Property Outline & Flashcards

Property 

1. Estates in Land and Future Interests  

1. Estate in Land: the amount, degree, nature, and qualify of a person’s interest in land or other property  

1. Fee Simple Estates:  

1. Fee Simple Absolute: absolute ownership; potentially indefinite duration; indefeasible (will not terminate and revert to someone else upon the happening of a specific event); no corresponding future interest  

2. Defeasible Fee Simple Estates: those that revert to grantor upon occurrence of specified future event  

1. Fee Simple Determinable: property reverts to grantor automatically if some specified event occurs à grantor gets fee simple absolute; grantee is left with nothing (grantor retains possibility of reverter) (to A so long as; to a until) 

2. Fee Simple Subject to a Condition Subsequent: estate subject to the grantor’s power to end the estate if some specified event happens; retains right of entry/power of termination; specified future event occurs AND grantor takes additional step to reclaim property à property reverts back to grantor; grantee is left with nothing. (to A, but if; to A, on the condition that; to A, provided that)  

3. Fee Tail: prevented current owner from cutting off inheritance rights; ensuring property would pass to grantee’s eldest son & heirs; abolished in most US states.  

2. Future Interests: Grantor grants present interest to grantee but retains future interest; specified future event occurs à grantor gets present interest back; grantee left with nothing  

3. Life Estates: An estate held only for the duration of a specified person’s life; at the end of that life, the interest will pass to someone else  

4. Remainder/Reversion: holder has no right of possession until the end of the measuring life; future interest becomes present interest – usually fee simple absolute; previous holder of life estate is left with nothing; future interest in an estate that will or may give the owner possession in the future  

1. Reversion: accompanies a fee simple determinable; the portion of the grantor’s interest that the grantor retains after transferring an interest that is of limited or potentially limited duration  

2. Remainder: future interest created in a transferee that is capable of becoming a present interest upon the natural termination of the preceding estates created in the same disposition. A remainder must be expressly created in the instrument creating the intermediate possessory estate.  

1. Either Contingent: subject to a condition that must occur before the remainderman can take  

2. Or Vested 

5. Executory Interests: an interest that divests the interest of another (if it is not a remainder because the preceding estate is not a life estate, then it must be an executory interest.  

1. Life tenant: holder of life estate  

2. Holder of corresponding future interest:  

1. Reversioner: If grantor holds reversion  

2. Remainderman: If non-grantor holds remainder  

3. Creation of life estates: Grantor may…  

1. Convey life estate and retain reversion; or  

2. Convey remainder, and retain life estate  

6. Termination of Life Estates  

1. End of measuring life  

2. Merger  

3. Waste 

4. Determinable/condition subsequent  

5. Subject to future interest  

2. Law of Ownership  

1. Real Property: ownership of land and things attached to land  

2. Personal property: ownership of anything other than land  

3. Four classic incidents of ownership: possession; use; alienation; exclusion  

1. Possession: intent + control  

2. Use:  

3. Alienation: transfer of property (by sale or gift)  

4. Exclusion: not allowing others access  

3. Property Ownership  

1. Possession: intent + control  

1. Actual Possession: the unequivocal exercise of control and dominion over the resource  

2. Constructive Possession: not actual, but sufficient for the law to deem it possession (i.e. having the keys to your locked car)  

3. Custody: possessor having given no intent to relinquish control, and you manifesting no intent to take control  

1. Rule of Capture: states that a person gains ownership of a previously unowned wild animal by capturing or gaining possession of it  

1. Applies to fugitive resources (resources that move on their own)  

2. First possession: a person gains ownership of an unowned thing by gaining possession over that thing  

3. First in time, first in right: if you had rights to an object before someone else, your rights are superior to theirs.   

2. Pierson v. Post: fox case; man intervenes in another’s hunt, kills the fox and takes it away. That intervening man has possession of the fox.  

2. Bailments  

1. Bailment: possession of personal property by one who is not the true owner  

1. Bailor: true owner  

2. Bailee: holder of property   

2. Bailee is obligated to return the specific good received when the bailment was formed  

3. Bailment created: expressly or implicitly by words/actions; turns on intent of Bailor to place property with Bailee for holding, and intent of Bailee to accept responsibility for property  

4. Lack of intent to take possession or lack of control will prevent bailment from being created  

5. Bailee liable for damage of property only if:  

1. Grossly negligent; when bailment benefits bailor and bailee  

2. Slightly negligent; when bailment solely benefits bailee  

3. Strictly liable when: failure/refusal to return property OR misdelivery  

6. Peet v. Roth Hotel Co.: woman leaves engagement ring with hotel worker to be delivered to a jeweler; ring is lost/stolen. Woman sues and recovers for amount of ring. RULE: A bailee has the burden of proving that a loss of property was not the result of their negligence.  

7. First American Bank, N.A. v. D.C.: Courier for 1^st Am. Bank parks in a no parking zone; vehicle is towed & impounded with deposit bags inside. While at impound lot, bags are removed from the vehicle. Court considers defendants bailee’s for hire. RULE: Gross negligence is required to hold a bailee liable for loss of the owner’s property only if the bailee was gratuitous, not compensated.  

3. Finding  

1. Finder wins when the property is:  

1. Abandoned: True owner (TO) voluntarily relinquished possession and does not want the property   

2. Lost: TO involuntarily relinquished possession & does not know where the property is   

3. Treasure Trove: TO voluntarily relinquished possession of coins or currency & because of time (antiquity) they are presumed dead or undiscoverable   

2. Owner of premises where property was found wins when property is:  

1. Mislaid: TO voluntarily relinquished possession and forgot where property is  

2. Embedded: in, on, or under owner’s land/real property; (or finder is a trespasser, or an employee/agent of landowner)  

3. Armory v. Delamirie: Chimney sweep’s boy finds jewel and brings it to goldsmith shop to be appraised. Apprentice at shop weighs it, takes out the jewels, and tells him of its worth. Apprentice offers $ for it, but boy asks for it back instead. Apprentice gives it back without the stones in it. RULE: The finder of a jewel does not acquire absolute property ownership, but does allow him to keep it against all but the true owner.  

4. Benjamin v. Lidner Aviation, Inc.: Plane inspector (employed by Lidner) finds $18K in wing of plane while doing inspection. Plane is owned by State Central Bank after it was repossessed. Benjamin followed procedures for property – notifying police and putting up notices; no one came forward. Benjamin & Lidner tried to claim the money. RULE: Mislaid property belongs to the owner of the premises where the property is found. Court decided this was the airplane, not the hangar.  

5. Corliss v. Wenner: Landowner hired company to construct driveway on her property. They found a glass jar filled w/ gold coins, and agreed to split it between themselves. RULE: personal property that is embedded in the soil is the possession of the land owner, not the finder.  

4. Gifts  

1. Gifts of real property must be made by written instrument (will or deed)  

2. Three elements of a valid inter vivos (during life) gift of personal property:  

1. Intent (while alive or upon death)  

2. Delivery (actual, constructive, & symbolic)  

1. Actual: actual physical transfer of object from donor to done  

2. Constructive: transfer of some object, usually a key, that will give access to the property that is subject of the gift  

3. Symbolic: transfer of a written document that evidences intent to make gift of personal property  

3. Acceptance presumed so long as object has some value   

3. Gifts causa mortis: one that is made when donor expects to die soon; revocable if the donor recovers  

4. Carter v. Percy: Woman worked as a caretaker for an elderly man for 10 years. Prior to his death, he wrote her two checks for $40 and $80,000. The day after his death, she tried to cash the check, but representative of his estate would not allow it. RULE: A decedent’s estate must pay a check written and delivered to the payee as a gift during life, even though the payee did not present the check for payment until after the decedent’s death.  

5. Discovery  

6. Adverse Possession  

1. Doctrine under which a person in possession of land owned by someone else may acquire valid title to it, so long as certain requirements are met, and the adverse possessor is in possession for a sufficient period of time, as defined by statute of limitations  

2. Ad Coelum Doctrine: owner of surface also owns the airspace above and subsurface below  

3. Constructive Possession: legal title to property gives owner constructive possession of that property; actual possession trumps constructive – SO it does not help TO if there is an adverse possessor  

4. Elements of Adverse Possession:  

1. Continuous actual possession: Single adverse possessor must maintain continuous possession of the property; continuity may be maintained between successive adverse possessors if there is privity between them  

2. Hostile: infringes on the rights of the true owner; if TO consents or gives license, not hostile; renters can’t be adverse possessors of rented property  

3. Open & Notorious: must be obvious to anyone who bothers to look (sufficient to put TO on notice); one will not succeed if possession is secret.  

5. Typically, possession must be:  

1. Actual: actually, physically in possession  

2. Exclusive: not shared with anyone else; exclude owners from possession as if they were the actual owner  

3. Statutory Implications: depends on jurisdiction (7 years if under color of title; 20 years if not)  

6. Marengo Cave Co. v. Ross: A cave was used as a tourist attraction & a large portion of the cave was actually under Ross’s land. The court ruled against Ross bc he had no reason to suspect it was under his land. RULE: Possession of land is open & notorious only if it would give clear and unequivocal notice to the TO that the owner’s rights are being invaded.  

7. Mannillo v. Gorski: 2 people owned adjacent property – one built steps that encroached 15 inches. RULE: A claim of adverse possession may be based on a mistaken possession, but it must also be visible enough to put the owner on notice.  

8. Howard v. Kunto: Multiple people owned adjacent plots of land, all the titles were incorrectly labeled, so they were technically on each other’s land. RULE: Adverse possession occurs when a person takes actual possession of property that is uninterrupted, open & notorious, hostile & exclusive, under a claim of right for a statutorily specified period of time.  

7. Exclusion  

1. Types of Exclusion:  

1. The Hermit’s Right: ability to exclude everyone at all times; may be invaded by another who can raise necessity defense to trespass  

2. The Bouncer’s Right: ability to allow some people but others to enter 

3. Exclusionary Vibes: the informal signals that groups use to exclude outsiders  

4. Exclusionary Amenities: amenities that have costs and that will have the effect of attracting some people and excluding others.  

4. Present Estates and Concurrent Ownership  

1. Concurrent Ownership: more than one person owning a property interest at the same time; no right of survivorship  

1. Tenancy in Common: Default concurrent interest; tenants have separate but undivided interests in the property; essentially a partnership; rights & interests may be conveyed by deed or will; can have equal or unequal shares  

1. Highly fractionated: when a property is owned by many people, each of whom owns a relatively small fraction of the whole.  

2. Options to Terminate Tenancy in Common OR Joint Tenancy:  

1. Agreement between all tenants in common;  

2. Court-ordered partition;  

3. Ouster (any act which unlawfully deprives a tenant in common of their share of the property)  

3. Partition: process to bring an end to the co-tenancy relationship; an action for division of property  

1. Partition in Kind: physical division of the property between the former co-tenants  

2. Partition by Sale: sale of property at auction, with proceeds divided among co-tenants according to their shares.  

3. Ark Land Co. v. Harper: A family owned many parcels of land in common; Ark Land wanted to purchase that land. Some of the family sold and some refused. The family wanted to partition in kind and ark land wanted to partition by sale. RULE: The economic value of property is not a decisive factor in determining whether to partition in kind or by sale.  

4. Esteves v. Esteves: Parents & son purchase home, each having ½ interest. 3 lived together for a period of time; son provided labor & repairs for the home. Son moved out & parents occupied home for 18 years. RULE: Where a cotenant has sole possession of the property and demands contribution for operating and maintenance expenses from the non-possessing cotenant, the tenant in possession must allow a corresponding credit for the value of his sole occupancy.  

5. Spiller v. Mackereth: Two ppl own building as tenants in common. One tenant used property as a warehouse; the other sent a letter telling him to vacate the building or pay rental value. RULE: A cotenant in common, having undivided right to the entire property, does not owe rent to his cotenant unless he agrees to, or unless he has effected ouster of his cotenant.  

4. Joint Tenancy: shared ownership in property where each owner has an undivided interest in the property; has right of survivorship (other joint tenant acquires all interest when one dies)   

1. Unities Required:  

1. Time: must acquire interests at the same time  

2. Title: must acquire title from same instrument  

3. Interest: must have equal shares in the property  

4. Possession: must have equal rights of possession & use  

2. Straw Person: person who holds title temporarily as convenience to another party  

3. Severance of Joint Tenancy: either tenant can unilaterally sever by conveying interest to a third party; this destroys right of survivorship  

4. Harms v. Sprague: Two brothers owned property as joint tenants. A man bought land nearly; one brother allowed him to use his joint tenancy interest as collateral for the balance due on the mortgage; that brother died & left his estate to the man. RULE: A lien placed on one joint tenant’s interest in jointly held property does not destroy a joint tenancy.  

5. Tenancy by the Entirety & Marital Property  

1. Can only be created between married couples  

1. Tenancy by the entirety:  

1. Concurrent interest between spouses; mostly resembles joint tenancy  

2. Created w conveyance “to spouse 1 & spouse 2 as tenants by the entirety”  

3. Has right of survivorship, but cannot unilaterally convey interests  

4. Cannot be unilaterally severed  

2. 3 ways tenancy can end:  

1. Spouses together transfer property to another person  

2. One spouse dies, right of survivorship gives sole ownership to surviving spouse  

3. Spouses obtain decree of divorce; sever tenancy be ending the marriage  

3. Less tan ½ of US jurisdictions recognize tenancy by the entirety  

2. Sawada v. Endo: Sawadas were injured in a car accident; the other person in the accident was a landowner in tenancy by the entirety with his wife. Before trial, the couple deeded that land to their sons. Sawadas were awarded a judgment against the couple and tried to recover from the land deeded to the sons. RULE: The interest of a husband or wife in a tenancy by the entirety is not subject to the claims of his/her individual creditors during the joint lives of the spouses.  

5. Leasing Real Property  

1. Lease: conveyance of an interest in real property; landlord conveys a present interest in real property to the tenant  

1. Statute of Frauds requires a lease for more than 3 years be in writing  

2. Written lease must at minimum contain essential terms (name of parties, identity of property, duration, rent, signatures of both parties)  

3. Security Deposit: Money tenant pays to the landlord that is kept separately in a fund for use if tenant causes damage to the property or violates terms of lease.   

2. Types of Leasehold Estates:  

1. Term of Years: measured by fixed period of time; expires when period of time ends; unless otherwise agreed by the parties, tenant must vacate & surrender possession; death of landlord or tenant does not affect term of years leasehold unless parties agree otherwise  

2. Periodic Tenancy: lasts for fixed period of time & then automatically renews for successive periods unless either party gives notice of termination; no specific ending date; created expressly or by implication; can be created by lease, but can also arise by implication when: (1) lease doesn’t include duration of lease but indicates how often rent is due; OR (2) paying rent on oral agreement that violates statute of frauds can created implied periodic tenancy  

3. Tenancy at Will: landlord & tenant agree that tenant may retain possession for an unspecified amount of time; either party can end tenancy at any time; some states have statutes setting minimum time for notice  

3. Landlord Duties & Tenant Remedies  

1. Delivery of Possession  

1. If lease does not expressly address landlord’s obligation to deliver possession to tenant, the common law rules apply  

2. Majority Rule: requires landlords to deliver actual physical possession to tenants (tenants entitled to damages when landlord fails to do this)  

3. Minority Rule: landlord is only obligated to provide tenant with legal right of possession; no obligation to deliver actual physical possession; satisfied if landlord delivers valid lease to tenant  

4. Holdover: tenant who wrongfully stays past the end of their lease  

5. Adrian v. Rabinowitz: Landlord rented space to lessee, but the previous tenant did not vacate, landlord filed for eviction; lessee filed suit against landlord. RULE: A landlord is under a duty to put a lessee in both actual and legal possession at the beginning of the lease term.  

2. Quiet Enjoyment  

1. Implied in every lease, there is a covenant that neither the landlord nor someone with paramount title will interfere with the tenant’s quiet enjoyment and possession of the premises. The covenant of quiet enjoyment may be breached in threw ways:  

1. Actual Eviction: landlord excludes tenant from the entire lease premises. Actual eviction terminates tenant’s obligation to pay rent  

2. Partial Actual Eviction: tenant is physically excluded from only part of the leased premises; need not be a substantial part of the premises for breach to occur.  

1. If by landlord – relieved of entire rent obligation  

2. If by third person – tenant liable for reasonable rental value of the portion they continue to possess  

3. Constructive Eviction: when a landlord’s breach of duty renders the premises untenantable; tenant must prove:  

1. The landlord breached a duty to the tenant;  

2. The breach substantially and materially deprived the tenant of use & enjoyment of the premises; 

3. Tenant gave landlord notice & reasonable time to repair; AND  

4. After that reasonable time, tenant vacated the premises  

4. A tenant who’s been constructively evicted may terminate the lease, relived of duty to pay rent, may also seek damages  

4. Discrimination  

1. Landlords may not conduct themselves in a way that violates anti-discrimination statutes  

2. Civil Rights Act: bars racial or ethnic discrimination in the sale or rental of all property  

3. Federal Fair Housing Act: bars discrimination based on race, color, religion, national origin, sex, or disability in the sale or rental of a dwelling. Discrimination against families w/ children (familial status) is also barred except in senior citizen housing.  

1. Does not apply to:  

1. Owner-occupied buildings with no more than 4 units in which persons live independently of each other; AND  

2. Single-family homes sold or rented by an owner who owns no more than three single-family homes.  

2. Unlawful To:  

1. Refuse to negotiate, rent, or sell housing;  

2. Provide different terms, conditions, or privileges for the sale or rental of a dwelling;  

3. Falsely represent that a dwelling is not available for inspection, sale, or rental;  

4. Induce or attempt to induce a person (for profit) to sell or rent a dwelling by making representations that persons of a particular protected characteristic are moving into the neighborhood; AND  

5. Refuse to make available a mortgage loan or other financial assistance or provide different term s or conditions for such transactions.  

4. Redlining: limited government subsidies for mortgages in minority neighborhoods whether homes were purchased by white people or people of color, encouraging white families to move to segregated neighborhoods & shaping the long-term value of housing in minority neighborhoods  

5. Covenant of Quiet Enjoyment: tenant has right to quiet use & enjoyment of the property MEANING tenant is able to use property w/o interference & if no other person is asserting a right to be able to use or possess the property  

6. Constructive Eviction: when tenant leaves the leased premises due to conduct by the landlord which materially interferes w/ tenant’s beneficial use of the premises  

7. Fidelity Mutual Life Ins. v. Kaminsky: Physician rented office space where he provided medical procedures, often abortions. Protestors would block the entrance so patients couldn’t get in. Lessor had agreed to provide security on Saturdays but did not. RULE: Constructive eviction can be an omission, not just an affirmative act.   

5. Tenant Rights  

6. Habitability  

1. Caveat emptor: let the buyer beware; courts would conclude that either (1) tenants had the ability to negotiate for & contract for express warranties of habitability or (2) they could have inspected the premises prior to leasing to ensure the premises were habitable (used until 1960s)  

2. Implied Warranty of Habitability: contract principle; goods being sold must be suitable for the purpose for which they are being sold (usually applies to residential leases not commercial leases)  

3. Today, breaches of the implied warranty of habitability tend to focus on:  

1. Violations of housing codes  

2. Conditions harmful to the health of the tenants  

4. Remedies  

1. Tenant may move out & terminate lease  

2. Tenant may make repairs directly, and offset the cost against future rent obligations  

3. Tenant may reduce or abate rent to an amount equal to the fair rental value in view of the defects in the property.  

4. Tenant may remain in possession, pay full rent, and seek damages against the landlord.  

5. Javins v. First National Realty Corp.: 2 individuals rented apartments in same building from First Nat’l Realty; both found numerous housing violations & withheld rent for 1 month; violations did not arise until after lease began. Court says nature of today’s housing market dictates adoption of implied warranty. RULE: An implied warranty of habitability is read into residential leases & breach of that warranty frees tenants from obligation to pay rent.  

6. Hilder v. St. Peter: A renter found multiple defects in her apt. & informed landlord who did not fix them. She paid for them to be fixed & continued to pay rent while living there. She sued for the amount she paid for them upon moving out. Court found in her favor.   

7. Tenant’s Duties  

1. Tenant’s Duties  

1. Duty to pay rent: usually arises from express covenant in lease; if tenant fails to pay, landlord can: (1) continue renting & sue for back rent; OR (2) evict tenant & recover possession of the premises; landlord must usually bring legal action for eviction   

2. Duty to not use premises for illegal purposes:  

1. If landlord & tenant both knew premises would be used for illegal purposes, lease is void  

2. If tenant alone planned to use property for illegal purpose, lease is enforceable against tenant & landlord can sue for breach  

3. Landlord may be held liable for criminal acts committed by tenant if landlord knew or should have known of them  

3. Duty not to commit waste:  

1. Doctrine of Waste: applies in circumstances where ownership of property is divided over time & prevents present interest holder from acting in a way that harms the interests of the future interest holder  

2. Tenant will be liable to landlord for committing affirmative or permissive waste  

8. Lease Transfers  

1. Absent an express restriction in the lease, a tenant may freely transfer his leasehold interest, in whole or in part 

2. Assignments & Subleases: When Tenants Transfer Interests  

1. Assignments: original tenant transfers all of her rights under the lease to the new tenant  

2. Subleases: original tenant transfers something less than all of her rights to the new tenant  

3. Privity of Contract & Estate 

1. Privity of Contract: parties are on opposite sides of a contract  

2. Privity of Estate: parties are on opposite sides of a real estate transaction  

3. Lease is both a contract & real estate transaction – SO parties to a lease are in both privity of estate & contract  

4. Restricting the Tenant’s Right to Transfer  

1. If lease is silent on the issue, lease is freely assignable & transferrable  

2. Lease might contain an outright prohibition OR require landlord’s permission  

3. Majority Rule: a silent consent clause enabled landlords to refuse consent w/ no reason  

4. Minority Rule: a silent consent clause requires landlords to provide a commercially reasonable objection to the transfer.  

5. Kendall v. Ernest Pestana, Inc.: RULE: A commercial lessor may not unreasonably withhold his consent to an assignment of a lease, with or without a clause requiring landlord’s consent to transfer the lease.  

9. Abandonment: moving out & ending the lease  

1. Tenant & landlord can mutually agree to end leasehold  

2. Abandonment: tenant implicitly attempting to surrender the lease  

1. Landlord can:  

1. Accept: lease is terminated, re-rents property. Retains right to sue tenant for damages  

2. Refuse: can rent to someone else; tenant still on the hook until re-rented  

3. Sommer v. Kridel: Student was engaged, signed a lease, & paid deposit to rent an apt.; engagement ended & student no longer planned to rent the unit – he informed the landlord, asking to be let out of the lease; landlord did not respond for 15 months, and did not attempt to re-rent the apt. RULE: landlord has a duty to mitigate damages when he seeks to recover rent due from a defaulting tenant.   

10. Holdovers: tenant who stays in possession of the leased premises after lease has expired.  

1. Landlord has two options:  

1. Treat them as a trespasser and bring an action for eviction  

2. Hold the tenant over for a new lease term; often called tenancy at sufferance  

2. Crechale & Polles, Inc. v. Smith: Man leased property for 5 years; when it was going to expire, asked to extend lease on a month-to-month basis; lessor orally agreed then later revoked that agreement; lessor sent letter requesting he leave on the date of the end of the lease; he did not leave, and sent a rent check for the following month, which they accepted; they did not accept the next month’s check. RULE: A landlord who failed to evict a holdover tenant and instead accepted rent for another month may not then hold that tenant to a new one-year lease term.  

11. Eviction: process landlords use to remove tenants & recover possession of their leased property 

1. Normally a legal procedure  

2. Self help eviction: landlord changes locks & removes tenant’s belongings – most states do not allow; would be considered wrongful eviction   

3. Berg v. Wiley: Berg leased restaurant space from Wiley; lease stated premises couldn’t be altered w/o landlord consent; Wiley accused Berg of violating the lease; while she was out of town, he changed the locks. RULE: If a landlord & tenant dispute possession of the premises b/c the landlord claims the tenant has breached the lease, then the landlord must use the judicial process.  

4. Dept. of HUD v. Rucker: RULE: Under administrative law, a federal agency’s implementing regulations are valid if they interpret plain statutory language that clearly reflects Congress’s view on an issue.  

5. Edwards v. Habib: Man rented apt. from lessor month-to-month; he reported sanitary code violations, and was then evicted (retaliatory); RULE: D.C. statutory code authorizing a landlord to evict a month-to-month tenant w/o cause impliedly authorizes constitutional defense to eviction even though the statute does not expressly confer a right to raise a constitutional defense.  

12. Real Estate Transactions  

1. Phases: pre-contract; contract negotiation & execution; closing; post-closing  

2. Brokers, Agents, & the Law of Real Estate Professionals  

1. Brokers & Agents are fiduciaries for their clients  

2. Commission: typically paid to listing broker, and broker pays bulk of commission to the agent  

3. Fiduciary relationships: where one person is representing another in a relationship of special trust & confidence  

4. Agents/brokers required to disclose all material information about a property transaction that they possess to their clients  

5. The duty of care requires agents and brokers to be diligent and professionally competent in their representation of clients  

6. The Seller-Listing Agent Relationship  

1. Two primary responsibilities: (1) helping seller find buyer for their home; AND (2) assist in negotiating with potential buyers and in completing the transaction once buyer is found  

2. They often help seller complete the contract of sale & assist seller at closing  

3. 3 Basic Listing Agreements:  

1. Open listing: the right to a commission is open to multiple brokers  

2. Exclusive Agency Agreement: the broker is the exclusive agent; the seller is giving the broker the right to be the only real estate professional who can earn a commission, but the seller retains a right to find a buyer on her own without paying the broker a commission 

3. Exclusive Right to Sell: sellers give the broker the exclusive right to sell the property, and broker earns a commission regardless of who finds the buyer 

4. Invitation to Subagency: MLS listing seen as invitation to subagency; another agent showing the home to potential buyer is acceptance of subagency – then working for the seller  

7. Buyer-Agent Relationship  

1. Pre-contract, an agent helping you find a home to purchase is technically still a seller’s agent  

2. Under an open listing, the listing is seen as an invitation by the listing broker to other brokers and agents to cooperate in the sale of the listed property  

3. Increasingly, buyers enter into written agreements to hire buyers' brokers who explicitly work for the buyer; such an agreement will establish this broker as an agent for the buyer and will defeat the presumption that the broker is working for the seller as a subagent of the listing broker  

4. Dual Agency: agent working for both buyer and seller; can create conflict of interest  

3. Transaction Risks; Title Issues  

1. Default rules established by common law (judicial decisions) ad statutes  

1. Most US jurisdictions place the risk of physical defects in commercial transactions on buyer  

2. The rule for residential transactions is more buyer friendly  

4. Title Risk  

1. Transfer of title (legal ownership of the property) from the seller to the buyer  

2. This transfer occurs when the seller delivers a deed to the property to the buyer at closing  

3. A deed is the instrument that transfers ownership of real property from one owner to another  

1. It contains:  

1. The names of the current owner (the grantor) and  

2. The new owner (the grantee),  

3. The legal description of the property and is signed by the grantor  

4. Transfers of real property must be in writing and notarized. Deeds should be recorded in the county where the property is located  

5. Potential issues include: ownership, encroachment, and encumbrances  

1. Encroachment: an interference or intrusion on another's property  

2. Encumbrances: A claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest. 

5. Other forms of Title Transfer  

1. A contract for deed, land contract or installment agreement: used when seller agrees to finance the purchase of the property and holds title or deed as security until buyer makes all payments  

2. Deed without warranty: grantor only warrants that there are no title defects during the time the grantor owned the property  

3. Quitclaim Deed: transfers ownership interest of the grantor to the grantee without any warranties or guarantees that title is good or that the property is free of liens or claims. Used mostly in non-sale transactions such as transfers between spouses  

4. Deed of Trust: title is transferred to a trustee, which is usually a trust or title company that holds the real property as security for the borrower's loan. At the time the loan is paid in full, title is transferred to the borrower. The only power that the trustee as is the power of sale if borrower defaults.  

5. Grant Deed: transfer ownership from grantor to grantee. The grantor promises that title has not been transferred previously and that there are not any encumbrances, other than those stated in the deed.  

6. Physical Condition Risks:  

1. Most common physical condition problems arise from defects in buildings and land improvements on the land  

7. Recording, Indexes and Title Searching  

1. The State Recording Acts:  

1. Create a system of public land records.  

2. Establish consequences for the failure to record a document  

3. Establish priority between competing claims relating to the property  

8. Protecting Subsequent Interest Holders: Race, Notice, and Race-Notice Statutes  

1. Recording acts typically protect subsequent purchasers and creditors for value, but do not protect subsequent donees  

2. 3 types of recording statutes:  

1. Race Statutes: first person to record wins  

2. Notice Statutes: subsequent purchasers or lenders will win if no notice of the prior unrecorded interest at the time they acquired their interest  

3. Race-Notice Statutes: combine both race and notice elements.  

3. Most recording problems involve a conflict between two persons  

4. The Shelter Rule: a grantee who receives a conveyance from a grantor who will win under the applicable recording act will also win under that recording act.  

9. Other Contracting Issues  

1. The Statute of Frauds  

1. Originally enacted in England in 1677  

2. Various versions enacted by the states  

3. A rare context where the actual language of the statute takes secondary importance to judicial decisions as a source of authority  

4. Does 2 important things:  

1. Requires transfers of interests in real property (other than leases of less than three years) to be created or transferred by written instrument  

2. Requires contracts for the purchase and sale of real property to be in writing, or evidenced by a written memorandum.  

5. Contract itself doesn't have to be in writing; a written memorandum that sets out the essential terms of the contract can satisfy the statute  

1. Must at a minimum:  

1. Be signed by the party to be bound;  

2. Describe the real estate; and  

3. State the price.  

2. The party that is trying to back out is the party to be bound; memo must be signed by this person  

3. Description of property should be specific enough that it is sufficient to allow a reader to uniquely identify the property and distinguish it from all of the other parcels of real property in the world  

4. Beyond a specific price, the requirement can be met with a formula that would allow the reader to calculate the purchase price  

6. Estoppel: provides an exception to the Statute of Frauds to a person who reasonably and detrimentally relies on an oral agreement to purchase or sell real estate; can easily apply to both buyers and sellers 

7. Part Performance - 3 elements:  

1. Delivery and assumption of actual and exclusive possession of the land to the buyer;  

2. Payment or tender of the consideration, whether in money, other property, or services to the seller; and  

3. The making of permanent, substantial, and valuable improvements by the buyer referable to the contract  

8. Hickey v. Green: An oral land-transfer agreement may be specifically enforced, even though it violates the Statute of Frauds, if the party seeking enforcement detrimentally relied on the validity of the contract & justice can only be avoided by specific performance.  

10. Closing & Delivery  

1. The seller delivers the deed to the buyer and the buyer delivers the purchase price to the seller  

2. Electronic Contracting & the Statute of Frauds  

1. A signature, contract, or other record may not be denied legal effect, validity, or enforceability solely because it is in an electronic form  

2. Electronic Signature: an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record  

3. Equitable Conversion & Risk of Loss  

1. Risk of loss: risk of physical damage to the property  

2. Before contract is signed; original owner bears risk of loss to the property  

3. Between contract signing and closing:  

1. Equitable conversion: buyer becomes the equitable owner of the property once the contract is signed; buyer bears risk of loss unless parties agree otherwise in contract  

4. Remedies for Breach of Contract:  

1. Two options:  

1. Specific Performance: requires losing party to perform its obligations under the contract  

2. Money damages: often tied to forfeiture (if the seller wins) or return (if the buyer wins) of the buyer's deposit  

2. Generally, a party can only obtain an equitable remedy if it can show that an award of the legal remedy of money damages is inadequate  

3. The legal remedy of money damages will always be available to a wronged party who has suffered a monetary loss  

4. Election of Remedies: if the winning party to a lawsuit satisfies the requirements of multiple remedies, that party can choose which remedy to receive  

5. Summary of Damages for Breach of Contract  

1. Seller's Breach: In most cases where a seller breaches a real estate contract, the buyer will seek specific performance, The buyer wanted the property, and it is the seller who is backing out. Courts tend to allow specific performance in the real estate context. Because each parcel of real property is unique, the aggrieved buyer cannot be made whole by money damages.  

2. Buyer's Breach:  

1. In most cases where a buyer breaches a real estate contract, the seller will seek money damages  

2. Often the seller will seek to keep the buyer's deposit  

1. If the contract included a liquidated damages clause contemplating forfeiture of the deposit, courts will tend to enforce the contract, at least if the seller later sold the property to another person at a loss.  

1. The seller will be able to keep the deposit even if the actual damages were less than the deposit amount  

2. On the flip side, the seller will be limited by the liquidated damages clause to the deposit amount even if the contract was silent on liquidated damages  

11. Real Estate Finance  

1. Secured Finance; Mortgages; Deeds of Trust  

1. Acquiring real property with borrowed money = financing  

2. The traditional mortgage loan  

1. Security interest in real property from the borrower to lender  

2. Mortgages  

1. The title theory  

1. A mortgage is a conveyance of title to the lender/mortgagee  

2. Title theory jurisdictions now treat the grant of title in a mortgage as a grant of a security interest, rather than a grant of a defeasible fee interest  

2. The lien theory  

1. A mortgage is the conveyance of a lien to the lender/mortgagee  

3. Foreclosures and Deed of Trust  

1. Common types of foreclosure:  

1. Judicial foreclosure: occurs though a judicial proceeding and the foreclosure sale is subject to judicial supervision  

2. Power of sale: private process; lender or other private party is given the power to sell the property on default by the borrower  

2. Equity of Redemption  

1. Setting a time limit on repayment and the borrower's equity of redemption rights  

2. Statutes that allow the borrower/mortgagor to redeem the property even after the property is foreclosed 

3. Adequacy of Foreclosure Sale Price  

1. Sale of property for less than fair market value  

2. Foreclosure Sales  

3. Courts may overturn a foreclosure sale for procedural irregularities and defects  

4. Courts rarely interfere with a foreclosure sale on the grounds that the foreclosure sale price was inadequate  

4. The Assumption - Subject-To Distinction  

1. Assumption is achieved through an affirmative agreement by new owner to take on the obligations under the mortgage  

2. Subject-To:  

5. Subordination 

1. Parties can agree to contractually alter their relative priority via a subordination agreement  

1. Where the senior interest agrees to subordinate or become junior to the junior interest  

2. Priority of interests in foreclosures  

1. If there are multiple interests secured by the property, the interest with the highest priority will get paid first from the proceeds from the foreclosure sale  

2. Interests that are junior to the interest that is being foreclosed upon are destroyed by the foreclosure process  

3. Citizens Bank & Trust v. Brother Construction: A bank held two mortgages against a property they had leased to a construction company. A mechanic’s lien resulted in the bank foreclosing, and they did not join the Brother as a party in the foreclosure action. The bank then tried to evict Brothers. The court held that the lease was not terminated because the Brothers were not made a party in the action. RULE: The foreclosure of a prior mortgage terminates a lease only if the tenants were parties to the foreclosure proceedings.  

13. Servitudes  

1. Non-possessory interests in property  

2. Easements: interest in land owned by another person, consisting of the right to use or control the land, or area above or below it, for a specific limited purpose; easement may last forever, but does not give the holder the right to possess, take from, improve, or sell the land.  

3. License: gives a party the revocable right to physically enter the property of another  

4. Profit: gives a party the right to physically enter the property of another & remove certain resources 

5. Covenant that runs with the land: a promise that is binding on both the present & subsequent owners of the property; can be enforced in law as real covenants or inequity as equitable servitudes  

6. Reserve: conveying all fee simple interest except a portion the conveyer keeps for themselves  

7. Grant: you own the property & allow another to use a portion of it  

8. Dominant estate: property that has the benefit of the servitude  

9. Servient Estate: property that has the burden of the servitude  

10. Appurtenant: servitude that is tied up with a parcel of property  

11. In Gross: servitude that is not tied up with a parcel of property (i.e. power lines)  

12. Affirmative Servitude: entitles holder of benefit to engage in a positive use of the burdened property  

13. Negative Servitude: prohibits owner of burdened property from using burdened property in a particular way.  

14. Express Easements 

1. Easement created expressly in deed or other legal instrument  

2. Easement may not be reserved to a third person (traditional common law rule)  

15. Non-Express Easements  

1. Prescriptive Easements: like acquisition of title to property by adverse possession  

1. Elements: must use the other person’s property in a manner that is:  

1. Visible  

2. Non-permissive; AND  

3. Continuous for the statutory period.  

2. McDonald v. Harris: Gravel pit owner conveys land to couple who builds a driveway to access a home they built; construction worked sometimes used the driveway; a woman bought the neighboring parcel & didn’t have a survey completed until 9 years later, when she determined the driveway encroached on her property. Rule: Entitlement to a prescriptive easement requires showing continuous, hostile, and notorious use of the easement for the requisite time period.  

2. Easements by Estoppel:  

1. Two Components:  

1. Conduct by one party; AND  

2. A detrimental change in position by a second party made in reasonable reliance on the first party’s conduct.  

2. Conduct typically includes express or implied grant of a license to cross or otherwise access servient estate  

3. Basically, licenses that become irrevocable due to reasonable detrimental reliance.  

4. Holbrook v. Taylor: Where the owner of land has granted a license to another to use and make improvements upon the land, and the licensee, relying on this permission, does use and make improvements to the land at considerable cost, that license is irrevocable.  

3. Easements by Prior Use: implied because of a use of the property that exists at the time of the division of the property; also called “quasi easement”  

1. Four Elements:  

1. Unity of ownership: at one time the two parcels were owned by one person  

2. When parcels were separated, one visibly or apparently made some use of the other parcel   

3. Use must have been continuous at the time parcels were separated  

4. Continued use must be reasonably necessary to the owner of the parcel claiming the benefit of the easement  

2. Houston Bellaire, Ltd. V. TCP LB Portfolio I, LP: Two phase office building; two companies really owned by the same ppl. RULE: An easement by implication requires the claimant to show (1) unity of ownership, and (2) apparent and (3) continuous use that is (4) reasonably necessary to the use and enjoyment of the dominant estate.  

4. Easements by Necessity: Applies to landlocked parcels  

1. Landlocked: parcel of land that has no access to a road  

2. Three elements:  

1. Unity of ownership  

2. Owner must transfer part of the larger piece of land in a way that creates a landlocked parcel  

3. Easement must be necessary for the landlocked parcel to reach a road  

1. Strict Necessity: impossibility or near impossibility, not mere inconvenience.  

3. Fike v. Shelton: Dividing a common tract of land such that one parcel lacks access creates an easement by necessity for the landlocked owner to access his property over the severed parcels.  

4. Schwab v. Timmons: The owner of a landlocked property cannot claim an easement by necessity or implication if the owner has conveyed away pubic-road access.  

14. Misuse of Easements 

1. If the owner of the benefit uses an easement in the manner that is beyond the scope of the easement  

2. Owner of servient parcel can bring action for misuse against the owner of the benefit; traditionally injunction  

3. Brown v. Voss: An easement appurtenant to an estate may not be extended to other adjoining estates.  

15. Termination of Easements  

1. Can terminate through:  

1. Express terms  

2. Release: holder of dominant estate executes a written release of the easement  

3. Merger: if t any point the dominant & servient parcels are owned by the same person  

4. Abandonment: if it is abandoned by the owner of the benefit  

5. Prescription: similar to adverse possession  

6. Estoppel: typically involves the acts by one party and a detrimental change in position in reasonable reliance on those acts by another party  

7. Eminent Domain: may be taken by government use of power of eminent domain  

8. Recording Acts: may terminate an unrecorded easement on the sale of the servient parcel to a good faith purchaser  

9. Foreclosure: foreclosure on a mortgage (or other lien) may terminate an easement that is junior in priority to the mortgage  

16. Affirmative Easements: gives holder right to enter upon servient tenement and make affirmative use of it  

17. Negative Easements: Allows the owner of the dominant parcel to prohibit the owner of the servient parcel from doing something  

1. Conservation Easement: places restrictions on the development of the servient parcel  

2. Agricultural Easement: restricts the use of the servient parcel to agricultural uses   

18. Covenants  

1. Running with the land: bind both present & future owners of the property; can be enforced in law as real covenants & in equity as equitable servitudes  

2. Creates the privilege to compel the possessor of the servient tenement to refrain from engaging in activity that the servient tenement would otherwise be able to do  

3. A formal agreement or promise, usually in a contract or deed, to do or not do a particular act; a compact or stipulation  

4. Affirmative covenant: agreement that real property will be used in a certain way; requires owner to undertake certain acts on the property  

5. Negative covenant: requires a party to refrain from doing something; especially in a real-estate financing transaction, the borrower’s promise to the lender not to encumber or transfer the real estate as long as the loan remains unpaid  

6. Elements of real covenants & equitable servitudes:  

1. Must be in writing  

2. Must intend promise to run with the land  

3. Must touch and concern the land  

4. Subsequent owner must have notice of the covenant for a burden to run with the land; notice is not required for benefit to run with the land  

5. Must be in privity for a promise to be enforced in law as real covenant (not required for equitable servitudes)  

7. El Paso Refinery v. TRMI Holdings: RULE: A covenant not to seek contribution from a prior property owner for environmental cleanup does not bind future owners of the property because it does not touch & concern the land.  

8. Common Interest Communities:  

1. Communities governed by a set of recorded covenants that run with the land  

2. These covenants, conditions, & restrictions typically create a governing board that has a duty to manage the community and enforce the covenants.  

3. Each resident owns their home in fee simple; association owns common areas.  

19. Changed Circumstances: the promises under real covenants and/or equitable servitudes may lose their enforceability if circumstances have changed & no longer possible to achieve the original purpose of the covenant.  

1. Western Land Co. v. Truskolaski:  Western subdivide land for residential use; included restrictive covenant forbidding use or property for anything other than single family homes; after time, area surrounding subdivision grew, including commercial developments; Western wanted to build supermarket w/in subdivision; homeowners ass’n sued to enjoin; Western argued covenant should no longer be enforced; court enforced restrictions; purpose of covenant could still be realized. RULE: A restrictive covenant limiting a subdivision to residential use remains enforceable despite commercial development in the area surrounding the covenant, so long as the covenant’s original purpose can still be accomplished and the property owners substantially benefit.  

2. Abandonment: either the plaintiff or an entire neighborhood has given up the benefits of the covenant, making it unenforceable; defense usually applied in the context of subdivisions or other developments w/ shared covenants 

1. Abandonment can occur if the plaintiff has repeatedly failed to act against other violations of the covenant. Can also occur if the violations are substantial and widespread enough that the neighborhood has effectively given up on the covenant.   

2. Fink v. Miller: Couple purchased lots in subdivision subject to covenant requiring wood singles on all roofs; many homes had been built w/ fiberglass or asphalt roofs; committee sought to enforce covenant after those had been built; couple installed fiberglass shingles; fink (neighbor) sued for injunction; court allowed them to proceed w/ fiberglass shingles.  RULE: A covenant is abandoned when there are readily observable violations of sufficient number, nature, and severity as to lead an average person to conclude that the property owners neither adhere to nor enforce the covenant.  

3. Public Policy  

1. Mulligan v. Panther Valley Property Owners Association: Woman lived in common interest community governed by property association; ass’n amended covenants to prohibit tier 3 sex offenders from living in the community; woman thought this infringed on her rights – unfairly restricted housing for certain group. RULE: A court may not uphold a restrictive covenant that bans sex offenders from living in a community pursuant to a summary proceeding without weighing the competing public policy considerations involved.  

4. Nuisance  

1. Tort placing practical limits on owner’s right to use their property; intentionally & unreasonably interfering with another person’s use & enjoyment of their property  

2. Elements:  

1. An intentional,  

2. Unreasonable,  

3. Substantial interference w/ the use & enjoyment of another’s property.  

3. Intent = intent to do the act, not intent to interfere w/ another’s use  

4. Three approaches to reasonableness:  

1. Traditional Approach: the blurriness of the line between reasonable & unreasonable  

2. Basic Restatement Approach: weighs the harm & the benefit  

3. Alternative Restatement Approach: the use is reasonable if (1) the harm is serious and (2) the person engaging in the conduct could pay damages w/o going out of business.  

5. Public Nuisance: interferes w/ public land; effects more than one person (entitled to monetary damages)  

6. Private Nuisance: interferes w/ private land; applies to one or few people (entitled to an injunction)  

7. Estancias Dallas Corp. v. Schultz: Couple owned home & apartment building was built next to it; air conditioner for unit was extremely loud to the point where they couldn’t be out in the backyard. RULE: A trial court must engage in balancing the equities when determining whether an injunction is appropriate to abate a nuisance.  

8. Boomer v. Atlantic Cement Co.: Cement company sued by neighbors who allege pollution from the plant is a nuisance; RULE: permanent damages, rather than an injunction, are appropriate when the damages resulting from a nuisance are significantly less than the economic benefit derived from the party causing the harm.  

9. Spur Industries v. Del E. Webb Development Co.: Developer built retirement community adjacent to a cattle feedlot. People wouldn’t buy the homes near the feedlot & developer sued for nuisance. RULE: When the public develops land in the vicinity of a public nuisance, the action creating the nuisance must be ceased by the party responsible for its creation, however, said party is entitled to compensation.  

10. Coming to the Nuisance: if plaintiff came into the area with knowledge of the activity now alleged to be a nuisance, then defendant can assert coming to the nuisance as a defense.  

20. Zoning Fundamentals  

1. Zoning Laws: typically operate by creating a number of zones w/in a municipality and by limiting the types of land uses permitted in each zone.  

2. Each state has the power to enact regulatory laws & exercise its police powers  

3. Municipalities have no inherent powers, apart from those granted by state law or constitution 

4. Zoning Enabling Laws: give municipalities the power to enact zoning laws; set limits on zoning laws  

5. Village of Euclid v. Ambler Realty Co.: Ambler owned land in Euclid (residential suburb); Euclid enacted zoning laws restricting development of industry; Ambler sues alleging that the zoning ordinances were unconstitutional. RULE: Municipal zoning regulations are constitutional, unless they are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.  

21. Pre-Existing Non-Conforming Uses  

1. Nonconforming: use prohibited by new zoning ordinance  

2. Pre-existing: use was in existence at the time the new ordinance was put into place  

3. In some jurisdictions, pre-existing nonconforming uses are allowed to continue in operation as of right  

1. The right to operate a pre-existing nonconforming use runs with the land  

4. Amortization: allows the pre-existing nonconforming use to continue for a set period of time, then requiring it to shut down.  

5. AVR Inc. v. St. Louis Park: Pre-existing concrete plant violated new residential zoning ordinance; planned for it to be phased out; city provided 2 yr. amortization period; concrete plant thought that was unreasonable. RULE: A city can mandate that a property owner cease certain land uses after a determined period through rezoning ordinances so long as the rezoning act is rational and related to the general welfare.  

22. Variances  

1. Variance: waivers of zoning requirement; granted to avoid undue hardship on property owners & to avoid potential constitutional problems that would be caused by rendering a parcel of land useless  

2. Commons v. Westwood Zoning Board of Adjustment: couple owned small vacant residential lot w/ 30 feet of frontage. Zoning laws went into effect requiring 75 feet of frontage to build; the couple tried to sell, but buyer could not purchase additional land to meet zoning requirements & requested a variance; the higher court granted the variance. RULE: A zoning board may grant a variance if strict application of zoning laws would cause a property developer undue hardship, provided the variance does not harm the public or substantially impair the intent & purpose of the zoning plan.  

23. Special Exceptions  

1. Special Exceptions: address uses that are expressly contemplated by the zoning ordinance but are permitted only if specific conditions are met by the property owner  

2. Cope v. Town of Brunswick: Cope’s applied for zoning exception to build apartment buildings, and board found that they did not meet the terms necessary for the exception (vague terms); Cope’s argued that the conditions were too vague and were unconstitutional. RULE: Special-exception conditions that lack sufficiently clear application guidelines are void as facially unconstitutional.  

24. Takings  

1. Public Use element in the just compensation clause 

1. An explicit prohibition on takings that are not for public use  

2. An implicit limitation, suggesting that the power of eminent domain does not extend to takings that are not for public use, and  

3. Is not a limitation at all, and instead a mere description of the typical reason for taking private property.  

1. Private property cannot be taken for public use without just compensation  

2. Regulatory Takings  

1. Due Process Clause of 5^th & 14^th Amendments: (5) no person shall be deprived of life, liberty, or property without due process of law; (14) nor shall any state deprive any person of life, liberty, or property without due process of law  

2. Due Process: substantive due process & procedural due process  

1. Substantive Due Process: infringing on personal rights  

2. Procedural due process: right to be heard; procedural protections given to people before they are deprived of life, liberty, or property  

3. Eminent Domain: when the government expressly takes property (for public use + just compensation)  

25. Per se Rules  

1. Per se Taking: a government regulation that causes a permanent physical invasion of private property  

26. Denominator Issue  

1. Asks how the pertinent parcel of land should be defined when deciding whether a regulatory taking has occurred  

2. Three Factor Test:  

1. The treatment of the land under state & local law;  

2. The physical characteristics of the land; and  

3. The prospective value of the regulated land.  

27. Alienability  

1. Three categories of restraint:  

1. Disabling restraints; denies grantee of thee property the power to alienate the property  

2. Promissory restraints; grantee promises not to alienate the property  

3. Forfeiture restraints; grantee will forfeit the property if the grantee attempts to alienate the property  

2. Merger of Interests: if all of the outstanding present and future interests come into ownership of one person, those interests merge into a fee simple absolute  

3. Rules favoring Alienability  

28. Waste  

1. A life tenant is entitled to all the ordinary uses and profits of the land but cannot do anything that would injure the interests of the person who owns the remainder or the reversion. If they do, the future interest holder may sue for damages and/or to enjoin such acts.  

2. Affirmative (voluntary) waste – Natural Resources: Generally, a life tenant may not consume or exploit natural resources on the property  

1. Open Mines Doctrine: if mining was done on the land before the life estate began, the life tenant may continue to mine the property – but is limited to the mines already open. The life tenant may not open any new mines  

3. Permissive Waste: Absent a contrary provision in the instrument creating the life estate, a life tenant has a duty to make repairs to the property to keep it from being damages by the weather, and to pay certain carrying charges (i.e. mortgage interest, property taxes, and special assessments for public improvements). Failure to make required repairs or pay required carrying charges constitutes permissive waste. A future interest holder who expends funds in satisfaction of the life tenant’s obligations is entitled to reimbursement.  

4. Ameliorative Waste: occurs when the use of the property is substantially changed, but the change increases the value of the property. Under modern authorities, a life tenant can substantially alter or even demolish existing buildings if:  

1. The market value of the future (or other nonpossessory) interests is not diminished; and either  

2. The remaindermen do not object; OR  

3. A substantial and permanent change in the neighborhood conditions has deprived the property in its current form of reasonable productivity or usefulness.  

29. Rule Against Perpetuities  

1. Provides that, to be valid, an interest in property must vest or fail not later than 21 years after a life in being at the time of the creation of the interest. If there is any chance the interest will vest after that time, the interest is void and is stricken from the grant. An interest is void if there is any possibility, no matter how remote, that it might vest (or fail) more than 21 years after some life in being at the creation of the interest. The Rule applies to executory interests, contingent remainders, class gifts, options, and rights of first refusal, and powers of appointment  

1. The validity of an interest under the rule is determined at the time the interest is created.  

2. Must Vest: an interest vests for purposes of the rule when it becomes (i) possessory, or (ii) an indefeasibly vested remainder or a vested remainder subject to total divestment.  

3. Lives in Being: any lives can be used to show the validity or invalidity of an interest, but no lives are of any help unless they are somehow connected with the vesting of an interest.  

4. Interests Exempt from the Rule: a charitable gift following a charitable gift, vested interests (other than open class gifts), and reversionary interests.