PROPERTY THEORY

What is Property?
 Property is not the object
o Property is a social institution describing the legal relationship between people with respect to the thing
 Owning property is holding a Bundle of Rights (Sticks) against others—No property is absolute!
o Property Rights:
 Possession
 Use
 Exclude
 Alienate (Transfer)

Law’s Values:
 Functionalist view
o Fairness
 Allocation and enforcement of P rights
o Efficiency
 Property to its highest and best use - judges value clear rules and sticking to them
 Formalist
o Consensus among ancient scholars
o Certainty, peace, and order

I. FIRST IN TIME: ACQUISITION OF PROPERTY BY DISCOVERY, CAPTURE, AND CREATION

A. Acquisition by Discovery
[FIRST IN TIME, FIRST IN RIGHT”]
 “This in the beginning all the world was America”
o America was large, wild, and unpossessed
 Johnson v. M’Intosh
o The π got land from Indians; Δ got land from US Gov’t
o Concept of “first in time, first in right” (occupancy theory) or first come, first served at play.
o Discovery gave title to European nations that came to America – a political sovereign. Any subsequent
owners would derive title from the sovereign that discovered the land. Power was transferred from
England to the U.S. to hold title to the land.
o Implicit here is that b/c land has to trace back to the sovereign, all land ultimately owned by the
government – from here derives eminent domain.
o “Mere occupancy” doesn’t give right to title
 nemo dat doctrine= “you cannot give what you don’t have”

 Occupancy Theory: “First in time, first in right”

 Labor Theory: John Locke [“EVERY MAN HAS A PROPERTY IN HIS OWN PERSON”]
o Property in, “One owns one’s self…” You own your own work, so if you mix your work with something,
you own the thing.
o If you take your own person and mix the labor of your body with possession of land, you earn the right
to exercise an ownership over it since you labored on the land to improve it in ways others didn’t.

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  Ex: Haslem case: Horse manure is abandoned property of the horse’s owners. If you rake the
manure into a pile, you’ve put work into it, making the manure yours b/c you changed its
original condition and greatly enhanced its value by your labor
 Adding labor materials to the property of another:
 Ownership depends on the value of the thing created
 Where only labor is added, the owner of the raw material is given title, unless fairness dictates
otherwise
 Where both labor and materials are added, ownership is placed in the person who owned the
principal material
 If the laborer is a thief or not an innocent improver, he will never get title

B. Acquisition by Capture
[THE BETTER CLAIM TO POSSESSION BELONGS TO THE FIRST PERSON WHO TAKES A FUGITIVE
RESOURCE AND EXERCISES DOMINION & CONTROL OVER IT REDUCING IT TO POSSESSION]
 Rule of Capture: the first one to control the thing to the point of reducing it down to a possession, you have the
right to possession
o This deals with an essential meaning of ownership: form and function
 Capture: Putting your hands on or mortally wounding
o Reduces wild animal to something you can possess
 Furae naturae = wild by nature (not subject to ownership)
 Majority Rule: (“Formalist”): Possession goes to the person who brings the resources under their control or
dominion first
o Public Policy: Certainty, peace and order
 Dissent (“Functionalist”/Instrumental)
o Intent (Who has the better claim?) + a reasonable prospect of taking
o Social interest in killing foxes, they are nuisance, we should encourage capture
CAPTURE= POSSESSION= OWNERSHIP
Pierson v. Post – Must Possess the wild animal pursuit is not enough to claim title. [Dead foxes] Post’s capture
Glenn v. Rich – Acts of appropriation are sufficient forms of possession when physical control isn’t reasonable, or custom
favors the acts. [Dead whales] Courts apply custom when: not against public policy, few people, close to legal rule,
acquiesced to and industry need, and little external cost
Keeble v. Hickeringill – Landowners are considered prior possessors (first possessors) of wild animals on their land.
[Duck trapper]
 Rationae Soli- (by reason of the soil)- a landowner has certain rights on account of ownership of the soil. Establishes exclusive
right to hunt wild game on a landowner’s property, subject only to government’s right to regulate  constructive possession
Popov v. Hayashi- Where an actor undertakes significant but incomplete steps to achieve possession of a piece of
abandoned (baseball in stands) AND the effort is interrupted by the unlawful acts of others, the actor allegedly has a
legally cognizable pre-possessory interest in the property (qualified right of possession) equal entitlement to ball
must use equitable division doctrine= cannot “split the baby” because thing will lose its value
 Relativity of Title- a person’s claim to title depends on where they stand in the chain of title
o Chain of title traces the path of ownership
o Idea that a person can have a relatively better title or right to possession than another, while simultaneously having a
right inferior to yet another person
 Animus Revertendi- “habit of return”
o Used to help determine domestication of animals
o If animal shows the tendency to return, the owner does not lose a property interest in the animal when it leaves the
owner’s possession
o Does not give ownership, if you already had title just says a person doesn’t lose title
o Escape- if a wild animal escapes, the owner loses possession and the wild animal is again subject to the rule of capture
 Rule of Increase- offspring of an owned animal belong to the owner of the mother, absent an agreement to the contrary

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Rule of capture applied to other “fugitive” resources: “owned by everyone, owned by no one”
 Oil & Gas—Courts have reasoned that ownership should be determined under the rule of capture (similar characteristics to wild
animals)
 Water Rights
o Surface Water- water on the surface of the earth, two types of jurisdictions:
 Riparian Rights- person has a right to water based on the fact that the land adjoins the water
 Prior Appropriation- based on seniority, not on location [first to reasonable and beneficial use]
 Whoever started taking out the water first and putting it to a beneficial use has the highest rights
 Occurs in arid states and cuts off the most recent seniority during droughts
 Some jurisdictions are a hybrid of both (Texas)
o Groundwater- water underground
 CL=Absolute ownership- rule of capture, first to pull out the water gets to use it [English Rule]
 [American Rule]= First in possession + reasonable use of resource (if harmed neighbor then unreasonable)
Tregedy of the commons & Economic Theory of Property
 Tragedy of the commons- idea that it will result in an exploitation of natural resources// when everyone has a
right to use and isn’t used effectively
o Finite resource with open access to public
o Consumption enjoyed by individual but costs are shared by all
 Externalities- (economic analysis of property) cost or benefit to a land use decision that isn’t taken into account
because it falls on others
o Purpose of property rights is to enhance social welfare by maximizing the value of scarce resources*
o Negative= air/water pollution, littering, cutting in line v. Positive = street performer playing music for
bystanders
 Sofia suffers from Ruth’s profitable gain of owning a porn shop in the residential neighborhood
o Internalize Externalities by: 1) incentivizing owners to use their own resources more efficiently; 2)
reducing costs of negotiation for remaining externalities
 People decide to create individual property rights when its more efficient to do so (Demsetz)
 Transaction costs- the costs incurred in making economic exchange: 1)search and information costs; 2)
bargaining costs; 3) policing and enforcement costs
o HIGH COSTS by virtue of the number of users:
 Free riders= benefit from the extraction of contributions from members of a group
 Holdouts= don’t accept to make payment on transaction, so transaction fails
 Utilitarian Theory- dominant view of property law today mere artifact—a human invention, social institution

C. Acquisition by Creation
{3 Non traditional IP Interests: 1) misappropriation; 2) property in one’s persona; 3) property in one’s person}
 (1) Property in One’s Ideas – Intellectual Property
o Quasi-Property- an owner may not hold property rights against the public but may maintain property rights
against specific individuals (competitors) (INS v. AP)
 International News v. Associated Press – Followed along with labor theory, and protecting someone who
labored to provide information. One who has gathered news or general information for the purpose of
publication has an interest that is entitled to protection from interference. [misappropriation]
 (2) Property in One’s Persona: The Right to Privacy
o Publicity (White v. Samsung Electronic America, Inc.) [Vanna White case]
 There is a property right in one’s own image
 Parody= creating something new
o Exclusive right for someone to use their name, likeness, signature, and voice for commercial purposes, arose out of
the right of privacy; must have person’s consent
o Allows celebrities to get the maximum benefit of what they have created
o Name is protected even after a person dies
o California law extended rule to include anything that evokes a person’s personality
 (3) Property in One’s Person: Body Parts (Moore v. Regents of the University of California)
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 o Body parts and Organs are not considered property once they leave the body out of public policy
concerns.  property = dominion and no longer have dominion once organ leave the body
 Privacy and dignity- covered under duty to disclose ONLY has breach claim on this NOT conversion
 Public policy- it would hinder research and make researchers liablewould open the floodgates/ fiduciary
 Role of courts- should be left to the Legislatureconstitutional provision to promote art/science/creation
o There are property rights in our body: We can sell blood, sperm, plasma, hair, eggs, etc.
o Locke Theory applied to Patent Law: the material + inventive effort (creation is something new)
o PP to protect public health and safety
D. The Bundle of Rights – Exclusion, Abandonment, and Destruction

 The right to property is not absolute because of policy (circumstances/ law or states protecting human rights)
EXCLUSION:
 Societal interest to: 1) deter trespassers; 2) confidence in predictability of legal system (Jacque v. Steenburg)
 “Property rights serve human values” – State v. Shack
o Property must account for social (mandated) rules, such as right to legal aid and gov’t services.
o Necessity/ important PP may justify entry from non-owners (State v. Shack – Farmer’s rights case)
o ABANDONMENT: (CL) – It must be an (1) intentional relinquishment of property, and (2) a voluntary act.
 You cannot abandon real property – externalities go against economic interests and project
costs onto others.
TRANSFER/ Alienation:
 Where an owner possesses a full “bundle” of property rights, the destruction of one “strand” of the bundle a
taking, because the aggregate must be viewed in it’s entirety (Andrus)
 To sell enables owners to their right to make profit on their possessions/ “things”
 If government can take away, must be justly compensated (eminent domain and policy regulate limit to taking)
DESTROY: Don’t want to waste property, create externalities. Use to highest and best use. (Eyerman v. Mercantile Trust)
[instructed to destroy in will] state may foreclose the right of inheritance/make conditional within constitutional limits
 Can only destroy while alive!

PUBLIC TRUST: Doctrine—not “fixed or static” but one to “be modeled and extended to meet changing conditions and
needs of the public it was created to benefit” (Matthews v. Bay Head Improvement Ass’n) [beach access case Ocean is
part of public trust and the Scope therefore requires that there be an easement to enter/ enjoy for public use

 The public trust can effect the sticks in the bundle depending on what the people decide to place importance
o Separates “legal” and
 Severance [Festa real life case about beach house]: State statute does not establish a rolling easement without
proof that an easement exists through dedication, prescription, or custom
Jacque v. Steenberg Homes, Inc. - Society has an interest in punishing and deterring intentional trespassers beyond that
of protecting the interests of the individual landowners. The right to exclude is ironclad.
State v. Shack - Trespass does not include a situation where representatives of recognized charitable groups enter
private land in order to provide government aid to those workers who need it. Non-owners may enter onto an owner’s
property in order to provide governmental services, even if the owner objects to the entry.

II. SUBSEQUENT IN TIME: ACQUISITION OF PROPERTY BY FIND, ADVERSE POSSESSION, AND

GIFT
A. Acquisition by Find

Mislaid, Lost, and Abandoned Property

 A typical summary of the common law rules like this:

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 o A finder of property acquires no rights in mislaid property, is entitled to possession of lost property
against everyone except the true owner, and is entitled to keep abandoned property.
 Subsequent Possession: The title of the finder is good against the whole world but the true owner (Armory)
o If apprentice makes mistake, Master is liable
 Goldsmith status= Bailee [ Case was Finder v. Bailee; finder wins bc RULE]
 Bailment transfers possession but NOT title. Bailee has duty of care while in possession of thing
o Finder prevails over subsequent possessor (aka first in time) Relativity of title!
o D must prove valuation of damages
o Prior Possessor= “owner” in absence of true owner
o (R ) True owner has the right to recover!

 Found Property
o General Rule: Finder prevails against all EXCEPT the true owner AND the prior possessors
o When talking about found property, ask 2 questions:
 (1) What kind of item is it? (lost, mislaid, abandoned, treasure trove)
 (2) Where was it found? (In the open, private residence, in a public place)
Hannah v. Peel - A man possesses everything which he is attached to or under his land.
RULES: 1) “A man possesses everything which is attached to or under his land”
2) “A man does not necessarily possess a thing which is lying unattached on the surface of his land even though
the thing is not possessed by someone else”
 Two categories of property
o Real Property- land and fixtures
 Ex. buildings, fences, dams, etc.
 Fixture- immovable property, personal property that became permanently attached to the land (ex. dishwasher)
o Personal Property- all other property
 Ex. car, tables, books, clothes, computers, stocks, etc.
 Personal Property
 Tangible- property of a physical nature, we can see it and touch it
 Intangible- assets that cannot be touched or seen but still have value
 Possession- the controlling or holding of personal property, with or without a claim of ownership. Can be actual or constructive
possession. There are two elements:
(1) An intent to possess on the part of the possessor
(2) His or her actual controlling the property

 Lost Property – (Unintentionally departed with item)

 Rule: Finder of lost property claims title to a lost item; finder’s title over a lost item is superior to all BUT:
 The original owner
 Previous finders
 Occupant homeowners (if found in residence)
 Also, finder shall lose to the landowner if the item is embedded in, or attached to land.
 Policy: Society wants to return lost property to the rightful owner. To promote fairness, they want to
reward the finder of the object.
Amory v. Delmirie - A finder of an object has a property interest which is not absolute, but is sufficient to allow the
finder to keep the object against all claims but those made by the rightful owner.

 Mislaid Property – (Voluntarily/Unintentionally placed somewhere by owner & forgotten)

 Rule: Owner of the locus where the mislaid property is found has title.
 Owner intentionally placed intending to reclaim it
 They have a higher chance of finding the owner
 “Shopkeepers” have a duty to use reasonable care for safe keeping, until true owner returns
McAvoy v. Medina - Mislaid property shall go to the owner of the premises as the 2 nd best person

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  Abandoned Property – (Intentionally left and not wanted back)
 Rule: Owner intentionally relinquishes all legal rights with no intention to confer rights or return for it
 The key is that the abandonment of property was intentional
 By rule – The property typically goes to the finder of the abandoned property.
 Treasure Trove
 Rule: Buried or left for safe keeping American courts usually give to owner of the land where
found/lost
C. Acquisition by Gift

A GIFT is a voluntary transfer of property to another without consideration.

 Elements needed to make a gift:
o (1) Donor (present) Intent
 Donor must manifest a present intention to make a gift to the donee
 “Present intent” can be a possessory interest, a future interest, or any kind of interest. (Gruen)
 Mere expectancy (promise) NOT ENOUGH
o (2) Actual Delivery
 Donor must transfer possession to the donee—“hand over the property”
 If manual delivery possible, IT MUST BE HAD! – should feel the wrench of delivery
 If donor still has access to/ possession of the gift, then can change their mind—no D
 When actual delivery is impossible or impracticable (intangible; future interests):
 Constructive – giving donee access to control the gift (car keys, safe combo)
 Symbolic – expressing a gift in written letter or photograph—descriptive
o Traditional—only when manual not feasible
o Modern—even when manual is possible (Deed to house)
o (3) Acceptance – usually presumed, UNLESS donee expressly refuses gift or not of value
 You can essentially boil a gift down to a gratuitous transfer of property without consideration
 Intent arguments will be totally objective (He said/she said)
 But in terms of law you need some subjective arguments to prove
 Elements do not need to be in order, just complete  Peal Ring Hypo

Gifts (TRANSFER)
 A Gift is a gratuitous, voluntary transfer of property without consideration
 2 Types of Gifts:
 Inter Vivos (irrevocable) – A gift made during the life of the donor. (all elements must be met)
 Can also be made where the owner reserves a life estate and the donee never takes physical
possession until donor’s death
 Causa Mortis (revocable) – A gift made in contemplation of and in execution of impending death
 There must be an imminence of death, if donor lives or not dying, then revocable
 Delivery requirements are relaxed, but if donor lives, the gift is presumptively revocable
 Donee can rebut presumption with proof of specific intent
 Revocable because the intent of the gift is to take hold after the death of the giver, BUT if donor
lives than
 When asking if gift sufficiently irrevocable, think about beneficiary rights (Newman v Bost)
 Testamentary (by will)
Newman v. Bost – The housekeeper claimed a causa mortis gift from the deceased homeowner. Actual, manual delivery
is needed if the item is capable of being given and is in the presence of the donor and the donee. Constructive delivery
of the item is deemed sufficient if the item is incapable of being manually delivered because of its size or it is not in the
presence of the donor and donee. SYMBOLIC DELIVERY NOT ENOUGH FOR COURT implicated by societal view

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Gruen v. Gruen - A father held a life estate to a painting, but gifted to his son. A valid intervivos gift was made as the
donor intended to make a gift to his son, only constructive (or symbolic?) delivery was needed as actual delivery of the
painting to the Plaintiff would have defeated the donor’s intent to retain a life estate in the painting and acceptance is
deemed presumed as it is a benefit to the donee. Transfer of a remainder interest to Michael by his letter// Victor
possessed LE

Pearl Ring Hypothetical (P. 191 Note 1)

 Hypo #1
 O owns a pearl ring
 O visits daughter A
 O leaves ring on bathroom Sink
 A discovers the ring
 When A tells O of the find, O tells A to keep it a gift
 Has O made a gift to A?
o Yes, the intent was there when O told a to take it as a gift
o The delivery was Manual when A to gained possession of it
o The acceptance is presumed if the item has value
 Hypo #2 (same base facts)
 Now A doesn’t telephone O about ring
 1 week later, A surprises O by producing the ring
 O takes the ring and gives it back to A and says she wants A to have it
 The ring doesn’t fit A’s finger, and O keeps the ring until it can be cut down
 O leaves wearing the ring and on the way home is killed in a car accident
 A sues O’s executor for the ring
 What Result?
o A gets the ring
o The intent was there when O says A can have it
o The delivery was constructive
o The acceptance is presumed because it has value.

III. POSSESSORY ESTATES

Types of Possessory Estates
 Freehold Estates
 Fee Simple Absolute largest estate
 Defeasible Fee capable of lasting forever, but can be cut off upon occurrence of a condition
 Fee Tail prevents land from being alienable by keeping in family line (“ To A & the heirs of his body”)
 Life Estate smallest estate because of based on finite amount of time
 Non-Freehold Estates
 Tenancy for a fixed term (Term of years)  leaseholds estates ( T has possession, but L has seisin)
 Periodic Tenancy
 Tenancy at Will
 Tenancy at Sufferance

The Fee Simple  largest estate b/c capable of lasting forever/ inheritable (close to abs. ownership)
A fee simple is an estate in land… (derived frim the feudal system of “estates”)  inheritable and fully alienable
 That you can convey during life  inter vivos
 Pass by will at death testate ---If no will  intestate (heirs get it, if not heirs then back to state)
 That creditors can reach (Govt can come get it from you)
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The FSA goes on forever, there is NO future interest; the most complete estate one can have.
 To “A and her heirs” // To “A for life, then to B forever”  A= LE, B = FS, O=nothing; all die= B’s heirs
 “To A” – Words of purchase
 “And her heirs” – Words of limitation
 Default presumption in modern law
 Interest – largest possible present estate that is close to absolute ownership
 Can convey during life; Pass by will at death; The creditors can reach
 Policy – People should be able to control their land and use it as they choose

Inheritance of a fee simple

 Heirs: Persons who survive and are successors of decedent takers under intestate succession
 Issue: Descendants (all)
 Ancestors: Come before you
 Collaterals: Everyone else: (aunts, uncles, brothers, sisters)
 Escheat: If no heirs, escheats to the state. Goes to government if you cant find anyone who’s an heir.

Inheritance of fee simple – Ex. 1

 O conveys Blackacre “to A and her heirs.” If A dies intestate without issue, will Blackacre escheat to the state?
o No. Only if A has no living heirs
o To die without Issue doesn’t mean that you don’t have any heirs.
o The property shall pass along to the next of kin, either ancestors or collateral
o If no heirs, then it goes to the government because O doesn’t have anymore sticks.

Inheritance of fee simple – Ex. 2

 O conveys Blackacre “to A for life, remainder to B and her heirs.” B then dies intestate without heirs. A then dies.
Who owns Blackacre?
o At present, A holds a life estate in Blackacre. B holds a remainder in fee simple.
o If B dies intestate without heirs, A shall still hold the life estate, and the remainder shall escheat to the
State upon A’s death.

Defeasible Fees (Fee Simple Determinable) MUST have FI assigned  capable of lasting forever but can be cut short

Defeasible Fee occurs with transferring of property to another while retaining a measure of control over its use. To be a
Defeasible Estate, it means it shall terminate prior to its actual end point, upon the sequence of some specified future
event.

There are three defeasible fee estates involving conditions that might cause them to end:
 (1) Fee Simple Determinable
 Future Interest - the possibility of reverter (POR) automatically reverts back to Grantor
 (2) Fee Simple Subject to a Condition Subsequent
 Future Interest - right of entry/power of termination Grantor must elect to exercise right
 (3) Fee Simple Subject to Executory Limitation
 Future interest - Executory Interest in 3 rd party Springing or Shifting Transferee

 Fee Simple Determinable - a fee simple so limited that it will end automatically when a stated event happens.
 As soon as the condition happens, it automatically goes back to owner (grantor)
 Includes words of limitations like:
 “As long as”, “Until”, “During”, “While”, “So long as”
 Examples
 “To A and her heirs so long as A does not sell alcohol on the land”
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  “To A and her heirs as long as she uses the land to grow flowers”
 Grantor retains possibility of reverter.
 Reversion: A reversion is the interest left in an owner when he carves out his estate a lesser estate and doesn’t
provide who is to take the property when the lesser estate expires

Mahrenholz v. County Board of School Trustees - The common law states future interests in land by possibility of
reverter or right of re-entry are inheritable, but are not transferable by will or by inter vivos conveyance. (Deed = FSD w/
ROE)  words used were more mandatory than permissive (automatic v. electoral)
 MODERN TREND: POR and ROE are transferable inter vivos or by will
 Fee Simple Subject to Condition Subsequent - a fee simple that doesn’t automatically terminate, but may be cut
short or divested at the transferor’s election when a stated condition happens.
 May be divested when event happens. Once the condition happens O has to exercise the right to get it
back.
 Does NOT happen automatically like a fee simple determinable
 Includes words of limitation like:
 “but if”, “however if”, “provided that”
 Example:
 “To A and his heirs, but if A sells alcohol on the land, then O has the right to re-enter and reclaim
the land”
 O has Future Interest = right of entry/power of termination BUT MUST elect to exercise right

 Fee Simple Subject to Executory Limitation - the estate created when a grantor transfers a fee simple subject to
condition subsequent, and in the same instrument creates a future interest in a 3rd party rather than in himself.
The future interest in the 3rd party is called the executory interest.
 As soon as the condition happens, it automatically goes to the person holding the executory interest
 Executory interest = future interest in a 3rd party
 Examples:
 “To A and her heirs, but if A sells alcohol on the land, then to B and his heirs”
 “To A and his heirs until B returns from Iraq”
 Shifting v. Springing
 Shifting – right of possession is taken from a 3 rd party
 Springing – right to possession is being taken from the grantor
 ***The Distinction between a FSSCS and FSSEL is whether it goes to the grantor or a 3 rd party***

Finite Estates

The defining characteristic of a finite estate is that it MUST end.

 Future interests following a finite estate is either:
 (1) Remainder in a 3rd party; OR
 (2) Reversion in the grantor
 3 finites estates
 (1) Life Estate
 (2) Fee Tail
 (3) Term of Years

 Life Estate measured against the holder’s life

 A conveyance “to A for life” gives A, a life estate that last for the duration of A’s life. A can transfer the life estate
to B, in which case B has a life estate “pur autre vie” – that is, an estate that is measured by A’s life-span, not B’s.
If B dies during A’s lifetime, the life estate shall transfer to B’s heirs until A dies. Every life estate is followed by a

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 future interest – either a reversion in the transferor or a remainder in a transferee, or both. Hence, suppose
that O conveys Blackacre “to A for life.” A has a life estate, and O has a reversion.
 What does a life estate do?
 Lasts the duration of the grantee’s life
 “To A for life”
 Words of limitation  “for life”
 Default for CL
 You can’t devise or inherit a Life Estate because it ends when you die
 ALWAYS followed by a future interest: reversion or remainder
 Purautre Vie – for the life of another
 Person’s interest will last for the life of another person instead of their own
Valuation of Life Estate & Remainder
 LE: present value of right to receive (%__) interest for life expectancy (__# years)
 Remainder: present value of full sum less LE.
 Assumptions
 Interest rate
 Actuarial tables
 Fee Tail pretty much obsolete now
 Is a life estate to the immediate grantee, and upon his/her death, a life estate to his/her children, a LE to
that child’s children, and so on until there are no “children” to take the fee tail
 Example:
 “To A and the heirs of her body”
 Largely Obsolete – used to be used to keep land within a family lineage, thus preventing alienability
 Read today as a FS
 Traditionally: “to A and the heirs of his body”

White v. Brown - Rules of construction of an ambiguous will favors a conveyance of fee simple absolute. (“To live in” =
FS)
No restraint on alienation (P) if wanted to give less than a FS, need to make it clear bc can effect: 1) marketability/
efforts of highest and best use, 2) concentration of wealth, 3) discourage improvements, 4) hardship on creditors
Baker v. Weedon - The courts role in determining whether to allow the sale of land affected by a future interest, is to
consider whether selling the land would prevent waste of the property and to consider whether a sale is necessary for
the best interest of all the parties, including the life tenant and the contingent remaindermen.
Doctrine of Waste cannot use your property in a way that is going to unreasonably interfere with another’s FI
 Affirmative: Voluntary acts, injurious to the property. (i.e., substantially reduce value, tear down house)
 Ameliorative: Waste, that adds to the value of the property. (Majority – not waste at all)
 Permissive: Failure to act (negligence) resulting in damage to the property.
o Open Mines Doctrine- if the mines were open before the LE was created, then life tenant can mine; if mines are
closed, life tenant cannot mine
 Life tenant can do what the grantor can do at the time it was conveyed
 (P) Is the nature of the property interests for both parties, testators intent (is it substantially changed)

IV. FUTURE INTERESTS  FULLY ALIENABLE/ TRANSFERABLE

Future Interests in Transferors
 Possibility of Reverter - A possibility of reverter arises when an owner carves out of his estate a determinable
estate of the same quantum  FSD
 What O keeps when O carves out a determinable estate
 Right of Entry – When an owner transfers an estate subject to a condition subsequent and retains the power to
cut short or terminate the estate, the transferor has a right of entry FSSCS

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  What O keeps when O carves out an estate subject to a condition subsequent
 Reversion – A reversion is the interest left in an owner when he carves out his estate a lesser estate and doesn’t
provide who is to take the property when the lesser estate expires
 When you transfer a lesser estate than what you have and estate is vested (not contingent) AND a
remainderman has not been specified
 Vested= having become a completed, consummated right for present or future enjoyment
 When the future interest that follows a finite estate is held by the grantor, the grantor holds a
“reversion in”
 Can be transferred by conveyance or inheritance

Future Interests in Transferees

2 Types:
 (1) Remainders
a. Vested Remainders
b. Contingent Remainders
 (2) Executory Interests

 Remainders - A future interest that is capable of becoming possessory immediately at the end of prior estate
 Vested – given to an ascertained person, AND not subject to a condition precedent
 Remainder man must be born, AND ascertainable, AND there is no express condition precedent
 To put it in another way, a remainder is vested if it is created in an ascertained person and is
ready to become possessory whenever and however all preceding estates expire.
 Indefeasibly vested remainders (cannot be divested)
 “To A for life, then to B and his heirs”
o B: indefeasibly vested remainder in fee simple absolute
 Subject to partial divestment (subject to open)
 (class gift) remainder to class of takers requiring that at least one member of the class to already
have vested. Remaining members have yet to vest, but have the possibility to vest subject to
condition precedent (“to A his grandchildren over 18.” B is 19)
 “To A for Life, then to A’s Children and their heirs.” A’s on child, B.
o A = LE// B= vested remainder in FS subject to open (partial divestment)// B’s
heirs= mere expectancy
o If A has no children= contingent remainder
 Subject to complete divestment
 “To A for life, then to B, but if B fails to marry before A dies, then to C”
o A = possessory life estate
o B = vested remainder subject to complete divestment
o C = executory interest
 Contingent – given to an unascertained person, OR subject to condition precedent
 Ex: “To A for life, remainder to the heirs of A.” Contingent remainder in heirs of A.
 A remainder is contingent UNLESS it qualifies as as vested
 In either situation, the remainder is not now ready to become possessory upon the expiration of
a preceding estate
 “To A for life, then to the heirs of B”
 Contingent remainder in “heirs of B”
 B’s heirs – mere expectancy
 Takers are unascertained
 “To A for life, then to B and her heirs if B survives A”
 B has contingent remainder, subject to condition precedent that B survives A.
 TRENDS:

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  Contingent Remainder: Traditional = not transferable // Modern= yes
 Subject to RAP
 Vested Remainder: accelerates into possession AND preferred by courts when ambiguous

 Executory Interests – A future interest in a TRANSFEREE (3rd Party) that can become possessory only by
divesting preceding interest
 Future interest in a transferee that to become possessory must:
 Divest or cut short some interest in another transferee (3rd party) (shifting); OR
 Divest the transferor (grantor) in the future (springing)
 “Executory”: That which is yet to be fully performed; that which remaines to be carried into operation or
effect; incomplete; depending on a future performance or event.
 Ex: “To A and his heirs, but if A dies without issue surviving him, to B and her heirs”
 A: fee simple subject to executory interest
 B: executory interest in fee simple
 Difference between POR (FI for FSD) is that EI (FI for FSSEL) is held by transferee instead of grantor

 Important Q from last year**

 Vested remainder subject to complete divestment vs. contingent remainder
 All about the timing!
 O “to A for life, then to B, but if B fails to marry before A dies, then to C.
 A: possessory life estate
 B: vested remainder in FS subject to complete divestment
 C: executory interest
 O conveyed “to A for life, then if B marries before A dies, to B.”
 A has possessory life estate
 B has contingent remainder in fee simple–subject to condition precedent of B’s marriage
 O has reversion in fee simple
 Notice how these are both basically the same thing, but they are classified differently because of the
wording of the conveyance.

Rule Against Perpetuities

“No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the
interest”
 Permits limited control over the future  prevents the dead hand control
o Based on the idea that alienable property is beneficial for society
 RAP in Texas—Section 26: Perpetuities and Monopolies
 Applies to interests that are not vested at the time of conveyance
o (1) Contingent remainders
o (2) Executory interests
o (3) Class Gifts (Vested Remainders Subject to Open)

3 Step Process
Step 1
 Does it apply?
o Is there an interest created in this conveyance that is subject to RAP? (CR, VRSTO, EI)
Step 2
 Will it vest or fail?

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 o Life in being:  validating life/ person who shows us whether interest will vest or fail within 21yrs of
death
 Those people living at the time the gift is made
 Consider those living at the moment the conveyance is made, then if each one of those die, will
the interest vest within 21 years
o When everyone is dead, are we going to know what happens?
Step 3
 Access the interest for changes if void/ valid
o Is the interest valid or void?
 Validating life = the person who can affect vesting or termination of the interest
 The person who will enable you to prove that a contingent interest will best or fail
within the life, or at the death of that person, or within 21 years of that person’s life
o Two creation points:
 (1) alive the time of inter vivos conveyance interest created at time of will
 (2) at time of devise (gift by will)  interest created at the testator”s death
o If Valid no change
o If Void strike clause from conveyance (P) courts want to preserve the intent of the testator

 Interest: Prevents a person from putting qualifications and criteria in his/her will that will continue to control or
affect the distribution of assets long after she has died
o Not about interests that last too long
o About vesting contingent remainders (subject to condition precedent or to an unborn/unascertained
person) AND executory interests AND class gifts
o Talking about some future interest

 Vest: right to immediately secure present or future interest = the right to immediate possession

 Rule: No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the
creation of the interest.
o Does not mean it has to vest within the time frame of 21 years old of a person
o Just means we have to know definitively one way or the other who this future interest is going to and if
the condition can be met
o Taking account of all possible things that might happen
o Life in being: period to, at the latest, 21 years after the death of the last identifiable individual living at
the time the interest was created

Rap Example #31 – P. 310

T devises property “to my grandchildren who reach 21.” T leaves 2 children (A&B) and 3 grandchildren under 21.
 Remainder is valid
 Validating life = survivor of T’s children (A or B).
o T is dead, so T can’t have any more children
o When A & B are both dead, all grandchildren will turn 21 within 21 years.
The validating life is the survivor of T’s two children. All of T’s grandchildren must reach 21, if at all, within 21 years after
the death of the survivor of T’s 2 children. Therefore the gift is valid.
 What if transfer was by deed?
o Invalid
o That means that T is still alive, and it is possible that someone can be added as a validating life.
o Then RAP would apply to a contingent remainder.

Rap Example #32 – P.310

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T “to A for life, then to A’s children for the life of the survivor of them, then to A’s grandchildren”
 [First: A’s children’s CR is valid]
 When T dies, A is 80 yrs old, kids B & C
 So when B & C die, we will know who the grandchildren are at that time, right?
 Void! “Fertile octogenarian” possibility
o Under CL RAP, it must be assumed that a person of any age can have a child, no matter what the
person’s physical condition. The presumption of lifetime fertility is conclusive, notwithstanding contrary
evidence.

Class Gifts  All of nothing rule! Class must close in order to vest
Q1: when are all class members ascertained?
 Within lives in being + 21 years
Q2: when are all conditions precedent met?
 Within lives in being + 21 years
 Regardless of when the gift vests in possession, gift will be good if it vests in interest within the RAP period.
 All or Nothing Rule. Gift to a class must stand or fall as a unit. That is, if any class member fails the Rule, then all fail.

Rap Example #33

O devises land “to A’s children who survive to age 25.” Suppose that at O’s death, A is alive and has 3 children, all of
whom are younger than 25 and at least one of whom is younger than 4.
 A: Nothing
 A’s children: executory interest
 Void – A may have other children after O’s death.
Note first that no life estate precedes the interest given to A’s children. The executory interest in A’s children is void. The
invalidating chain of events in that A may have another child after O’s death, and that child may reach age 25 more than
21 years after the death of A and A’s 3 children who were alive at O’s death. Lives in being could possibly be not alive.

 Frozen Sperm: Courts disregard the possibility of posthumous parentage for purpose of Rule Against
Perpetuities.
 Fertile Octogenarian:
RAP Reform
 Cy pres
o Court reforms the conveyance to avoid RAP
o Give effect to transferor’s intent (drafter’s intent)
o Courts directed to liberally construe and apply this provision give effect to the good part of
conveyance
 “Wait and See”
o Basically says, instead of saying it was void at the creation of interest, wait and see if the conveyance
shall in-fact vest at the end of the 21 years.
o The gifts remains valid unless if fails actually to vest within the permissible period
 USRAP
o “Uniform Statutory Rule Against Perpetuities”  provides a fixed waiting period  about 50% of states
o Wait and see for flat 90-year period
 Restatement (Third)
o “Two-Generations” approach (defines measuring/validating lives as 2 generations younger)
 Specific Statutory Reforms:
o Statutes in place to correct technical perpetuity violations
o Ex: Illinois §: states presumption that no one >65 OR 13< are capable of having children
 Rise of Perpetual Trust:  about ¼ states
o Replaced RAP with Rule Against Restraints on Alienation
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  As long as trust gives “power of sale” to trustee, it doesn’t restrain alienation!
RAP in Texas
 Constitutional provision
 Cy pres: Tex. Prop. Code Ann. Sec. 5.043(a)
o a court shall reform or construe an interest in real property that violates the rule to effect the
ascertainable general intent of the creator of the interest.
o See, e.g., Medina v. Holder, 2003 WL 22964270 (Tex. App.―Austin, 2003) [struck out restraint in deed/
intent of grantor]

V. CO-OWNERSHIP AND MARITAL INTERESTS

Concurrent Ownership

When 2 or more people have concurrent rights of present or future possession

Consecutive Ownership: present possession + future interests

3 Types of Concurrent Ownership

 (1) Tenancy in Common - TIC have separate but undivided interests in the property; the interest of each is
descendible and may be conveyed by deed or will. There are no survivorship rights between tenants in common.
 (2) Joint Tenancy - JT has the right of survivorship. Each owns the undivided whole of the property
 (3) Tenancy by the entirety - Can only be created in husband and wife

Tenancy in Common >> “T to A and B”

 TIC have separate but undivided interests in the property; the interest of each is descendible and may be
conveyed by deed or will. There are no survivorship rights between tenants in common.
 Rule: each owns an undivided interest in a part of the whole  can transfer up to your interest
 Interests may be unequal
 May be conveyed separately by deed or will or at different times
 Transferable inter vivos, devisable, inheritable
 No right to survivorship
 Destroyed by partition
o Partition - When concurrent owners fail to reach an agreement on a division of property, people can
receive an equitable action of partition. The action is available to any joint tenant or tenant in common.
It is unavailable to tenants by the entirety.
 Note: this is the default tenancy at modern law!  Courts still look at parties’ intention

Joint Tenancy >> Four unities; right of survivorship; severable (becomes TIC)
 Each owns the undivided whole of the property: undivided possession in the whole  severable
 Defining characteristic – “Right of Survivorship”
o If you are a joint tenant and survive the other JT, you automatically take an interest in the whole
o Cannot be passed by will or inheritance
o Can be unilaterally severed (Riddle)  If JT conveys interest it severs the JT = Creates TIC
 Modern: If ambiguity= presumption of TIC bc favors alienability
 CL: presumed JT rather than TIC bc liked tying up land
 4 unities MUST be present
o (1) Time: Had to be acquired or vested at the same time to each person

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 o (2) Title: Has acquired by the same document/ instrument
o (3) Interest: Equal size and duration (undivided shares)
o (4) Possession: The entire property, meaning right to possession of the whole
o PLUS intent for right of survivorship
 Ex: “To A and B in joint tenancy with the right of survivorship”, and “not as tenants in common”
 Ex: A + B + C, A  D (A, B, and C are JT’s. A sells his interest to D.)
o B & C are TIC with D in 1/3
o B&C are still JT with undivided 2/3 interest
 Who has an interest in what?
 Rule: when you destroy a JT you do so in respect to your OWN relationship with the other joint tenants
o Thus D + B + C have a tenancy in common, C and B retain a joint tenancy
 Mortgage Theories: (Harms)  ROS must be clear if you want it conveyed, interest in mortgage extinguished
when JT survives
o Title Theory: mortgage gives title to mortgage; mortgager right of redemption
o Lien Theory: In reality, mortgage is more like a security (lien)  does not affect time or title unities
unbothered (dicta from Harms)
Tenancy by the Entirety >> 5th unity of marriage; not unilateral severance
 Rule: essentially a JT + unity of marriage (H&W)
o Presumption that a tenancy by the entirety is created upon marriage
 Five Unities, the common law unities plus marriage  marriage restricts W/H ability to destroy right of survshp
 Difference from a JT is that there is NO unilateral severance. They can agree to severe but cannot do it
unilaterally
o MUST have spouse permission to destroy right of survivorship
 Termination by:
o Death
o Divorce
o Mutual Consent
 Conveyance
o To A and B as co-tenants in a tenancy by the entirety with the right of survivorship and not as tenants in
common
 TX: “community property” ONLY All property before marriage =yours BUT all property acquired during is CP

Marital Interests
 Tenancy by the entirety (common law approach)—English system
o H&W have separate property
o Coverture dictate women could not own property—W ceased to be legal person
o Married Women’s Property Act (gave control to W) – enlightened feminism, protected W from H debts
o (R ): The interest of one spouse in the T by the E is NOT subject to levy by the other spouses’ creditors
(Endo)  Indivisibility of the estate/ indispensable feature = neither spouse can alienate w/o consent
 (P) Protect the other spouse, protect the home
o ( R): Creditor can only attach T/E property if the debt is an obligation of both spouse
 Community property (civil law approach) –Continental System  property from earnings during marriage
o Adopted by only 9 states (Texas is one of them) income from separate property= CP
 SP if before marriage, inheritance, or gift
o Marriage is treated as an equal partnership, NO SURVIVORSHIP (“passes” to the other)
o All property acquired during the marriage by the efforts of either spouse is community property
o Property brought into the marriage or received by a spouse during the marriage by gift, descent, or
devise is separate prop.
 Presumption of property acquired during marriage as CP rebuttable by preponderance of the
evidence (receipts, bills, deeds)
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  BOTH parties must agree to classify as SP  neither spouse can unilaterally alienate CP
o Both spouses must join in a conveyance of comm. Prop.
 CP only conveyed as an undivided whole manager makes this decision in TX (either spouse
can)
 Transfers by manager shall be in GF and for good cause (fiduciary)
o Spouses equally divide community property upon divorce
o Death: surviving spouse retains ½ interest, deceased spouse’s ½ interest passes to heirs tax valuation!
o Waiver: spouse may waive community prop. Rights
 Migrating couples:
o The character of the property is established by the domicile of the spouses at the time it is acquired
 When you change your domicile, ownership does not change unless both parties consent BUT
the law of domicile governs the estate.
 Common Law marriage both parties manifest intent to be H &W (legal effect in TX)
o Same Sex Marriage: allowed now with equal property rights

 TERMINATION: T/E
o Divorce:
 CL= property goes with title
 T/E severed into TIC
 JT stays the same
 NOW= equitable distribution of marital property

Factors:
o Intent of the parties
o Fairness
o Efficiency/ partial considerations
o Death: CL= Real Property by Dower (W) or Curtesy(H); everything else by elective share  not
TX

VI. TRADITION, TENSION, AND CHANGE IN LANDLORD-TENANT LAW

A. The Leasehold Estates

The principal leaseholds are the term of years, the periodic tenancy, and the tenancy at will.
 (1) The Term of Years: A term of years is an estate that lasts for some fixed period of time or for a period
computable by a formula that results in fixing calendar dates for beginning and ending, once the term is created
or becomes possessory. A term must be for a fixed period, but it can be terminable earlier upon the happening
of some event or condition. Because a term of years states from the outset when it will terminate, no notice of
termination is necessary to bring the estate to an end.  termination automatic upon end of term
 (2) The Periodic Tenancy: A periodic tenancy is a lease for a period of some fixed duration that continues for
succeeding periods until either the landlord or tenant gives notice of termination. (i.e., “to A from month to
month,” or “to B from year to year.” If notice isn’t given, the period is automatically extended for another
period.) It can be created by implication. The death of the landlord or tenant has no effect on the duration of a
term of years or periodic tenancy, but it does on the tenancy at will.
 (3) The Tenancy at Will: A tenancy at will is a tenancy of no fixed period that endures so long as both landlord
and tenant desire. If the lease provides that it can be terminated by one party, it is necessarily at the will of the
other as well if a tenancy at will has been created. A TAW ends, among other ways, when one of the parties
terminates it (It also ends, impliedly, at the death of one of the parties). Modern statutes ordinarily require a
period of notice – say 30 days or a time equal to the interval between rent payments – in order for one party or
the other to terminate a TAW.
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 o L can actually and constructively evict at any time!
 (4) The Tenancy at Sufferance: Holdovers: Arises when a tenant remains in possession after termination of the
tenancy.
o CL the LL has 2 options:
 (1) Eviction (plus damages)
 (2) Consent to the creation of a new tenancy (express or implied)

B. The Lease
What actually makes a lease is that it matters primarily whether or not an arrangement amounts to a lease because
leases give rise to the landlord-tenant relationship, which carries with it certain incidents – certain rights and duties and
liabilities and remedies – that do not attach to other relationships. A lease is both a conveyance and a contract.
T possession // L control
 Lease conveys possessory (property) estate in land
 Leases contain exchanges of promises in contract

F. The Tenant Who Defaults

 Nonpayment
 Holdover don’t leave after lease terms end
 Violating any covenant of lease

1. Tenant in Possession

Berg v. Wiley - The only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered, but
who claims possession and rights adverse to those claimed by landlord, is by resort to judicial process.
 SELF HELP
 The common law rule was that a landlord may rightfully use self-help to retake leased premises from a tenant
provided that the (1) landlord is legally entitled to possession and (2) landlord’s means of reentry are peaceable.
 Modern trend holding that self-help is never available. This view is founded on the premise that the potential
for violent breach of peace inheres in any situation where a landlord attempts by his own means to dispossess a
tenant.  L must ALWAYS resort to judicial process to dispossess a T who has not abandoned or surrendered
possession

2. The Tenant Who Has Abandoned Possession

Sommer v. Kridel - A landlord has a duty to mitigate damages by attempting to re-let an apartment vacated by a tenant
at fair market value.
 (R ) A landlord does have an obligation to make a reasonable effort to mitigate damages in this situation for
the following reasons:
 Fairness: Application of the contract rule requiring mitigation of damages to a residential lease is justified as a
matter of basic fairness. If the landlord has other vacant apartments besides the one which the tenant
abandoned, he has a duty to make reasonable efforts to attempt to re-let the apartment and treat it as one of
the vacant stock.
 PROOF:To assess whether the landlord made reasonable efforts to mitigate, the court should consider whether
the landlord offered/showed the vacant apartment, advertisements, among other factors.
 The landlord need not accept less than fair market value rent or substantially alter his obligations as established
by the pre-existing lease.
 The court overruled precedent based on the theory that when the landlord signed the lease with a tenant, the
landlord may not interfere with the estate granted to the tenant by the lease.

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  The court noted that a lease for residential property could no longer be distinguished from an ordinary contract
and thus was subject to the contract rule requiring mitigation of damages.--> full of implied covenants
o CL says no duty to mitigate: Property Theory-- a lease is a conveyance of property. It divests L of
possession and therefore L has no responsibility if T abandons

Landlord Remedies:

 Sue for back rent

 Recover possession
 Damages for breach of covenants
 Keep security deposit
 Accelerate rent
o Caveat lessee= T takes property as is

Constructive Eviction
Constructive eviction occurs when the LL or his representative substantially interferes with the tenant’s use and
enjoyment of the leasehold, by act or omission. In doing so, the LL has breached the covenant of quiet enjoyment.
 The interference must be substantial – that is, the premises must become essentially unusable for the intended
purposes.  L must be in control to fix, therefore has the duty to fix
Remedies
 The tenant may terminate the lease and vacate. The T is also entitled to damages, including the difference
between rent paid and reasonable rental value, cost of seeking other rental, lost profits, etc.
Requirements That Tenant Must Meet
 (1) Absence of waiver
 (2) T must give notice to LL (so LL can remedy)
 (3) T must vacate premises within a reasonable time; T cannot remain in possession and claim constructive
eviction.

• Olden times: Property—lease = conveyance

– “Caveat lessee” or “as-is” rental
– T’s rent obligation was independent
– No duty to provide habitable premises exception = quiet enjoyment/ constructive eviction
• Modern times: Lease is also a K
– T’s expectation: suitable housing, not farmland
– Ls in best position to maintain property
– Modern Ts at bargaining disadvantage
• IMPLIED WARRANTY OF HABITABILITY: For residential leases, implied warranty that L will deliver & maintain
“premises that are safe, clean, and fit for human habitation.”

– T promises to pay and L promises to keep habitable

– HOW TO PROVE: T must-
• Must give notice of defect to L, reasonable time to fix
• Show substantial violation of a housing code = (prima facie case); or
• Show that defect has impact on health and safety
– REMEDIES:
– Recission, Reformation, Damages
• Compensatory: difference between value as warranted and value as it exists w/ defects
• Hilder court remands this Q

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• Consequential damages for annoyance & discomfort
• Punitives—SCt suggest Trial Court consider
• Withhold future rent; deduct for own $ in repair

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