, repair shop, or service provider to hold onto someone else's personal property (such as a vehicle, jewelry, furniture, or artwork) until they receive full payment for the work or repairs performed on it

• possessory of personal property

• gets first to be paid in a line of creditors

Mechanics liens

• real property

• file in the deed room

• a legal claim or security interest placed against a property by an unpaid contractor, subcontractor, laborer, or material supplier who helped build, repair, or improve it

• It acts as collateral. If you are not paid for your work or materials, the lien attaches to the property title to pressure the owner or general contractor into settling the debt

Public Nuisance

• brought forth by public officials

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

• interferes with the health, safety, comfort, or property rights of an entire community, neighborhood, or a considerable number of people

Private nuisance

• unreasonable use of ones property to cause substantial interference with the use of anothers land

Zoning ordinances

• laws that divide counties into use districts designated residential, commercial, or industrial

Cook v. Sullivan 829 A.2d 1059 (N.H. Sup. Ct. 2003).

• addressed whether landowners created an actionable private nuisance by altering wetlands and causing water damage to neighboring property

• water seeping up due to alterations that Sullivan made

reversion interest

when a life estate reverts back to the original grantor

remainder interest

when a life estate goes to someone else designated by the original grantor

what kind of interest does the person currently enjoying the life estate have

present interest

what kind of interest doe the person with reversion/ remainder interest have

future interest

3 categories of bailments

1. sole benefit of the bailor

2. sole benefit of the bailee

3. mutual benefit bailment