PROPERTY

LAW 2018
Professor Herz
PROPERTY: relationship among people [how do I stand as compared to others vis-a-vis this thing?]
Possession is not always ownership: depends on how the interest/possession was obtained. One cannot sell an
interest he does not have

How to approach the rationale for a legal theory:

Substantive Rules Efficiency: the social or economic costs and benefits created
Incentives: how the rule drives society to act
Identify why people do the activity in question in the first place
Justice: what will make the more moral party prevail
Historical Rules Transaction Costs: the costs to create and teach the new rule
Stability: deciding whether sudden shifts create unfairness
Administrability Enforcement: whether the legal test ask questions that are easy to answer

Externality: when costs outside the bearing on the seller are present
● Classic example of how markets fail; the seller will underestimate costs b/c they forget about external costs that
do not impact the individual party but impact the outside world

ACQUISITION OF PROPERTY
Chain of Title: history of ownership from the present owner back to original owner
When obtaining property, a buyer must evaluate the interest of the conveyor to confirm that the conveyor in fact owned
what he purports to be transferred.
● Owner: sole party with legal authority to make a purchase to acquire occupancy
● Right of occupancy: right to be on the property, but not a right to own it

Elements for a Sale of Land K:

1. Price
2. Party
3. Terms
4. Signature
5. Description

It is usually easy to figure out who owns a parcel of land. The conceptual issue becomes determining where the 1st man
got title from:
Other than buying property, one can obtain it by:
1. Discovery: Johnson
2. Capture: Pierson
3. Finding: Armory
4. Adverse Possession: Van Valkenburgh
5. Gift: Gruen
Cases in acquisition involve disputes over the interest in the property:
● Ejectment: action to claim right of ownership of the property
● Eviction: action to reject the right of a tenant to use the property

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 DISCOVERY
First in Time Rule: whoever finds the property first/ discovers it has title.

Purpose for implementing:

● Administrability: easier to enforce with a bright line rule
● Efficiency: use the resources to develop the land rather than to fight over it
● Incentives: makes people want to go out and find more land
● Fairness: if you were there first, cannot argue it is not fair
Locke’s Labor Theory of Property: Individual property is a natural right that arises when individuals create value by
mixing their labor with the land. A person owns the fruits of his labor.
● Property originates from the exertion of labor upon natural resources
o When you cut down a tree in the woods; you own the tree b/c you did labor to get it
● Theoretical justification: at least as there is enough of & as good of the thing you are taking for others
o There are enough similar trees to allow said tree to be yours
Johnson v. McIntosh: Both parties bought same land by deed. Johnson bought from Native American tribes and
McIntosh bought from US who got from England. Dispute who owns the land. Whoever had original title had right to sell
● While Native Americans were on land before England, McIntosh prevails to avoid legal chaos
o If Johnson won, would call into question all ownership taken from Native Americans
o Gov. would ignore the ruling, calling into question the legitimacy of the courts
● Conquest theory to avoid counter ruling:
o Might defines right: if property interest shifts by sword, ownership shifts but occupancy does not shift
o Native’s had right of occupancy after conquest but lost occupancy due to incompatible lifestyles (racism)
● While ruling is counter to general rule, established rules of discovery are valid

CAPTURE
Capture Rule: the first person to “capture” or obtain unowned personal property owns the property
MAJORITY RULE:
Pursuit alone is not enough to establish ownership;
A pursuing party must retain the property’s
liberty enough to make it his.
Incentives: Court does not want to incentivize waiting
and claiming ownership after someone else captures
● Law of 2nd makes no sense
Argument against Social Norm Theory: social norms
may reflect practices that harm outsiders to the sport
(Externalities). The role of law is to counteract the social
norms that are bad for society
Administrability: bright line rule of capture creates less
disputes over ownership
MINORITY RULE:
property rights attach at the point you have a
reasonable prospect of capture
Incentives: think about why people do the thing you are
trying to control
● Goal to eliminate foxes, must incentivize pursuing
foxes, not fighting over who owns the fox after
Social Norm Theory: courts should defer to enforcing
social norms to not disappoint social expectations; want
people to respect & follow the law
Locke Labor Theory: once you begin pursuit, you have
done labor and deserve the fruits of your labor

Pierson v. Post: Post was chasing a fox with dogs. Pierson comes after some time, shoots fox, and takes it away. Dispute
as to who owns the fox and whether Post pursued it enough to possess ownership and preclude Pierson’s ownership.
● Court held that Pierson had ownership: reasoning consistent with majority view
● Dissent reasoning consistent with minority rule

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 FINDING
Goal of Finding: to maximize likelihood that lost property will end up back to the true owner
● When you find lost property, you have right to it against everyone but the true owner (Armory)
● When you find personal property placed on purpose but left accidentally, the owner of true property where
personal property was left is responsible for the thing (McAvoy)

To increase chances for return to true owner: Balance between rights/restrictions of finders
● Do not allow finders keepers w/o any exceptions b/c if we did, would over incentivize people to find in a non-
productive way (i.e. thieves)
● If finder has no rights, eliminates incentives for thievery, but also creates disincentives for finding at all

5 factors to determine if property belongs to owner of land

where found, or finder: (Hannah v. Peel)
1. Attached or embedded to the land v. sitting on the land
2. Is the finder an agent or employee of landowner?
3. Is there a K between the finder and landowner?
4. How did the thing get on the property? God v. person?
5. Public v. Private space
Today by statute in most states: finder must turn property to police, who give to finder after allotted amount of time
Armory v. Delamirie: boy finds jewel; brings to goldsmith for appraisal; goldsmith takes jewel, just gives back setting;
boy wants jewel back (replevin) or money (trover) but goldsmith refuses and claims as his.
● F1 (boy) v. F2 (goldsmith): F2 argues in possession; F1 argues first in time
● Held: F1 prevails b/c First in Time trumps Current Possession
● Rule: finder has right superior to anyone besides the true owner and anyone who possessed prior
Hannah v. Peel: Δ buys house; doesn’t live in it. Gov’t uses property to station troops. Π soldier finds brooch
● Held: Π soldier has rights to the brooch b/c was on top of the land and the owner would likely not be found
o Purpose of rule to landowner is to unite the true owner with his property but this brooch would clearly
never be claimed
● Rule: Land owner possesses anything attached to/ under surface of land, but not necessarily things lying on top
● Precedent Cases:
Bridges v. Hawkesworth: customer finds bank Belongs to finder, not the shop owner, b/c
notes that had been accidentally dropped ● True owner was never found
● In public space
South Staffordshire Water Co. v. Sharman: Belongs to landowner b/c:
pool cleaner finds rings at the bottom of a pool ● Owner entitled to everything attached to or under the land
he was cleaning for the landowner ● Employee rule: when find something on property while
working for landowner, you find it for the employer
Elwes v. Brigg Gas Co.: Π owned land and Belongs to landowner b/c:
leased to Δ company for a long time. While ● Attached to the land
drilling, Δ found sunken ship unknown to Π ● No difference that existence was not known b/c rightful
owner would never have been found anyway

McAvoy v. Medina: Π found bag while at Δ’s shop. Π left the bag with Δ so efforts could be made to find true owner
(never found). Π demanded the money from Δ; Δ refused.
● Held: Finding misplaced property in a store does not give Π the right to take it and claim ownership; it was Δ’s
duty to hold onto it in case the true owner returned.
● Difference between McAvoy & Bridges→ bank notes in Bridges were accidentally dropped; bag in McAvoy was
deliberately placed.
Employee/Agency Rule: Different courts prioritize employee status differently:
● Jackson v. Steinberg: money found by maid in drawer: awarded to hotel owner on theory that it was mislaid
property that the maid had duty to deliver to her employer
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 ● Erickson v. Sinykin: money found by interior designer and held as abandoned. Court found that she had no duty
to report and was the finder of lost property
● Kalyvakis v. The TSS Olympia: Money found by ship steward on floor of ship's public men's restroom awarded to
finder on ground that it was lost/abandoned
● Hoel v. Powell: Hoel family saw money scattered on road while driving; Hoel contacted authorities; policeman
took money; Hoel's said they wanted it if true owner not found; b/c Hoels took charge of scene before police
arrived, was enough to give them finder's rights superior to anyone but true owner of the money

GIFT
Rule of Gifts: Inquiry to ensure the donor sought to, meant to, knew he was giving property to a donee
Applies only to personal property (not real property)
Unlike K law, court holds the donor to a gratuitous giving w/o quid pro quo or consideration:
● The action of giving, not the promise of giving, is binding
● Binding b/c the court values stability and finality so everyone knows who owns what

Gifting property focuses on possession: 3 requirements to validate gift of personal property (AID):
1. Intent [subjective]
2. Delivery [objective – indication/proof of the subjective intent/proof]
3. Acceptance [if there is delivery, acceptance is assumed, unless donee expressly refuses a gift]

Traditional (and diminishing) rule of delivery: if an object can be handed over, it must be
Modern rule of delivery: If manual delivery is not possible given size/weight, 2 alternatives:
1. Constructive Delivery: handing over a key/object that will give access to the subject matter of the gift. (Scherer)
2. Symbolic Delivery: giving something representative (i.e. written instrument) to declare a gift of property (Gruen)

Courts find constructive or symbolic delivery when:

● The evidence of donative intent is concrete and undisputed.
● There is every indication that the donor intended to make a present transfer
of the subject-matter of the gift.
● The steps taken by the donor to affect such a transfer must have been
deemed by the donor as sufficient to pass the donor's interest to the donee

Checks and Constructive Delivery: Different courts evaluate differently:

Scherer v. Hyland minority rule:
● Found constructive delivery where donor who got a check from another, endorsed the check, put it on a table in
her apartment that she shared with donee, left a note giving the check to donee, and then killed herself.
● Purpose of rule is to prioritize the intent of the donor
Woo v. Smart majority rule:
● Found no delivery for a check that was not cashed before the donor b/c a check is just a promise in future to pay
and until the check is cashed, it can be “stopped”
● Theory of the rule is that with a check delivery is not complete
Gruen v. Gruen: Π’s father wrote Π a letter on 21st birthday gifting him a famous painting. The letter was destroyed but
had said that father wanted to transfer ownership to Π, but father wanted to retain possession for the rest of his life. Later,
Π’s father wrote two more letters. Letter 1 said it was wrong to say he wanted to use the paintings for life (tax purposes)
so revoked that line. Letter 2 simply stated that he was giving the painting to Π. Π never took possession of painting. His
father retained possession until he died. When father died, Π sought to get the painting but Δ step mother refused.
Π wanted to have the painting as an inter-vivos gift rather than from inheritance b/c:
● Forced share statute: cannot write a spouse out of a will. A % of estate goes to surviving spouse no matter what

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 o Δ receives a share of total estate, which if included the painting, would give her more money
● Basis: what item sold for (-) what was obtained for. The lower the value when obtained, the lower the tax
o If gifted, value would be what dad got for. If willed, value would be at time of devising. Π would be
taxed less if gifted at time of letter
Held: Π met all requirements of gift:
1. Intent: this is an inter-vivos gift from father to son of title to ownership while maintaining title of possession
o Δ’s argument (rejected by court): intent was to be testamentary; If treated as would be invalid given
failure to adhere to certain requirements
2. Delivery: Follows modern standard that some circumstances make it illogical to require manual delivery
o Symbolic delivery (letter) is better for proving intent than actual delivery without witnesses
o No reason to impose burden on the parties without any positive benefit of protection of fraudulent claims
(especially in cases like this one where the donor retains a life estate)
o Not always the case: usually the courts require actual delivery unless not possible, but they are more
lenient when actual delivery has no relevant benefit
o Δ’s traditional approach (rejected by court): no manual delivery but could have been so no effective
delivery. Π should have gone to NY, been handed the painting, and then allowed father to keep
3. Acceptance: Acceptance is essential but is presumed unless specifically rejected
o Π had proof of acceptance via statements acknowledging to friends and retaining letters for verification

ADVERSE POSSESSION
Adverse Possession: method of transferring interests in land without consent of the prior owner & even in spite of the
dissent of such owners.
Every jurisdiction has a statute of limitations for when an owner of property can bring an ejectment claim against a
trespasser. After the statute has run, title transfers to occupier of the property
Purpose: to clarify & quiet titles which are openly and consistently asserted, provide proof of meritorious titles, and
correct errors in conveyancing – make it easier to find the true owner
Earnings Principle: the law should reward people who are making productive use of the property
If the owner is not being productive, and the possessor is, the possessor will provide the greatest value from the land.
Sleeping Principle: the law should penalize the negligent, dormant owner for sleeping on his rights
If the adverse possessor’s entry was not reasonably observable, we could not rightly blame an owner for being dormant

To determine if Adverse Possessor has claim to the property:

HOCEAN (Hostile, Open, Continuous, Exclusive, Adverse, Notorious)
Specified term of years: will vary from state to state based on statute (NY = 10 years)

Actual Entry: uses the property the way an ordinary owner of this kind of property use it
● Is the property enclosed? Did the possessor have color of title?
● Color of Title: claim founded on a written instrument or judgment that is invalid. (i.e. a deed or will).
o Different requirements for claim of right v. color of title (statute will tell the differences)
Exclusive: only one person may occupy the property for the time
● Members from same family on property together allowed; business partners are not
● When not exclusive, can claim rights of easement (Van Valkenburg)
Open and Notorious: the acts of possessor would reasonably put property owners on notice that someone is on their land
● Objective standard: not what landowner knows, but what he should have known (West v. Tilley)
● Courts are realistic about the objective standard: minor encroachments don’t count (Mannillo)
● Wording of the statute is important “cultivated, enclosed” etc.
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 o 2008 NY statute amendments- “acts sufficiently open to put a reasonably diligent owner on notice”
adds that de minimis (to trivial or minor to merit consideration), non-structural encroachments are non-
adverse (Manillo rule)
Continuous/ Uninterrupted: The possessor must use it as a real owner would for the allotted time
● Requires that you are there for a long time, but not every second (can go out to dinner)
● Tacking: allows previous owners and current owners to claim right over sleeping true owners (Howard v. Kunto)
Hostile and Claim of Right: Confusion in this category b/c “adversity and “hostility” imply wrongfully seeking
something whereas “claim of right” and “claim of title” imply that the possessor thinks something is his
● Hostile: cannot have permission to occupy land from the owner (renting)
● Claim of Right: He must/ he must not know that the land is his
MAJORITY OBJECTIVE VIEW INTENTIONAL TRESPASS VIEW GOOD-FAITH VIEW
State of mind is irrelevant: How the The adverse possessor must The adverse possessor must
possessor acts is more important than subjectively know the land he is on is subjectively and mistakenly believe
what the possessor is thinking not his the land he is on to be his
Not relevant: what possessor thinks Mistaken possession does not May require land to be in the deed
Relevant: constitute hostility description (color of title) to show good
faith belief that land was yours
Refrains from rewarding bad-faith Most courts do not accept this rule b/c Most courts do not accept this rule b/c
actors and makes a rule that is easier to rewards bad-faith adverse possessors is hard to administer as it is difficult to
administer: easier to assess actions and penalizes good-faith possessors so assess what someone subjectively knew
than internal thoughts

NY Statute: not about subjective state of mind but about the reasonable/objective basis for the adverse possessor to
think he owns the property (language is confusing and without precedent)

§501 Objective Rule: Did possessor act as if it were his property, not what did he think
● Adverse Possessor definition: “occupies real property of another person or entity with or without knowledge of
the other's superior ownership rights in a manner that would give the owner a cause of action for ejectment”
● Title established upon the expiration of statute of limitations provided that the occupancy has been adverse,
under claim of right, open and notorious, continuous, exclusive, and actual.
● Claim of Right definition: “a reasonable basis for the belief that the property belongs to the adverse possessor or
the property owner, as the case may be”
o Confusing language b/c could interpret as the possessor believing the property belongs to the owner
o Objective standard of a “reasonable basis for that belief”: easier to prove in court than proving what
was in your head (E.g. if Walling was shown the property line, did not have a reasonable basis for belief of
where line was)
§543 De Minimus Encroachments: even if you have actual knowledge, it is not adverse in some circumstances:
● Non-structural encroachments (e.g. fences, hedges, shrubbery, plantings, sheds) are permissive and non-adverse
● The line between structural and non-structural (shed v. barn) is not clear in the statute

Van Valkenburgh v. Lutz: Lutz (Δ) live in farming area for long time. Started to use adjacent land. Crossed, built a farm,
cleared trees, and built a house for Δ’s brother. Van (Π) move in and eventually bought lot next door sold on foreclosure.
Π tells Δ to get off the land. Δ is treating the land as theirs but do not own the land. Neighbors think it is theirs.
C1: Δ sues Π for declaration that they may pass the property under prescriptive easement. Δ prevails and can pass
through but Π can tell them to get their stuff out.
C2: Π sues Δ seeking ejectment
● B/c Δ had no piece of paper (color of title), must show substantial enclosure or cultivation & improvement of
the land as a way of giving notice to true owner
● Majority uses both subjective views: Δ not sufficiently hostile. Makes no sense b/c would mean that one only
has right to adverse possess when already own the property
o If think it is yours (good-faith) and are mistaken, not adverse
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 ▪ Thought garage was his own property: not hostile b/c not adverse
o If know not yours (bad-faith) and occupy anyway, not claim of right.
▪ Knew he did not own the other parts of the land, so not a claim of right
● Π’s ownership established in C1 so cannot now disavow his favorable judgment
● Dissent objective view: Δ occupied entire land b/c occupied enough of it: must only behave like an actual owner
Walling v. Przybylo: Walling’s were occupying the land and they think it is their property. After winning comes out that
they knew it wasn’t their property: NY overrules Van Valk and holds that state of mind of possessor are not relevant
Manillo v. Gorski: Gorski added concrete platform with steps to his side door. Steps encroached on Manillo’s land by 15
in. Court must determine if the encroachment was (1) hostile (2) open and notorious
● Is hostile: Switches from Maine Rule to Connecticut Rule and holds that the encroachment was hostile
o ME intentional trespass rule: innocent mistake precludes hostility thus precludes adverse possession
o CT objective rule: entry and possession are enough to satisfy adverse possession, regardless of mistake
● Not open and notorious: while stairway is open and notorious, the 15 in. encroachment was not
● RULE: there is no presumption that knowledge arises from a minor encroachment along a common
boundary. The true owner must have actual knowledge for it to be open and notorious.
o Justice/Incentives: Minor encroachments being open and notorious would require all property owners to
know exact property lines and encourage negligence by people adding to land.
o Administrability: instead of requiring adverse possessor to remove the encroachment, able to pay the true
owner for the property. While don’t have title, have the rights to purchase this property

Howard v. Kunto: Everyone is on the wrong lot b/c surveys were wrong, and deeds were mistaken to where homes were
built. Kunto buys lot and moves in. A year later Howard comes and claims land as theirs with new and correct deed.
● Court finds for Kunto even though did not meet statutory period b/c predecessors did
● Tacking: adding the Kuntos + predecessors time together for adverse possession
o Tacking is appropriate when predecessor and possessor are in privity b/c would otherwise create an at
odds relationship between continuous and exclusive
o Privity: there is an equal connection between current and prior possessor so the parties are seen to have a
continuous undertaking
● Tacking usually pertains to encroachment, but court finds can also apply to different land b/c has same impact

West v. Tilley: Δ builds concrete wall that goes over the line and builds additional wall that goes onto Π’s property. Meets
all requirements of adverse possession but Π disputes over claim of right saying Δ should not get land b/c did not know
they were encroaching and Δ must know they are encroaching to be adverse
● Court finds for Δ: should ignore state of mind
● Δ’s argument: 1. We should prohibit bad faith claims (Van Valk) or 2. Forget about state of mind and look at an
objective test (what you do not think). Should look at other elements and infer claim of right if all are met
● Π’s argument: Legal rule requires hostility (Van Valk). If we allow someone to mistake land is theirs, puts
burden on true landowners to figure out boundary lines and survey (justice) and incentivizes reckless building on
another's property. Should not reward ignorance
City of Tonawanda: ownership and use of real property lying between a creek and road.
● Old Rule: no AP against any government property
● New Rule: AP is possible if government owns land only in proprietary capacity
● EX: can adversely possess land that gov’t had tried to sell but cannot adversely possess the White House

ESTATES IN LAND
Property comes with a set of rights that can be limited (bundle of sticks that can be separated):

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 Includes the right to: SELL | EXCLUDE | MORTGAGE | RENT | OCCUPY
Numerus Clausus: principle that there are a fixed number of estates and no one can create new ones

Fee simple: “To A” or “To A and his heirs.” Most complete kind of possessory and future ownership interest
where owner has property now & forever. Alienable, devisable, inheritable. Within a fee simple can grant:
Life estates: you own it now, someone else will get it when you die (possessory; not inheritable) alienable
Remainder: everything other than the life estate (future interest; inheritable)
Reverter: when interest goes back to the grantor (future interest) alienable devisable and inheritable
Division of ownership rights by time: “to x for y years”
Per autre via: A has life estate & B has remainder interest. If A sells his life estate to C, C will have possession
until A dies. After A dies, interest transfers to B (even though C has interest, depends on A’s life)

Decedent: Person who dies with inheritable property interest. After death, interest passes:
Testate: someone dies with a will
Testator/testatrix: man/woman who writes will
Devisees: persons who take real property by will
Legatee: persons who take personal property under a
decedent’s will
Almost all wills include a Residuary clause to avoid
intestate succession: grants everything not specified to
a party. “residue & remainder of my estate to X”
Intestate: person dies without a will
Heirs: persons who take by intestate succession: order
of succession specified by statute:
Issue: direct lineal descendants:
children/grandchildren
Ancestors: parents
Collaterals: relatives other than ancestor/issue
(siblings, cousins, etc.)
Escheat: if no heirs or will, property goes to the state

Law of Waste: rules seeking to avoid uses of property that fail to maximize the property’s value while
adequately protecting interests of both parties
Affirmative waste: arising from voluntary acts
Permissive waste: arising from failure to act (negligence)
Ameliorative waste: changes to the property that result in an increase its value. Despite increase in value, theory is that
fee holder is entitled to take possession in the same condition as when transferred to the tenant

Purpose of Law of Waste: to minimize conflict between the bilateral monopoly relationship of tenant and remainderman:
Interests in conflict b/c one wants to use all value within life while the other wants to conserve. Places constraints of use
on the tenant to lessen the negative impact on the remainderman
Monopoly: only one seller → increase in prices b/c higher demand than supply and no competition
Monopsony: only one buyer → decrease in prices b/c higher supply than demand and excess competition
Bilateral monopoly: only one buyer and only one seller → neither can threaten to deal elsewhere, driving
negotiation is meaningful. If no solution on get stuck (Baker).

Restraints on Alienation: prohibiting an owner from transferring interest in property

Disabling Restraint: deed withholds from the grantee the power of transferring his interest
Forfeiture Restraint: deed conditioned so if grantee attempts to transfer interest, forfeited to another person
Promissory Restraint: grantee promises not to transfer his interest.
Objections to Restraints:
1. Makes property unmarketable, so land may be made unavailable for its best use
2. Perpetuates concentration of wealth by making it impossible for owners to sell

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 interest and consume sale proceeds
3. Discourages improvements on land
4. Creditors prevented from reaching property, creating hardship b/c can’t rely on
owner's enjoyment as collateral

Baker v. Weedon: John wrote a will giving property to his wife “during her natural life, but when she dies to her children
but if she has no children then it goes to his grandchildren when she dies.” Anna has a life estate and Johns grandchildren
have fee simple remainder interest. Anna doesn’t live on the farm anymore and rents it out for $1,000 a year plus $300 for
sign rental. Farm is worth $168k (terrible investment). Grandkids argue if they sell now it’s only 168k, but if they wait 4
years it’ll be worth more, so want to maximize their gain.
● Trial court: is waste b/c farming not viable anymore & by leaving it not putting it to its “highest and best use”
● Reversed: When life tenant and remaindermen have conflicting interests, look at “the best interest of all parties”
● Courts of equity have the power to order the sale of property subject to future interest to prevent waste
● Example of Bilateral Monopoly b/c life tenant and remainderman are already known with conflicting interests,
difficult to negotiate b/c neither party has leverage

White v. Brown: Jessie wrote a will to Evelyn White "to have my home to live in and no to be sold.” Named Sandra
White Perry the "executrix of my estate" and granted her “personal property to Sandra. My house is not to be sold." Other
nieces/nephews sued for the remainder of the property. Question is whether Evelyn had a life estate or fee simple with a
void clause restraining alienation. Ambiguity in the language, because “live in”
● If life estate: remainder would be without will and go to heirs through intestate succession
o If only part of will is testate, use will for completed part and then intestate succession for the rest
● If fee simple: “Not to be sold” would be struck b/c there is a firm rule against restraints on alienation
o When there is ambiguity in the language, interpret it as fee simple.
● Majority: in fee simple and struck clause “to live in” b/c was restraint on alienation
● Dissent: unambiguous life estate and that court should refrain from striking terms of will whenever possible

DEFEASIBLE ESTATES
Defeasible Estate: an estate that can be terminated prior to its natural end-point upon the occurrence of some specified
future event. Can apply to any estate:
Defeasible fee owner has everything forever, with the possibility of losing it if something comes to pass
Defeasible life estate might end earlier than at the natural death of the tenant if something comes to pass (i.e. “O
to A for life so long as the property is used only for residential purposes”)
Purpose: to assert land use control and behavior control no related to any particular use of land
The most common defeasible estate is a defeasible fee-simple. There are 3 types:

Determinable; Subject to Condition Subsequent; Subject to Executory Interest

Type of FEE SIMPLE SUBJECT TO CONDITION SUBJECT TO EXECUTORY

Fee DETERMINABLE:
Ends automatically when stated
event happens. Right when event
occurs, reverts back to grantor
Language Words of duration followed by
language that causes automatic
reversion to the original grantor
As long as; For so long as
SUBSEQUENT:
Does not end automatically but
may cut short if the condition is
met
Words of condition followed by
language that grantor may enter
On the condition that; but if it no
longer
INTEREST:
Ends automatically when stated
event happens. Right when event
occurs, transfers to third party
Words of condition followed by
language that causes automatic
transfer to a subsequent owner
On the condition that;

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 Future Grantor has possibility of
Interest reverter: Grantee may never
violate the language but if does,
interest automatically goes back
to grantor
Example: “O to the school board so long
as used for school purposes.”
If not used for school purposes, will
revert back to O
Grantor has right to entry but
must execute that right: Once
condition met, if grantor does not
reenter it is still the grantee’s.
“O to the school board, but if not
used for school purposes,
grantor has right to re-enter and
retake”
Cut short but only if O elects to
exercise the right of entry
Third party holds an executory
interest: vests automatically
when grantee violates the
language
“O to school board, but if it
ceases to use the land as a school,
to the city library”
school board: fee simple
city library: executory interest

Fee simple subject to condition subsequent & subject to executory limitation use same language: the distinction is only the
future interest following:
● Condition subsequent: followed by a right of entry
● Executory limitation: followed by an executory interest

**NOTE: Executory interests often are voided due to the Rule Against Perpetuities

B/c distinctions in language can be arbitrary, courts look at intent of grantor or use presumption: Most jurisdictions use
presumption and find fee simple subject to condition subsequent

In the real world, the distinctions between defeasible estates are typically irrelevant
● Difference between conditional and durational language, even if identifiable, usually
has the same end result
● Possibility of reverter vs. right of reentry has no difference b/c the holder of the interest
must take action either way
● 3rd RST gets rid of distinctions and only uses fee simple defeasible
Valuation in defeasible estates: With defeasible estates it is difficult to determine value b/c likelihood of the passing of
interest cannot be determined. In defeasible life estates, can make an estimate in how long person can live and do math to
figure out what the interest is worth if never reverts/transfers. With defeasible fees, cannot have any estimate as to timing
All restrictions on land use are to some extent a restriction on alienation: A defeasible estate may not put a clear
restraint on alienation (to A unless sold then to B).
When restrictions are less clear, courts either distinguish between restraint of use and alienation based on form or
substance:
Form: Simply evaluate based on the language of the condition.
● Restriction is void if it says, “cannot sell to X”
● Restriction is valid if says, “can only be used for Y”
Substance: Looks at the effect of the restriction rather than the language.
● Restriction is void when the condition attached to the fee makes it unable to convey to a majority of the market
● RST takes this approach
● Courts more likely to deem a condition valid if it is to maintain for church or school use only: more lenient when
towards a charitable function b/c courts want to incentivize people to give to charity (Odd Fellows)
Personal Conduct Restraints: used to be common to have life estates defeasible upon marriage
● Current rule: cannot make land defeasible if purpose is to coerce into not marrying and restrict how one lives
● Rationale: Law values marriage like it values alienation. Courts ought to enforce right to marry when possible
● Execution: evaluate validity of the condition by looking at the purpose of the condition:
o If looks like trying to coerce abstention from marriage: void
o If seems like trying to provide support until marriage: upheld

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Mahrenholz v. County Board of School Trustees: Mr. and Mrs. Hutton convey to school district (1.5 acres) “to be used
for school purposes only otherwise to revert to Grantors.” Gave 38.5 to Jacqmains. Gave Jacqmains reversionary
interest of school. Mr. Hutton dies. Jacqmains convey everything to Mahrenholz. Mrs. Hutton dies. Did not think Harry
(Hutton’s son) had any interest. School stops holding classes. Harry conveys his interest to Mahrenholz (if he has). Harry
also disclaims interest to school district.
IL statute (not law in most jurisdictions anymore): reversionary interest is not alienable or devisable, but only
inheritable by an heir. The grantor cannot control where the reversionary interest goes
● Given statute, Hutton transfer of reversionary transfer to the Jacqmains was void so son Harry has reversionary
interest as the heir Ownership depends on whether fee is determinable or subject condition subsequent:
o If fee simple determinable, Mahrenholz gets: Harry’s future interest is a possibility of reversion,
which reverted back automatically when school stopped holding classes. When Harry passed interest to
M, he had the property to convey
o If simple subject to condition subsequent, school board gets: Harry’s future interest is a right of
reentry, so would have to claim the land for it to revert. Since did not exercise the right, did not transfer
to M when conveyed his interest to them
● Holding: It is a fee simple determinable b/c had both language of duration and condition (Note: this makes no
sense b/c counter to rule that if ambiguous, use subject condition subsequent)
Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano: grantor gave deed to Π with restriction
that land may only be used by the lodge and cannot be sold. Language: “restricted for use and benefit of second party
only and in event of sale or transfer by second party reverted to first party/heirs.”
● Condition that cannot sell or transfer: a clear restraint on alienation so void
● Condition that only the lodge can use it: question as to whether this is a restraint on use or alienation
o If restraint on use: fee simple subject to condition subsequent and valid
o If restraint on alienation: it is a fee absolute with a void restriction on alienation
● Restraint is worded as condition subsequent but result ends in unable to be alienated
o Majority: condition subsequent b/c intent is clear that they wanted to be kept for purpose of the fraternal
lodging (could be considered charitable donation)
o Dissent: all use restrictions have same legal effect as alienation restraint b/c limiting the sale market

Nebraska Case: opposite position than Odd Fellows: when condition attached to defeasible fee simple and creates a limit
on alienation to a majority of the market, it is void. Looks at the effect as opposed to form of language
● Note: b/c this restraint was not charitable could be distinguishing factor that made court stricter

FUTURE INTERESTS

Future Interest: whoever comes after the possessory interest (current interest) – rights to the enjoyment of property at a
future point in time
Purpose: to allow the testator to control inheritance of the land not only at death, but also at the time of his
children’s death
Owner of future interest has legal rights: while does not have possession, has existing property interest that may become
possessory in the future. Can be retained by the grantor or conveyed to transferee:

Retained by Grantor Conveyed to Transferee

Reversion: future interest held by grantor of interest less than
the one he owns to another (life estate, term of years)
● Not dependent on (non) occurrence of condition precedent
Possibility of reverter: future interest held by grantor of who
transfers determinable estate
● Demands a condition precedent: possibility that grantee
Remainder: future interest that follows a possessory interest
after the prior interest ends naturally
Two mutually exclusive types of Remainders:
● Vested: at least one ascertainable taker AND future
interest does not have a condition precedent
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 never violates the condition so may never revert ● Contingent: if there no ascertainable taker OR the
future possession is subject to a condition precedent
Right of entry (power of termination): future interest held by
grantor who transfers fee simple subject to condition
Executory Interest: future interest that cuts short another
subsequent
possessory interest
● Demands a condition precedent and the grantor to act on
● Typically follows a defeasible fee
his right to terminate

Vested vs. Contingent: identify if there is an ascertainable taker and/or a condition precedent:
Ascertainable taker: taker can be specifically determined when the transfer/devise is made effective
● If the taker identified by description (not name) that can apply to more than one person, it is not ascertainable
Condition Precedent: event that must occur or not occur before and interest becomes vested or possessory
If vested interest, determine which vested interest is present:
Indefeasibly Vested: have future interest without any condition (e.g. an absolute remainder)
Vested Subject to Open: one party will definitely get future interest, but not sure if anyone else will also have interest
● Gift to an “open class”: when a person has interest and can’t lose it, but they may have to share it (common
example is when a parent is alive and future interest is to their “children”)
o [i.e.: “to Betsy for life, remainder to her kids.” Betsey has one kid, Cam. Cam will definitely get a future
interest, but Betsy may have another kid, so the class is still open]
Vested Subject to Complete Divestment: there is a condition subsequent that will divest the interest
● If the future interest is to the grantor: possibility of reverter or right of entry
● If the future interest is to the third party: executory interest
**NOTE: defeasible estates all result in divestment, so the future interest will never be a remainder b/c
remainders require interest to pass upon the natural end of prior possession.

Alternative contingent remainder: when one of two named persons takes to the exclusion of the other based on
whether or not a condition precedent occurs.
● (i.e.: to A for life and then to B if B reaches 21, but if B does not attain age 21, then to C)

Trust: asset that exists for the benefit of 1 person that is controlled by another person
Trustee: controls the estate and has legal title to the estate
Beneficiary: gets income that the trust generates, then becomes the outright owner or there is a beneficiary for life and
after the beneficiary dies, the principal goes someone else when the beneficiary dies (equitable title)

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Future Interests Flowchart

(Zoom in to read or download this image and open it separately to make larger)

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 RULE AGAINST PERPETUITIES

Rule: Forbids a grantor from creating future interests in property that may not vest until a date beyond 21 years after the
death of anyone living at the time the deed/will took effect:
“no interest is good unless it must vest or terminate no later than twenty-one years
after some life in being at the creation of the interest”

Purpose is of the rule is to control the “dead hand of the past”: prevent people from using deeds or will with
qualifications to affect and exert control over ownership of property long beyond the lives of people living at the time the
instrument was written.

Step 1: determine if the future interest is subject to the rule

Rule is limited to future interests in third parties (not the grantor) where the interest has not vested when conveyance
was created (third party is unascertained OR there is a condition precedent to the interest becoming vested)
SUBJECT TO RAP: NOT SUBJECT TO RAP
Vested Remainder
Contingent Remainder
Vested remainder subject to divestment
Vested Remainder Subject to Open Reversion
Possibility of Reverter
Executory Interest
Right of Entry

Step 2: determine whether the given interest may not vest within the perpetuity period of the “lives in being +21 years”
Rule of logical proof: must prove that a contingent interest is certain to vest or terminate no later than 21 years after
the death of the validating life.
● The rule will void the contingency if there is any possibility that the contingent future interest violates the rule.
o Need find only one possible scenario, no matter how remote the possibility, in which a contingent future
interest violates the rule
First identify:
1. When the interest was created: determine whether the conveyance was via deed or will
● If conveyed in a will: created when testator dies
● If conveyed in a deed: created when deed is written
2. The life in being: every relevant party alive at the time of the creation of interest
● Note: The life in being may not be the testator if conveyance is a will b/c the interest is not created until he dies
3. The vesting event: the event(s) that must occur before the contingent future interest vests
Example: Upon O’s death, “to A for life then to B if she
survives A, otherwise to C”
1. Interest created: when O died
2. Lives in being: A, B, C
3. Vesting event: A’s death and whether B survives A
Then Determine:
Whether it is at all possible that the vesting event will not occur or fail within 21 years after the death of a life in being
alive at the time the interest was created.

Validating life: the person who allows you to prove that the contingent interest will vest or fail within the life of that
person, or at the death of that person, or within 21 years after that person's death.
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● In the above example, B is the validating life. The interest will vest with B or C upon A’s death, depending upon
whether B is alive or not.

B/c only need one possible scenario to invalidate, RAP may turn on events not immediately apparent
Must imagine untimely births and deaths. If it is at all possible that will not vest or fail, the entire clause is void:
Valid: “to A for life, then to a’s first child to reach 21.” Void: “to A for life, then to A’s first child to reach 24”
A is alive with no children A is alive and has one child, B, who is 23.
● B may die before turning 24 while A is still alive. A may
● Any child of A will have been born in A’s lifetime.
then have another child, C and die when C is 1. C’s interest
● Any child will die or turn 21 within 21 years of A’s death
will vest 23 years after A dies
so the interest must vest when a child of A becomes 21or
● While it is almost certain that the remainder will vest within
fail when A dies without children
21 years of death, the logical possibility that it will
neither vest nor fail will violate the clause

Vested remainder subject to open results from class gifts:

Class gifts: grant to more than one person identified by description rather than name and/or dependent upon a condition
precedent.
● As soon as one person in the class is identified and satisfies any condition precedent, the person’s interest vests
and the interest of any remaining people in the class remain contingent .

All-or-nothing rule: all persons must pass under the Rule or no member’s interest will be good. A class gift is not vested
in any member of the class until interests of all members have vested
● The class must be closed: every member must be in existence and identified and all conditions precedent for
every member of the class must be satisfied within the perpetuities period

Class Closing Rule exception for families (AKA Rule of Convenience): Rather than voiding the conveyance, class
closes when 1 member of the class is entitled to immediate possession or enjoyment, even if this means closing the class
before it closes naturally (i.e. when possibility of births end)
● Does not terminate interest of existing class members whose interests are not yet vested at the time of creation
● Blocks anyone conceived/born after the closing from sharing in the gift
● Must be possessory; a vested future interest does not close the class:

Valid: “To A’s children as survive to age 25.”
At time of O’s death, A alive with three children.
● A’s eldest child has reached 25 by time O died, class closes
prematurely at O’s death.
● Any child born after is excluded but any children alive not
yet 25 have interest that will vest upon turning 25
Void: “To A for life, then to A’s children who turn 25.”
At time of O’s death, A is alive and A’s one child, B, is 26.
● Even though B’s interest has vested, it is not possessory b/c
A is still alive and has the life estate.
● B/c future interest/ not possessory, the clause is void
● B could die, A could have another kid, C, and A could die
when C is 1. Would not vest within 21 years.

TEST:
1. Determine if the grant gives a specific number of years from the creation of the
interest that is less than 21 years from the creation of the interest.
● If yes, interest is good
● If not, go to Step 2
2. Determine if a named person is essential to the happening or non-happening of
the vesting event
● If yes, go to Step 3
● If no, go to Step 4
3. Determine if the event must occur or be certain to fail, during the person’s life
or within 21 years or less of her death
● If yes, interest is good
● If no, interest is void per RAP
4. If no named person, will be a described person or class. Determine whether the

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 class is closed
● If yes, interest is good
● If no, void under RAP

Jee v. Audley: Audley left interest of £1,000 to his wife during her lifetime in his will. After wife’s death, £1,000 was to
go to his niece Mary Hall & her issue. If Mary Hall had no issue, the £1,000 was to be equally divided between
“daughters then living” of the Jees. When Audley died, his wife had already died, Mary Hall had no issue, and the Jees
were alive and 70 years old. 4 daughters of the Jees brought suit to secure £1,000 should Mary Hall die without issue.
Interests: Audley’s wife: life estate; Mary Hall: fee simple subject to executory interest if dies w/o issue;
daughters then living: executory interest
● Question is whether the daughters’ executory interest is void under RAP → held void:
o “Daughters then living” = daughters living at time of Mary’s death, had not happened when testator died
o Possible for Jees to have another daughter after testator’s death and would get a share upon Mary’s death
o Does not matter that Jees were 70 and would not have a child. Mattered that was logically possible
● NOTE: Mary cannot be the validating life b/c her interest is a “fee tail” – do not need to know fee tail b/c no
longer exists but reason why void in this case

RAP Flowchart

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 CO-OWNERSHIP AND MARITAL PROPERTY

Co ownership: two or more persons have concurrent rights of present or future possession
**NOTE: While examples are in fee simple, concurrent interests apply to all interests in property

3 Types of Concurrent Interests: Tenancy in Common | Joint Tenancy | Tenancy by the Entirety

Tenancy in Common: Each tenant owns a separate and undivided share of the whole property
● Interest may be devised or conveyed and there is No right of survivorship

Joint Tenancy: Each tenant owns the undivided whole of the property on his own
● Interest may not be conveyed or devised but may be severed and has a Right of Survivorship
● Must be indicated by specific language (joint tenancy + survivorship) or else presumed tenancy in common

Traditional Common Law requires 4 Unities Essential to a Joint Tenancy:

1. Time: all tenants must acquire their interest in the property at the same time
2. Title: all tenants must acquire title by the same interest or joint adverse possession
3. Interest: all tenants must have equal/identical shares
4. Possession: all tenants must have the right of possession over the whole property

Tenancy by the Entirety: husband and wife own property as a single unit (see pg. 17)

Right of Survivorship: when one co-tenant dies, surviving tenant automatically absorbs the other’s share of property
● B/c no interest passes given right of survivorship, Joint Tenancies are used often to avoid the expensive process
of probate: the legal process by which the terms of a will are assessed, defined, and carried out

Severance: if any of the 4 unities are destroyed, a joint tenancy is terminated and turns into a tenancy in common
NY Real Property Law: §240-c. Joint Tenancy Severance: (see Riddle for case example in CA)
● Do not need permission to sever joint tenancy, but must provide notice to avoid fraud
● Notice need not be actual notice: only constructive notice is needed
● Notice via recorder: constructive notice by giving deed to government official for public inspection

**NOTE: Presumption is against a joint tenancy. Courts assume a tenancy in common unless
otherwise specifically stated (Not all courts follow this rule: Harms v. Sprague)

Uniform Simultaneous Death Act: if A and B die at the same time, half is distributed as if A died first, and half is
distributed as if B died first. Originally led to awful/ pointless litigation trying to prove who lived 30 seconds longer.
● Current Law: if there is a common incident then they're automatically treated as if they died at the same time if
they die within 120 hours of each other

Riddle v. Harmon: Mr. and Mrs. bought house as joint tenants. Before death, Mrs. made attorney grant herself undivided
interest in ½ to make them tenants in common. Doc. states specific purpose was to terminate the joint tenancy w/ husband
and grant remainder to her devisees. Precedent: you cannot convey land to yourself to change your interest.
● Lower court relied on Clark v. Carter and held that you need a strawman: cannot convey something to yourself
to terminate joint tenancy b/c conveyance is by definition from A to B

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 ● Court reversed and found that allowing persons to shatter joint tenancies directly rather than setting up legal
fictions (strawman process) to accomplish same purpose is more efficient

Harms v. Sprague: Harms (William and John) brothers buy as joint tenants. Δ1 Sprague bought separate home from Δ2
Simmons. Δ1 Sprague gets John to put up joint tenancy as collateral for the balance due on the purchase of the Δ2’s home.
William doesn’t know of the collateral. John dies and leaves whole estate to Δ1 Sprague. William sues for quiet title
● Issue: (1) by creating a lien on joint tenancy, does the party convey something and thus destroy the joint tenancy
or is the joint tenancy still intact? (2) Does the lien give Sprague any possessory interest in the property?
o William Argues: William owns whole property b/c was joint tenancy and has right of survivorship
o Sprague Argues: When John put up the house as collateral the joint tenancy was severed to tenancy in
common. When John died, b/c tenancy in common is devisable, Sprague acquired half of Harm’s house.
● Held: (1) B/c John’s mortgage was a lien on his property interest and not a transfer of title, there is no severance
of joint tenancy with William. When John died, William assumed title in entire property. (2) Mortgage John took
out on his interest in the property did not survive his death.
o Lien: right to keep possession of property belonging to another until a debt owed is discharged.
● Lien theory: joint tenancy is not severed because of a lien b/c the lien does not transfer ownership; a lien is a
potential right to get the property if there is a default, but a lien itself does not transfer title to the borrower

Partition: division of property between co-tenants arising from conflict of interest between parties

**NOTE: A partition is an absolute right for concurrent tenants. The court decides
how to divide the property, not whether to divide the property

If possible, 1 tenant will buy out the other or they will sell the land together and split the proceeds.
If the parties cannot manage partition on their own, the court will split the land in a partition action. Two types of
partition actions exist:
1. Partition in kind: court will literally divide the property between parties
2. Partition in sale: court will order sale of the property & divide proceeds

In theory, the presumption is for a partition in kind. In practice, partition in sale happens often
General rule: courts should only order partition in sale when it would be (1) impractical or inequitable to split in kind
and (2) the interest of the owners better protected by sale
● Impractical/inequitable: land too hard to split evenly, too many people, division would make one part unusable
● interest of the owners protected: courts split on how to evaluate
o Delfino: With partition, parties’ personal interests are worth protecting, so the court need not maximize
the economic value of the property
o Johnson v. Hendrickson: property should flow to highest & best use so offer sale if partition would make
land more economically valuable
Owelty: when co-tenant pays more for property, requires order of compensation to make appropriate adjustments to
compensate:
● If a partition in kind results in one co-tenant getting a more valuable part than other co-tenants
● If a partition in sale yields higher price than otherwise would b/c one co-tenant made valuable improvements

Delfino v. Vealencis: Π and Δ were tenants in common. Π owned more than Δ, but Δ used land as home and for operation
of garbage removal business that had been in the family for years. Π sought partition in sale rather than kind so could
convert into apartment community. Δ wanted partition in kind so could continue living there and running business.
● Court ordered for default rule in theory is partition in kind, but in reality, usually in sale.

18
 ● 2 factors for a court to order partition in sale were not found here
o Impracticable or inequitable not present here b/c could easily split down the line
o Interests of the owner better protected by sale: court took position that interests protected does not need to
be aligned with what will make the property most valuable

Benefits and Burdens of Co-Ownership:

All co-tenants, regardless of possession, share in Benefits and Burdens of Co-Ownership.

Benefits: rents and profits flow to all co-tenants proportionate to their share of the co-owned land
Required contributions: pitch in for the taxes/mortgage
● Rationale: w/o payment the gov. takes the property from all the co-tenants
Contributions not required: pitching in for the repairs
● Rationale: repairs are a judgment call. Value of property goes down by not repairing but not at risk of losing the
property if you don't keep it up
● Alternative: Co-tenants can partition if they are not happy with others pitching in for repairs
COTIP: Co-tenant In Possession | COTOP: Co-tenant Out of Possession

Ouster: when the occupying tenant acts to prevent the other co-tenant from using the property, the COTIP has ousted the
COTOP (e.g. changing locks)
● For ouster to occur, COTOP must first make a demand for access and COTIP must deny access
● Action for ouster: COTOP demanding rent from COTIP for use of property
o Cannot bring action until after ouster has occurred
● Statute of limitations can run on action for ouster: COTOP may lose co-tenancy through adverse possession
o Statute does not start to run until there ouster occurs
o Mere fact that COTIP is living on property alone does not start clock
If one co-tenant is in sole possession of concurrently owned property, courts are split on whether an ouster is required
for the COTOP can demand rent from the COTIP:
● Majority Rule: without an ouster, COTIP does not have to pay proportionate share of rental value to COTOPS
o A demand or an attempt to enter the property is essential.
o If one cotenant asserts ownership of the property in a way to deprive his cotenant of his rights to the
property, an ousting has occurred, and the ousted co-tenant is entitled to compensation for his interests
● Minority Rule: a cotenant in exclusive possession must pay rent to COTOPs even absent an ouster
Spiller v. Mackereth: Π and Δ co-tenants in common renting a building out. When lessee vacated, Δ began using as a
warehouse. Π wrote letter demanding Δ vacate half or pay rent. Δ refused so Π sued for rent.
Issue: Does a COTIP have to pay a COTOP rent?
Court takes Majority view: ouster is necessary for COTOP to demand rent and Δ not liable for rent b/c refusal of Π's
demand for rent or to vacate half of a property does not constitute an ouster.
● Δ did not attempt to assert absolute control over premises by locking doors b/c old tenant took locks & Δ needed
to protect his stuff; no evidence Π was denied copy of keys. Π not prevented from entering/use/enjoyment of land
Swartzbaugh v. Sampson: Mr. and Mrs. own property as joint tenants with right of survivorship. Over the objection of
Mrs., Mr. leased a portion of the property to Sampson, upon which Sampson constructed boxing pavilion. Mrs. sued her
husband and Sampson to cancel the leases governing the land where the boxing pavilion was built.
● Held: Mr. can rent out without Mrs. approval b/c not tenants in the entirety. Mrs. has same remedy against
Sampson (lessee) as would have against Mr. (co-tenant)
o Mr. conveyed temporary right of possession to Sampson, but it is not exclusive b/c as a joint tenant, Mrs.
has right to enter the rented property
o If Mr. dies, Mrs. has right of survivorship and all the land: the lease to Sampson “disappears”
● Rule: anything that a lessor could do with the property as a joint tenant, a lessee can do as well

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 *Example of potential remedies: all involve lawyers, time & money; none get rid of the boxing ring.
Partition in kind against Partition in kind against Partition of Sale: Ouster: go after Accounting against her
Sampson: husband: Sampson for rent husband:
Divide land for time that Split property and become Sell part w/ boxing ring Would need to provoke Accounting by definition
Sampson leases; when tenants in common. for time of lease & divide. him to oust is against the cotenant
lease up could cease Proceeds reflecting
Problem: Mrs. loses right pavilion to Sampson rest Doesn’t get what she Benefits from leases
Only works if structure of survivorship from divide in half wants b/c doesn’t minus expenditures (what
does not sprawl over more husband on other half of invalidate lease Mr. is getting from
than half the property the land Hard - land worth more Sampson) but doesn’t get
w/ pavilion rid of ring

Marital Interest 3 divided rights: Rights upon Marriage | Rights Upon Divorce | Rights after death
Tenancy by the Entirety: co-tenancy created in husband and wife → own the property as a unit, not by equal shares
● Requires 4 unities of joint tenancy + marriage
● Couple must be married at the time they acquire the property: engagement is insufficient
● Married couple not automatically tenants by the entirety: Property must be conveyed as a tenancy by entirety
● There is a Right of Survivorship for surviving spouse
● Neither spouse has alienable or partition rights
● Unlike joint tenancy, requires permission by both spouses to sever the tenancy by the entirety
● Divorce terminates tenancy by entirety; absent agreement contrary, usually become tenants in common
● Creditors cannot reach the jointly held property unless both spouses agree or take out loan together
Married Women’s Property Acts: gives women same rights as men; her property is her property. The interest of a
husband or wife in an estate by the entireties is not subject to the claims of his or her individual creditors during the joint
lives of the spouses. Different states have different rules:
Group 1 (No longer good law) Group 2 (NY) Group 3 (Sawada)
Common law rule: husband can convey Interest of debtor spouse may be sold/levied
Attempted conveyance by either spouse
entire estate to cover debts; wife only has a upon separate debts, subject to spouse’s
wholly void and the estate not be subjected
say after husband dies (right of contingent rights of survivorship. Interests
to separate debts of one spouse only
survivorship). of each spouse subject to separate debts

Sawada v. Endo: Δ hits Π in car accident. After accident but before trial, Δ and his wife, tenants by the entirety, conveyed
their house to their sons. C1: Π received judgment against Δ for accident. Δ did not pay damages to Π. C2: Π seeking the
court to set aside conveyance by Δ to sons so can be used to satisfy lien.
● Π claims conveyance was fraudulent: if someone transfers property to it from creditors, the transfer is invalid
● If conveyance was fraudulent, property transfers back to Δ and b/c wife is dead, property is fully his by right of
survivorship and Π can get at the property to collect on judgment
● But, if creditors could never get at property to begin with (before conveyance when Mrs. alive) then the
conveyance is not fraudulent because you have given away something that could not have been alienated.
● Hawaii court adopts Group 3 rule: neither the husband nor the wife’s interests are alienable unless they act
together. Holds that b/c of Married Women’s Property Act, conveyance couldn’t be fraudulent b/c Sawada’s
never would’ve been able to get at this property
*if court adopted Group 2, conveyance = fraud b/c creditor could reach each spouse’s debts individually before conveyance.

Originally, fault had to be asserted to get divorced. The creation of no fault divorces established changes in law
surrounding division of property.

Upon divorce: some states apply the rule of Equitable Distribution and separation of tenancy by
the entirety, while some states apply a Community Property System

Rule of equitable distribution: property is divided by the court, in its discretion, on equitable principles. (concept of
fault may be ignored/excluded or included to guide the equitable division)
Distribution varies by state:
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 ● Some states: courts may divide all property owned by spouses, regardless of time/manner of acquisition
● Other states: courts may divide only marital property
Marital Property: different definition depending on the state:
● Some states: all property acquired during marriage by whatever means (earnings, gifts, inheritances)
● Other states: only property acquired from earnings of either spouse during marriage
o Rationale similar to community property: marriage is a partnership and property acquired from earnings
of spouses during marriage should be equally divided upon divorce
Rehabilitative Alimony: support for a limited time until spouse can enter the job market and become self-sufficient
Views on Education Degrees as Marital Property: vary by state
● Majority (Graham): degrees are NOT divided at divorce
● Minority: restitution through reimbursement alimony (get paid back what you paid for the degree)
● NY: used to be outlier, holding that degrees were marital property but joined majority view with twist by statute:
o Contributing to education is a relevant factor in the evaluation of equitable distribution

In re Marriage of Graham: Married for 6 years while H pursuing MBA and W working as steward. H worked part time.
W contributed 70% of financial support and did most of the housework/cooking. No children. Got divorced.
● Statute: marital property is all property acquired by either spouse subsequent to the marriage
● Held: education degree is not property, and thus not marital property and does not get divided up upon divorce
o Cannot put $ value or an earning expectancy on an MBA

Community Property: both husband and wife contribute equally to material success of marriage, so each should own an
equal share of the property acquired during the marriage by joint efforts: includes earnings, rents, profits, etc.
● Like Tenancy by Entirety: cannot alienate without consent
o If buy property as joint tenants and spouse doesn’t consent: it is community property and can be devised
o If buy property as joint tenants and spouse does consent: joint tenancy valid with right of survivorship
● Unlike Tenancy by Entirety: no right of survivorship

Separate Property: property acquired before marriage or during marriage by gift, devise, descent
● Presumption: all property (including separate) is community property. The party trying to argue property is
separate has burden of proof based on preponderance of the evidence

Management of Community Property: in most states husband and wife have equal management powers, but some
states allow for one spouse to have management power in some cases
● E.g. one spouse operates a business of community property w/ sole control over the business
● The manager of Community Property is the fiduciary: must act in good faith for the benefit of the other spouse
● Manager’s ability to gift Community Property depends on the state:
o TX: manager could validly make a gift of community property
o CA/WA: any gift of community property by managing spouse can be set aside by other spouse
● In most states: liability to creditors follows management. Creditors of managing spouse can reach whatever
community property the creditor spouse is legally entitled to manage.

Mixing Community Property with Separate Property: Sometimes property is acquired before marriage, but part of the
purchase price is paid after marriage w/ community funds. States are not in agreement on how to approach this problem.
● Inception of right rule: character of the property determined at the time agreement made
● Time of vesting rule: character does not pass until all installments are paid
● Pro rata apportionment: community payment buys in a share of the title

FAIR HOUSING ACT

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Civil Rights Act: all citizens have same right as white citizens to purchase etc. real/personal property
Fair Housing Act: one cannot refuse to sell, discriminate, publish notice of preference, or intend to make such preference
against a sale or rental of property because of race, color, religion, sex, familial status, national origin or handicap (NOTE
only for private dwellings)

14th Amendment interpreted to only limit state discrimination. FHA mean to limit private discrimination on housing as
well. Note: Jones v. Alfred held CRA applied to private parties as well
Civil Rights Act and Fair Housing Act are each broader in application in different ways:
Civil Rights Act Broader Fair Housing Act Broader

CRA FHA CRA FHA

Includes personal property Cannot make claim for Only applies to Protects classes beyond race
personal property discrimination of race

Does not limit restrictions Limits discrimination to Does not include limitations Services and advertising
to dwellings dwellings on advertising within limitations

Does not contain Contains exemptions under Must prove motive to make Do not need to prove
exemptions 3603 a prima facie case motive: just discriminatory
impact/disparate treatment

Prima facie case 🡪 Π must show that he was: A member of protected class | Applied and qualified | Refused rent/sale
| Property remained available
● If Π makes prima facie case, Δ must come with rational explanation for denial (i.e. bad credit history)
o Δ has burden of proof to show was not discriminatory (i.e. provide history of past tenants)
● If Δ provides information, burden shifts to Π to show this is a pretext for discrimination
Legal Standard: Must show that an ordinary reader would think one class is preferred to another

§3604: Discrimination in Sale or Rental Housing and Other Prohibited Practices

a) Cannot refuse selling or renting for race, color, religion, sex, familial status, national origin, or disabilities
b) Cannot discriminate in terms (i.e. charge more b/c of race or familial status)
c) Cannot publicly publish preferences or limit selling based on characteristics
● If discriminating, cannot use housing financing services or brokerage services
§3603: Exemptions. Can discriminate if…
3604 does not apply to single family houses sold or rented provided that:
● Individual owner does not own more than three single family houses at one time
● The selling/renting was without use of rental facilities or rental services of any real estate broker etc.
● Without publication of advertisements → 3604(c) applies to everyone
● When dwelling is multi family of no more than four families and owner maintains and occupies one
of the living quarters
Section 3603 Applied via the Mrs. Murphy Exception: has an apartment to rent in her home, published an
advertisement “private white home.”

Soules v. Dep’t of Housing and Urban Development: Π wanted to move into apt advertised by Δ and contacted her. Δ
eventually called back and asked if she had kids and Π got angry. Δ had another tenant in the house that was old and
needed quiet. Π hired test group to see if discriminatory. First test called and said had kid and Δ said is he quiet and she
said yes. Ended up not returning calls. Test two single and said you can look at the house. Δ offered to lease house to
another person who had kids. Ended up leasing to someone who didn’t have kids. Δ said reason did not reach to Π was b/c
of bad attitude and reason did not get back to test 1 was because was caring for sick aunt.
● Asking about children in app. okay b/c zoning law and NY law limit number of kids of certain sexes and rooms
● Asking whether noisy fine b/c not facially discriminatory. Circumstances show she was trying to find quiet tenant
for the old man

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 LEASEHOLDS
Leasehold estates: non-freehold estates. A lease is both a conveyance and a contract
● Conveyance: transferring possessory interest of land
● Contract: Contains promises by both parties for the benefit of the other

**NOTE: Usually, leases for more than a year must be in writing per the Statute of Frauds

Difference between a lease and a loan or license: lease gives rise to landlord-tenant relationship, which carries with it
certain rights, duties, liabilities, and remedies not present in other relationships.
● It is sometimes hard to determine if something is a lease or some other kind of conveyance
o Identify based on: intention of parties, number of restrictions on use, exclusivity of possession, degree of
control retained by granting party
● Distinction more important under property law than under contract law
Form leases: standard contracts typically used by landlords, giving all tenants option on a take it or leave it basis with no
negotiation. Justified as fair by competition within the market
● Hardship on landlords to create thousands of individualized leases
● If tenant does not like terms, can go to new landlord

3 Principal Leaseholds: Term in Years | Periodic Tenancy | Tenancy at Will

Term of Years: estate that lasts for a fixed time or for a period computable by formula that results in fixed calendar
dates for beginning and end once the term is created or becomes possessory
● Common Law did not permit a limit on duration, but some state statutes limit the duration of terms of years
● A term must be for a fixed period, but can be terminable earlier upon the happening of an event or condition
● B/c fixed period indicates when termination will occur, no notice of termination necessary to terminate estate.

Periodic Tenancy: lease for some fixed duration that continues for succeeding period until either the landlord or tenant
gives notice of termination (i.e. from month to month or year to year)
● Common law rules: half a year’s notice is required to terminate a year-to-year tenancy
○ For periodic tenancy of less than a year, notice of termination must be given equal to the length of the
period, but not to exceed 6 months
○ Notice must terminate the tenancy on the final day of the period, not in the middle of the tenancy.
● State statues have shortened the notice period required to terminate periodic tenancies and permitted a month-to-
month tenancy to be terminated at any time following 30 days’ notice.
● Death of the landlord or tenant has no effect on the duration of a term of years or periodic tenancy
● Requires notice to terminate. If notice is not given, the period is automatically extended for another period

Tenancy at Will: tenancy with no fixed period that endures as long as both landlord and tenant desire
● If the lease provides that it may be terminated by 1 party, it is necessarily at the will of the other as well if a
tenancy at will has been created (Complications to this rule examined in Garner)
● Unilateral power to terminate a lease can be engrafted on a term of years or a periodic tenancy
○ EX: a lease by “L to T for 10 years or until L sooner terminates” creates a term of years determinable.
● Tenancy at Will ends when one party dies
● Modern statutes = period of notice (30 days or time equal to interval btwn rent payments) for 1 party to terminate.
Garner v. Gerrish: Donovan leased house to Gerrish. Donovan used pre-printed legal forms to draw up lease, filling in
the appropriate terms; Gerrish signed it. Document had no definite termination date for the lease. Doc. provided: “Lou
Gerrish has the privilege of termination this agreement at a date of his own choice.” Donovan died. Garner, Donovan’s
executor, filed suit seeking to evict Gerrish from the property.
● Courts below applied property law: lease created a tenancy at will and LL to evict the tenant at any time
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 ● NY COA reversed and applied K law: should apply the clear expressed intent of contracting parties

In a leasehold, there is both privity of estate and privity of K between the landlord and tenant:

Privity of Estate: mutual immediate and simultaneous interest in the leased premises. (i.e. T has possession, and LL has
reversion).

Privity of K: the lease is the contract, which establishes the rights/duties LL and T have.

When tenant assigns or subleases his interest to a third party, Privity between parties may shift
Assignment: a OG Tenant conveys all interest to a third
party (assignee).
LL still may hold the OG Tenant directly responsible for
the terms of the lease
LL and OG Tenant: remain in privity of K but not
privity of estate
Assignee and LL: in privity of estate but not privity of K
OG Tenant (assignor) and Assignee: in privity of K but
no privity of estate
Sublease: OG tenant conveys less than his full interest in
the property to another by term of years or retains a right
to re-enter/revert.
OG Tenant directly responsible for performance under the
lease
LL and OG Tenant: remain in privity of K and privity of
estate
Sublessee and LL: not in privity of K or estate
OG Tenant (sublessor) and sublessee: in privity of K
but no privity of estate

To determine whether a transfer is a sublease or assignment, courts evaluate K Law and Property Law

Contractual idea: intent of the parties Property idea: Interest Conveyed

What interest did the original tenant intend to If it is less than his entire interest, it is a sublease.
convey to the transferee If conveys everything, it is an assignment

Note: what conveyance is called in the K is not conclusive (Ernst), but relevant to parties’ intent

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Permission to sublease/assign by landlord: In general, leaseholds are freely transferable absent a contrary provision in
lease. If LL includes express provision that cannot sublease, T’s right is restricted.

Most leases state that tenant can only assign/sublet if the landlord consents. If this provision exists, rules vary by
jurisdiction:
Majority Rule: if the lease requires permission, consent can be withheld for any reason.
Minority Rule (Kendall): LL can only withhold consent to transfer lease for a commercially reasonable justification.
Any increased value beyond rent build up in a lease belongs to lessee. The lessor only has reversionary estate to benefit
from on expiration of the lease.
● Commercially reasonable basis: business reason rather than a personal or discriminatory reason and rather
than an excuse to extort more rent.

Ernst v. Conditt: Ernst (LL/Π) leased land to Rogers (T), who built and operated race track and then sold Conditt
(Assignee/Δ) business. Δ asked for 2-year lease of the property. Δ and Rogers got permission from Π for transfer. Called
sublease in the document. Δ paid rent to Π directly for a while. Stopped paying but remained in possession of the
property. Π demanded back rent but Δ did not. Π sued.
● Δ argues sublease b/c would not have privity of estate OR privity of K w/ Ernst so Rogers is liable to pay rent.
● Π argues assignment, so there IS privity of estate and Δ is liable.
● Held: It’s an assignment; although the document labeled it “sublease” and there was a clause regarding Roger’s
liability; Rogers had no right to re-entry (property approach).
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Kendall: Bixler (T) subleasing hangar space from Pestana (LL/Δ). Lease didn’t have provision saying such consent will
not be unreasonably withheld. Bixler entered agreement to sell his business (included lease) to Kendall (Π/assignee). Δ
refused to consent to assignment of lease to Π, arguing any increase in market value of the property during lease term
belongs to Δ as the lessor, not to Bixler the lessee. Π brought suit seeking a declaration that Δ’s refusal to consent to the
assignment was unreasonable and thus invalid as an unlawful restraint on alienation.
● Held: Δ’s refusal to grant Bixler consent is unreasonable and an unlawful restraint against alienation.
Adopted minority rule (commercially reasonable justification to withhold consent).
● Dissent: provisions of K btwn parties should be respected b/c lessor relied on the existing majority rule @ time
they made the lease & the legislature endorsed the majority rule

Defaulting Tenants: Sometimes tenants may fail to meet their burdens under the lease. LL has remedy
regardless of tenant’s status:
In Possession: defaulting tenants, fails to pay rent, holds over after termination that the landlord wishes to recover (Berg)
Rule: cannot use self-help to evict a tenant, must bring summary proceeding. Upheld in all states for real
property, but self-help may be used for personal property
Out of Possession: T abandons the premises prior to the end of lease.
Berg v. Wiley: Wiley (LL, Δ) and Berg (T, Π) entered a lease for building to be used as a restaurant. Lease required T to
get permission from LL to make changes to the property and required T to uphold health code for the restaurant; LL also
had a right to re-enter. LL thought T was violating the terms of the lease so changed the locks of the building. Π sued for
wrongful eviction, Δ raised defense of abandonment.
● Held: Although LL has a right to re-enter, he does not have a right to use self-remedy, should have used judicial
process. Wiley’s changing of the locks was unlawful b/c he did not resort to judicial process.
o Old Common Law Rule: LL entitled self-help is allowed if (1) LL is legally entitled to re-ender and (2)
repossess in peaceable manner (self-help). OVERRULED
o New Rule: Any lessor who wishes to retake property from lessee for violations of the lease must seek
judicial assistance.

Duty to Mitigate Majority Rule under Sommer: LL has obligation to make reasonable effort to attempt to re-let
premises and mitigate damages where they seek to recover rents due from a defaulting tenant.
● LL must treat apartment in question as if it was another one of his vacant stock.
● Measure LL’s efforts by extent to which he offered to prospective tenants; how LL listed apartment, etc.
● T normally required to bear cost of any reasonable expenses incurred by LL in his attempt to re-let the premises
Sommer v. Kridel: Kridel (Δ, T) signed a lease with Sommer (Π, LL) and paid the first month’s rent & security deposit.
Before Kridel moved in, he wrote a letter to Sommer he would no longer have the money to pay the rent. During lease
term, a third-party contacted LL and inquired about/was ready to lease Kridel’s vacant unit, but Sommer said the unit was
already rented to Kridel. LL did not show apartment to anyone else until over a year after he got Kridel’s letter. Sommer
brought suit against Kridel seeking rent for the entire 2 years of the lease.
● Held: There were no reasonable expenses incurred by LL here that T should be liable for: LL waited 15 months
and allowed almost $5k damages to accrue before attempting to re-let despite availability of a tenant who was
ready, willing, and able to rent the apt - who Sommer turned away to increase the damages.

Riverview Realty v. Perosio: Δ entered 2-year lease (Feb. 1 1973-Jan 31, 1975) with Π for apartment in their building;
monthly rent. Lease prohibited tenant from subletting/assigning it without consent of LL. Δ took possession; vacated in
Feb 1974 after only paying rent through Jan. 1974. LL filed complaint on October 31, 1974, demanding $4500 for
monthly rent from Feb 1, 1974-Oct 31, 1974. Δ answered alleging there was valid surrender of the premises and Π failed
to mitigate damages 🡪 court applied Sommer and remanded to determine if was reasonable
**NOTE: New York Follows the Minority Rule: no duty to mitigate

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Covenants within a lease: in a lease, like any K, both parties have obligations and make promises
Must determine if the covenants are independent v. dependent: whether party A's obligations depend on party B
fulfilling his obligation and vis-a-versa
● Dependent: A’s breach eliminates B’s obligation to perform.
● Independent: A’s breach does not eliminate B’s obligation to perform, but B can get damages for A's failure to
perform. Most obligations within a lease are independent.
T’s duty to pay rent dependent on 2 major covenants required by the LL. If LL fails to meet standards, tenant may
withhold rent: Covenant of Quiet Enjoyment and Implied Warranty of Habitability
● T cannot waive covenant of quiet enjoyment or warranty of habitability
● The major difference between quiet enjoyment and habitability is that habitability only applies to residential
leases whereas quiet enjoyment applies to commercial leases

Covenant of Quiet Enjoyment: In every lease, residential and commercial, there is an implied covenant that
the tenant shall have the right of possession, occupancy, and beneficial use of every portion of the leased
premises
● LL has an implied duty to: make and keep the premises habitable, disclose latent defects in the premises that
were not apparent on reasonable inspection by the tenant, to maintain common areas used by all the tenants in a
building, to undertake carefully any repairs the landlord promised or volunteered to make, to abstain from
fraudulent misrepresentations as to the condition of the leased premises
● W/ standard apartments, sensible for LLs to be responsible for repairs🡪 have long-term interest/expertise.

Constructive eviction: when the tenant is deprived of the beneficial enjoyment of part of the premises, but is
not deprived of actually occupying part of the premises
● Tenant may leave the property within a reasonable time and stop paying rent

Actual Eviction: when LL impairs the tenant’s right to occupy some part of the premises.
● Tenant will no longer be obligated to pay rent.

Village Commons v. MCPO: MPCO (T, Δ) leased basement of building from Village Commons LL (LL, Π) for office &
evidence storage space for 7-year term. Exclusive remedies provision said LL would maintain premises; if LL breached, T
could sue, but no right to terminate lease/withhold rent. Property had recurring water leaks that damaged real/personal

27
property. LL told T to move evidence out of problem areas. Although LL made some repairs, declined to pay for those
that would actually fix problem. T left & stopped paying rent. LL sued. MCPO claimed wrongful eviction.
● Held: MCPO wrongfully evicted and is relieved from its obligation to pay rent. Exclusive remedies provision only
limits T’s ability to terminate, does not mention eviction. T’s rent obligation extinguished b/c LL's own acts or
omissions (failure to repair) deprived T of right to possess/use the property.
● Partial Actual Eviction: T was told to remove/stop using a material part of the leased premises.
● Constructive Eviction: the leaks were so substantial that the property become unusable and were forced to move out.

Lounsbery v. Snyder (1865): de minimis non curat lex

● Stack of woods is a trespass, not eviction
● Need more than "a transitory or feeling interference."
The 5th Avenue Building Co. v. Kernochan: Partial Actual eviction. City took back the land and not the L, so there is only
partial rent abatement.*
Eastside Exhibition Corp.: Movie theater case. Must interfere with more than a trivial manner with tenants use.

Implied Warranty of Habitability: LL has duty to ensure that the conditions of his premises do not render the apartment
"unsafe and uninhabitable" or prevent premises from serving their intended function of residential occupation.
To determine whether there is a breach of warranty of habitability evaluate:
● Local or municipal housing codes: major violations will show evidence that not habitable
● Review whether the claimed defect has impact on safety or health of the tenant
● P must show that notified LL of the deficiency and allowed for sufficient time to correct
Warranty of Habitability is both a warranty and a dependent covenant:
● Warranty: premises must be safe clean and fit for habitation at time of execution lease
● Covenant: LL will maintain and repair the premises so that they remain in the same condition throughout the
term. Tenant’s covenant to pay rend and landlord’s duty to repair uninhabitable conditions are dependent
Damages for tenant = difference between fair market price and value of premises for duration of breach
● Punitive damages may be awarded for conceivable for Annoyance and Disturbance
● Tenant may be awarded money for tenant fixing the apt.
Warranty covers all defects latent or patent vital to the use of premises for residential purposes
● Even if tenant knows of the defects, if essential, they do not lose warranty.

**NOTE: Implied warranty of habitability may apply to conditions beyond a LL's control (Poyck v.).

Arguments in favor of warranty of habitability: Argument against warranty of habitability:

Can’t rely on markets when bargaining power between
LL and T is so uneven
LL is in the best position to bring up to a certain
standard (expertise and economies at scale)
If allow waiver, Ts will waive w/o knowing what they
are waiving b/c don’t know hidden problems
Some Ts will live in a bad apt. for low rent: Upkeeping
conditions will make apts. more expensive; some
people won’t be able to afford anything
If you make being LL sufficiently expensive, lacks so
LL’s will abandon than upkeep

Externalities: will have impact on people around them

(two parties not only ones at stake)

Hilder v. St. Peter: T moved into building that had substantial problems: (leaking, broken windows, no lock) LL promised
to make repairs but never did. Dangerous to live in w/ feces all over the basement. T sued for back pay on 14 month rent
already paid under warranty of habitability and punitive damages.
● Held: T was able to get all back rent and potentially punitive damages b/c demonstrated that:
○ LL had notice of previously unknown defect and failed within reasonable time to repair
○ Defect affecting habitability existed during time withheld rent

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 Poyck v. Bryant: LL had duty to materially attempt to stop ongoing, frequent issue of secondhand smoke by smoking
neighbors to T; Smoke just as invasive as the more common conditions such as odors, chemical fumes, excessive noise,
water leaks, and extreme dust penetration.
Park West: Tenants proved Park West breached implied warranty of habitability; strike of building janitorial staff led to
non-performance of essential services and compromised the health and safety of the tenants. Numerous violations of
housing and sanitation codes

Landlord’s Tort Liability: Common law held LL liable for T injuries only when LL negligently breached
limited duties included within the quiet enjoyment and constructive eviction. However, w/ adoption of implied
warranty of habitability, general negligence standard on LL began to be imposed in all circumstances
● Usually strict liability will not be imposed, but there is a growing trend for a general duty of care by landlords to
their tenants
Tenant’s Duties: Tenant cannot perform affirmative actions and has a duty to avoid voluntary waste:
● Tenant breaches if makes a change to affect a vital and substantial portion of the premises as would change its
characteristics and appearance; fundamental purpose of the erection; or the uses contemplated, or a change of
such a nature as would affect the very realty itself, extraordinary in scope and effect or unusual in expenditure.
● Not every alteration amounts to waste: depends on degree and permanence of the effect

Rumiche Corp v. Eisenreich: tenant replaced ceiling with sheetrock and installed light fixtures and attached a wooden
closet and put frame around window
● Court said not waste but Dissent argued changes were material: b/c was not up to code was very important

LAND TRANSFERS

2 Transactions Exist in a Real Estate Transfer:

(1) Purchase & Sale Agreement: The Contract
(2) Deed: The Conveyance

The Contract of Sale: Executory agreement between the buyer and seller creating a commitment to, on a
specified future date, to transfer the title.
● K is not legally required to convey title, but is a practical requirement given need for financing by lender
● Mutual covenants: seller will transfer, buyer will pay for the property at a future date specified in the contract
● Contingency provision: circumstances that release one or the other party from their obligation.
The Purchase Agreement will include:
1. Parties’ names

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2. Legal description of property (i.e. street address; possibly survey of the property)
3. Itemization of furnishings, appliances, shrubbery, air conditioners, and fixtures included in sale
● Fixture: something movable, but in place is permanent (i.e. furnace)
● Usually comes with house even though not specified.
4. Purchase price and how it is to be paid: earnest money, amount of money required for actual sale, and planned financing (including
interest charges and length of the mortgage)
● Earnest Money: the money buyer pays to seller to demonstrate commitment; locks buyer into exclusive right of purchase
unless there is a justified reason (contingency)
5. Contingencies: circumstances that release parties from obligations.
● Mortgage Contingency: if buyer cannot obtain a mortgage loan within a certain amount of time, K may be rescinded, and the
buyer gets earnest money back.
o Mutual covenant: seller takes house off the market, buyer applies for financing
● Inspection Contingency: buyer inspect property & rescind K if cost of remedying a material defect exceeds a threshold.
● Attorney review: buyer has certain amount of time to take contract to lawyer and back out if lawyer has material objection
6. Good title furnished by seller: indicated by abstract/certificate of title or title insurance policy
7. Contingent warranty of title: disclosure of all title restrictions, rights, limitations title subject to
8. Date of transfer of possession: usually but need not be the date of closing
9. Proration of utility bills, property taxes, and similar expenses
10. Party responsible for risk of fire or other hazard pending closing or transfer of possession
11. Basic terms of any escrow agreement
12. Provision for return of earnest money if sale is not completed
13. Signatures of the parties.

Marketable Title: free from doubt that would expose the party holding title to hazards of litigation.
● If K is silent on marketable title, will be implied unless it is expressly waived.
● If seller cannot convey a marketable title, buyer is entitled to rescind the contract.
Title unmarketable if:
1. Seller lacks all or part of title
EX Adverse possession may be considered unmarketable b/c there are doubts (i.e. may not be continuous)
creating possibilities of litigation; other courts will say it is marketable title b/c you own it and can sell it
2. Title is subject to an encumbrance
Encumbrance: non-possessory legal interests that restrict the use/enjoyment of property (i.e. mortgages and easements)
● If nothing in the K says anything about what an encumbrance is, an easement is an encumbrance
● K may say what is a valid encumbrance and what is not
● Certain easements are not encumbrances if useful or obvious: EX telephone lines b/c company has easement

**NOTE: If K seller gets title insurance, will confirm good and merchantable title and avoid fights
about what marketable means

Lohmeyer v. Bower: Buyer signed K to buy house from Seller. K stated that Seller must provide marketable title subject
to restrictions and easements and if any restrictions were found, Buyer must allow Seller to correct violations. House
violated zoning ordinance and a restrictive covenant. Buyer said that not marketable and sought to rescind contract. Seller
refused and said that would be able to purchase extra land to comply.
● Held: the violation of the zoning ordinance permitted buyer to back out of the K
● Restrictive covenants are encumbrances & impact marketable title, but buyer can waive marketable title
o Here, buyer waived right to convey marketable title subject to easement and restrictions of record
● Zoning ordinances are not encumbrances, but violations of zoning ordinances are encumbrances
o Unmarketable b/c fixing property to meet ordinance required buying different land than bargained for
o Reasonable for buyer not to know the encumbrance: allowed buyer to get around broad waiver provision

Marketable title is not equivalent to market value

Sinks v. Karleskint: Π purchased land that had no legal access. Tried to get out of K.
● Held: this is marketable b/c in fee simple, free from encumbrances, and buyer is entitled to possession

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 o Just b/c cannot reach land via public access does not make it unmarketable.
o Even if lack of access were a title defect, buyer entered K with knowledge of lack of access→ thus
waived marketable title. NOTE: not all courts agree with this

Marketable Title Acts: Exist in about 18 states, make title searches quicker and more efficient by eliminating property
interest after a predetermined period of time
 If a given jurisdiction has a 30 year Marketable Title Act, the buyer need only go through public records to see if
there is a title recorded for that property within 30 years and determine whether the property is marketable. If
there is nothing, buyer can file for quiet title to ensure ownership.

Seller’s Duty to Disclose:

Traditional Common Law Caveat Emptor: buyer beware; seller has no obligation to disclose property defects.
● Based on the historical context that it was land that was being conveyed, not property, so easier for buyer to
inspect/understand qualities themselves.
● Seller allowed to stay silent but cannot affirmatively misrepresent or actively conceal any defects with the
property. The defect must be discoverable by buyer.
Modern Trend: seller has a duty to disclose: (a) material defects which are (b) known to the seller and (c) not
reasonably discoverable/readily observable
**NOTE: if a jurisdiction requires a duty to disclose, parties can include an
“as is clause” to invoke caveat emptor through the contract. (seller still
cannot actively conceal defects)

Factors Typically Considered for Duty to Disclose Legislation:

● If there is fiduciary or confidential relationship
● If conditions cannot possibly be discovered by the most careful and prudent buyer (i.e. such as circumstances
other than the physical condition of the property Stambovsky)
● If the defect is latent and material

To have a cause of action, the defect must be material. 2 tests to determine materiality:
● Objective test: whether a reasonable person would attach importance to it in deciding to buy
● Subjective test: whether the defect affects the value or desirability of the property to the buyer

Disclosure Form: required by statute for seller to fill out form disclosing all defects he knows about
● Based off what seller knows, but does not need to do an inspection
● If seller does not provide form, must be $500 penalty fee
● If found to have not disclosed material defect within the form, buyer can rescind K
● Most sellers simply pay the $500 penalty fee to avoid risk of rescission by buyer

Stigma statute: Statutes put in place to protect sellers from having to disclose conditions that “stigmatized” properties,
i.e. murder in the house or occupant with AIDS
**NOTE: Real estate agents prefer more detailed duty to disclose legislation, b/c
a vague common formulation might place the agents on the hook for wide array of
defects
Stambovsky v. Ackley: Π bought house from Δ, K signed, but before closing Π found publications written by Δ stating
house was possessed by poltergeists: sought to rescind K
● Held: this warrants equitable relief b/c Π could not be expected to know about the alleged ghosts; would not show
up on a normal inspection; caveat emptor cannot be used here b/c defect is not discoverable.
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 ● While would’ve had a duty to inspect house for structural and physical defects, nothing to alert to possibility
that the house had haunted reputation, he cannot be expected to inquire into this.
● Policy argument: allowing this encourages predatory business practice and offends principles of equity
● Seller not only aware, but responsible for creating the reputation, creating duty in good faith to disclose
Johnson v. Davis: Parties entered K for sale of house. Buyer asked about water marks; seller said there were none and
roof in good condition. Buyer put down payment. Post-rainstorm, buyer entered house and found substantial leaky roof.
● Held: Seller of a house is liable for failing to disclose material problems with the structure of the house that he
knows about and was specifically asked about by the buyer. (misrepresentation)
o Seller knew about leak, and not only failed to disclose, but lied to the buyer about it.
o Leaky roof is a material defect, so seller is liable to the buyer to return the deposit.

Remedies for Breach: Where party breaches K for sale, other party has various remedies:
1. Keeping of earnest money deposit: Order deposit out of escrow for non-breaching party to keep. Will only be taken
out if both parties agree or a court orders removal.
● Buyer: Restitution of deposit money → barely sought for b/c falls short of value of property to the buyer
● Seller: If there is a clear breach the buyer will likely agree b/c will lose if go to court
NOTE: if there is a liquidation clause, may enforce beyond earnest money if amount is proportionate to damages
2. Sue for damages: relief based on non-breaching party’s loss caused by the breach
● Buyer: Value of property at time of breach minus the contract price. If breach is due to unmarketable title:
o English Rule: only can recover deposit if seller acted in good faith
o American Rule: purchaser to recover expectation damages b/c easily discoverable via title searches
● Seller: cost of relisting, delay, difference between what was contracted and what it was actually sold for

3. Sue for specific performance: equitable relief is granted, when money damages would be inadequate.
● Buyer: b/c real estate is unique, buyer would probably win on specific performance
● Seller: seller likely wouldn't be able to get this b/c goal of sale is money and can get via damage relief

4. Liens: Debt in the form of holding property subject to sale to pay off the debt
● Buyer: debt to secure paid deposit. Court may order property sold to repay the buyer for deposit.
● Seller: debt to secure unpaid amounts owed under the purchase agreement

Maintaining earnest money is the most likely remedy Suing for specific performance or damages most
for SELLER likely for BUYER

The Deed: written instrument to convey property under (statute of frauds) Essential components:
Grantor/Grantee’s Name | Words of Grant | Property Description | Grantor Signature | Acknowledgement/Witness
A deed must contain a description of the parcel conveyed, locating the land by:
1. Natural or artificial monuments and, reference to directions
and distances (“metes and bounds”)
2. Government survey, recorded plat, or some other record
3. Street and number or the name of the property

While not required, it is customary to state in deed that consideration was paid to prove that grantee is a bona fide
purchaser entitled to the protection under recording acts
Traditionally, a sealed instrument was required to convey a freehold; replaced by signature requirement in most states\
3 Types of Deeds: Difference btwn types of deeds surround what seller is promising to convey

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General Warranty Deed: warranties against all title defects, before/after grantor took title. Conveys 6
Interests:
3 current interests 3 future interests
1. Seisin: confirming grantee owns property in fee simple 4. Covenant of general warranty: grantor promises to
2. Right to convey defend lawful claims against ownership for grantee
3. Marketable Title: there are no encumbrances 5. Quiet enjoyment: Same as covenant of gen. warranty
6. Further assurances: if grantee needs more docs,
grantor will provide
**NOTE: If first 3 promises valid, covenant of gen. warranty irrelevant b/c no one has a lawful claim

Special Warranty Deed: warranties only against the grantor’s own acts but not the acts of others.
● EX: if there is a mortgage on the land executed by grantor’s predecessors, grantor is not liable.

Quitclaim deed: no warranties of any kind; simply conveys whatever title the grantor has, if any
● If turns out there is no interest to convey, the grantee cannot sue the grantor
Forged and Fraudulent Deed: grantor does not know his signature used, or was coerced into to signing
● If conveyed w/ grantors forged signature, void even from subsequent bona-fide buyer who didn’t know of forgery
● Most courts hold that a deed procured by fraud is voidable by the grantor in an action against the grantee
o Subsequent bona fide purchaser from the grantee unaware of the fraud prevails over the grantor.
● **Note: there is no bright lined difference between forged/fraudulent deeds.
Estoppel by Deed: If grantor conveys land that he does not currently own but warrants that he has title to the land → he
must follow through on conveyance if he subsequently acquires title.

Delivery: a deed must be delivered with intent that it is operative to be effective immediately
To effectively deliver a deed by handing over, a grantor may:
Immediately transfer: Hand the deed to grantee upon receipt of purchase price
Escrow: person who holds good faith money/deposit
Transfer upon fulfillment of conditions: hand deed to 3rd party escrow agent, who hands over to grantee upon closing

It is not necessary for the deed to be handed over to the grantee for effective delivery. It only requires an act that signifies
an intent to be immediately bound by the transfer
● Can simply be declaration of being bound to the deed
● Common case: grantor executes deed & deposits with idea that grantee will take the land at grantor's death:
o If grantor intends to pass title to grantee now: delivery even though possession postponed
o If grantor intends for no interest to arise until death, no delivery has taken place, it is a will not a deed;
instrument was not executed with two witnesses in accordance with Statute of Wills: not valid
Where grantor delivers deed but reserves a right to rescind or intends for it to become operative only
after death, actions are nothing more than an attempt to employ a deed as a will and thus not a valid
conveyance.
Rosengrant v. Rosengrant: H&M sought to transfer their farm to Jay. They brought Jay to a bank where Harold handed
him the deed to "make it legal." Jay instructed by H&M to give the deed to the bank for safekeeping. The banker typed
both J and H’s name on the envelope & instructed Jay to record the deed upon their death. H&M continued to live on the
property. When they died, Jay recorded the deed, but it was challenged for a failure to properly deliver the deed.
● Held: The deed was null and void b/c was intended to be a will, rather than a deed; no transfer at the time the
actual conveyance took place. B/c not properly recorded under Statute of Wills, transfer invalid.

Revocable trusts: trust where grantor may alter/cancel provisions at any point while alive
● During life of trust, income earned distributed to the grantor; only after death does property transfer to grantee.
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 ● No need for delivery or recording but recording is evidence of intent for the trust instrument to be effective
● Similar effect as Life estate for the grantors and remainder in grantee upon their death.
● *Rosengrant would have avoided this issue if they had a revocable trust.

There are 2 kinds of loans: secured and unsecured

● Unsecured: if borrower defaults, lender must bring suit to get a default on the loan.
o Court may order garnishment of wages etc. but not as desirable b/c no assurance lender will be paid back
o High interest rates to offset potential default by the buyer
● Secured: Lender has guaranteed payback even if borrower defaults b/c lender can take collateral in substitute
o Collateral: tangible object lender has right to if there is a default
o Lower interest rates b/c less risky for lender given protection by collateral
Interest: (1) rental payments on the money, (2) protects the lender against not getting paid back.

Mortgage: secured loan on real estate where the property is collateral

2 steps to taking out a mortgage:
The Note: piece of paper stating, "I Owe [lender] [money] and will pay back over [time period]"
The Mortgage: contract giving the lender property interest in the real estate being purchased
● Interest conveyed: if borrower defaults, lender gets the house to sell and pay off loss

Mortgage commitment: indicates that the lender has pre-approved you for a mortgage based on your creditworthiness/
income. Lenders usually issue a letter verifying your approved loan status
● Lenders require borrowers to contribute 10-20% of down payment on the house

Mortgagor: the borrower and buyer of property

Mortgagee: the lender and recipient of payments specified on the note

Refinancing: b/c of shifting interest rates, a mortgagor might take out another loan with another mortgage to replace the
current mortgage.
● Mortgagor borrows enough money with new loan to pay off old loan if interest rates lower overall amount owed

A mortgage is an encumbrance that might make title unmarketable

● Typically, if grantor still has mortgage, will use money obtained from the sale to pay the lender off at closing and
walk away only with what is left. Promise will be included in the acceleration clause within the mortgage K
o Acceleration clause: enables the mortgagee, upon transfer of the mortgagor’s equity, to declare the
whole amount of the mortgage debt due and, upon failure to pay, to foreclose.
● Like other encumbrances, a mortgage can be waived by the buyer by either purchasing subject to the mortgage
or assuming the mortgage.
o Subject to the mortgage: purchaser does not assume any personal liability for the mortgage, but agrees
that if the mortgagor defaults, the land purchased may still be used as collateral
o Assume the mortgage: purchaser takes on the mortgage and promises to pay off the debt

Foreclosure: process by which, after default on the Note, collateral is sold off in to pay the debt
Process: property sold, money goes to mortgagee to pay off. Note, anything left over goes to mortgagor
● Inspections often don’t happen in foreclosure sales b/c need to get the permission of the person living there and
it’s so unlikely that defaulting borrower will let potential buyers in

Equity of Redemption: borrower can get home back if can pay the loan off in full up UNTIL the sale is made; once the
foreclosure sale is made, the borrower cannot pay off the loan to get their property back.

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 ● Equity of redemption prior to sale exists in all states
● Statutory right of redemption creates this right for a set period after the sale exists in only some states (not NY)

Judicial v. Non-judicial Foreclosure Sales

Judicial foreclosure: if sale overseen by a court
● Must establish a valid mortgage and terms of loan have been violated; court orders a foreclosure sale
● Private party (referee) retained to figure out money owed; parcel the funds when property is sold
Non-judicial foreclosure [self-help]: sale overseen by mortgagee (private sale/foreclosure by advertisement)
● When a lender is running the foreclosure sale, have a fiduciary duty to protect interest of the
borrower and must exercise good faith and due diligence to find a fair price (Murphy)
o Not in good faith if there is purposeful disregard to the duty or intentional harm.
o No due diligence the mortgagee to act as a reasonable man would with respect to the sale
● If mortgagee does not adequately fulfill its fiduciary duty to protect interest of the borrower,
damages on foreclosure sale should be measured by level of mortgagor’s breach:
o If acted in bad faith: difference between fair market value and actual selling price
o If acted in good faith but not due diligence: difference between a fair price for the property
(lower than fair market value) and actual selling price.
● Many states (NY) do not allow non-judicial sales

Murphy v. Fin. Dev. Corp.: Borrower bought a house, took out a mortgage from D (lender/mortgagee). Borrower lost his
job and defaulted on mortgage payments. Borrower tried to hold off on foreclosure sale, but Lender held the sale anyway.
No one but Lender and Borrower at the sale. Lender bought for $27K, 2 days later sold to a third party for $38K making
profit. The value of the house was appraised at $54K.
● Held: While D satisfied the good faith requirement, did not satisfy the due diligence requirement
o Good faith b/c Lender worked with Borrower to avoid foreclosure,
o No Due Diligence b/c didn’t adequately advertise the sale, advertise the sale, or postpone when no other
bidders showed up due to rain.
● Not awarded difference of fair market value & actual selling price but fair price & actual price b/c not in bad faith

**NOTE: Murphy is unusual b/c courts typically uphold foreclosure sales despite low prices in the
absence of procedural irregularity that is prejudicial or that chilled bidding.

Priority Rules: profits from the property sold pays off first mortgage completely before a dollar goes to pay off second
mortgage.
● As a result, the second mortgagee will only foreclose when they are very confident the sale will produce
enough funds to pay off both
● Second mortgages will have higher interest rates b/c less assurance on collateral

Deficiency Judgment: if the sale does not produce enough money to pay off the debt, lender may bring suit for remainder
of the payment
● If judicial foreclosure, sale price usually not challengeable (unless shocks conscience of court) & applied to debt
o Mortgagee entitled to deficiency judgment of difference between selling price & remaining due on loan
● If private foreclosure, courts scrutinize to assure that the mortgagee acted fairly; may deny deficiency judgment
o If the lender buys the foreclosing property, and then sells and gets a profit large enough to cover the
remaining payment due and still seeks a deficiency judgment courts will deny any recovery.
○ Legislatures have enacted anti-deficiency statutes to protect borrowers from these unfair practices.

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 TITLE RECORDING SYSTEM
Recordation: central, county level, govt system of any document that creates or affects interest in land
Purpose: Preserves in a secure place important documents that may be easily lost or misplaced.
● Purchaser will want to search the records to make sure that there are no adverse prior recorded claims. Recording
prevents subsequent purchasers from previous owners from prevailing over him.
Recording does not have legal effect: A deed is valid and good against the grantor upon delivery without recordation.
Recordation merely publicizes the transaction which already has legal effect
● Preserves records against destruction, protecting (a) rights of third parties and (b) rights of buyers against third
parties; Subsequent bona fide purchasers are protected against prior unrecorded interests

Prior to judgment in a suit affecting title, any party may record a lis pendens: notice of pending action
● Puts subsequent claimants on notice of claims being litigated to protect purchasers for value and lien creditors
against prior unrecorded interests.
Public Records Office: where all instruments affecting title (deeds, mortgages, liens, etc.) are recorded
● From the evidence of title in records office, a professional will conclude who has the fee simple title to the land
● Land title records include: copies of documents filed with the recorder & indexes to these copied documents.
Title Registration: state registers title and issues certificate to owner; reissued to each new purchaser
Title Insurance: private insurance companies sell policies to provide purchasers w/further security→ backup to the
recording system.

Indexes: Buyers of land use an index to search the title recorded in recorder’s office.
2 Types of Indexes Currently Used in the US:
1. Tract index: indexing documents by location of property (by parcel identification number).
2. Grantor-grantee index: separate indexes kept for grantors and grantees.
● Grantor index: all instruments indexed alphabetically & chronologically under grantor’s surname
● Grantee index: all instruments indexed under the grantee’s last name
*Might have separate grantor and grantee indexes for each type of instrument: one index for deeds, one for mortgages,
one for wills, one for liens, etc.
Index sets forth deed’s essentials: grantor, grantee, description of land, kind of instrument, date of recording, and
volume and page #s where the instrument can be found set forth in full.
● Title searcher must examine the complete instrument the index is merely a helpful method of locating the
instrument among the many volumes in the recorder’s office.
How to search an index:

While doing title search, identify any potential encumbrances or claims on the property:
● Identify mortgages, attachments, and any conveyances of interests less than a fee simple.
● Make sure none of grantors conveyed to more than one person

**NOTE: Statutes require that, for an instrument to enter the records, it must be
acknowledged before a notary public or other official; If not authorized, may not be
“recorded” to give constructive notice. (Messersmith)

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Recording Acts
Race statute: Whoever records the deed first wins. (only 2 states follow this rule)
● Whether a subsequent purchaser has actual knowledge of the prior purchaser’s claim is irrelevant.
● The virtue of a race statute for the title searcher is that it limits inquiry into matters off the record.
● EX: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B
for a valuable consideration. B actually knows of the deed to A. B records the deed from O to B. Under a race statute, B
prevails over A, and B owns Blackacre b/c he recorded first

Notice statute: if the second purchaser had notice of a prior unrecorded instrument, the second purchaser could not
prevail over the prior grantee
● Turns completely on if the second purchaser had notice at the time of the purchase.
● Protects a subsequent purchaser against prior unrecorded instruments that they are unaware of even though the
subsequent purchaser fails to record.
● EX: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B
for a valuable consideration. B has no knowledge of A’s deed. Under a notice statute, B prevails over A even though B does
not record the deed from O to B.

Race-notice statute: a subsequent purchaser protected against prior unrecorded instruments only if the he (1) is without
notice of the prior instrument and (2) records before the prior instrument is recorded.
● Eliminate lawsuits turning on extrinsic evidence about which deed was delivered first.
● The actual copying by the recorder of a doc. into the records does not necessarily mean that the document is
“recorded” within the terms of the recording act.
● EX: O, owner of Blackacre, conveys Blackacre to A, who does not record the deed. O subsequently conveys Blackacre to B,
who does not know of A’s deed. Then A records. Then B records. A prevails over B because, even though B had no notice of
A’s deed, B did not record before A did.

**NOTE: For valuable consideration - conveyance must be through purchase, but not through a gift or
succession.

Proper recording serves as constructive notice of the transfer to all subsequent buyers. A deed is not entitled to be
recorded unless duly acknowledged. The recording of an instrument that does not meet all of the statutory
requirements of recordation does not provide constructive notice.
Messersmith v. Smith: C & F Messersmith (Π) each owned a ½ interest in land. C executed a quitclaim deed conveying
her ½ interest to F (this was not recorded but F owns everything at this point). On May 7, 1951, C executed a mineral
deed granting Smith (Δ) ½ interest in the oil and minerals located on the land. Smith noticed a minor error in the deed and
returned to C, tore up the deed, and prepared a 2nd deed he then brought to a notary public, who acknowledged C’s
signature by telephone. Smith then conveyed his ½ interest in the mineral rights on the property to Seale (Δ). 2nd deed
and conveyance to Seale were recorded.
● Held: 2nd deed granting Smith ½ interest in the oil/minerals located on the land was not properly acknowledged
by C before a notary public (was over phone); THUS not sufficient for purpose of recording statute.
o C already conveyed her interest to F and had no rights to transfer to Smith. Thus, Smith did not have title
to convey to Seale.
o Since Smith recorded his deed before Frederick, Seale would have had a right to the 1/2 interest in the oil
and minerals had the statutory requirements for recordation been fulfilled.
o This was a race-notice jurisdiction. Had it been a notice jurisdiction, Seale would had won but Seale
cannot prevail b/c deed improperly acknowledged, thus incapable of being recorded.

In denying the petition for rehearing, Messersmith court distinguishes btwn 2 cases:
O conveys to A, who does not record. O subsequently conveys to B, who has no notice of A’s deed and gives a valuable
consideration. B’s deed is entered into the records, but it has a defective acknowledgment. B conveys to C, who has no
notice of A’s deed, gives a valuable consideration, and records his deed.
● This is Messersmith - held that B’s deed is not “recorded” and therefore C is not a subsequent purchaser in good
faith whose conveyance first is recorded.
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 O conveys to A by a deed with a defective acknowledgment. A records his deed. O subsequently conveys to B, who records.
● Last paragraph of Messersmith opinion says this case “differs materially” from #1 and leaves open the question
whether B would prevail over A.
● If B actually searched the record and found A’s deed, B would have actual notice; the issue of constructive notice
arises only if B does not have actual notice.
Chain of Title Problems
● Chain of title: recorded sequence of transactions by which title passes from a sovereign to the present claimant.
o Series of recorded documents that, in particular jurisdiction, give constructive notice to subsequent
purchaser.
● The more technical meaning: the period of time for which records must be searched and the documents that
must be examined within that time period.
o In technical sense, chain of title includes, and is coextensive with, those instruments that will be picked
up by the title search required in the particular jurisdiction.
o Meaning of chain of title varies by jurisdiction (some require a more extended search)

Board of Education of Minneapolis v. Hughes (Min. 1912): Hoeger -> Hughes. 1906 delivered deed and left name blank |
4/27/09 Hoeger to D& W. | 11/19/9 D & W to Board of E. | 1/27/10 BoE records. | 12/16/10 Hughes fills in name and records |
12/21/10 D & W record. The deed to Hughes was recorded before the deed to Duryea & Wilson, though the deed from them
to BofE was recorded before the deed to Hughes.
● Holding: Race/Notice state
● Hughes had the authority to fill in his name, the delay did not make his deed invalid.
● Since the deed given to the BoE was not recorded by D&W before Hughes recorded his deed, there was no
notice to Hughes because the deed to the BoE would not have shown up in a grantor search. BoE had a wild
deed! No notice!

3 kinds of notice with respect to a prior claim: actual | record | and inquiry.
1. Actual notice: arises where one is personally aware of a conflicting interest in real property, often due to
another’s possession of the property.
2. Constructive notice; notice that the law deems you to have notice regardless of your actual knowledge. (2 types)
o Record notice: consists of notice one has based on properly recorded instruments.
o Inquiry notice: circumstances in which a reasonable person would have made further inquiry into the
possible existence of an interest in real property.

Luthi v. Evans (Kansa 1978): Owens to International Tours on February 1, 1971. Recorded on February 16, 1971. On January
30, 1975, the same Grace V. Owens executed and delivered a second assignment of her working interest in the Kufahl lease to
the defendant, J.R. Burris.
● Holding
● The recording of the assignment from Owens to Tours, which did not describe with sufficient specificity the
property covered by the conveyance, was not sufficient to impart constructive notice to a subsequent purchaser
such as J.R. Burris in the present case. Since Burris had no actual knowledge of the prior assignment from
Owens to Tours, the later assignment to Burris prevails over the assignment from Owens to Tours. Faulty
undescriptive recording fails.

Orr v. Byers (Cal. 1988): Orr judgement against Elliot October 1978. Recorded with the name misspelled. Elliot sold the
property to Byers in 1979. Since Elliot’s name was misspelled, the judgement from Orr dd’t show up in the title search. Orr
therefore, did not get any money from the sale to Byers. Orr sued everyone and there mother saying the spelling wasn’t
different, but alternate.
● Holding: We conclude the burden is properly on the judgment creditor to take appropriate action to ensure the
judgment lien will be satisfied. The recorder is the one in the position to avoid the problem. The burden is too high to
put it on the searcher.
● R: The doctrine of idem sonans remains viable for purposes of identification. But it has not, to our knowledge, been
applied in this state to give constructive notice to good faith purchasers for value.

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Harper v. Paradise: (Deed 1) Susan granted life estate to Maude, with remainder to Maude’s children upon Maude’s
death. OG deed was lost. Susan died; (deed 2) her legal heirs executed a document which acknowledged that the deed
from Susan to Maude had been misplaced & conveyed to Maude their interest in the property (fee simple). Maude used
the property to secure a loan from Ella; Maude defaults. Ella foreclosed on the property and title to the property continued
to pass until it reached Paradise. Maude died; Maude’s children and the Paradises both claimed rights to the farm.
● Paradise should have investigated b/c 2nd deed expressly referenced lost 1st deed (effectively replacing it
● Each purchaser of the property from Ella on should have engaged in more diligent efforts to discover the
nature of the earlier conveyances b/c put any subsequent purchasers on inquiry notice.

NUISANCE
Nuisance: one should use one’s own property in such a way as not to injure the property of another.
● Established via common law (no statutes support law of nuisance)
● Nuisance law seeks to address incompatible land uses: goal of protecting rights of one person’s use at the
expense of someone else’s right to use.
● Issue with nuisance law: when you have incompatible uses, one party will always be injured by the use of
another. No matter who wins, the other can't use the property how they want.

Public Nuisance: not individual property-based interest; concerns public as a whole as a general disruption of public
welfare (generally govt is the Π)

Private Nuisance: property issue of one specific person. Actionable if there is a substantial, non-trespassing
interference with the use and enjoyment of one’s property which is:
● Intentional and unreasonable OR Unintentional and negligent, reckless, or ultra-hazardous
● AND causes the Π harm

To bring a nuisance action, activity cannot be merely annoying but tolerable. Must be:
● Substantial: intolerable in nature
● Unreasonable: harm caused by the activity outweighs any value it brings

Property Rule Court Directs Damages

Entitlement Rule 1: Traditional Common Rule Rule 2: Δ purchases Π’s entitlement w/o Π’s consent
Assigned to Π entitled to injunction for price set by court
Π Δ forced to abate or stop nuisance-generating activity EX: Δ pays damages to Π reflecting reduction in market
altogether value from continued use
Estancias Dallas v. Schultz Boomer v. Atlantic Cement
Entitlement Rule 3: Problematic Activity may continue Rule 4: Π “purchases” Δ’s entitlement w/o Δ’s consent
Assigned to In principle Π can negotiate (and pay for) reduction or for a price set by court
Δ elimination EX: Δ forced to transfer title to of the land to Π
Spurr v. Del Webb

2 ways to approach remedy:

1. If the nuisance is just too unbearable (substantial) and bothers the plaintiffs, must allow for injunction (Jost)
2. Estancias balancing approach: gravity of the harm must outweigh the utility of the actor's conduct
○ Gravity: how much it costs for people it is hurting
○ Utility of conduct: what benefits brings to the people doing the act/benefiting from the conduct
Coming to the nuisance: person who got there second and then claims a nuisance
● Becomes relevant here when talking about the remedy (Del Webb)
● Does not mean all Πs who come into nuisance automatically lose; you cannot anticipate outcome.
○ If Π cannot tell he would come into the nuisance, may not lose (opposite of Del Webb)

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Morgan v. High Penn Oil Co.: Π owned land with house, restaurant, and trailer park that they rented out. Δ Oil company
operated an oil refinery very close to Π's land. Π produced evidence that multiple times a week Δ would emit nauseating
gas that would invade Π's land and this substantially impaired Π's use and enjoyment of their land by them and their
renters. Demanded Δ to abate use of the gas but they refused.
● Held: Δ intentionally and unreasonably caused gases to escape to Π's land to a substantial degree that
impairs Π's use and enjoyment of the land
● Injunction damages proper: can infer that Δ intends to operate in the same manner in the future and if permitted
to continue, the gases will create irreparable injury to Π in use of property

Is a nuisance; Π has right to injunction

Estancias Dallas Corp. v. Schulz: Πs had a quiet home until Δ erected a multi-building apartment complex next to their
property. Entire complex was served by 1 AC system, situated Πs property. The apartments would not be rentable without
air conditioning. The noise from AC extremely loud. Πs complained they could no longer entertain in their
backyard/carry on normal conversation in their home, even with the doors and windows closed.
● To decide whether an injunction is appropriate, court should weigh: the injury to the Δ and the public if the
injunction were granted against the injury to the Π if the injunction were denied.
● Held: Πs suffered substantial injury in the loss of enjoyment of their home; this injury was likely to continue. No
evidence of any apartment shortage in the area such that the public would be affected by the loss of this complex
○ Δ’s injury if injunction granted = having to pay for new AC unit (could have put it in to begin with)
Is a nuisance; Π has right to monetary damages from Δ
Boomer v. Atlantic Cement Co. (NY): Δ operates a large cement plant. Π (neighboring landowners) sued for injunction
and damages due to injury to its property from dirt, smoke, and vibration from Δ's plant.
● Held: Boomer is entitled to a temporary injunction that will be lifted once permanent damages are paid by
Atlantic. A permanent injunction will not be awarded b/c Δ’s operations provide significantly more economic
benefit to Δ than the damage caused to Πs.
● A permanent injunction here would be inappropriate - would require Atlantic to completely close its $45mil
operation unless a cleaner method cement production could be found, thus be unfair to Atlantic b/c pollution
problem is not specific to Atlantic.

Coming to the Nuisance Π purchases entitlement at cost set by court (SPUR IS A PUBLIC NUISANCE CASE)
Spur Industries v. Del E. Webb Development: Spur (Δ) owns some cattle raising company, was in the land before Webb
(Π) developed a retirement home. Webb sued for nuisance (public and private) the smell and the flies of the cattle injured
enjoyment of the property and the residence
● DW came to the nuisance; he created his own problem by building southward toward farm instead of northward.
● Spur’s operation is lawful although it’s a nuisance b/c it impacts the entire residence of Webb’s development.
Spur is enjoined but is entitled to compensation because his actions were lawful and unproblematic and became a
problem (nuisance) when Webb’s put his development there.

PRIVATE LAND USE CONTROL

Law of Servitudes allows parties to place private restrictions on the use of properties. Restrictions included easements,
covenants and common interest communities.

Interest Definition Example

Easement The right of one person to enter the land of another A is given the right to enter upon B’s land.
*Within SOF for a defined purpose. A = dominant estate
B = subservient estate

Profit The right of one person to take something natural A is given the right to enter upon B’s land and
*Within SOF off another’s land and use the land as necessary to remove something attached to the land.
enable the profit holder to enjoy it. ● Hay, timber, coal.

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 License Oral or written permission given by the possessor of Dinner Party
interest allowing a licensee to do something that
otherwise would be a trespass Drake Concert
**Unlike easements and profits, may be revoked.

Real Covenant Agreements, promises, or deed provisions that
relate to real property and bind/benefit subsequent
owners of the properties solely b/c they own them
Requires Horizontal and Vertical Privity
A Owns Blackacre and Whiteacre. A sells
Whiteacre to B; A they both agree to only build
single family homes. B sells Whiteacre to C
A and C are bound by the real covenant b//c
benefit and burden runs from B to C

Equitable Covenants respecting use of land enforceable Neighbors agreeing to only build single family
Servitude against successors in equity regardless of its homes on their property
enforceability at law (enforced by injunction)
Need for Horizontal and Vertical Privity replaced
by notice to subsequent purchaser

Easement: non-possessory interest. The right of one person to enter the land of another for a defined purpose.
***An easement can have a duration comparable to any of the possessory estates.
● An easement can be in fee simple (perpetual duration), for life, or for a term of years.
● Whatever you can do in fee simple, you can do with an easement.

2 Types of Easements

Easement appurtenant: benefits the dominant estate to the detriment of the servient estate. Includes 2 pieces of land:
1. Dominant estate: Land benefited by the easement
2. Servient estate: Property burdened by the easement.
*If you have a possessory interest in the dominant estate, you
have “right of way” (right to cross) through the servient estate.

Easement in gross: benefits a person rather than property. Includes 1 piece of land: servient estate.
● Unless assignable, ends at the owner's death.
● There is no dominant estate. The servient estate grants the benefit of an easement to a specific person.

**NOTE: easement appurtenant runs with the land, easement in gross does not

Creation of easements may be enforced through:

express provision (grant) | implication | necessity | estoppel | prescription | eminent domain
If the interest is none of the above, it may be a real covenant or equitable servitude.
Easements granted by express provisions are within the Statute of Frauds and require a written instrument
signed by the party to be bound. Easements to third parties:
● Common Law Rule: grantor cannot reserve easement in favor of third party (NY)

● RST/Modern Rule: an easement can be created in favor of a third party (Willard).

A grantor may reserve an interest in the land to be granted for use by a third party.
Willard v. First Church of Christ, Scientist: McGuigan owned 2 adjacent plots of land. Sold lot 19 but retained
ownership of lot 20. The Church used lot 20 as parking lot. Peterson bought lot 19 and sought to resell it to Willard, who
wanted to buy both lots. Peterson agreed to sell both lots, which required him to purchase the parking lot from McGuigan.
Created easement in the deed from McGuigan to Peterson, the conveyance was “Subject to an easement for the benefit

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of the church to use as a parking... such easement to run with the land only so long as the property for whose benefit the
easement is given is used for church purposes.” Peterson recorded the deed, then sold both lots to Willard. Willard
discovered the easement months later; brought an action against Church to quiet title on the property.
● Held: Church entitled to use parking lot during services b/c McGuigan created an easement for Church use when sold
her land to Peterson. Deed with this interest was properly recorded by Peterson, thereby giving Willards notice.

Reservation: provision in deed creating some new servitude which did not exist before as an independent interest
● EX: O conveys Blackacre to A reserving a 20-foot-wide easement of way along the south boundary of
Blackacre. The easement did not exist as an independent interest prior to the conveyance by O.
Exception: provision in deed that excludes from the grant some preexisting servitude on the land.
● EX: after the above conveyance, A conveys Blackacre to B, except for the easement previously reserved by O

Easements by estoppel: A license that becomes irrevocable under the rules of estoppel is treated as
an easement. Use must:
● Permission: be with the servient tenant’s permission (revocable license).
o In Holbrook, “actual consent . . . or at least . . . tacit approval”
● Make improvements in Reliance: involve reasonable and substantial reliance by licensee
o EX: construction of an improvement
o Length of time not relevant; extent and nature of the reliance is what counts

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.
Holbrook v. Taylor: Holbrook owned a road; granted permission to a nearby mine to use it for moving coal. After the
mine closed, Taylor bought land next to road and built a house there. Holbrook granted Taylor permission to use the road
for the activities necessary for construction of this house & for general improvements to land. After house built, Holbrook
gave Taylor permission to widen road; Taylor began to do so at significant cost. Dispute over use of land; Holbrook built
a steel cable across road to prevent Taylor from it.
● Held: Taylor has an easement by estoppel, thus, Holbrook cannot revoke permission he granted to Taylor, which
Taylor reasonably relied on in making improvements of considerable cost.

Easements by Implied Prior Use (Implication) requires:

● Severance of title to land initially undivided: dominant & servient estates were previously
under unified ownership
● Quasi-easement: when owner conveys the dominant estate, the easement goes w/ it so long as
easement is an apparent, existing, and a continuing use of one parcel prior to severance
o Most courts today have broadened apparent to include any use that is discoverable
through reasonable inspection. (not necessarily visible)
o **Rebuttal for lack of notice argument
● Reasonable necessity for the use at the time of severance
o Likelihood that the parties intended the use to continue after severance, inferred from
the dominant owner’s use & enjoyment of the easement being reasonably necessary, as
opposed to strictly necessary (Van Sandt)
o Reasonable necessity: where the property could be used without the easement, but
only with difficulty and expense. (In NY and TX you need strict necessity)
An easement will be implied in favor of a grantor for sewer pipes running under the grantee’s land, because the
grantee is charged with notice, as the existence of such pipes is apparent even if it is not visible.
Van Sandt v. Royter: Bailey owned 3 plots of land and put a private lateral drain across the lots to the public sewer. She
conveyed lot 19 first, who then conveyed to Van Sandt, then conveyed lot 20. Neither conveyance had an exception or
reservation. Van Sandt’s basement flooded with sewage. After investigating he discovered sewer line under his property
coming from Royster’s house. Van Sandt asked Royster to stop discharging sewage, but he refused. Van Sandt sued to
enjoin. Nothing in the conveyances indicated the presence of the pipes and pipes were not visible to the parties.
● Held: The use was apparent b/c Van Sandt knew his house was equipped with modern plumbing and that the
plumbing had to drain into a sewer.
o The fact that pipes are buried and not visible does not mean that the easement is not apparent
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 Easement by necessity: created when the owner of an estate conveys a portion of his land but needs to reserve for
himself the use of part of the conveyed land.
● To prove an easement by necessity: the purported easement holder must show that, at the time of the conveyance,
the easement is necessary for ingress and egress to and from the dominant property.
● Think: land-locked property - owner of dominant estate could not possibly enjoy his land w/o the easement

Easement by prescription: obtained under circumstances similar to adverse possession (differs from AP b/c does not
need to be exclusive).
● Purported owner of the easement must make use of easement in a manner adverse to the actual owner of the land.
● *If owner has knowledge & grants consent (actual or implied) to use the land, no easement by prescription created.

No easement by necessity is created where the easement exists out of mere convenience.
Othen v. Rosier: Hill conveyed 100 acres of his land in 1896 to a person, which eventually reached Rosier in 1924. Hill
conveyed another 60-acre tract 1897 to another person, which eventually reached Othen in 1904. In 1913, Othen acquired
another 53 acres of Hill’s land in; in 1924, Rosier acquired another 16.31 acres of the land. Othen’s land did not connect
to a public road, so in order to access the road, Othen would follow a fenced-in path which ran through Rosier’s property.
Rosier was concerned that certain water patterns threatened to cause damage to his property, so he constructed a levee to
channel the flow. The levee blocked half of the road used by Othen, making the path muddy and unusable. Othen sued
Rosier, alleging that Rosier blocked his right of ingress & egress to his land.
● Held: Othen's use of the roadway was merely permissive. Other & predecessors had a license to use the pathway,
which did not amount to a prescriptive right.
● NOT AN EASEMENT BY NECESSITY
o While there was evidence that Othan had no other means of reaching his land since 1990, there was no
evidence that proved OG severance landlocked Hill in 1896.
● NOT AN EASEMENT BY PRESCRIPTION
o Court saw Rosier’s construction of a gate as controlling access of pathway, giving Othen implied permission
o If the owner has knowledge and grants consent (actual or implied) to use the land, no easement by
prescription can be created → so Othen was merely granted a license to use the land, which cannot ripen to
an easement by prescription.

An easement appurtenant to an estate may not be extended to other adjoining estates. BUT when the extension of
the easement does not increase the burden on the servient estate, the equities prevent the servient estate from
enjoining the extension.
Brown v. Voss: Predecessors of A granted predecessors of B a private road easement to be used for ingress & egress to
and from B 🡪A. Voss acquired A; Brown acquired B & C, at different times and from different owners. Predecessors of C
had nothing to do with the easement relating to B. Brown began building house straddling B & C. After Brown had spent
2 years and $11k preparing to build house, Voss placed a fence, logs, and a concrete sump on the easement land in order
to prevent Brown from further using it. Brown sued to have the obstructions removed. Voss countersued to prevent Brown
from using the easement for access to anything other than B.
● Held: Voss’s injunction should not be issued based on the equities. There was no increase in burden on the
servient estate since it was being used for the same purpose, and Brown acted reasonably in the development of
the property, even though it was technically a misuse of the easement to access C 🡪 A.
**NOTE: if Brown had an easement in gross (personal easement; doesn’t run w/ land), Voss would have no claim
Negative Easements: Obligation to not use one’s own property in a way burdening the easement holder
Originally Limited to four kinds: Legislatures in many states have begun authorizing:
● Right to unobstructed windows ● View Easements
● Right to unobstructed channel of air (light and air) ● Solar Easements
○ Right to light & air not = right to a "view" ● Conservation Easement
● Right to flow of artificial stream ● Historic Preservation and Façade Easements
● Right to of a building
**NOTE Some courts will be willing to enforce additional negative easement at discretion

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2 Types of Interests in Land: Real covenants & Equitable Servitudes
Definition: Agreements, promises, or deed provisions that relate to real property and that bind or benefit subsequent
owners of the respective properties solely b/c they own the property.
● Are said to run with the land b/c they benefit and obligate subsequent landowners
o Real covenants: tied to the estate in the land, not the land itself. burden estates in land, not the land itself
o Equitable servitudes: run with the land itself, not the estate. [why there is no privity requirement]
Benefited estate: property whose owner benefits from a covenant or servitude in any controversy.
Burdened estate: property whose owner is bound by a covenant to act or not act.
**NOTE: Whether property is benefited or burdened depends on whether the property owner is trying to enforce a
covenant against another landowner, OR other persons are trying to enforce the covenant against the property owner.

Real Covenant: requires owner of burdened estate to perform some act or to pay money.
● Includes: duty to maintain a wall or dam.
● Enforced by damages.

Restrictive Covenant: restricts or prohibits the uses that can be made of the burdened property.
● Includes: covenants restricting property to single-family residences; covenants prohibiting farm animals on
property; covenants prohibiting the sale of alcohol there.
Requirements for an Enforceable (Real) Covenant:
A writing | Intent to bind successors |Touch and Concern |Privity of Estate
Horizontal Privity: necessary relationship btwn original Vertical privity: relationship btwn original covenanting
parties to the agreement for the covenant to run with the land parties and their successors. Required for both the burden and
(i.e. bind and/or burden subsequent owners) benefit of a real covenant to run.
● Measured at time of OG agreement creating the covenant ● Only requires that subsequent property owner succeed to
● Not necessary for its enforcement between the original an OG party’s entire estate or ownership interest in the
parties: No “privity of estate” needed since original parties property
are bound/benefitted by “privity of K.” ● Either directly from OG party, or through persons on the
● Permits enforcement of covenant against successors when same chain of title
covenant is created in conjunction w/ transfer of property
interest (i.e. deed conveying fee simple - OG promisor &
promisee need grantor-grantee relationship)

2 approaches: Some jurisdictions distinguish btwn what constitutes vertical

1. Horizontal privity required for the burden to run, but not
for the benefit to run.
2. horizontal privity required for both burden and benefit to
run (majority)
privity for burden to run & what constitutes vertical privity for
a benefit to run:
● For a burden to run, party must have succeeded to
original promisor’s entire estate or ownership interest
● For benefit to run, subsequent owner must have a
possessory interest in the property
** if a successor to the original covenanting party takes
property by adverse possession, there is NO vertical privity b/c
new chain of title begins.

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Equitable Servitudes: covenants respecting the use of land enforceable against successors, owners, or
possessors in equity regardless of its enforceability at law (enforced by injunction)

Requirements for an Enforceable Equitable Servitude:

1. Writing
o Writing not required, but implied, when there is a general common plan
2. Intent to bind successors
3. Touch and Concern
4. Burdened party must have actual or constructive Notice
o Notice of the covenant is required for the burden of an equitable servitude
to run with the land, but not required for the running of the benefit.
o All subsequent owners and possessors are bound by this servitude just as
they are bound by the easement.

Requirements for an Enforceable Equitable Servitude: no horizontal or vertical privity is required.

● **In some jurisdictions (NY), vertical privity of estate required for benefit to run
● Neponsit manages to find that vertical privity of estate exists even though plaintiff owns no property

One who purchases property with knowledge of restrictive covenants burdening the land must honor the covenant.
A party purchasing real property may not receive rights to the property greater than those owned by his seller.
Tulk v. Moxhay: Tulk owned land w/ houses and a garden. Tulk sold a portion to Elms, conveying the portion in fee but
containing a covenant stipulating that the garden must be maintained and that no houses be built on that ground. Covenant
purported to bind Elms and his heirs/executors/administrators. Elms’s land eventually conveyed to Moxhay, whose deed
did not contain the same covenant, although he took land with knowledge of it. Moxhay desired to build upon the garden.
Tulk, who still owned several houses on the land, sought an injunction preventing Moxhay from disturbing the garden.
● Held: Moxhay’s purchase of the land is in direct line with Elms’s ownership interest, which clearly had a
covenant attached, and Moxhay knew of the covenant.
o Would be inequitable to allow Elms to sell property that he knew to be burdened to another party and receive
compensation for the land as though it were free and clear b/c this would render the intent of the original
covenant meaningless.

A covenant contained in a deed requiring the payment of money (assessments) “touches and concerns” the land if
it substantially affects the rights of the parties as landowners: burdening one party for the purpose of increasing
value on other party
Neponsit Property Owners' Association Inc. v. Emigrant Industrial Savings Bank: Neponsit brought action to foreclose
on lien upon Emigrant’s unit. Lien arises from a covenant contained in a deed of conveyance of the land from Neponsit to
a predecessor in title of Emigrant. Emigrant purchased land at judicial sale and the conveyance was made subject to the
covenant. Covenant provided that sale is subject to annual charge for maintenance of the residential community and
failure to pay each year will allow Neponsit to have a lean on the land until it is fully paid. Clear the parties intended
covenant to pass to assignees and successors.
● Held: Emigrant had to pay the assessment
● Privity of estate should not exist here b/c HOA (P) does not own property, thus the benefit does not run to the
association. If P was Neponsit Realty Co. (who owned the property), there would be classic privity of estate b/c
benefit runs to Realty Co. as landowners.
o NEPONSIT COURT FOUND PRIVITY OF ESTATE WILL EXIST between an HOA & property owners
when the association is acting as a medium through which enjoyment of a common right is preserved.
● *Neponsit is early example of Common Interest Community

An equitable servitude can arise without a writing when a common scheme/general plan exists.
An equitable servitude arises when a common owner conveys land for public benefit with restrictions upon
neighboring land.

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Sanborn v. McLean (only aregue when there is no writing NOT when ther eis no notice): McLaughlins owned land;
conveyed portions to others including restriction that only residences would be built on the land. McLeans purchased land
through a series of conveyances tracing directly to the McLaughlins, whose title did not include the same restriction.
McLeans started to build a gas station on their lot. Sanborn & neighbors of adjoining land (who trace title to common
owners) sued McLeans to enjoin construction of the gas station.
● Held: Although McLean’s deed did not have explicit restriction, McLean cannot build gas station.
● The implicit equitable servitude sprang into existence with the restriction (when the McLaughlins first conveyed
restricted land to others) and the writing is evidence of the OG common owner intention of common scheme;
Although imperfectly expressed in the deeds it is the developer’s intent that matters.
● When McLeans purchased their plot, they should have noticed:
o Their parcel traced back to the McLaughlins, who owned 97 related surrounding parcels.
o Those related parcels conveyed with strict limitations on use
o The surrounding lots contained houses which conformed to a general consistent plan, which at a minimum
puts them on inquiry notice that the land was uniformly burdened with similar covenants.

**NOTE: Such restrictions are enforceable against each subsequent purchaser with
knowledge of the restriction until the easement expires or other events render the restrictions
outdated.

Racially Restrictive (Discriminatory) Covenants: Courts will set aside equitable servitudes if they are against public
policy
State court enforcement of a racially restrictive covenant constitutes state action that violates the Equal Protection
Clause of the 14th Amendment.
Shelley v. Kraemer: Property owners on a street signed & recorded a restrictive covenant providing no races other than
Caucasians were welcome as tenants on the property for next 50 years. Shelleys, a black family, bought a house on one of
the restricted parcels of land without knowledge of the restrictive covenant. Kraemer’s & other white property owners in
the subdivision brought suit to enforce the covenant, seeking to enjoin the Shelleys from taking possession and divest
them of title to the property.
● Held: State court enforcement of the restrictive covenants against the Shelleys would deny them equal
protection in the exercise of their property rights.
o BUT the restrictive agreement alone cannot be regarded as violating any rights guaranteed by the 14th
amendment b/c the 14th amendment only inhibits action by the state.
o The amendment erects no shield against merely private conduct like here - where the action was by the
property owners.
● A common plan argument would be rejected here b/c common plans only apply when they begin with a single
owner who then subdivides - but here, it was just a group of neighbors, with no restriction on the land, who
seemingly got together and decided this.
o There was a writing, but it was unenforceable:
▪ Had intent
▪ Did not touch & concern the land
▪ No actual notice; may have had constructive notice b/c it was recorded but it was not part of the deed
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.
Western Land Co. v. Trusloaski: All the lots have a restriction to residential use (explicit in all the deeds). Subdivision is
developed except for a 3.5 acre parcel. A developer wants to build a shopping center and the neighbors want to block the
construction b/c in violation of the servitude. Developer claims that the servitude was terminated b/c of change in
circumstances outside the area that is subject to the servitude.
● Held: Servitude was not terminated despite the changes that have taken place outside of the subdivision.
o Even though the traffic has increased & commercial development has grown outside the subdivision, the
owners within have testified to the desirability of the subdivision remaining for purely residential purposes.

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Common Interest Communities: B/c covenants may be insufficient to produce the neighborhood you desire
due to difficulty of enforcement, no assurance they will be upheld, and expense, CICs & public land use regulations
favored.
● EXs: retirement communities; gated communities; condos; cooperatives; time-shares .

Federalism argument for CICs: efficiency of local welfare is maximized if we govern by community.
2 Essential Features of CICs:
Assessment: private counterpart of real estate taxes
● Homeowners Association has power to raise funds reasonably necessary to carry out its functions.
● Power to levy assessments is enforceable by fines & liens on individual property (Neponsit)
CCRs: conditions; covenants; restrictions - land use controls

Mechanics of CCRs (5 Documents)

1. Declaration (Constitution) → creates the thing (uses, boundaries, etc.)
2. Homeowner Association Bylaws
3. Plat map
4. Deeds for each unit on the lot
5. Board of Developers rules & regulations

CA law says common interest development use restrictions are given a presumption of validity and are
enforceable unless unreasonable or against public policy.
Nahrstedt v. Lakeside Village Condominium Association, Inc.: Nahrstedt bought a unit in the Village Condos and moved
in with her 3 cats. When the condo association learned of cats, it demanded their removal. Nahrstedt sued & argued the
restriction was unreasonable as applied to her cats, which were kept indoors and not free to roam any common areas.
● Held: As a matter of law, the Association’s rule prohibiting dogs and cats while permitting other pets is not
unreasonable.
o No public policy supports overruling the Association’s rule, nor do any constitutional or statutory rights
guarantee a person’s right to maintain their pets in CICs.
● Deference to enforcing CCR rules is appropriate b/c condo owners are entitled to know the existing use
restrictions that will be enforced at the time they purchased their units.
o This encourages development of CICs which are cheaper than single-dwelling buildings & attract buyers
looking for stable, planned environments.
o Affording condominium rules a presumption of validity discourages lawsuits & promote stability/
predictability b/c employing a case-by-case view of these challenges increases the likelihood of lawsuits.

Nahrstedt court referred to & approved of Hidden Harbour Estates v. Basso: FL court stated that use restrictions
subsequently imposed by action of the condominium association board are subject to a more stringent standard than the
deferential standard applied to restrictions included in the original declaration.
● Subsequently, CA Supreme Court held the deferential Nahrstedt standard applies to use restrictions included in
recorded amendments to declarations.
● The court distinguished btwn restrictions in a recorded amended declaration and an unrecorded restriction
promulgated by the board, as to which the deferential standard presumably does not apply.

PUBLIC LAND USE CONTROL

Land Use Regulation: when the government intervenes to preclude or require private parties to use their land in a certain
way, the most common way this is done is through zoning.

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Zoning: dividing and restricting land in a municipality into zones (districts) in which certain land uses/buildings are
permitted or prohibited.
Two primary restrictions within a zoning regime:
Use restrictions: Area restrictions:
what you can do with the property. What you can build on property
Include residential, commercial, & manufacturing districts bulk, height, min. lot size, and setback limits

Each use has a subdivisions w/ numbers identifying the 2 kinds of setbacks:

"intensity" of the buildings
EX: under residential districts, R10 (least restrictive) can have
most people living in it & R1 (most restrictive) allow only
detached family homes
Setbacks for design of building: requiring building get
narrower as more floors are built (Empire State Building)
Setbacks within the lot: how far back from the road the
building can start

Most zoning ordinances are cumulative: Permitted uses in more restrictive zone are allowed in a denser zone; Also
applies to height and area restrictions: buildings in the least restrictive area can be any height allowed in the municipality
whereas a ten-story structure, as an example, cannot be located in an area district restricted to 2 and ½ stories.
● Euclid: a landowner can build a single-family district U2-U6, but a retail store cannot built in U1 or U2.

SC in Euclid established rule that in general, zoning ordinances are constitutional b/c makes more open space and
comfortable living.
● There is a presumption of validity of zoning ordinance: challenger must make a clear showing that the rules of
an ordinance are unreasonable and arbitrary to prove that it is unconstitutional.

Municipalities do not have pre-existing authority to administer zoning ordinances. States grant these powers through
Zoning Enabling Acts.
● Most states follow the Standard Zoning Act, so structure is similar across jurisdictions.
● Zoning regime will always have map with the zones and text that tells you what the zones mean

The Comprehensive Plan: statement of local govt’s objectives and standards for development based on surveys and
studies of the city’s present situation and future needs to anticipate change and promote harmonious development
● Courts are not strict and usually don't enforce based on goals of the ordinance b/c the future is unpredictable
● Made up of maps, charts, showing general boundaries of height, area, bulk, and use zones, and locations of
streets, bridges, parks, public buildings, etc.

Parties in Zoning Regime:

● City council: legislative body that adopts/amends the comprehensive plan and zoning ordinance
● Planning commission: puts together comprehensive plan for council approval, recommends
amendments to ordinance, may grant permits and may be backed by Dept. of City planning
● Building department: grants as-of-right permit and issues certificates of occupancy
○ As-of-right permit: a use conforming to the zoning regulations; doesn’t require approval
from the Zoning Board.
● Board of Zoning Appeals/Board of Adjustments: grants variances, special permits, and hears
appeals from building dept. Decisions
○ Non-as-of-right permit: when the use/size restrictions of a building do not meet the zoning
regulations, need approval.
● Zoning officers: enforce laws by going around and identifying non-compliance; if function not
handled by the Building Dept.
Regardless of whether in compliance w/ zoning ordinance, every owner must get a permit to build on their
property.
● Permit as of right: in compliance w/ zoning ordinance. Owner goes to Building Dept. for permit. Will be
approved unless not in compliance. If Dept. erroneously denies, owner may appeal to Zoning Appeals Board

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 ● Special Permits/ Variances: not in compliance with zoning ordinance. Owner goes directly to Board of Zoning
Appeals to seek permit despite not falling within the regulations.

VILLAGE OF EUCLID v. AMBLER REALTY CO: Ambler owned a plot of land in a town that developed system of
cumulative ordinances dividing districts by use, height, and area. Plot had U2, U3, and U6 all in a line and crossed over in
different direction with varying height ordinances. Ambler had the land for the purpose of some sort of business but could
not build on land b/c of the zoning requirements.
● Claim: zoning ordinance was unconstitutional b/c creating a serious diminution of the property’s value, thus
violating the Takings Clause for not providing just compensation.
● Holding: ordinance is not an arbitrary law because it advances the public health and safety of the general welfare.
It is a valid exercise of authority, leaving other provisions to be dealt with as cases arise directly involving them

Flexibility in Zoning: Non-Conforming Uses | Variances | Special Exceptions

Non-Conforming Use: a use of property that was allowed under the zoning regulations at the time the use was
established but due to subsequent changes in those regulations is no longer a permitted use.
ALL states have some form of non-conforming use statutes.
EX NJ Zoning Enabling Act: Any nonconforming use or structure existing at the time of
the passage of an ordinance may be continued upon the lot or in structure so occupied and
any such structure may be restored or repaired in event of partial destruction thereof.

B/c the use was legal & in place before an ordinance takes effect 🡪 The original use will be grandfathered in.
● Except for already being in the district, would not be permitted in under the newly enacted zoning ordinance.
● Must exist at the time the ordinance takes effect; mere ownership of the parcel/having a plan to use it for a
non-conforming use is insufficient.

Change in ownership does not end the nonconforming use status 🡪 runs with the land, not the landowner.
● However, once a landowner abandons a nonconforming use, the right to unlawful use terminates; neither the
owner nor any subsequent owner can resume.
Owner of a nonconforming structure can engage in normal maintenance and repairs
● Some jurisdictions require municipalities to allow replacement/repairs so long as repairs do not increase the
nonconforming use / expansion is no more than required by the growth of the business on the land.
○ Natural expansion: change is ok if expanded to meet natural changes (i.e. increased demand).
● Change from one non-conforming use to another non-conforming use may be permitted if the change reduces
impact on zone in question.

An owner of property will be granted an equitable or vested right to build a non-conforming use after the
enactment of an ordinance if the claimant:

1. Acted in good faith w/ no good reason to believe the enacted/amended ordinance would
2. prohibit intended use.
Made or committed to substantial expenditures toward building or operating the
nonconforming use before the ordinance was enacted
o Developers may rely on estoppel if they reasonably relied to their detriment on
issuance of permit and proceed to make expenditures (Parkview).
3. In good faith, received a building permit for the nonconforming use.

Main ways to terminate non-conforming use:

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 ● There is a change of use 🡪 not terminated in all states (depends on jurisdiction)
● Use is abandoned
○ To eliminate litigation over intent to abandon, many states will terminate if the use is discontinued for a
period of time defined by statute (Toys R Us)
● The structure is completely destroyed (i.e. burns to the ground)
○ May fix partial destruction of property w/o terminated non-conforming use (i.e. damaged roof)

Rationale for non-conforming use: Arguments against non-conforming uses:

Fairness and reliance Argument for grandfathering does not work

Hinders economic development: businesses
will not want to risk investing in property subject
to complete destruction by one ordinance
Inefficient: deadweight loss to tear something
down; More expensive to fix something that
doesn't meet standards
Retroactive restriction unconstitutional:
unlawful taking w/o just compensation
Hard to say use intolerable b/c have tolerated it
in land use b/c new zoning requirements create
incentive to keep going much longer than natural
life by creating less competition and a
government made monopoly.
By definition, the use is being prohibited b/c they
are better off not being there
Fairness argument empty b/c just cuts the line in
a different place: someone who is starting plans
but hasn’t started still had relied reasonably

Amortization: permitting continuance of non-conforming use for a specified maximum period of time, after which the
nonconforming use will no longer be permitted in the district. (PA NW)

To determine if amortization is appropriate, weigh the burdens and benefits on parties:

● Owner: Is the investment minor & quickly recouped or is it huge & hard to recoup?
○ Quick and easy to recoup (signs)
○ Problematic and hard to find new place (junkyard)
● Public: How intolerable or problematic is the condition towards surrounding people in the community?

Only half of state legislatures permit amortization at all (NY); courts disagree on constitutionality:
Minority of courts hold amortization provisions to Majority of courts uphold reasonable
be unconstitutional on their face, under the federal amortization provisions as legitimate regulatory
or a state constitution. (PA NW) tools that do not offend the Takings Clause.
Seen as a taking of property, requiring either just Seen as analogous to prohibiting expansion of non-
compensation to landowner or no enforcement conforming use or renewals of abandoned uses

While some states allow amortization on some nonconforming uses, NO municipality amortizes all uses
● Courts determine permitted amortization period based on the reasonable time necessary for the owner to recoup
the cost of improvements made to the property 🡪 can range from 3 months to 40+ years

TODAY: focus of applying amortization ordinances is on

troublesome uses like adult bookstores billboards

PA Northwestern Distributors v. Zoning Hearing Board: P obtained permit and certificates to lawfully lease premises
and open adult book store. 4 days later, town published notice regulating adult commercial enterprising and imposing
extensive restrictions on location and operation of adult commercial enterprises. P would have to vacate within 90 days or
change the purpose of the store b/c is by definition an adult commercial enterprise
● Held: PA rejects amortization rule; finds it per se violative of state constitution. May only order if is considered a
nuisance or abandoned. Otherwise, govt must provide just compensation b/c is taking (1/2 states follow)
● Concurrence: blanket rule unnecessarily restricts police power to provide reasonable methods to eliminate
nonconforming uses in public interest. Must weigh public/private loss on a case by case basis (1/2 states follow)
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Toys R Us v. Silva: Owner of a nonconforming warehouse in a residential district contracted to sell premises to real estate
developer. Owner emptied the warehouse. Zoning ordinance provided that either abandonment with intent or
discontinuance of the nonconforming use for 2 years forfeited the nonconforming status. Sale fell through. To try and
preserve its nonconforming use status, owner transferred a small amount of goods back into warehouse after 19 months &
assigned a property manager.
● Held: Despite placement of boxes, nonconforming use was terminated b/c was substantially discontinued for 2
years. Complete discontinuance was not necessary to lose nonconforming use status.

Parkview Assoc. v. City of New York: Dept of Building erroneously interpreted a zoning map and issued a permit to
Parkview Associates for a 31-story apartment building. 8 months later, Dept. alerted by neighbors who saw the building
rise far above the 19 stories permitted in the district; Dept. revoked the building permit. NY COA rejected Parkview’s
claim that “its reliance on the permit caused substantial & irreparable harm requiring that the City be estopped from
revoking the permit.”
● Held: Parkview must adhere to zoning restrictions b/c reasonable diligence by Parkview would have uncovered a
good faith inquiry to the existence of the limitations. Estoppel is not permitted when reliance is unreasonable.

Zoning ordinances permit the board of adjustment to grant variances.

Variance: an administrative order waiving application of the zoning ordinance in order to keep the ordinance
from denying a landowner all reasonable use of his property.
● Allows a landowner to build on land or use the land in a manner otherwise not permitted by the zoning ordinance.
● Works to prevent city/county from being held liable under the Takings Clause or the zoning ordinance from being
declared unconstitutional under the substantive Due Process Clause.
TWO types of variances:
Use variance: permits a use otherwise prohibited in Area variance: permits deviations from area, bulk,
a district set-back, floor space, height, and other non-use
EX: allowing commercial use in residential zone) requirements of the zoning ordinance
NOTE: While burden of proof very high on use variance, Boards and Courts are more receptive to area
variances b/c they typically do not change a district’s essential character.

Adjustments Board will grant a variance only if there is substantial evidence that 2 elements are met:
1. Grant of the variance would not be substantially incompatible with the public good and the intent and purpose of the
zoning plan and ordinance.
● Judged by manner and extent to which variance will impact character of the land.
● Guarantees that the variance will not be inconsistent with the zoning ordinance overall plan.
● Too great a departure from the zoning plan looks like an amendment to the zoning plan itself, which is not a
power of the Board of Adjustments; must be made by municipal legislature
2. The landowner would suffer an undue hardship if the variance is not granted.
Undue Hardship: no effective use can be made of the property if the variance is denied.
● Owner must make reasonable efforts to comply with zoning ordinance (i.e. if lot is undersized, to sell it to or
buy additional land from a neighbor at a fair price).
● Owner’s hardship must not have been self-inflicted (i.e. by earlier disposing of part of his land with the result
that what was left fell short of area requirements).
○ Hardship must arise from some unique physical condition of the land; involves a particular condition
that justifies treating it differently from other land in the district.

NOTE: in principle, Board may not judge based on personal hardship but the hardship the application puts
on the property itself. In practice, Board has a ton of discretion and may grant if the owner is likable and
will not cause problems with neighbors.

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Commons v. Westwood Zoning Board of Adjustment: Weingarten wanted to build a 1-family house on the only
undeveloped lot in a residential neighborhood. The lot did not meet the existing zoning ordinance minimum lot size
requirements. Weingarten sought a variance, proposing to build a narrow but deep 4-bed home. Neighbors opposed his
plan; board denied variance b/c he failed to demonstrate any evidence to establish hardship and granting the variance
would substantially impair the intent and purpose of the Zone Plan and Zoning Ordinance of the Borough of Westwood.
● On appeal: court held the record did not support the board of adjustment’s conclusions - board could not base its
decision on the size of the house b/c the planned construction did not violate any of the traditional zoning
purposes of light, air, and open space reflected in the ordinance.
○ While minimum lot size requirements “conserving the value of the surrounding properties” and “aesthetic
considerations” were all appropriate “desiderata of zoning,” the board did not rest its decision on
evidence about such matters - instead simply drew conclusions unsupported by the facts.
● Reasoning: it cannot be said that there was not any evidence to establish hardship.
● Until the 1947 amendment to the zoning ordinance the Πs or their predecessors in title could have constructed a
one-family house on the lot. Ownership commenced in 1927 when the Westwood had no zoning ordinance.
● An attempt, albeit unsuccessful, had been made to acquire an additional 10-foot strip from southern neighbor. A
40-foot frontage would have at least brought the property into conformity with 1 home in the neighborhood.
● There had been discussion concerning the possible sale of the property to a neighbor, there being a substantial
divergence in the offering and asking prices.
● Could reasonably be concluded that if a variance were not granted the land would be zoned into inutility

Conditional Use/Special Permit/Special Exception: within a zoning ordinance, aside from as of right
uses, small list of "special uses" are permitted, but require special restrictions & approval from the Adjustment Board
instead of the Dept of Building (Cope v. Inhabitants of Town of Brunswick)

Incentive Zoning: allowing for loosened zoning requirements provided that owner uses for specific purpose to benefit the
city.
EX: NYC has incentive zoning for public spaces established through Privately Owned Public Spaces (POPS)
● Allows 6 extra square feet for floor area for every 1 square foot provided to the public for use
● As a result, have large public areas within dense cities, but also have bigger buildings

FAR: building area divided by lot area. Every zone has a FAR limit. Buildings within a zone must have an FAR lower
than the set number.
Zoning Mergers: owners may combine 2 or more adjacent lots FAR applies to the whole
● If a building is over the FAR requirement, by merging with an adjacent lot under the FAR requirement, the
unused square footage can be applied to the lot over the requirement
● Unlike incentive zoning, a merger is not an exception b/c the land is not being used beyond any restriction.
Simply treating as one building
● Everything must place locally: can only merge with land directly adjacent
○ However, an owner may merge something not adjacent if he has already merged with buildings
intermediate. The chain of buildings are considered one building by merger

Exclusionary Zoning: If a town’s zoning regulations effectively prevent low & moderate-income families from
residing in the town, the regulations are unlawful; Land use regulation, must provide opportunity for low &
moderate families to live in the town & may not constructively prevent them from doing so.
Southern Burlington County NAACP v. Township of Mount Laurel: Mount Laurel enacted zoning regulations to align
w/ NJ tax structure. Residential use restrictions made it so only those w/ high income could live there, while 29% of land
was zoned exclusively for industry (barely used). As a result, low/moderate income families were prevented from living
there & NAACP sued claiming the combined land use regulations unlawfully excluded these people from the town.
● Held: Unconstitutional b/c zoning regulations are part of the state’s police power: must promote general welfare
○ Adequate housing for all citizens is consistent with general welfare; towns must enact land use
regulations necessary to provide the opportunity for appropriate housing for all classes.
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● If system of zoning ordinances contrary to general welfare → not in line w/ the intended purpose of zoning
authority & not allowed; municipalities zone primarily for the welfare of the people and not for the benefit of the
local tax rate.

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