Property Unit 2

Ways to transfer real or personal property to another during life or at death?

• Sell

• Donate/Gift (during life)

• Devise (after death)

What are gifts? What are the main types?

Irrevocable transfer of property rights without payment or consideration to the donor;

• Inter vivos

• Causa Mortis

• Testamentary

What are inter vivo gifts? Requirements?

Gifts given during the donor’s lifetime;

1. Intent

2. Delivery

3. Acceptance

→ Do not need to occur simultaneously; All three need to be checked off at some point

Delivery - Inter vivo gifts

Modern practice is a more flexible approach that focuses on intent;

Modes:

• Actual

  • = Physical transfer

• Constructive

  • = Allows access to subject matter

• Symbolic

  • = Physical transfer of something that symbolizes the gifted item

What are causa mortis gifts? Requirements?

= Gifts made by a living person in contemplation of death; Effective immediately, but are revocable; Valid only if the donor dies of the peril contemplated at the time the gift was made

1. Intent

2. Delivery

3. Acceptance

4. Donor’s anticipation of imminent death

What are testamentary gifts?

= Gifts that only become effective once a person has died

Promise vs. Gift

Promise does NOT have present intent

Estate?

= Interest in land measured in terms of duration; Limited set of estates or packages of ownership of time that are allowed

What is a present possessory estate?

= Estates that confer the right to occupy on the basis of land here and now;

In contrast to future interest, which is real ownership of land that is not actionable now, but gives future possession if and when the present possession ends

What is a fee simple absolute?

= One has the right to possess now vs. future interests, which might transform into present possessory in the future

• Fully

  • Alienable

  • Descendible

  • Devisable

  • May last forever

• Magic words:

  • O → A

  • O → A in fee simple

  • O → A and A’s heirs

What is subsequent possession?

Once property rights are created, how do you transfer property to others?

1. Gift/inheritance

2. Sale

3. Finding

4. Taking

What is mislaid property?

= Property that is left intentionally in a place by the owner but accidentally left behind

Ownership retained

What is lost property?

= Property that is unintentionally lost by the owner in an unknown place

Ownership retained

What is abandoned property?

= Property that is released back into the commons; Owner intends to relinquish all interests in the property with no intention that it be acquired by a particular person

Armory v. Delamirie

• Chimney sweeper finds jewel, which is taken by defendant; Chimney sweeper has better claim to jewel than everyone else apart from original owner

• Trover = Forced purchase; Defendant can keep item but she must compensate plaintiff for it

• Relativity of title = Despite not being original owner, chimney sweeper can maintain claim for trover against subsequent party

  • Ownership of finder is good against the whole world aside from the true owner

What is bailment?

= Rightful possession of goods by a person (bailee) who is not the true owner (bailor)

• Bailee will have better title to an item than any other person besides the true owner

What is adverse possession?

= Process by which one person, through extended possession of someone else’s property, can actually obtain legal title to that property against the original owner’s interest

• Original owner doesn’t intend to transfer land, but adverse possessor has superior title to it

• Applies to both real and personal property

• Statutory period requirement (typically 10 or 15 years)

• Possession ripens into ownership

• Theory of punishing owners that are not using land efficiently or sleeping on rights they have over land

What are the requirements for adverse possession?

1. Actual and exclusive possession which was

   • Adverse possessor only gains title to land they actually occupy

2. Adverse to the “then true owner” and

   • Permission voids adverse possession!

3. Open and notorious, as well as

4. Continuous for statutory period

5. **In some states, adverse and under claim of right; hostile (mental state)

   • CA and NY

Toll for statute of limitations? (Adverse possession)

• Disabilities on the part of the owner can toll (pause) the statute of limitations if the true owner had a disability at the time the cause of action accrued

  • Minority

  • Imprisonment

  • Insanity

  • ~Cannot temporally tack onto owners with disabilities~

  • Once clock starts, it can’t stop for owner with disability

What is temporal tacking?

= Allows one to combine different periods and parties of adverse possession to satisfy statutory period

• Requires privity -> Contract, conveyance, lease that links the parties together

What is a fee tail?

= Right to possession that may not transform in the future

• Present owner A has a present interest to occupy the land

  • Can alienate land during their lifetime

  • Descendible but NOT devisable through will

  • If A dies with heir, then property goes to heir in fee tail, and continues as such through generations

  • If A dies no heir, then property reverts back to O

What is Intestate Succession?

= Someone dies without a will

What is a life estate?

= An estate that lasts the duration of A’s life

• Alienable, but only during A’s lifetime

• POOFS as soon as A dies

• Land is NOT descendible or devisable

• Magic words:

  • O → A for life

What is a life estate pur autre vie?

= An estate given to A that lasts for the duration of another party’s life (B)

• Present interest that evaporates when guide life (B) dies

• Alienable, descendible, and devisable only during A’s life

What is a reversion future interest?

= Future interest retained by the grantor

• O conveys to “A for life”

• Future interests held by O during A’s lifetime

• Once A dies, property reverts back to O (or O’s heirs)

• O’s future interest becomes a present possessory estate in fee simple absolute

What is a remainder future interest?

= Future interest, the remaining of which, goes to a third party

• O conveys “to A for life, then to C”

• Future interests held by C during A’s lifetime

• O has NO more interest in the land

• When A dies, the remainder of the time slices goes to C

• C’s future interest becomes a present possessory estate in fee simple absolute

What is a fee simple determinable?

= Fee simple estate that automatically ends when a certain event or condition occurs, giving the right of possession to the transferor

• Duration = Indeterminate, but potentially infinite

• Devisable

• Descendible

• Alienable

• Future interest = Retained by grantor

• Magic words:

  • To A so long as A uses the property for XYZ

    • …as long as…

    • …until…

    • …during…

    • …while…

What is a fee simple subject to Condition Subsequent?

= A fee simple estate that may be terminated at the election of the grantor when a certain condition occurs

• Duration = Indeterminate, but potentially infinite

• Devisable

• Descendible

• Alienable

• Future interest is retained by grantor: Right of entry/Power of termination

• Magic words:

  • “To A, but if XYZ”

    • …provided that…

    • …condition that…

    • …if…

    • …provided, however…

• “To A, but if XYZ”

  • …provided that…

  • …condition that…

  • …if…

  • …provided, however…

Fee simple subject to condition subsequent

• To A so long as A uses the property for XYZ

  • …as long as…

  • …until…

  • …during…

  • …while…

What is a fee simple subject to an executory interest?

= A defeasible fee simple created for a transferee that is followed by a future interest in another named transferee - Triggers automatically

• Duration = Indeterminate, but potentially infinite

• Devisable

• Descendible

• Alienable

• Future interest is not held by grantor

• Magic words:

  • “To A so long as XYZ, then to B

What is waste?

= When future interest holds present interest holder accountable for maintaining the property

What are the different types of waste?

1. Affirmative Waste

2. Permissive Waste

3. Ameliorative Waste

What is affirmative waste?

= Affirmative or voluntary acts that decrease the value of the property

Exceptions:

• Reasonable amounts for repair and maintenance

• When present tenant is given permission

• When, prior to change, land was used in exploitation

• Where land is suitable only for exploitation

What is permissive waste?

= When the life tenant allows the property to fall into disrepair or take reasonable measures to protect the property

Obligations of the tenant:

• Reasonable repair

• Taxes

• Special assessment

• Interest on encumbrances (mortgage), but not principle

What is ameliorative waste?

= Substantial changes to the physical character of the property that increase the value of the property

• Doctrine of Changed Circumstances

What is the Doctrine of Changed Circumstances?

= Market value is not diminished by the change AND

A substantial or permanent change in the neighborhood conditions have deprived the property in its current form of reasonable productivity or usefulness (aka changed circumstance)

What are future interests?

= Interests that exist now, but are not possessory now

Categories:

1. Interests retained by the transferor

2. Interests created in the transferee

What are interests retained by the transferor?

1. Reversion

2. Possibility of reverter (estate might revert back to O if condition is triggered)

3. Right of entry

→ All future interests held by transferor are vested (not subjected to RAP)

What are remainder interests?

= Interests that are capable of becoming possessory; do not divest, but wait patiently for prior estate to expire before it becomes possessory

• Condition precedent or Condition subsequent

What are executory interests?

= Interests that must actively divest/cut short a prior estate to become possessory; Active moment that cuts off estate, rather than patiently waiting for moment to naturally occur

• Condition precedent

What is a condition precedent?

= Condition that must be fulfilled before the interest is possessory

• Ex. In 2000, O to A for life, then if B graduates law school, to B.

• Property is not going to B unless the condition, going to law school, is fulfilled first. A condition precedent.

What is a condition subsequent?

= A condition that operates after (can think of as dispossess)

• Ex. in 2000, O to A for life, then to B so long as B graduates law school.

• The property is going to go to B, but will get taken away if condition is not met. A condition subsequent

What is vesting in possession?

= Occurs when a party can actually take possession of some property

What is vesting in interest?

= Occurs when a party has a legally certain interest in property, even if they can’t possess it right now

Vested vs. Contingent?

Vested =

1. Belongs to ascertained person and

2. There are no conditions precedent that must be satisfied before remainder is certain to become possessory

Contingent =

Either

1. Belongs to unascertained person OR

2. There is a condition precedent that must be satisfied

What is an indefeasibly vested remainder?

= Property where remainderperson is certain to take it

What is a vested remainder subject to open?

= Remainder in a class of people that may increase; Additional entries may partially divest the vested remainders

What is the Rule Against Perpetuities?

= 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

• Only applies to contingent future interests held by third parties:

  • Contingent remainders

  • Executory interests

  • Vested remainders subject to open

Steps for approaching a RAP problem?

1. Identify all interests in conveyance

2. First interest is the present possessory (Typically life estate or fee subject to executory limitation)

3. Then identify future interest (Look to see if it’s a form of remainder or executory interest)

   • Look for whether or not interest waits patiently or cuts it short following the previous estate

   • Executory - Done; subject to RAP in itself

   • Remainder - Not all forms subject to RAP; ask whether it’s vested or contingent

4. After identifying all interests and then concluding that RAP is present, do independent RAP analysis

5. Identify vesting event by determining what is the uncertainty?

6. 21 years after all parties die, ask “Is there a possibility that the contingent interest will vest after this point?

7. If yes, then it is void. If no, then it is valid

8. Cross out part of conveyance that violates RAP

9. Conclude with what remains

Types of concurrent estate ownerships?

1. Tenancy in Common

2. Joint Tenancy

3. Tenancy by the Entirety

What is the Right of Survivorship?

= If one owner dies, then the other owners absorb the decedent’s interest

• The heirs of the owner do NOT acquire the interest

• The moment one dies, their interest/share disappears!

What is a Tenancy in Common?

= Each tenant has a separate but undivided interest in the whole property

• No right of survivorship

  • Fully alienable, devisable, and descendible by each tenant

What is a Joint Tenancy?

= Each tenant in common has a separate but “undivided” interest in the whole property

1. Right of survivorship

   • “Nothing” passes to a third party upon death

   • Not devisable or descendible (unless only one tenant left)

2. Special requirements for creation: Unities of Time, Title, Interest, and Possession

   • Time = Same moment

   • Title/Instrument = Same document for all co tenants

   • Interest = Equally divided; Unity of interests required

   • Possession = Right to whole thing

What is a Tenancy by the Entirety?

= Only available to married couples

• Requirements of a joint tenancy plus a fifth unity, marriage

• Right of survivorship

  • Not descendible or devisable (unless only one party left)

• Severance

  • Cannot be achieved through conveyance

  • Divorce

What is a Partition?

• Action available to any tenant in common OR joint tenant

  • Not available for tenancy by the entirety (need to divorce first)

• Partition in kind =

  • Physically divide the property

  • More favored by law

• Partition by sale =

  • Sell the property and divide proceeds according to each tenant’s share

  • Partition by sale only allowed when:

    • 1) Physical attributes of the land make partition impossible and 

    • 2) The interest of the owners would be better promoted by sale

What is an ouster?

= Wrongful exclusion of a party entitled to possession (co-tenant) from a part or whole of property they are entitled to

What is a rent ouster?

= One cotenant wrongfully dispossesses or excludes other cotenant(s) from the common property

Liability:

• The cotenant must reimburse the others for their own wrongful use. Look for one cotenant actively denying the other access/use

What is an AP ouster?

= One cotenant wrongfully denies the ownership interest of another cotenant. The ousting cotenant must assert full exclusive ownership

What is accounting with a third party?

= Can recover rents or profits paid by a third party to one co-tenant

• Can get this remedy without proof of ouster

• Value based on actual receipts - Not fair market value

What is accounting with reduction?

= Concurrent owner benefits that involve third parties or removal that reduces the value of the land are shared according to their ownership interests

• Natural resources: A co-tenant cannot select and choose for themselves what party of the property they want to “partition” out for sale

What are the burdens of co-ownership?

• Concurrent owners typically have a duty to share expenditures that could result in a lien against the property according to their ownership interests

  • Taxes

  • Mortgage payments

• Concurrent owners do not have an obligation to contribute to repairs (even necessary ones), maintenance or improvements

  • The tenant who does pay for them can be entitled to a credit from any accounting or partition

What are the different jurisdiction types of marital property?

1. Traditional common law

2. Separate property

3. Community property

What is separate property jurisdiction?

= Property is separately owned by the spouse that acquired it, even during marriage

• At divorce, assets acquired during marriage are split equitably

• At death, disinheriting a spouse is forbidden; if a spouse is cut out, they can sue for forced share

What is community property jx?

During marriage

• Separate property:

  • Property acquired through gift or inheritance

  • All pre-marriage assets

  • All income earned during marriage that does not require spouse’s labor

• Community property

  • All income earned and all assets acquired during marriage from spouse’s labor is jointly owned

At divorce

• Split according to shares

At death

• Each spouse can devise their separate property

• Each spouse can only devise their share of the community property - No forced shares