I. Bundle of Sticks

Property = rights and interests

• these rights are relational, meaning they may change depending on who it on the other side

Right to Exclude: a right inherent in owning real property, including the right to exclude anyone and anything from one’s property that one does not want on the property.

• Property rights are not absolute, visitors can legally enter upon a property to provide services to tenants, even over the property owner’s objection

• Also, if you are engaged in business and soliciting members of the public, your right to exclude can be qualified in a place that is a public forum.

Right by Occupancy: exists only for the time that the person retains actual possession of the property. But, if the person increases the value of the property by his or her labor and expense the person then may leave it for a reasonable time while arranging for it to be transported away. if someone takes the property away during this time, the owner may bring an action against the person who took the property.

Right to Use: the right to use your property in whatever manner you see fit

• limitations

  • zoning

  • sic utere tuo: means that one may not use property in a manner that causes unreasonable/intentional harm to the use and enjoyment of another’s land. This is not “any harm” but only “unreasonable harm”

Right to Destroy: owners have the right to destroy their property unless doing so goes against public policy, such as if it would unnecessarily harm others and decrease their property values.

Ad Coelum Doctrine: common law rule providing that a landowner owns everything above and below the surface of the land. Generally this ownership of land includes possession of not only the surface but also the airspace above the surface and the sub-surface below

• example: mineral estate is an ownership interest in below-ground minerals, such as oil. A mineral estate typically appears in contrast with a surface estate, which is an ownership interest in the land iteslf and anything about the ground.

II. Property Acquisition

Capture and Find

First Possession: a doctrine acknowledging that the first person to control an unowned object, with the intent to make it their own, becomes the rightful owner of the object

Rule of Capture: ownership of unowned property is awarded to the first possessor. This is the basis of the allocation of property rights in water, oil and gas, and ocean fishing

• property in wild animals is acquired by occupancy, meaning at least mortally wounding or capturing from a distance, and at most physical possession

• court may uphold the customary method of acquiring a property right. Example: whaling custom where the person who found the whale notifies the whaler

Law of Finders: one who finds lost property gets to keep it, at least until the true owner reclaims it, and even then the finder might, by law or custom, expect to received some sort of reward for recovering the lost item

• actual possession is prima facie evidence of a legal title in the possession. Possession of personal property gives rise to a rebuttable presumption of ownership.

• an exception to the law of finders is that when the finder is trespassing on someone else’s land the trespasser might not get to keep what he found

Classification of Found Property

• abandoned property: the owner has voluntarily relinquished rights to the property; the finder obtains ownership of the property against all others, including the former owner

• lost property: the owner has involuntarily and unintentionally lost possession; the finder obtains title subject to the rights of the original owner

• mislaid property: the owner voluntarily and intentionally places the property somewhere and then neglects to return for it or forgets where it is; the owner of the locus in quo (place in which), rather than the finder, obtains the right of possession against all but the true owner. If an object is on your property, then you are presumed to have constructive possession

• treasure trove: coins, currency, jewels, gold, or silver found hidden in the earth or another private place; belongs to the finder, not the owner of the land where found, subject to the rights of the true owner

Gift: a gift of personal property requires

1) donative intent

2) delivery of the gift to the donee; and

3) acceptance of the gift by the donee

*all three elements don’t need to happen in a particular order

Intent: donor must exhibit clear and unmistakable intention to make a gift and to make a present transfer of interest in the property. One must also intend to irrevocably and completely part with the property; tentative or conditional intent is not enough.

Delivery: donor must deliver the gift either manually, constructively, or symbolically. Manual delivery is the actual physical transfer of possession. Constructive is giving the control over the property and is acceptable if manual is impossible or impracticable. Symbolic is handing over something that represents the gift.

Acceptance: once the donee exercises dominion over the gift or makes any assertion of ownership acceptance is implied and generally acceptance is presumed when the gift is valuable

Types of Gifts

Inter vivos - a gift of property during the donor’s lifetime made without consideration. Not revocable once it is complete

Causa Mortis - gifts that are made by a donor in contemplation of the donor’s impending death. This kind of gift is revocable if the donor recovers

Adverse Possession: a statute of limitations where if you do not bring an action to eject a trespasser in the statutory period, you have lost your right to do so.

Elements of Adverse Possession - OCEAN

1) Open: means that possession cannot be hidden

2) Continuous: means the possession must be uninterrupted for the statutory period

3)Exclusive: means the possessor should not share possession with others, including the true owner

4) Adverse: means the possession must be contrary to the interests of the true owner (“hostile and under a claim of right”)

5) Notorious: means that the possession must be conspicuous or prominent

Notes on Adverse Possession:

• To claim adverse possession a person must occupy under a hostile claim of title which cannot be done if the person knows they don’t own the land

• The court usually finds that rights should be awarded to those who most productively use the property

• you must have a bona fide claim and believe in your own mind that you have a right as the owner. The court will not grant adverse possession to someone because they wished to “squat” on it

• in chattel cases the clock does not start until the owner discovers or reasonably should have discovered that the item has been taken

Three Approaches to the State of Mind and Adverse Possession

• Objective: where the trespasser’s subjective beliefs are irrelevant; the trespasser must reasonably and objectively appear to treat the property as his own

• Good Faith: answers title only to those who make a legitimate mistake

• Hostile or Aggressive Trespasser: require the trespasser to know she is trespassing, but nevertheless intended to claim the property as her own, or at least intend to claim it regardless of whether she owns it

Adverse Possession of Chattels

• general elements of adverse possession (hostile, actual, visible, exclusive, and continuous)

• typically, courts hold that the statutory time period begins to run from the time the adverse possessor gains hostile possession of the personal property

  • also Discovery rule and Demand and Refuse Rule

III. Property Interests

Types of Co-Ownership

Tenancy in Common: created by a conveyance to two or more people who may have unequal shares unless otherwise specified. Each co-owner has a right to sell, lease, or encumber their share without permission of the other co-tenants. Upon death, each co-tenant’s share passes with his or her estate

Joint Tenancy: Different from tenancy in common in that there is a right of survivorship and when one tenant dies their interest is automatically absorbed by the co-tenant. To create one there must be an intent to create clearly specified in the deed. There also must be four unities:

• Possession - joint tenants have equal rights to possess the whole

• Interest - must have acquired the same type of interest

• Time - must acquire interests in the property at the same time

• Title - must have acquired interests in the same instrument

Tenancy by the Entirety: basically a joint tenancy with the fifth unity being marriage. No possibility of unilateral severance, and it cannot be partitioned unless both spouses consent.

Destroying a Joint Tenancy

Severance: an action of a joint tenant which removes one of the unities and severs the right of survivorships. The co-tenants remain in concurrent ownership, but the right of survivorship has been terminated.

Partition: ends the co-ownership of property and divides the property between the co-owners. When the property is partitioned, the property will no longer be in concurrent ownership which is different from severance. You always have the right to partition unless it goes against public policy or if it would wreak havoc.

• Partition in Kind: (actual or physical partition) the property is physically divided into pieces and given to each co-tenant as separate property; the law prefers this type.

• Partition by Sale: the property is sold by the court and the proceeds divided according to the ownership shares of each co-tenant; ordered only if partition in kind cannot be made without prejudice to the interest of the parties

Rights and Relations Between Tenants

General Rules:

• rents received: If a cotenant leases out to a third party, they need to account to the other cotenants for rents received

• carrying costs: Cotenants have a mutual obligation to pay the necessary cost of maintaining the property, including mortgage, insurance, taxes, and other necessary costs

• repairs and improvements: Cotenants who make repairs to the property, even if necessary, do not have the right to demand contribution from the other cotenants. In an accounting action or upon partition, the paying cotenant should get credit for necessary repairs. For improvements, the cotenant making the expenditure receives a credit upon partition for the increase in property value attributed to the improvement

• waste: A cotenant may be able to enjoin actions that damage the property or, if the action has already occurred, may obtain damages for the decline in property value

Ouster: the denial of a co-tenant’s right to possession. Duty to pay rent is implicated only when one has been ousted. There must be a demand to occupy, a rejection of that demand, and usually something in writing. In some cases it is more of a constructive ouster, like not giving them the code to the property

Marital Property

separate property: this is the common law approach where, upon marriage, each spouse may continue to hold and manage separate property titled in his or her sole name.

community property: this is the minority rule where during the marriage, the earnings of either spouse and any property acquired with those earnings becomes community property owned equally and jointly by the couple regardless of how it is titled. In death, the surviving spouse gets 50% of the estate and in divorce some states split 50/50 while others divide assets equitably.

Doctrine of Elective Share: on the death of a spouse, the surviving spouse is entitled to take a certain share of the deceased spouse’s estate, regardless of the provisions of the will. The amount of share ranges from 1/3 to 1/5 of the estate.

IV. Estates and Future Interests

Future Interest = A property interest that will not accrue until a later date or upon the occurrence of a prescribed event.

Basic Estates

Fee Simple Absolute: you own the property outright with no encumbrances. This is a present possessor estate. We assume fee simple absolute unless otherwise stated because the presumption is that you are giving the best ownership. it is indefeasible, meaning it will not terminate and revert to someone else on the happening of some event

Life Estate: you have a present possessory interest until you die. The terms must be defined in a lifetime and cannot be a set amount of years or something. The estate can then either revert to the original owner or it can go to a third party who has a remainder. You can also give yourself a life estate or you can create more than one life estate.

Estate for Years: a tenancy for a specified period of time. It can either revert to the original owner or it can go to a third-party remainder.

• Remainders

  • a future interest that is created in the same conveyance as the corresponding life estate and has the potential to become possessor immediately and automatically when the life estate ends. A remainder can only follow a life estate, a fee tail, or a leasehold or other estate for a definite term of years.

  • vested remainder: it is held by a living, identifiable person, and there are no conditions to that person taking possession of the property when the life tenant dies. It tells us exactly what happens when the life estate ends

  • Contingent Remainders: An interest in property that will vest if a contingent event occurs, and if that contingent event occurs, the right to possession will accrue when the interests of the prior tenants end. It is granted to a person that is not in existence or ascertained.

Defeasible Estates

Property interest in which the holder must use the property in a defined manner; in the event that the property ceases to be used in that manner, the property reverts to the grantor.

Fee Simple Determinable: a limitation durational character. The duration is built into the granting language such as “so long as” or “until.” If a violation occurs the property automatically reverts to the grantor, this is a future interest held by the grantor and is called a “possibility of reverter.”

Fee Simple Subject to a Condition Subsequent: a limitation with conditional language that follows language granting a fee simple absolute. If a violation occurs, the grantor has the option of retaking the property; this is a future interest retained by the grantor and is called a “right of entry” or “power or termination.”

The Executory Interest

a future interest held by a third person who is a non-grantor that either cuts off another’s interest before its natural expiration or begins after the natural termination of a preceding estate

V. Real Estate Transactions

Pre-Contract Period: the time period preceding the moment at which the owner of real property executes a contract for sale with the purchaser where the broker plays a central role in helping the seller locate a purchaser

Executory Period: the time period immediately following the signing of the contract and until the moment of closing where the seller has yet to give the purchaser the deed and the purchaser has yet to give the seller the complete purchase price.

The Enforceable Contract and the Statute of Frauds: the statute of frauds applies to agreements to transfer any interest in real property. The property transaction is the conveyance and the agreement that sets up the conveyance is contractual so there must be an offer, consideration, acceptance, and meeting of the minds

The Basics of Statute of Frauds:

• parties: the purchaser and the seller

• price: the consideration to be paid

• property: the real property that is to be conveyed

The Description of the Real Property

• the description must be sufficient to allow a third person to unambiguously determine the intent of the parties

• metes and bounds: a method of describing the boundaries of a plot of land, utilizing compass headings and distance measurements. It is a written description that will satisfy the statute of frauds if it ends where it starts

The Exceptions to the Statute of Frauds

a court may order specific performance of the contract if the purchaser can demonstrate that the purchaser has partly performed on the contract. It rests on whether there was a detrimental reliance and evidence of an agreement that is a substitute for a written agreement.

Title Examination and Marketable Title

the law requires that the seller deliver “marketable title,” or the purchaser can walk away from the transaction and demand the return of his earnest money. A marketable title is a title that a reasonably prudent buyer would accept under the circumstances or that is reasonably free from doubt. Most contracts will contain an express obligation to deliver marketable title at closing, but regardless, there is an implied obligation.

Elements of Marketable Title

• seller must be the “record owner” of the property they intend to sell

• seller must have a fee simple absolute ownership without encumbrances or limitations

• by purchase of the property, the purchaser will not be placed into a non-frivolous prospect of litigation over ownership

Lohmeyer v. Bower: a violation of a government regulation is a per see title defect

Caveat Emptor and the Quality of the Property

common law concept that the buyer must accept the property in its existing condition regardless of any defects in physical quality, and as a result, the seller had no duty to disclose defects in the condition of the premises

Discovering the Problem

Patent: discoverable by purchaser: the modern legal rule places the risk of the loss on the purchaser if the defect is patent.

Latent: non-discoverable

Stamovsky v. Ackley: If a seller creates a condition that materially impairs the value of a contract and is within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, nondisclosure of the condition constitutes a basis for rescission of the contract.

Van Camp v. Bradford: In general, a seller need not disclose a stigmatizing factor associated with his or her residential property.

Loans

Seller financing - a purchaser will not procure a loan from a financial institution and will instead purchase the property from the seller on credit

The standard mortgage - a lien against property that is given as security for a debt or other obligation and that is removed when the debt or obligation is satisfied. The debt that the mortgage secures is represented by a promissory note.

• lien theory: gives the mortgagee a security interest in the property but has no effect on title or possession. The mortgagor retains full title and has the sole right of possession unless the mortgagee forecloses

• title theory: (minority rule) gives the mortgagee legal title to the property. If the mortgagor defaults, the mortgagee keeps the property.

Foreclosure: in the event of a default the mortgagee may seize and sell the property to satisfy the debt

• judicial foreclosure: the mortgagee files a lawsuit seeking a judicial decree of foreclosure by sale. The mortgagee will also name as parties any junior lienholders or others who claim an interest. If they win the court will order a power-of-sale foreclosure

• non-judicial foreclosure: authorizes the lender to foreclose on the property without going to court and can be done only pursuant to a “power of sale” provision in the mortgage document, meaning the borrower grants the lender, a right to sell the property at a private sale in satisfaction of the debt.

Price: courts use different rules to test the sale price of foreclosed property. the Shock the conscience standard looks at whether the price is so low that the court, an objective third party, would be scandalized by the amount paid by the purchaser at the foreclosure auction. The restatement says that a court is warranted in invalidating a sale where the price is less than 20 percent of fair market value

Equitable Conversion: a doctrine that regulates the ownership of real property in the interval between contract formation and closing. Once the parties execute an enforceable contract for the sale and purchase of the property, the buyer is regarded as the equitable owner of the property, and the seller acquires the equitable right to be paid the purchase price. The buyer’s equitable ownership is treated as an interest in real property, and the seller’s right to the sale proceeds is treated as personal property.

Post Closing Period

Deeds

Merger Doctrine: In real property law, the merger doctrine states that the contract for the conveyance of property merges into the deed of conveyance. This means that any guarantees made in the contract that are not reflected in the deed are extinguished when the deed is conveyed to the buyer

Quitclaim: contains no promises whatsoever regarding title. Enforceable for conveyance in every jurisdiction

Warranty Deeds: contain specific protections for the grantee of the deed. Meant to provide the grantee of the deed with recourse (the ability to sue) if it later turns out there is a defect in title.

• Present Warranties: (also known as Covenants of Title) promises that are breached, if at all, at the time of conveyance

  • Seisin: grantor warrants that he has rightful freehold possession (i.e. that he is the owner of the property in fee simple absolute)

  • Authority to convey: grantor warrants that he has the authority to convey the interest in property

  • no encumbrances: grantor warrants that there is no encumbrances at time of conveyance affecting title to the real property

• Future Warranties: promises that are breached, if at all, at some point following conveyance

  • Defense: (also known as Covenant of General Warranty) grantor warrants that he will appear in court and defend grantee against a third-person alleging a superior title

  • Quiet Enjoyment: grantor asserts that grantee will not be disturbed in possession by someone with superior title

  • Further assurances: grantor promises to take action as necessary to correct a title problem that would otherwise be a violation of the present warranties. Requires the grantor to take action after closing as necessary to protect grantee’s title

Limited (or special) warranty deeds: protects grantee against encumbrances and defects in title made by, through, or under the immediate grantor only

Recording

First in time: the person who received an interest in the land first prevails

Recording Statutes

• race: gives priority of title to the party that records a claim first, even if the party had notice of an earlier unrecorded claim on the same property

• notice: a type of recording act that gives priority of title to the party with the most recently obtained valid claim, but only if the party also lacked notice of an earlier claim. Notice may be actual, constructive, or by inquiry.

  • A bona fide purchaser - One who purchases property for valuable consideration without notice of prior claims in the property or defects in the seller’s title.

  • shelter rule - bona fide purchaser has the ability to extend his privileged position to a third person who has notice or would be deemed to have notice. anyone who takes property from a BFP steps into the BFP’s shoes, and therefore prevails against anyone against whom the BFP would have prevailed

• race-notice: affords priority to a subsequent purchaser or grantee who accepts an instrument without notice of any previous claim and records the instrument prior to the recording of any instrument establishing an earlier claim

VI. Landlord Tenant

Types of Leases

Tenancy for a Term of Years - a tenancy for a specified period of time

Periodic Tenancy - continues from period to period until termination

Tenancy at Will - leasehold interest wherein the tenancy may be terminated at any time by either the landlord or the tenant

Tenancy at Sufferance - a tenancy obtained lawfully at first but unlawfully retained after the lawful tenancy’s expiration. The landlord may either treat the tenant as a trespasser or a tenant under a new lease.

Right to Possession

American Rule - older common law rule. The landlord conveys the exclusive possessor rights and retains only a reversion. The new tenant must remove the holdover

English Rule - requires the landlord to place the tenant in actual physical possession

Right of Quiet Enjoyment: the tenant’s right to exclude means that even the landlord does not have the right to enter the tenant’s property. This is a default rule and the tenant may always grant the landlord a right in the lease to enter the premises.

If a landlord violates the implied covenant of quiet enjoyment, the tenant could sue but could not withhold rent:

• common law exception where the landlord or a party claiming under a landlord physically removed the tenant from the premises, then the tenant is relieved from rent

• Constructive evictions where the landlord interferes with the tenant’s use of the premises to such a significant extent that forces the tenant to leave would also relieve them from rent

Constructive Eviction: the landlord, through its action or inaction, will render the premises “untenable” so that they have been “constructively evicted.” The remedy for the tenant is that the lease is terminated, and they are relieved from paying rent.

Elements of Constructive Eviction

1. substantial interference: must be substantial and of a kind that would cause a reasonable person in tenant’s position to be forced to leave the premises the right away or as soon as possible

2. notification and opportunity: the tenant must notify the landlord of the interference, and give the landlord an opportunity to fix the problem, if possible and within a reasonable time frame

3. vacate: the tenant must actually vacate

4. breach of express or implied promise in lease: the interference must result from a breach of an express or implied promise made by the landlord to the tenant in the lease

Implied Warrant of Habitability: a promise that the landlord will keep the premises in good repair and generally in livable condition for the term of the lease. Different from quiet enjoyment in that you don’t have to move out and you don’t have to pay your rent. If it violates a state ordinance or a building code it is per see inhabitable

Hilder v. St. Peter: all residential rentals include an implied warrant of habitability, which cannot be waived or disclaimed

Tenant’s Duties: to take physical care of the premises and to pay rent

Abandonment: a tenant walks away from the premises and relinquishes any intention to return. If the tenant abandons, the landlord may treat the lease as continuing and the rent accrues or the landlord may “accept surrender” and treat the lease as terminated from the moment of acceptance. Taking the keys is akin to accepting a check. The landlord may make clear that accepting the keys is not accepting surrender.

Landlord Duties: landlord is under no duty to keep tenant’s safe from crime except where there is a defect in the premises which enhanced the likelihood, where it is was reasonable to foresee, or if you voluntarily take up the task of making the property secure.

VII. Servitudes

Easements: you obtain the right to do something on the burdened party’s land

• affirmative - entitles the benefited party to do something on the land

• negative: restrict the burdened party from doing something

• easement appurtenant - benefits the easement holder

• easement in gross - more of a personal right that you give someone (i.e. the phone line that runs through your backyard)

  • personal, meaning the easement holder has an interest in the servient tract regardless of whether the benefited party owns particular land

  • often used for billboards, utilities, railroads

Creation of Easements

• you cannot create an easement in a third party (“stranger to the deed”)

• in many cases, a deed from a developer will simply refer to a subdivision plat, which contains a survey map showing the location of the easements across each lot

• Express: written by grant or reservation

  • must be in writing that complies with the statute of frauds

  • should specify location, extent, and the proper use of the easement

• Estoppel: the dominant tenant reasonably relied to his detriment on the servient tenant’s promise

  • the court will not invoke its equitable power absent substantial injustice

• Implied Easements:

  • focus on what the parties intended at the time of the conveyance

  • must arise when a common owner splits her property and conveys part of it to someone else

    • implied by prior use: if a particular use of the servient parcel already existed and was reasonably necessary to the use and enjoyment of the dominant parcel

      • prior use must have been apparent and continuous and use was reasonably necessary

    • implied by necessity: if an easement became necessary due to the conveyance.

      • need for the easement did not arise until the property was divided

• Prescription: same thing as adverse possession

Termination or Change

• location can be changed by a new document, signed by both parties in agreement

• termination

  • abandonment: they no longer need the easement and they no longer use it

  • merger: properties have merged and there is no longer a dominant property

  • estoppel: someone relies on the fact that you no longer use the property and you see that they think that

  • condemnation: if the government acquires the servient tenement by eminent domain

  • prescription: in an adverse manner you can take the property back

• misuse

Real Covenants: promises respecting the use of land.

to run with the land to subsequent owners:

• intent for it to run with the land

• it must touch and concern the land

• there must be horizontal privity

• party bearing the burden must have had notice

  • covenants may be implied on lots with a uniform pattern of restrictions within a common scheme of development

VII. Takings

Eminent Domain

• the takings clause of the Fifth Amendment requires the government to take private property only for public use and to provide just compensation

just compensation - means the property’s fair market value, based on its highest and best use. Compensation is often based on sales of comparable property or the capitalization of the property’s expected income stream

public use - interpreted to require a valid public purpose

Regulatory Takings

• may occur when government action impairs property value without actually confiscating it

• Penn Central Test - factors used to determine when the diminution of value equals a taking that requires just compensation

  1) The law’s economic impact (considers the extent to which the law has decreased the property’s value); 

  2) The owner’s reasonable investment-backed expectations (whether the owner could have reasonably anticipated the kinds of restraints being challenged when the owner invested in the property); and 

• 3) The character of the government action (beneficial public purpose?)

Per see regulatory takings

• permanent physical occupations (Loretto)

  • any government action that authorizes a permanent physical occupation of private property is a taking regardless of whether the action achieves an important public benefit or has only minimal economic impact

• total takings

  • 100% diminution in value