BLAW 2 Exam 2

Terms

Property

Interest, or groups of interests, that is legally protected

Tangible Property

Physical objects (A farm, a chair, and a household pet, goods)

Intangible Property

No physical form (Rights represented by a stock certificate, promissory note, a deed, copyrights, patents, leases)

Real Property (Realty)

Land and interests in land (land, buildings, fixtures)

Personal Property (Chattel)

Every other thing of interest that is not real property (Goods, negotiable instruments, stock certificates, etc…)

Fixture

An article or piece of property that was formerly treated as personal property but has been attached in such a manner to land or a building that it is now designated as real property even though it retains its original identity

Personal Property Transfer by SALE

A sale of tangible personal property (goods) is transfer of title to specified existing goods for a consideration known as the price (Consideration = price)

Personal Property Transfer by GIFT

A transfer of title to property from one person to another without consideration (No consideration)

* Delivery
* Intent
* Acceptance
* Classification

Donor

The maker of the gift

Donee

The recipient of the gift

Constructive Delivery

Frequently, an item, because of its size, location, or intangibility, is incapable of immediate manual delivery. In such cases, an irrevocable gift may be effected through the delivery of something that symbolizes dominion over the item

Personal Property Transfer by INHERITANCE

From a person who dies, either with or without a will

Personal Property Transfer by ACCESSION

Means the right of the owner of property to any increase in it, whether natural or human-made (For example, the owner of a cow acquires title by accession to any calves born to that cow)

* Growth
* Produce
* Offspring

Personal Property Transfer by CONFUSION

Intermixing of goods belonging to two or more owners such that they can identify their individual property only as part of a mass of like goods

* If due to mistake, accident, or agreement, loss is shared proportionately
* If caused by an intentional or unauthorized act, wrongdoer bears loss

(For example, John & Amanda each contribute 500 tons of coal to a storage pile. Each own half)

Personal Property Transfer By POSSESSION

A person may acquire title by taking possession of property

Abandoned Property

The finder is entitled to the property (Intentionally left)

Lost Property

The finder is generally entitled to the property (Unintentionally left)

Mislaid Property

The owner of the **premises** is generally entitled to the property (If property is intentionally placed somewhere by the owner, who then unintentionally leaves it)

Treasure Trove

The finder is entitled to the property (The property must have been hidden or concealed for such a length of time that the owner is probably dead of undiscoverable)

Property Insurance

Contractual arrangement that distributes risk of loss among a large number of members (the insureds) through an insurance company (the insurer)

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Coverage - Of fire and property (casualty) insurance provides protection against loss due to fire and related perils

Types of Fire - Friendly Fire

Fire contained in its intended location (fireplace)

* No coverage

Types of Fire - Hostile Fire

Any fire outside its intended or usual location

* Coverage

Co-Insurance

therReduction in benefits for underinsuring the value of property based on a percentage stated in the insurance policy and the amount underinsured

* Usually, 80%
* Deductible (Fixed $)

Other Insurance Clauses

If multiple insurers are involved, liability is distributed *pro rata*

*Pro Rata*

Proportional

Types of Policies - Valued Policy

Covers full value of property as agreed upon by the parties at the time the policy is issued

Types of Policies - Open Policy

Covers fair market value of property as calculated immediately prior to the loss

Insurable Interest

An interest in someone’s property that justifies insuring the property

* The interest must exist at the time the property loss occurs
* Risk exposure

Premiums

Amount to be paid for an insurance policy

* Consideration paid by insured

Defenses of the Insurer - Misrepresentation

False representation of a material fact made by the insured that is justifiably relied upon by the insurer

Defenses of the Insurer - Breach of Warranty

The failure of a required condition

Defenses of the Insurer - Concealment

Fraudulent failure of an applicant for insurance to disclose material facts that the insurer does not know

Waiver

An insurer *intentionally* relinquishes the right to deny liability

Estoppel

An insurer is prevented by its own *conduct* from asserting a defense

Termination

Insurance contract may be terminated by due performance or cancellation

Bailments

The temporary transfer of personal property by one party (Bailor) to another (Bailee)

For the Bailor’s Sole Benefit

Include the gratuitous custody of personal property and the gratuitous services that involve custody of personal property, such as repairs and transportations (EX: Tom lets Sue store her bicycle in his garage - Sue is bailor)

For the Bailee’s Sole Benefit

Usually limited to the gratuitous loan of personal property by the bailee (EX: Tom lets Sue borrow his car - Sue is bailee)

For Mutual Benefit

Includes ordinary commercial bailments, such as delivery of goods to a person for repair (Tom drops off his car at Sue’s auto shop for an oil change - Sue is bailee)

Essential Elements of Bailments

1) The delivery of possession from a bailor to a bailee

2) The delivery of personal property, not real property

3) Possession without ownership by the bailee for a determinable period

4) An absolute duty on the bailee to return the property to the bailor or to dispose of it according to the bailor’s directions

Bailee’s Duties to Exercise Due Care

The bailee must exercise reasonable care to protect the property and to return it to the proper person

Bailee’s Absolute Liability

1) the parties so agree;

2) industry custom requires the bailee to acquire insurance, but fails to do so; **or**

3) the bailee uses the bailed property in an unauthorized manner (Ferris Beuller’s Day Off)

Bailee’s Right to Limit Liability

Certain bailees are not permitted to limit their liability for breach of their duties, except as provided by statute

Bailee’s Right to Compensation

Entitled to reasonable compensation for work/services performed

Bailor’s Duties

* Bailment for benefit of bailee, the bailor warrants she is unaware of any defects
* Other cases, the bailor has a duty to warn of all known defects and all defects she could discover upon a reasonable inspection

Pledge

A bailment for security in which the owner gives possession of her personal property to another to secure a debt or the performance of some obligation (Security interest by possession)

Warehousing

A bailee who, for compensation, receives goods to be stored in a warehouse (Storing of goods for compensation)

Safe Deposit Boxes

A majority of States hold that a person who rents this from a bank enters into a bailment relationship (Renting these creates a bailment)

Carriers of Goods

Anyone who transports goods from one place to another, either gratuitously or for compensation, is a carrier (Transporter of goods)

Innkeepers

Hotel and motel owners or operators are held to the same strict or absolute liability for their guests’ belongings as are common carriers for the goods they carry (hotel or motel operator)

Document of Title

An instrument evidencing ownership of the goods it covers

Warehouse Receipt (Type of Doc of Title)

Receipt issues by person storing goods

Bill of Lading (Type of Doc of Title)

Issued to the shipper by the carrier


1. As a receipt for the goods
2. As evidence for their carriage contract, and
3. As a document of title

Negotiability

Document of title is negotiable if, by its terms, the goods are to be delivered to *bearer* or to the order of a named person

* Not negotiable instrument

Due Negotiation

Delivery of a negotiable document in the regular course of business to a holder, who takes in good faith, for value, and without notice of any defense or claim

* Similar to Holder in Due Course

Ineffective Documents

For a person to obtain title to goods by negotiation of a document, the goods must have been delivered to the issuer of the document by their owner or by one to whom the owner has entrusted actual or apparent authority (i.e., agent)

Freehold Estate

A right of ownership of real property for an indefinite time or for the life of a person

Present Interest

* Immediate possession
* Fee estate & life estate

Fee estate

The right to immediate possession for an indefinite time and the right to transfer the interest by deed or will

Future Interest

* Future possession
* Remainder (3rd party) & Reversion (Original grantor)

Fee Simple

Absolute ownership of property; may be sold or passed to heirs

Qualified Fee

Ownership subject to its being taken away upon the happening of an event

* To A in fee simple absolute, as long as used as residence

Life Estates

Ownership right in property for the life of a designated person

* **To A for life**, then to B
* Measuring life can be any living person
* To A for the life of C

Remainder

The ownership that takes effect when the prior estate terminates

* To A for life, **then to B**
* May be reversion
* Property returns to original grantor (or their estate)

Reversions

Grantor’s (or heirs) right to return of property upon termination of another estate

Remainders

* Third party
* Vested
* Contingent

Vested

Unconditional remainder that is a fixed, present interest to **be enjoyed in the future**

Contingent

Remainder interest conditional upon the happening of an event in addition to the termination of a preceding estate

* To A for life, remainder to C if married, otherwise to D

Lease

Contract for use and possession of land and grant of an (temporary) estate in land

Landlord

Owner of land who grants a leasehold interest to another while retaining a reversionary interest in the property

Tenant

Possessor of the leasehold interest in the land, during lease term

Definite Term Lease

Lease that automatically expires at the end of the term

Periodic Tenancy Lease

Lease that continues for successive periods unless terminated by notice

* Month to month

Tenancy at Will Lease

Lease that is terminable at any time

Tenancy at Sufferance Lease

Possession of real property without a lease

* Tenant overstays lease

Assignment

Transfer of all of the tenant’s remaining interest in leasehold

* Assignee takes place of Tenant
* Pays rent to Landlord directly

Sublease

Transfer of less than all of the tenant’s interest in the leasehold

* Subtenant pays rent to Tenant
* Subtenant liable to Tenant

Tenant’s Obligations

The tenant has an obligation to pay a specified rent at specified times, or if none specified, to pay a at the end of the term

* Rent obligation usually specified in written lease
* Lease usually requires rent paid at beginning of period

Destruction of the Premises

Under the common law, if the premises are destroyed the tenant is not relieved of his obligation to pay rent and cannot terminate the lease

* Most states have statutes that modify this position

Eviction

If the tenant breaches one of the covenants of her lease, the landlord may terminate the lease immediately and evict her from the premises

Abandonment

If tenant abandons property and the landlord reenters or relets it, tenant’s obligation to pay rent terminates

Quiet Enjoyment

The right of the tenant to have physical possession of the premises free of landlord interference

Fitness for Use

Most courts impose for residential leases an implied warranty of habitability that the leased premises are fit for ordinary residential purposes

Repair

Unless there is a statute or a specific provision in the lease, the landlord has no duty to repair or restore the premises

* Most states have statutes that impose habitability obligation on landlord
* Lease agreement may impose duty of repair

Tenancy in Common

Co-ownership in which each tenant holds an undivided interest with __no right of survivorship__

* Most popular form of joint ownership
* A, B, & C own Greenacre as tenants in common. If B dies, his 1/3 interest passes to his heirs (not automatically A or C)

Joint Tenancy

Co-ownership with the right of survivorship

* A, B, and C own Greenacre as joint tenants. If B dies, A & C become 50/50 owners

Requires the presence of the four unities:


1. Time
2. Title
3. Interest
4. Possession

Tenancy by the Entireties

Co-ownership by spouses in which neither may convey his or her interest during life

* Property acquired during marriage
* Terminated via divorce
* Property passes to surviving spouse

Community Property

Spouses’ rights in property acquired by the other spouse during their marriage

* Income received during marriage split evenly between spouses
* Property acquired during marriage owner evenly by each spouse
* EXCEPTION for gifts & inheritances
* Community property states

Condominiums

Separate ownership of individual units (interior) with tenancy in common with respect to common areas (exterior)

Cooperatives

Property owned by a corporate entity/association

* Tenants own stock in owner entity
* Entity leases units to its shareholders as tenants

Easement

Interest that provides a limited right to use the land of another in a specified manner

Appurtenant

Rights and duties created by the easement pertain to and run with the land of the owner of the easement (dominant parcel) and the land subject to the easement (servient parcel)

* EX: Right to access Redacre via crossing Blueacre

In Gross

Rights are duties created by the easement are personal to the individual who received the right

Creation of Easements

Easements may be created by


1. Express grant or reservation
2. Implied grant or reservation
3. Necessity
4. Dedication, and
5. Prescription (adverse use)

Profits a’ Prendre

Right to remove natural resources from another’s land

* Extract oil and gas from another’s land

Licenses

Permission to use the land of another

* Less extensive than an easement (short term)
* EX: Permission to park your car
* EX: Customers may enter business premises

Transfer: Sales Contract Formation

A contract to transfer any interest in land must be in writing to be enforceable

Marketable Title

The seller must transfer marketable title, which is a title free from any defects or encumbrances

Implied Warranty of Habitability

* Residential Property
* Common Law Rule
* Statutes

Common Law Rule

Under caveat emptor (“let the buyer beware”) the seller is not liable for any undiscovered defects