LEC 8 CH 10

Property Law

Property Law

Collection of rules that confer rights of ownership, possession, and transferability over things.

Property

Something in which one has a legal interest with the right to possess or use it to the exclusion of others.

Property ownership includes the right to:

• possess and use property

• prevent others from possessing it

• transfer property rights to others.

Fee simple

ownership rights granted by the government to possess real property, exclude others from it, build on it, sell it, give it away, and transfer it.

Life Estate

ability to retain a limited interest in the property for the duration of a person's life (used back in the day for sons to give grandma land till she died)

Easement

right to use the land of another for a specific purpose (Right of Way: right to cross property to reach their own, ex: right to use neighbours driveway)

Leasehold

The temporary right to occupy real property. leases can be residential or commercial

Policy

The contract between the insured and the insurer that outlines the terms and conditions of the insurance coverage.

Types of Property:

Real, personal, intellectual

real property (real estate) - tangible property

immovable things: land, buildings, fixtures

personal property

movable: chattels: automobiles, furniture, machinery AND intangible (choses in action)

tangible property

physical things

chattels

movable, tangible property: cars, computers, furniture, clothes

intangible property

can own rights to but has no physical substance. its value is not physical. ex: choses in action: goodwill

Choses in action examples and meaning

intangible personal property, ex: goodwill, shares in coorporation, negotiable instruments (cheques)

intellectual property

things created by the mind or intellect ex: copyright, trademarks, patents

importance fo property law for business people

• shows where businesses maybe vulnerable to loss (insurance)

• allows ownership and possession to be split (rent)

• promotes lendings and borrowing money (property held for debt/loans)

• allows innovations to florish (protects creators)

bailement

person is in possession of personal property owned by another.

bailor

party in a bailment that owns the personal property

bailee

party in a bailment that is in temporary possession of the personal property

if bailee does follow its legal duty of care and goods are damaged while in their possession the bailor can..

sue the bailee for the tort of negligence, if the bailor can establish the harm ( damage or destruction of goods) the onus will shirt to the bailee who will have to prove they excersiced due diligence with respect to the goods to avoid liabilty.

bailor has duty of care to the bailee to..

take care that the bailors goods do not cause hard to those using them and to warn the bailee of any defects or inherent damages in the goods

in a bailment the standard of care ..

varies depending on the type of bailment

most common type of bailment in business situations:

lucrative bailment

lucrative bailment

both bailee and bailor receive benefit from the bailment

constructive bailment

bailor loses personal property, bailee takes possession

special bailment

obligations are imposed by statute, only one party receives benefit from bailment

gratuitous bailment

no money or other payment changes hands

4 Conditions precedent when buying and selling real property

1. conditional on financing: buyers not required to complete the sale unless theyre able to arrange a mortage/financing

2. conditional on zoning approval: buyers not required to complete the sale unless they can obtain the zoning they want

3. conditional on inspection: buyers not required to complete the sale unless a building inspection shows no hidden structural problems

4. conditional on environmental audit: buyers not required to complete sale unless environmental audit shows no hidden environmental hazards

conditional contracts mean that the property is not

“sold” until the conditions are met or otherwise removed by the purchaser (within the time set out in the contract to do so).

Common Warranties

• warranting no toxic wastes on property (oil tanks underground)

• warranting no asbestos in buildings (if later discovered, buyers remedy is to sue the vendor for damages)

Closing date

time specified in agreement when real property is legally transferred

Mortgage

loan secured by real property, giving the lender the right to sell the property if the borrower fails to repay the loan.

Standard obligations of the mortgagor:

• To make periodic mortgage payments

• To pay all property taxes

• To insure the property against loss

• To make necessary repairs so the property does not lose value
  

default

mortgagors failure to fulfill their obligations under a mortage

amortization period

length of time required to pay entire mortage debt

if the mortgagor defaults, the mortgagee may:

• Sell the property under the authorized power of sale

• Obtain title in a foreclosure action

• Sell the property in a judicial sale action

Businesses choose Commercial Leases because:

• Does not tie up capital

• Increase a business’s flexibility to change locations

• decrease maintenance responsibilities

Commercial lease vs Residential

stronger rights given to commerical landlord compared to residential lease. Left up to party in lease. Residential Tenancy Act restricts landlord’s rights relating to damage deposit, rent increase, eviction, etc. Commercial Tenancy primarily governed by the terms of the lea

Exclusive Possession

While lease is in operation, the tenant may exclude all others from the property, including the landlord

Quiet Enjoyment

Tenant’s right to use leased property for the intended purpose without interference from the landlord. (usually stated in lease what tenant will use the premises for)

The Right of Distress

Allows commercial landlords to seize and sell a tenant’s personal property when rent is unpaid. Residential lease, landlord required to store and care for tenants personal property

Forfeiture

Allows landlords to regain possession of the premises when a tenant fails to pay the rent

Sublets

Tenants have right find a new tenant to take possession of the premises unless the lease states otherwise, which almost every commercial lease restricts. Generally, Tenant needs landlord’s consent.

Assignment

Tenants have right to have a new tenant become party to the lease and deal directly with the landlord, unless lease says otherwise which most commercial leases do. Commercial leases require landlord consent.

Types of Insurance: Sensible businesses usually carry:

• Property loss • Liability for property loss • Occupiers’ liability • Business interruptionti

When deciding on coverage, it is wise to consider:

• The types of loss that you want to insure against

• The value of coverage that you are willing to pay for. You will never receive payment for more than the value of the asset insured, no matter what the value of the insurance is stated to be.

3 other types of lucrative bailment

1. bailment for repair or service

2. Consignment: give possession of goods to another but still retain legal ownership of goods until sold

3. Parking lots: bailee takes short-term possession of vehilce and parks it; valet parking.

deductible:

out-of-pocket payment that an insured must make that is deducted from the insurance payment