Personal Property, Real Property, Wills and Trusts

Personal Property

  • Purchase- Acquiring ownership through buying property.

  • Inheritance- Receiving property through a will or as an heir.

  • Possession- Acquiring ownership by taking control of property.

  • Production- Creating property through manufacturing or development.

  • Gift

    • Acquisition - Acquiring ownership by receiving property voluntarily without consideration.
    • A voluntary transfer of ownership for which no consideration is given.
    • For a gift to be effective, the donor must:
      • Have intent (based on the relationship, language, conduct, value, etc.).
      • Deliver the gift (directly or indirectly), physically or constructively.
      • Have the recipient accept the gift,
    • Inter vivos vs. Cuasa mortis
      • Gifts cuasa mortis only becomes absolute when the donor dies, and are revoked if the donor survives.

  • Accession

    • The creation of added value to existing personal property.
    • If an improvement is made wrongfully (i.e., without the owner’s consent), the owner retains ownership of the entire property.

  • Confusion

    • Commingling goods to the extent that one person's property cannot be distinguished from another person’s.
    • If confusion occurs following a mistake, agreement, or act of a third party, the owners retain the property based on their contribution.
    • If confusion occurs following an intentional act, the innocent party usually receives control over the entire property.

  • Mislaid Property:

    • Property that is placed somewhere voluntarily by the owner and then inadvertently forgotten is mislaid.
    • A finder of mislaid property will not acquire title to the goods, and the owner of the place where the property was mislaid becomes a caretaker of the mislaid property.

  • Lost Property

    • Property that is involuntarily left by the owner is lost.
    • A finder of lost property can claim title to the property against the whole world except the true owner.
    • When a finder of lost property knows the true owner and fails to return the property to that person, the finder is guilty of the tort of conversion.
    • Many states have estray statutes, requiring finders to report their discoveries in exchange for allowing them to keep any unclaimed property after a certain period of time.

  • Abandoned Property

    • Property that has been discarded by the true owner, with no intention of claiming title to the property in the future is abandoned.
    • A finder of abandoned property can claim title to it.
    • Exception: trespassing on another’s property.
    • The owner of lost property who eventually gives up any further attempt to find it is frequently held to have abandoned the property.
    • Who decides what’s “lost” and what’s “abandoned”?

  • Bailments

    • Delivery of personal property without the intent to deliver title (e.g., loan, lease, store, delivery, etc.).
    • Bailment agreements can be express or implied (subject to the statute of frauds).
    • The bailee must have exclusive control over the property and knowingly accept the property.
    • The bailee must exercise due care (or they commit the tort of negligence) and return or dispose the property at the end of the bailment period in accordance with the bailor’s instructions.

  • Special Bailments

    • Common carriers: licensed to transport freight or passengers for the public.
      • Strict liability which cannot be contracted away (but can be capped).
    • Warehouse companies: As professional bailees, they are subject to a heightened standard of care when determining negligence.
    • Hotel operators: Traditionally subject to strict liability, but in most states can avoid it if they provide a safe for guests’ valuables and inform them that a safe is available.
      • Statutes often limit the liability of articles not kept in the safe.

Real Property

  • Definitions
    • Land and all natural or manmade structures attached to it.
    • Much of the space above the land.
    • All of the area underneath the land, including resources and water.
    • Plant life and vegetation (as long as they are in the soil).
    • Fixtures: Things attached to the to the land/property with the intent of becoming a permanent feature
      • Can the object be removed without substantial damage to the property?
      • Is the object so adapted to the rest of the realty that it became a part of it?
      • Exception: Trade fixtures installed by tenant.
  • Ownership
    • Fee simple absolute: The owner has complete and exclusive rights forever.
    • Life estate: Last for the lifetime of a specified individual.
      • That person (tenant) can use the land as long as they don’t commit waste.
      • Must pay property taxes and keep the property in good condition.
      • Ladybird deeds (FL).
  • Multi-Party Ownership
    • Tenancy in common: More than one person owns the entire property, and any owner may transfer their interest without consent.
      • The default presumption in most states.
    • Joint tenancy: More than one person own the entire property, but transferring the interest terminates the joint tenancy.
      • Joint tenants have right of survivorship for the other tenants’ interest.
    • Tenancy in the entirety: More than one person (typically a married couple) owns the property, and may not transfer the interest therein.
      • Divorce, death, or mutual consent terminate tenancy in the entirety.
  • Leasehold Estate: A temporary, qualified right to exclusive possession of property
    • Fixed term tenancy: A lease for a specified period of time.
    • Periodic tenancy: No specified term; rather, rent is paid at certain intervals, at which point the lease is renewed for another term.
      • Fixed-term turning into periodic.
    • Tenancy at will: Lease until one party chooses to terminate (uncommon).
    • Tenancy at sufferance: wrongful possession of property.
    • Subletting vs. assignment.
  • Nonpossessory Interests
    • Easement appurtenant: The owner of land has the right to go on (or take from) adjacent property. The easement transfers with the land.
    • Easement in gross: A person may enter (or take from) a property. May not be transferred.
    • Easements may be created by:
      • Contract, deed, or will.
      • Implication.
      • Necessity.
      • Prescription (adverse possession).
    • License: Permission to enter one’s land for a specific purpose or period of time. Revocable by the licensor.
  • Transfer of Ownership
    • Seller must provide marketable title at closing.
      • Closing vs. contract.
    • New homes have an implied warranty of habitability.
    • Sellers must disclose any known defects in the property.
      • Note on caveat emptor.
    • After closing, the buyer should (but is not obligated to) record her ownership of the deed with the state/county.
  • Transfer - Deeds
    • A deed must include the name and signature of the seller, words of conveyance, and a description of the property.
    • A warranty deed includes the most protection against defects of title.
      • The seller has title to the property.
      • A covenant of quiet enjoyment.
      • A covenant that there are no known adverse claims to the property.
    • A special (or limited) warranty deed guarantees the latter, but only regarding claims that arose during the seller’s ownership.
    • A grant deed only guarantees that the seller has title.
    • A quitclaim deed only passes title – no guarantees.
  • Transfer – Adverse Possession: Obtaining legal title following wrongful possession
    • Possession must be actual and exclusive.
    • Possession must be open, visible, and notorious.
    • Possession must be continuous and peaceful.
    • Possession must be hostile and adverse.
    • Why reward illegal action?
  • Real Property Hypothetical
    • Grey owns a commercial building in fee simple. Grey leases the building to Haven Corporation.
      • Can Haven transfer possession for even less time to Idyll Company?
      • What if Grey sells Haven a life estate in the building?

Wills and Trusts

  • Terminology
    • Testator: The person making the will, making a testamentary disposition of the estate.
    • Estate: the property owned by the decedent at death.
    • Executor: Personal representative named in the will.
    • Administrator: Court-appointed representative in intestacy cases.
    • Intestacy: Where a person dies without making a will.
    • Codicil: An amendment to the will.
  • Bequests
    • Specific bequests: conveying specific property to another.
    • General bequests: conveying property not specifically identified, which can be described in monetary or group terms.
    • Residuary bequests: conveying the remainder of the property.
    • Abatement: reduction in the conveyed property due to insufficient assets in the estate.
    • Ademption: failure of a gift because the testator no longer owns it.
  • Willmaking Requirements
    • Testamentary capacity
      • Requires understanding the nature of the act, property, and heirs.
    • Testamentary intent
    • A written document
      • Some states allow video wills
    • The testator’s signature
    • Witness signatures
    • Note on holographic wills
  • Revocation:
    • The act of revoking or invalidating a previously made will
      • By physical act: intentionally destroying the will
        • Can be done at the direction and in the presence of the testator
      • Revocation by subsequent writing (new will or codicil)
      • By operation of law (e.g., divorce)
  • Issues in Wills
    • Testators are usually unable to disinherit their spouse but can disinherit their adult children.
    • Sometimes the law requires direct, specific disinheritance.
    • An heir can disclaim their gift (usually in writing).
    • Property passing outside the will.
    • Simultaneous death.
    • Probate.
    • In terrorem clauses.
  • Intestacy
    • Typically, the wife and/or child(ren) split the estate.
    • If there are no wife or children: Grandchildren -> parents -> collateral heirs -> state.
    • Stepchildren do not share in the estate, but legally adopted children are treated the same as biological children.
      • Adult adoption.
    • “Illegitimate” children may be entitled to share, depending on the state and whether or not parenthood was established or practiced.
  • Lineal Descendants: What if an heir dies before the decedent?
    • Per stirpes: lineal descendants of that heir split the gift equally.
    • Per capita: the gift is pooled and split for each generation.
  • Trusts
    • The person creating the trust is called a grantor or settlor, and the person managing it is the trustee.
    • Inter vivos trust is created during the grantor’s lifetime. A testamentary trust is contemplated and created in a will.
    • Revocable trusts allow the grantor to control property and amend the trust, and gains are subject to the grantor’s personal income tax.
    • Irrevocable trusts eliminate control by the grantor, but any gains from the trust are taxed separately.
  • Trusts - Continued
    • Pet trusts/honorary trusts.
    • Charitable trusts: Created for charitable purposes.
    • Spendthrift trusts: Created to protect the assets from creditors, releasing only limited portions to beneficiaries.
    • Medicaid trusts.
    • When is money distributed?
    • Rule against perpetuities: a trust cannot provide for the distribution of property beyond “a life in existence plus 21 years.”
    • Illustration: The fertile octogenarian; the unborn widow.