STUDENT STUDY GUIDE

THE LAW
OF
PROPERTY

A Guide for the First Year Law

Student
© Peter M. Malaguti

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Professor’s Note

This is a relatively-short primer aimed at providing direction for first-year law students
who are attempting to master the law of property. It is not intended to comprise a
comprehensive statement of American property law; you will need to use your
casebook, class discussions, horn books, and other materials to ensure the full
knowledge necessary to understand the subject and perform well in the course. I have
purposely written this primer in a casual style to lessen the gravity of the subject and
make it more accessible. I also have organized the primer to follow roughly the
organization of the class syllabus. I hope you will find it to be a useful tool as we wend
our way through the course.

This work has not been proofread or peer-reviewed by other law professors. I would
appreciate any feedback that you might find on typos, syntax, lack of clarity, etc.

At times, property law seems abstract, dense, multi-layered, abstruse, and just plain
ornery. Still, there is beauty in its structure, and intellectual stimulation in its application.
I hope you come to enjoy the subject as I have.

I. INTRODUCTION – OVERARCHING OBSERVATIONS ABOUT PROPERTY

LAW

What Approaches Or Mindsets Should You Employ In Attempting To

Master Property?

Here are some suggestions about how to prepare to study Property, and some of the
intellectual approaches you should bring into the course:

 Although Property law is rules-based, don’t forget about the policy behind
each rule. You should always remember that rules of law weren’t created just
to give law students something to learn. Every rule of law was devised to
address a particular problem. You need to figure out the problem the rule
attempts to address, and the policy underlying the construction of each rule.
This will make it easier for you to understand how the rule will apply to a new
set of facts you haven’t seen before, i.e., a fact pattern on your final exam. It
will also enable you to make determinations about when exceptions to a rule
should apply. For example, you will learn that if you own a wild animal, in
most instances your ownership of that wild animal will cease upon its escape.
If your domestic animal escapes, however, your ownership of that animal will
usually continue. So, if your caged fox escapes and someone else captures it,
your ownership in the fox ceases upon escape and the capturer’s ownership
begins upon capture. But if your family dog (a domestic animal) runs off, you
still own the pet although someone else has taken it into his home. It isn’t
good enough merely to learn the two rules and apply them. Instead, you need

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 to consider the policy considerations for distinguishing between wild animals
and domestic animals in the first place.

 Never just accept the easy answer because there is no such thing as an easy
answer in Property law. American society, and our individual interpersonal
relationships, are messy and nuanced; there are no “silver bullets” available
to solve our problems. Law, which attempts to impose order on our society
and interpersonal relationships, is a reflection of that society and those
relationships. And, because Property transactions can be quite complex,
Property law is as messy and nuanced as any other law school subject. So,
when you think you’ve got the rule down pat, ask yourself a couple of more
“what ifs” before you get too comfortable.

 This is the most important advice I can give is that your professor can’t teach
you Property law; you have to learn it yourself. This means that you have to
take charge of learning Property law. And, this is especially true with “estates
in land” and the “rule against perpetuities.” Think of the “immersion” foreign-
language class you took in college and/or high school. Imagine that your
professor walks into the first class and starts lecturing, entirely in French,
about the history of the Eiffel Tower. Will you absorb the entire history of the
Eiffel Tower in that class? Unless you come into that class already
possessing a mastery of the French language, the answer will be “no.” In fact,
you probably won’t even able to take any notes in that first class because you
won’t understand what the professor is talking about. The same holds true for
a good chunk of Property law. Sitting in class and attempting to absorb
“estates in land” through a lecture or class discussion will be just as “foreign”
as trying to learn something taught in a language you don’t understand. There
is only one way to learn it: leave the class and reread that section of your
book. Then, amplify your notes. Then, do a few problems, most of which you
will get wrong at first. Then swear at the professor. Then, meet with some
classmates and argue about the material for a while. Then, swear at the
course. Then, do some more problems and look to a “horn book” for
additional explanations. Then, swear at your decision ever to go to law
school. Then do some more problems, reading and arguing with classmates.
Then, after having expended immeasurable amounts of blood, sweat and
tears, you will see that you are beginning to master the topic. This is the life of
a law student.

 Start to notice some of the differences between Property and the other first-
year courses you are taking. You probably will be taking Property in
combination with some or all of the following courses: Civil Procedure,
Contracts, Torts, Criminal Law, and Constitutional Law. If you pay attention,
you’ll see that, although the mechanics of legal analysis are essentially the
same throughout the courses, each has a different focus or calls for a slightly

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 different approach. For example, you should observe that Civil Procedure is
about “procedural” law rather than “substantive” law; that is, while Property,
Contracts, Torts, Criminal Law and Constitutional Law focus on the substance
of the rules of law and the results they effect, Civil Procedure deals with the
conduct of a civil action, from its filing through its conclusion. Like Civil
Procedure, Evidence is a procedural course rather than a substantive one.

You will also notice that the nature of a contract transaction is temporally-
different from the nature of a property transaction. Contract law deals with the
course of conduct of “parties” to the contract over a measurable period of
time. There are obligations flowing back and forth between the parties over
that course of time. In contrast, a property transaction occurs in the blink of an
eye. The seller owns the land, but then, upon delivering the deed to the
buyer, no longer owns the land. Boom, it’s over! Accordingly, you will learn
that obligations in Property law are either non-existent or much more short-
lived than in Contract law. Paying attention to this type of detail will help you
understand the overarching principles of each subject, which in turn is
essential to mastery of the subject.

 Property analysis is methodical and mostly rules-based; pay attention to the

way that each rule is organized. Understanding the organization of a rule of
law will help you organize your approach to analyzing a fact pattern dealing
with a particular rule of law. Most Property rules are organized in one of two
ways: (1) by a general rule with exceptions, or (2) by elements that must be
achieved for the rule to apply.

The rule of trespass is an example of the first type of organization.

Professors’ definitions of trespass vary, but it can be as simple as
“intentionally going onto someone else’s property without permission.” Thus,
when the rule of trespass is at issue, your first act of analysis must be to
determine whether someone identified in the facts: (1) intentionally (2) went
onto someone else’s property (3) without the owner’s permission. If so, the
general rule of trespass has been satisfied. But, as you likely are aware,
when the word “general” is placed before the word “rule,” an exception to the
general rule is likely to follow. Analytically, therefore, you are not done until
you consider every possible exception to the general rule and determine
which, if any, apply. For example, let’s say you look onto a neighbor’s
property and see a young child thrashing about in a small pond on the
property, repeatedly screaming “help.” You instantly run onto your neighbor’s
property and save the child from drowning. Although undeniably you
intentionally went onto your neighbor’s property without his or her permission,
and are a trespasser under the general rule, do you think the law should
impose liability against you for trespass? Or should there be an exception?

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 The rule of “adverse possession” is an obvious example of the second
enumerated type of organization by the elements. You will learn that when a
person trespasses for a very long time – typically 20 years – the trespasser
can actually become the owner of the property. In order for adverse
possession to take effect, however, the trespasser must demonstrate that he
or she satisfied a number of elements (most jurisdictions require the
satisfaction of five elements). In this type of analysis, you essentially construct
a “check list” of the elements, and check them off as you apply the facts to
each element. If any one element is not met, adverse possession will not
occur and the trespasser will remain a trespasser rather than become an
owner.

II. THE LAW

PERSONAL PROPERTY

Lost, Mislaid, Abandoned, and “Bailed” Property, Along With “Treasure

Trove”

“Relativity of Title”

It’s time to shed those trite notions of ownership you picked up prior to law school. Do
you remember: “finders keepers, loosers weepers?” As a legal concept, it’s wrong. Do
you remember: “possession is nine-tenths of the law has learned the doctrine of
“relativity of title.” The informed law student knows that ownership rarely is absolute.
There often are different degrees of ownership in more than one person. The trick is to
determine who has greater ownership rights in the watch. The informed law student
would recognize that both you and I have rights in the pocket watch (you have rights as
a finder and I have rights as a true owner who has lost personal property), and that the
determination of who gets to keep the watch comes down to the question of who has
more rights in it.

The trick, then, is to determine how to measure rights in personal property. We use two
different yardsticks to measure relative rights. The first yardstick is the “status” of the
parties. Our example immediately above provides two people with different statuses: I
am a “true owner” and you are a “finder” of the watch. As we’ll see below, status alone
determines the outcome of this case because the rule is that “the finder of lost property
owns it as to everyone in the world but the true owner.” Hence, my status as a true
owner gives me greater rights to the watch than your status as a finder; I win.

Here’s another situation in which status alone would settle the question: Suppose that,
instead of losing my pocket watch, while studying in the law school library I take it out to
look at the time and place in on the table in front of me. You come by and exclaim,
“Quick, get out of here, there’s a bad fire in the stacks, but the alarm isn’t working!” I

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jump up and run out of the library while you calmly put the pocket watch in your pocket
and walk out behind me. Once again, I’m the true owner of the pocket watch. But this
time, you’re not a finder; you’re a thief. Since the law generally doesn’t permit thieves
any rights to the property they steal , I have greater rights to the watch,and will get to
keep it over you.

Sometimes, however, the status of the parties is equal, and we need to resort to
additional means of measuring relative rights. This is when you pull the second
yardstick out of the tool box: “priority of occupation.” Let’s reconsider the first scenario
about the pocket watch, with a couple of additional facts. The watch falls from the hole
in my pocket and you find it. Unfortunately, however, you purchase your clothes from
the same place I do, and the watch also slips through a home in your pocket,
whereupon another law student picks it up. Neither you nor the other law student
discovers that I am the true owner, and I never appear to reclaim my watch. You and
the other law student both claim ownership of the watch. Upon examining the status of
each of you, we can see that you both are finders of lost property. Accordingly, we
cannot determine who has greater rights merely by examining your respective statuses.
We must resort to “priority of occupation,” which essentially provides a rule of “first in
time, first in right.” In otherwords, whoever came into contact with the pocket watch first
would win. In this case, you would win under priority of occupation. (And, once again
we see that “possession is not nine-tenths of the law.”)

Although you first learn about this “relativity of title” doctrine during your personal
property section, the concept is just as important in real property law. So, please don’t
forget about it.

Let’s specifically consider the relative “status” rights that people have in lost, mislaid,
abandoned, “balied” and “treasure trove” property.

Lost Property: Property is “lost” when its true owner’s dispossession occurs
involuntarily and without his or her knowledge. The hole in the pocket fact pattern
previously mentioned is an example of lost property; the true owner parted with
possession involuntarily and without even knowing it.

Your consideration of title to lost property will almost certainly begin with Armory v.
Delamirie, a pre-Revolutionary War case from England that has become almost as
famous to law students as Pierson v. Post. There, a “chimney sweeper’s boy” found a
jewel on a setting, and brought it to a jeweler for appraisal. The jeweler removed the
stone from the setting, gave an artificially-low value for the item and, when the chimney
sweeper’s boy refused to accept the artificially-low value to sell to the jeweler and
demanded the item back, handed back the setting only without the valuable jewel. The
boy sued for the value of the missing jewel and the jeweler defended on the ground that
the boy was a mere finder rather than the true owner of the jewel, and thus lacked the
ability to sue for a jewel that belonged to someone else. The court ruled for the boy,

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citing the now famous finder’s rule: “the finder of [lost property] has such a property as
will enable him to keep it against all but the rightful owner.”

So, there you have it. The status rights in lost property are: (1) the “true owner” – the
loser – of lost property has the greatest amount of rights; (2) the “finder” has the second
greatest quantum of rights – s/he owns as to the entire world except the true owner; and
(3) others (thieves, property “converters,” etc.) have even less rights or no rights at all.

Let’s examine the other “status” situations that might arise in the “relativity of title
context:

Mislaid/Misplaced Property: “Mislaid” or “misplaced” property is different from

“lost” property. With mislaid property, the true owner purposely (voluntarily) places the
object of personal property somewhere but forgets s/he had done so. Usually, a
“mislayer” of property will figure out where s/he left it and return to retrieve it, but
sometimes the “mislayer” never comes back.

There is a different rule when property is mislaid instead of lost. Rather than the “finder”
of mislaid property holding title against all but the true owner, the person in rightful
possession of the real estate on which the mislaid property is found will obtain title
against all but the true owner (even if someone other than the real estate owner finds
the item on the real estate). So, for example, in the semi-famous case of McAvoy v.
Medina, 93 Mass. 548 (1866), a customer in a barbershop found a pocketbook sitting
on a table in the barbershop. The customer and barber agreed that the barber would
hold the pocketbook in the event the true owner returned to claim it. When the true
owner never returned, and the parties fought over ownership, the court declared the
barber to have greater rights than the customer because the location of the pocketbook
when it was found – on a table – indicated that it was mislaid rather than lost.

Abandoned Property: One abandons personal property by purposely

relinquishing possession of it with no intent to come back to claim ownership rights.
(Remember this concept, because you’ll later see that one can also abandon a real
estate claim.) Abandonment can occur instantly, but the best evidence of abandonment
usually is the passage of significant time without retrieval. (Usually, the person
abandoning is nowhere to be found and, hence, unavailable to testify about his or her
state of mind at the moment of leaving behind the personal property.) The rule for
abandoned property is similar to that for lost property: the finder of abandoned property
obtains the greatest rights in the property. (Note that there is no “true owner”status
involved since the “true owner” has relinquished his or her rights to the property).

Treasure Trove: Treasure trove is: (1) money or other recognized valuable
personal property (gold, silver, gems, rare coins, art, jewelry, etc.), (2) that is clearly
hidden (underground or in places such as cellars, attics, or within walls), and (3) the
property is old enough to determine that the true owner is dead or not coming back for

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other reasons. At common law, the finder of treasure trove owned against all others
regardless of whether s/he was trespassing at the time of the find. Thus, a trespasser
would obtain title to treasure trove even over the owner of the land on which it was
found. Modern law varies from state-to-state, but the trend is to award title of treasure
trove to the owner of the land on which it is found, or to the government. The policy
supporting this trend is to discourage trespass and bothersome treasure-hunting
activities.

Buried/Embedded Property: A finder of property buried in the ground on

another person’s real estate, doesn’t own it as a finder (unless it’s treasure trove).
Instead, the law deems the finder to have found it for the benefit of the person owning
the property on which it is unearthed.

Property Found By An Employee In The Scope Of Employment: In a

perverse way, your boss “owns you” when you are on the clock and acting within the
scope of employment. A logical extension of this notion is the fact that your employer,
rather than you, owns what you find while acting in the scope of employment. This
notion of ownership advances the policies of the law of “agency.”

Bailments: A “bailment” is the rightful possession of personal property by

someone other than the actual owner. The law of bailments has overtones of both
contract law and property law. Usually, the possession of someone else’s property
results from a contract relationship. For example, I engage Federal Express to ship a
book to my cousin in Tuscon, Arizona. I agree to pay a fee for the service; Federal
Express and I create a contract supported by offer, acceptance and consideration. On
the other hand, Federal Express’s possession of my book during the shipping process
gives it certain property rights in the book regarding third persons. Thus, Federal
Express can exercise ownership rights as to my book over persons who come to
possess it by theft, conversion or mistaken delivery.

Nomenclature: The”bailor” is the owner of property who allows someone else to

possess it. The “bailee” is the non-owner who is rightfully possessing someone else’s
property.

At common law, there were three types of bailment relationships:

 One that benefits the bailee, e.g., the bailee borrows the bailor’s Rolex watch
in order to dress up for a job interview. In a bailment that benefits a bailee,
the bailee owes the bailor a high duty of care in respect to the bailed goods;
the bailee is liable for even slight negligence.

 One that benefits the bailor, e.g., the bailor is going away on vacation and
delivers his cat to the bailee so the bailee can care for the cat when the bailor

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 is away. Here, the bailee has a very low duty of care and is liable only for
gross negligence or wanton and willful conduct.

 One that benefits both the bailor and bailee; sometimes called a mutual-
benefit bailment, e.g., FedEx, the dry cleaner, etc. Here, he must act as a
reasonably prudent person would given the circumstances (the “ordinary
negligence” standard).

At common law, the so-called “misdelivery rule” applied. Regardless of the type of
bailment, a bailee who delivered personal property to the wrong person was strictly
liable for conversion of the personal property, even in the absence of any form of
negligence.

Today, the trend is to treat bailees’ liability as to all types of bailments under the
ordinary negligence standard.

Putting It All Together: Expect me to mix and match the statuses of parties in
order to create complex fact patterns. In such a case, don’t forget to use the “priority of
occupation” doctrine to “break a tie” when two or more persons have rightful status
regarding the item of personal property. Here’s an example: An owner of a Rolex
watch lends it to his friend who intends to wear it to a job interview. The friend puts the
watch in his pocket but, because there is a hole in the pocket, the watch falls out without
the friend’s knowledge. A finder picks up the watch and brings it to a jewelry store for
appraisal. The jeweler states that the watch is worth only $15, which the finder refuses
to accept. The jeweler replaces the watch with a “Folex” (fake) watch, which the finder
unwittingly accepts. Later the friend realizes he lost the watch and goes to the jeweler
to attempt to purchase a replacement Rolex for the owner. The friend sees the Rolex
and, because he recognizes a mark on the watch, realizes it was the one he borrowed.
At that instant, the finder comes back into the jewelry store asserting that the jeweler
wrongfully replaced the Rolex with a “Folex.” The friend, finder and jeweler all claim
ownership of the watch. Who prevails?

Whew! The only person we can eliminate by status is the jeweler; like Delamirie, he’s
the wrongful converter of someone else’s personal property. The friend has rightful
status in the watch as a bailee. And the finder has rightful status as to the watch as a
finder. As between the friend and finder, we choose the friend because of priority of
occupation; he had rights in the Rolex before the finder did. Some professors will even
say that the friend “is the true owner as to the finder.” But, of course, if the true
(original) owner of the Rolex appears, it will go back to him since both the bailee and
finder have the duty to return respective property to the true owner.

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REAL PROPERTY

Real property is the heart and soul of Property law. It is what is tested on the bar exam,
and what most property lawyers practice. It is also considerably more complex than
personal property law. But don’t panic. Remember that the analysis is mostly
mechanical. Learn the mechanics. You can do this.

The Right to Exclude and Trespass

As you’ll see when we get to estates in land, ownership of real estate gives its owner
several important rights. But the most important right of all is the right of “exclusive
possession.” This allows the owner far more than physical occupancy of the land. It
confers the right to control the land; that is, the right to pick and choose who gets to
come on the land. And, in testament to the importance of the right of exclusive
possession, the owner need not even articulate a rational reason to exclude others.
The remedy for a breach of the right to exclusive possession is the tort action of
trespass.

Trespass is: (1) intentionally (2) going on someone else’s land (3) without permission.
With the exception of intent, the elements are self-explanatory. Please note that the
intention to trespass has nothing to do with the state of mind to be a trespasser; one
does not have to intend to be a trespasser to satisfy the intent element of trespass.
Here, the requisite intent is merely the intent to be where one physically is. Consider
the following example: you go for a walk in your back yard and believe you are on your
land, but you are not; you are five feet into your neighbor’s property. Even though you
don’t believe you’re trespassing, you’ve satisfied the intent requirement and actually are
a trespasser. Your intent to move your body where it went is sufficient to satisfy the
intent requirement. In other words, you will almost always satisfy the intent requirement
unless you are propelled onto someone else’s land by an external force, or arrive there
by some uncontrolled reflexive action.

As important as the right to exclude is in the world of Property law, it isn’t absolute.
Accordingly most states allow the following exceptions to trespass:

The “necessity” defense: This recognizes that preserving life and avoiding
serious injury are more important concerns than the right to exclude whomever a
property owner wants from his or her property. The quintessential example is the
person who trespasses to rescue a drowning child. There are limits on the necessity
defense, however. The threat of death or serious injury must be imminent and certain
(not far off, debatable or speculative). Also, the trespasser must reasonably expect that
his or her action will directly abate the risk. Finally, the trespass will only be excused if
there is no effective legal alternative available. Some states also will not apply the

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necessity defense when the legislature has already spoken on the subject and
specifically precluded it. For example, the U.S. Supreme Court has acknowledged a
constitutional right to an abortion and many states have adopted statutes imposing a
“buffer zone” around abortion clinics. The purpose of these statutes is to create space
between the women using the clinics and protestors exercising First Amendment rights
near the clinics. It would be difficult for an anti-abortion protestor who went into an
abortion clinic to prevent abortions to employ the necessity defense to trespass, in spite
of a sincere belief that s/he is saving innocent life, because the legislature has clearly
spoken and precluded such activity.

Retrieving property: A person rightfully in ”hot pursuit” of his personal property

is allowed to go on someone else’s land to retrieve it. Hot pursuit requires that someone
else has the owner’s property and that the owner is engaged in an active attempt to
retrieve it.

Blocked road: A person is allowed to go over someone else’s land to continue

on his or her journey if the public road is blocked or impassible. Nevertheless, the
intruder is liable for the cost of repairing any damage he creates in passing through.

Attractive nuisance: Children who otherwise would be trespassers are not

considered trespassers if the landowner maintained a dangerous condition that should
reasonably have be seen as attractive curious children who don’t know any better.

Invent your own exception: Courts will consider other exceptions based on
valid public policy considerations. For example, in State v. Shack, a legal services
attorney and community organizer were arrested for trespass when then went onto a
farm without permission to assist migrant farm workers with legal matters and minor
medical issues. The court refused to consider them trespassers, however, on the
ground that the ability to get vital legal representation to migrant farm workers in their
own dwellings is more important than the right to exclude protected by the law of
trespass.

A tip on organizing your analysis: As already mentioned you should first go

through the elements of the definition of trespass and make a preliminary determination
whether the actor is a trespasser. If s/he is not, the case is over. But if it’s arguable
that the person is a trespasser under the general definition (as it almost always will be
on a law school exam), go through each of the exceptions, one-by-one, to see if any
applies.

Adverse Possession

If we were to ascribe moral sagacity to property law, we would consider trespassers to

be bad people. After all, the nature of trespass is to interfere with the most important
property right of all: the right to exclude. Understanding this, however, we also ask

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Property students to accept that maintaining a trespass for a really long time – usually
20 years – empowers the trespasser to convert his or her bad behavior into outright
ownership of the land (at the expense of the actual owner.)

Many students are shocked by the law of adverse possession; they believe it to be
immoral, or at least amoral. They ask: “if trespass is wrong, then how can the law
reward a trespasser brazen enough to hold out for 20 years?” Here are some of the
justifications for adverse possession:

Productivity: In economic theory, the non-use of any resource, including real

estate, is considered to be bad for the economy and thus bad in general.
Accordingly, under economic theory, the productive use of land, even by that of a
trespasser, is considered better than non-use by a record owner.

Statute of limitations: All civil actions, including trespass, must be subject to an

appropriate statute of limitations in order to avoid stale claims and maintain the
integrity of the judicial system. Adverse possession fits into this statute of
limitations theory. At some point, the statute of limitations runs and the owner
must lose his or her right to sue the trespasser. Since the ultimate remedy for
trespass is ejectment (eviction), the owner loses the remedy along with the cause
of action.

Maintain the status quo: Richard Posner, the most recognized proponent of the
of “law and economics” movement, argued that an adverse possessor becomes
economically attached to the property, and losing it would constitute a serious
monetary loss. On the other hand, the title holder has essentially forgotten the
economic benefit of his or her land, and its reacquisition would constitute a
unexpected increase in his wealth. A decision for the adverse possessor creates
greater economic utility.

Personhood: Oliver Wendell Holmes suggested that even non-owners of real

estate who have been in possession for a long period of time develop
“expectations” that the law should recognize.

Maintain the legal structure: Others suggest that the law needs a method of
settling troubling disputes between parties, and adverse possession provides a
logical way of doing this.

You should recognize the flaws in each of these justifications of adverse possession, as
well as the flaws in not having any statute of limitations for the action of trespass. For
example, some argue that the imposition of economics into legal outcomes creates
“soulless” law. They say that economic theory is concerned only with the efficient
operation of markets and ignores important but immeasurable considerations such as
human dignity and social justice.

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 Burden of proof: The person asserting adverse possession has the burden of
showing compliance with all of the law’s elements, usually by a “preponderance of the
evidence.” A “preponderance of the evidence” simply means that the proposition one is
seeking to prove is “more likely than not;” in other words, if the jury considers the
evidence to come out even, the plaintiff will lose because s/he bears the burden of
proof. You should also recognize the Civil Procedure overtones in the law of adverse
possession. There are two ways of presenting a claim of adverse possession. First, an
adverse possessor can take the role of plaintiff and file a complaint asking a court to
enter a “declaratory judgment” that s/he has obtained title by adverse possession.
Plaintiffs carry the burden of proof in civil cases. Second, a defendant may raise
adverse possession as an “affirmative defense” to the owner’s civil complaint in
trespass. Rule 8(c) of the Federal Rules of Civil Procedure provides the affirmative
defenses to a civil complaint, and the “statute of limitations” is among them.
Accordingly, adverse possession is an affirmative defense to the plaintiff’s cause of
action for trespass. As you will learn in civil procedure, the person raising an affirmative
defense bears the burden of proving it. So, in all cases, the adverse possessor bears
the burden of proof.

Elements: The states differ on the elements an adverse possessor must prove,
but here are the five most common requirements:

Actual: The trespasser must actually occupy the property, or place another
on the property under his or her claim, e.g., a tenant. This doesn’t
mean that the trespasser must remain a prisoner on the land for the
entire statutory term (usually 20 years). S/he is free to come and
go, and even take vacations, in the same manner as a normal
property owner. Along with the element of actual comes the notion
that the trespasser will obtain only the land that s/he actually
possesses. Consider the following example: an owner of a 20 acre
tract of land doesn’t pay much attention to it. A trespasser comes
along and possesses one acre of that land, meeting all the
elements of adverse possession for the requisite period. The
trespasser will obtain title only to the one acre, not to the total 20
acres, because the one acre is what the trespasser actually
possessed. There is an exception to this rule – constructive
adverse possession – that will be considered shortly.

Open & notorious: Most statutes of limitations don’t begin to run until the person with
the right to sue either knows or should have known that s/he had a
“cause of action” against the defendant. In adverse possession, no
actual knowledge of the record owner is necessary. Instead, the
statute of limitations will run as long as the trespasser’s possession
is “open and notorious.” This requires that the trespasser’s use of
the property be so visible and apparent that it puts the community

13
 (including the legal owner) on notice that someone is on the
property and exercising ownership rights. Actions of the trespasser
that tend to hold himself or herself out as the actual owner will
satisfy this requirement: paying taxes, retrieving mail, mowing
lawns, errecting fences, painting houses, etc. If the record owner
has actual knowledge, but does nothing, this element is met even if
the trespasser’s actions weren’t otherwise open and notorious.

Hostile: A few states require that the trespasser know s/he is trespassing.
Other states require just the opposite: the trespasser must believe
the property to be his or hers. But the overwhelming view is that
the trespasser’s state of mind is irrelevant. The hostility
requirement is satisfied if the person maintaining the adverse
possession is infringing upon the rights of the record owner. All
trespassers maintain an affront to the record owner’s right to
exclude, and thus are hostile. Thus, under the majority rule, any
trespass satisfies this element. It is possible, but very difficult, for a
non-trespasser to meet the requirement of hostility. For example,
one co-tenant may maintain an adverse possession against
another co-tenant; but since co-tenants by definition are lawfully on
the property, the hostility requirement will not be satisfied short of
an actual ouster or unambiguous assertion of possession against
the right of the other co-tenant.

Exclusive: Adverse possessors need not act alone. More than one person at
a time may maintain an adverse possession. The key here is that
the adverse possessor cannot share possession with the record
owner. If the record owner maintains possession over the same
tract of land as the trespasser, this element won’t be met.

Continuous: This element merely requires that all four of the other elements be
met for the full statutory period, usually 20 years. The instant all
five elements are met, the record owner ceases to be the owner
and the trespasser becomes the owner. The acquirer will likely go
to court in order to obtain a recordable judgment creating a
“marketable title,” see infra, but s/he became the owner the instant
the elements were met.

Additional matters to consider:

Length of time required: The statutory period (length of time) required to obtain
title by adverse possession varies from state-to-state. You should assume the most

14
common statutory period of 20 years unless a fact pattern tells you that the applicable
statute states otherwise.

Constructive adverse possession: This is an exception to the rule that the

adverse possessor only gets that which s/he actually possesses. If an adverse
possessor moves onto the land under a (1) defective deed or will, and (2) has a good
faith belief that s/he owned the entire property described in the deed or will, then s/he
will obtain all the property described in the deed or will rather than that which s/he
actually possessed. Please understand that the adverse possessor must first have met
all the elements of adverse possession for constructive adverse possession even to be
considered. It appears that constructive possession applied in Ewing v. Burnet; thus,
Burnet would have received the entire lot described in the deed even if he did not
actually possess all of it.

Tolling: Sometimes statutes of limitations are delayed in running because it

would be unfair to run them in certain circumstances. Here’s an example: the statute of
limitations in most states for negligence actions is 3 years. Suppose a defendant’s car
rear ends a plaintiff’s car while the plaintiff is sitting at a red light. The accident causes
the plaintiff to go into a coma, which he doesn’t come out of until five years later. It
would be unfair for a court to tell the plaintiff that the statute of limitations already ran
while he was in the coma, and that he has no redress for his injuries. So the law will
“toll” the running of the statute of limitations until the plaintiff has come out of his coma
and has had a fair amount of time to file a law suit.

The same thing happens with adverse possession. If a trespasser begins an adverse
possession against a minor (someone under the age of 18), someone lacking the
mental capacity to file a trespass action (because of a physical or psychological
reason), or someone confined to a penal institution (in some states, but not all), the
running of the statute of limitations will be tolled. Here is the rule you’ll have to learn for
the bar examination:

First, tolling only occurs if one of the aforementioned disabilities existed at the
commencement of the adverse possession. As unfair as it seems, if a trespasser
begins his adverse possession on January 1, and the record owner of the premises
goes insane one day later, on January 2, tolling will not occur; the applicable statute of
limitations will run as if the record owner were healthy and able to eject the trespasser
the entire time. On the other hand, if the record owner goes insane on Jaunary 1, and
the trespasser begins the adverse possession on January 2, tolling will occur.

Second, the record owner will be given 10 years to file a trespass action after the
applicable disability is removed or abates. So, if the record owner is 6 years old when
the trespasser commences his adverse possession in 1980, the disability will be
removed in 1992 when the record owner turns 18, and the record owner will have 10
years after turning 18 – until 2002 – to file the trespass action.

15
Finally, in no event shall the record owner’s disability shorten the usual statute of
limitations. Let’s assume that a jurisdiction has a 20 year adverse possession statute of
limitations. If the record owner is 16 years old when the trespasser commences his
adverse possession in 1980, the disability will be removed in 1982 when s/he turns 18.
An application of the 10 year rule would give the record owner until 1992 to file the
trespass action. But this would reward the trespasser for maintaining an adverse
possession against a disabled owner because the adverse possessor would only have
to trespass for 12 years rather than 20 to obtain title. So, the law will revert to the
original 20 year period and require the adverse possessor to maintain the trespass until
2000 in order to become the owner.

The Seasonal Use Doctrine: We already know that an adverse possessor need
not remain tied to the land for the entire 20 years in order to obtain title. But what of the
trespasser who only comes for the summer months, and continues this pattern for over
20 years? Does s/he obtain title by adverse possession? If the property is
appropriately considered to be one generally used only seasonally for the seasonal in
which the trespasser occupied it continuously over the length of the statutory period,
then this will suffice. Obvious fact patters invoking the seasonal use doctrine include
beach houses, ski houses and farming activities.

Easements by Prescription: An easement is a non-possessory right to cross

over or use someone else’s property. The quintessential easement is the “right of way,”
which allows someone from an adjoining property to cross within a limited area. We’ll
discuss easements in more detail near the end of this chapter.

An “easement by prescription” is an easement obtained by adverse possession. Let’s

say that you drive over a small strip of your neighbor’s yard every day to go to work.
Let’s also say that he drives over the same strip and that your and her driving activities
continue on this way for more than 20 years. You will not be able to obtain title to the
strip in question through adverse possession because your neighbor’s use of the same
strip destroys any claim of exclusivity that you have. However, the law allows an
easement, rather than outright ownership, over the strip if you satisfy each element of
adverse possession on the strip except for exclusivity. Here, it appears that all the other
elements – actual, open and notorious, hostile and continuous – are met. Accordingly,
your will obtain an easement by prescription over the strip that allows you to continue to
cross it by car.

“Quantity of Title:” An adverse possessor obtains only that title of the person
who could have evicted him, and no more. You have to understand a couple of
concepts to get this one. First, do you remember “relativity of title?” It also applies to
real estate. It is common for two or more people to own different interests in the same
property. For example, a tenant under a 99 year lease owns a present estate entitling
him or her to possession, called an “estate for years.” But the landlord also owns a
future interest called a “reversion.” A “life estate” includes the present estate owned by

16
the “life tenant” (which is measure by the life of a person: nearly always the life tenant).
But there is also a future interest following the life estate called either a “reversion” or a
“remainder.” We’ll get into this much more in the “estates in land” section. The second
thing you must understand is that only the owner of the present estate can evict a
trespasser because only the owner of the present estate has the right of possession.
(Don’t forget that trespass is an affront to the right of possession.) Thus, the tenant, but
not the landlord, can evict a trespasser because only the tenant has the present estate.
The life tenant, but not the reversioner or owner of a remainder interest, can evict the
trespasser for the same reason.

Now, let’s put this into perspective. If a tenant has 50 years remaining on a 99 year
lease when a trespasser commences an adverse possession, there will be 30 years left
on the lease when the adverse possessor meets all the elements and obtains title. The
adverse possessor will only get title to the remainder of the lease because only the
tenant could have evicted him. It would not be fair to give the adverse possessor the
landlord’s title because the landlord could not have ejected the trespasser. Some call
this concept “quantity of title” because it involves the amount of title the adverse
possessor obtains.

“Quality of Title:” Most people have mortgages on their homes. What happens
when a trespasser acquires title by adverse possession to a property that is subject to a
mortgage created by the owner from whom s/he took title? It’s unlikely that the original
owner, who is now dispossessed of title, will continue to honor his or her mortgage
obligations upon learning of the trespasser’s title by adverse possession. So, can the
bank enforce the mortgage lien against the new owner, the adverse possessor?

The answer lies in the concept of “quantity of title.” The first concept you must
understand is that of “chain of title.” Let’s say that A sells to B, who later sells to C, who
later grants a mortgage to D, and then C sells to E. Each of the parties – A, B, C, D and
E – do not have distinct titles of their own; they all own in the same chain of title. With
each successive transfer or grant, a new title is not created. Instead, the old title just
gets longer (adds another “link” onto the chain). The owner of a mortgage interest in a
chain of title can enforce that mortgage within the chain of title, but not beyond it.

Only three occurrences can break a chain of title and create/start a new one: a an tax
takings (for failure to pay real estate taxes), eminent domain takings (sometimes called
“condemnation”), and a taking by adverse possession. The last of these is the only one
you will confront in law school.

Now, back to the question presented. Assume that an adverse possessor takes title
from E. Can the bank enforce the mortgage lien against the adverse possessor? No,
because the adverse possession broke the chain of title and started a new one.
Mortgage holders can only enforce mortgages within the same chain of title in which
they were placed.

17
Estates in Land

How To Approach This Topic

Welcome to the big leagues; this is often the “gut check” point for Property students.
Just when you started to grow a little comfortable with Property law, up comes Estates
in Land, which is unlike anything you’ve ever seen. You must avoid the urge to panic.
Just because this stuff is different doesn’t mean that you can’t master it. It’s actually
very mechanical and with a lot of practice you may even eventually wonder what
caused your initial consternation.

First, some historical context is appropriate. (We know what you think about history, but
don’t worry; we’ll be brief.) Scholars tend to divide history into three eras: the Classical
Age, the Medieval Age, and the Modern Age. Wedged between the Classical and
Modern Ages, the Medieval Age is sometimes referred to as the “Dark Ages.” This is
because, while the Classical and Modern Ages are considered periods of great
scholarship and cultural advancement, the Medieval Age is marked by barbarian
invasions, crime, torture, intense superstition, the Inquisition, and even the bubonic
plague (“black death”). Just think Monty Python and the Holy Grail: all those sod huts
and “bring out yer dead.” One wouldn’t think that a substantial, coherent body of law
could emanate from the Dark Ages, but this is exactly what happened. Modern
Property law (Estates in Land) was born in medieval England, achieved adulthood in
medieval England, and remains largely unchanged into 21st Century America. Its
primary development occurred between the years 1066 (the Norman invasion of
England) and about 1600.

This explains why Estates in Land seems so foreign to 21st Century law students. It’s a
product of the medieval mind, yet remains firmly entrenched in today’s system of land
ownership and property rights. The medieval mind was infused with religion, myth and
superstition, and many byproducts of these notions found their way into the law of
Estates in Land. Initially, it’s difficult for law students to wrap their heads around this
stuff because it seems antiquated, foreign and, at times, nonsensical. And it’s easy for
the modern law student to ponder: if this stuff was created to manage a feudal,
agricultural economy, how did it ever become and remain the law in America, which was
never feudal, and has not been driven by an agriculture-based economy in quite some
time?

But you need to pause for a moment and think about just what the law of Estates in
Land is up against. The very nature of Property law requires the reconciliation of
enigmatic and, at times, seemingly-incompatible forces. Let’s start with an axiom: the
land on the Earth has been here from the creation of the planet, and will remain here
until the planet ceases to exist (if it ever does). Now, another truism: unlike land, a
person has a finite lifespan; no single person can own a parcel of land until the end of

18
time. Yet another maxim: people understand that they will die, and it’s natural for them
to arrange their affairs so their property, including land, will pass to their loved ones
when they are gone. And, finally: land is a valuable product and, as with other
commodities, it benefits commerce to ensure it remains freely transferable.

Do you see some of the inherent problems in constructing a coherent system of land
law that deals with these issues? It’s very difficult to reconcile natural human desires
with physical and economic realities. But that’s the burden borne by the Estates in Land
construct. For example, consider the following common dilemmas: I know the dead
can’t own land, but I’d like to control who owns my land for at least a couple of
generations after my death. Or, I’d like to keep my land in the family for generations to
come, but I know that preventing my progeny from being able to sell it is bad for the
economy.

Our system of Estates in Land isn’t perfect; at times it’s downright baffling. But it’s been
remarkably successful in aligning these naturally-repellant forces. Here are some
overarching principles you’ll need to bear in mind when approaching this topic:

1. It’s all about “”grants.” For now, forget about those lengthy hypothetical fact
patterns the professor invents to twist students into knots, and which you’ve
just started getting used to. (Don’t worry; they’ll resurface when you finish the
section on Estates in Land.) In Estates in Land, the professor will give you a
pithy “grant” and ask you to spit back “the state of the title.” Quite simply, the
“grant” is language pulled out of a deed or will, the two primary means of
transferring real estate. Here are a couple of examples of grants: “to A and
her heirs;” or “to A for life, and then to B and his heirs.” When a professor
asks for “the state of the title,” s/he wants you to state each of the interests
created by the grant, and the identity of each person owning each interest, at
the instant the grant becomes effective. So, the state of the title for the first
quoted grant is: A owns a fee simple absolute. And, the state of the title for
the second quoted grant is: A owns a life estate and B owns an absolutely
vested remainder. (Don’t worry; we’ll start to define some of this strange
language quite soon.

2. Start to learn the nomenclature. Here are a few important words that
professors will use freely and expect you to know. A “conveyance” is a
transfer of real estate from one person to another. It can be either a sale or a
gift. It can be either voluntary (e.g., by a deed) or involuntary (e.g., by a
foreclosure). Some professors will use “conveyance” to specifically refer to a
transfer by deed (as opposed to by will). A “devise” is a transfer of real estate
specifically through a will (not a deed). Although there is a separate class on
Wills and Trusts that you likely will take later in law school, you do need to
know two things about wills right now: (1) a will does not have any legal
effect, and thus will not transfer any property at all, until the death of the

19
 testator (the person transferring property through the will); and (2) a will
transfers only the property owned by the testator at the instant of his or her
death. Thus, a gift made one day before the death of the testator cannot be
transferred through the testator’s will. An “alienation” is essentially the same
as a “conveyance.” Very soon, you will begin learning about “present estates”
and “future interests. It’s a tad gauche to call them “present interests” or
“future estates,” although your professor will probably forgive mixed-up terms
if you seem to have the concepts correct fundamentally.
3. In general terms, the structure of Estates in Land is divided into two parts:
present estates and future interests. Quite simply, the owner of a present
estate is entitled to the immediate right of possession; s/he doesn’t have to
wait to get on the land. The owner of a future interest, however, must wait for
a prior present estate to end before s/he is entitled to take possession.

4. Estates in Land usually involves two or more people owning estates or

interests in the same real estate at the same time. (There’s that “relativity of
title” beast rearing its ugly head once again.) We can have two people
owning different interests in the same land at the same time. The above
example – to A for life, and then to B and his heirs – fits into this category. As
we’ll see, A owns a “present estate,” and B owns a “future interest.” Or, we
can have two people owning the same interest in the same land at the same
time. An example of this would be, “to A and B as tenants in common.” We
call this version of ownership “concurrent estates.” Of course, Estates in Land
also can involve only one person owning the entire interest in real estate to
the exclusion of others. The quoted example above – to A and her heirs – is
an example of this. But, in candor, it’s highly unlikely that your professor will
question you on this because one-person ownership is far too simple to waste
valuable class or exam time on.

5. There is a hierarchy of present estates. They proceed in this order: fee

simple, fee tail, life estate, and then all the non-freehold estates: estate for a
term, periodic tenancy, tenancy at will, and tenancy at sufferance. The lowly
non-freehold estates are equal, with the exception of the tenancy at suffrance,
which some don’t even consider to be a real estate. These estates will
become more than incomprehensible names as you read on.

6. Temporally, our system of Estates and Land requires us to account for the
ownership of land from the present until “forever.” We’ve already identified
the reality that a parcel of land will continue to exist as long as there is a
planet Earth. Accordingly, a legal system designed to provide for ownership
rights must account for ownership of land until “forever.” In addition, we’ve
acknowledged that people naturally want their hard-earned assets, including
land, to pass to their loved ones at death. We therefore also need a scheme
20
of ownership that allows people to control their land after they have died, at
least a while.

Our system of land ownership provides various units of ownership that can be
shorter than a day (an estate for a term), or as long as “forever” (a fee
simple). Thus, we can get to “forever” by having a single person own a fee
simple (an estate of potentially infinite duration). An example is the grant: “to
A and her heirs.”

A has a fee simple estate, which potentially lasts forever

Today The End of Time

(Forever)

But we can also add together a number of estates and interests of shorter
duration that eventually get us to a fee simple estate (which lasts forever).
Here’s an example: “to A for five years, then to B for life, and then to C and
her heirs.”

A has an estate for a B has a life C has an absolutely vested remainder,

term, estate which will become a fee simple .

Today The End of Time

(Forever)

Not only must we provide for ownership until forever; we also have to identify
ownership at every point along the way until we get there. In other words, we
can’t have gaps in ownership. Consider the following grant: “to A for her
natural life, and then to B and his heirs 5 years after A’s death.” At first
glance, this grant would appear to create a gap in ownership between the
death of A and 5 years later, when B’s ownership will commence. But, as
said, we cannot have gaps in ownership, and our scheme of Estates in Land
creates a future interest “by operation of law” (implicitly) called a “reversion” to
fill in that 5 year gap. We’ll talk about the specifics of the reversion later.

One “trick” that can be helpful in remembering to cover all points along the
timeline is the “close the circle” theory. When drawing a circle, you always
begin and end at the same point. The same is true for solving an Estates in
Land grant; you always begin with a fee simple absolute, and must always
end with a fee simple absolute. Consider this grant: “to A for life.” Even
21
 without having learned the niceties of each estate, you can probably figure
out that A has a life estate. But we don’t see any other estates expressed in
the grant. Does this mean that we’ve covered all points along the timeline?
No, a life estate is a smaller estate than a fee simple absolute and a life
estate doesn’t get us to forever. We are only here:
FSA

Life Estate
This doesn’t close the circle, so we need to find a hidden future interest to get
us back to the point of beginning. That hidden future interest is a “reversion”
which, when it converts to a present estate, will be a fee simple absolute. We
have closed the circle:
FSA
FSA

7. A general observation about life also applies to Estates in Land: “things

change.” Not long ago, you learned that, when a professor asks for the “state
of the title,” s/he is referring to a specific point in time: the instant of the grant.
We wish it could all end there, but you have to expect the professor to follow
up with an “and then” question. So, if you are given the grant, “to A for his
natural life, and then to B and her heirs,” you will identify the state of the title
as: life estate in A (a present estate) and absolutely vested remainder in B
(which is a future interest). You’ll feel pretty good about yourself when the
professor congratulates you for getting it right. But, your professor may
continue: “Assume that 10 years after the grant, A dies. Now, what is the
state of the title?” Ah, things change. Although you may not yet be able to
determine the entire title, you do have enough information to determine two
things: (1) A’s life estate ended on A’s death; he no longer has a present
estate; and (2) although B had a future interest at first (he had no right to
possess until A’s death), he now has an immediate right to possession and,
hence, a present estate.

The point here is that Estates in Land is fluid rather than static. As people
move along the timeline of life, things change; for some, their present estates
end, and for others, their future interests become present estates. This also
manifests in a more complex example that we’ll give you now although you
won’t fully understand it. (Don’t worry; you’ll understand enough to make the
lesson valuable for later use when you “can handle the truth.”) Consider the
following grant: “to A for life, and then to B if he has taken and passed the bar
exam.” At the time of the grant, B had never taken the bar exam. You’ll learn
22
 later that the state of the title is: life estate in A, contingent remainder in B,
and reversion subject to divestment in the grantor. Now, let’s consider what
happens when things change. Ten years after the grant, while A is still alive,
B takes and passes the bar exam. What is the state of the title when B
passes the bar exam? Well, A still has a life estate because he’s still alive.
But, because B has satisfied the condition imposed by the grant – passing the
bar exam – his contingent remainder converts to a “vested” remainder. And,
since B has satisfied the condition and will now definitely obtain a present
estate at A’s death, the grantor’s reversion will “divest” (terminate) and he’ll
no longer have a future interest. The new state of the title is: life estate in A,
absolutely vested remainder in B. The grantor has nothing. Once again,
“things change.”

The Estates and Interests

As you already know, Estates in Land is broken into two sections: “present estates” and
“future interests.” The owner of a present estate gets to enjoy possession of the
property immediately. The owner of a future interest will have his or her right of
possession delayed.

Present Estates

Present estates are broken down further into two types: “freehold” estates and “non-
freehold” estates. Freehold estates are characterized by “seisin” (notice the spelling; it’s
not “season”) and non-freehold estates are not. Seisin is one of those medieval
concepts that causes the eyes of modern students to glaze over. Generally, one would
rather own a freehold estate (with seisin) than a non-freehold estate (without seisin). In
medieval England, before the emergence of modern markets and economic systems,
land was wealth, and seisin carried status. Seisin was marked by possession/
ownership worthy of a freeman, who, unlike a serf, owed little or no service to a lord.
Transfer of freehold estates required the ceremony of “livery of seisin,” which often
involved the passing a chunk of earth or dropping of a twig taken from a tree. Okay, if
you think this is all starting to sound a bit silly, you’re correct. Most people, including
property professors, don’t really understand what seisin was/is all about. And the truth
is that it doesn’t really matter. Let’s leave it at this: non-freehold estates are what we
recognize today as tenancies, e.g., a one-year lease or tenancy at will, and freehold
estates are all other form of ownership.

The freehold estates are: the fee simple, the fee tail, and the life estate. The non-
freehold estates (tenancies) are: the estate for a term (sometimes called an “estate for
years” or a “term of years”), the periodic tenancy, the tenancy at will, and the tenancy at
sufferance. Let’s look at them in more detail.

The Non-Freehold Estates (the landlord-tenant relationships)

23
The owner of a non-freehold estate essentially has the same 3½ of the rights/powers
enjoyed by the owner of a life estate. Once again, these rights are: use, exclusive
possession, the right to derive profits, and the right to convey during the term of the
estate. Note that the owner of a non-freehold estate has no power to commit waste on
the property.

At common law, the non-freehold estate was considered a pure property interest, and
not a contract. Hence, the landlord was absolved of further obligations to the tenant
once s/he delivered possession; in the same way a seller has no obligations to a buyer
once s/he delivers a deed. Today’s law demonstrates an understanding of the
economic and practical realities of the landlord-tenant relationship. Almost always, the
landlord is providing services throughout the lease term. There exists a continuing
course of dealing that seems much more like a contract relationship than a “boom, it’s
over” property transaction.” Consequently, non-freehold estates today are considered
to be both an estate in land and a contract. Property law governs some aspects of the
relationship and contract law governs other aspects. One important area in which
property law applies is in regard to “consideration” (the payment of money, or a
bargained-for exchange of non-monetary value). While “consideration” is a required
element to the creation of a contract, it is not necessary generally in a real estate
transaction, and specifically to create a landlord-tenant relationship. Accordingly, a
landlord is free to confer tenant status without charging any rent at all. Indeed, this is
somewhat common in family situations.

Estate for a Term

The estate for a term is sometimes called an “estate for years” or a “term of years.” It
requires a definite term with a certain beginning in end; the term must be fixed in
advance of occupancy. The term need not be for an exact year or exact multiples
thereof. For example, one can have a term of years designed to last for 15 days, 4
hours and 36 minutes (although we don’t know why anyone would create such an
estate for a term.)

An estate for a term will end by its own terms, without the landlord or tenant having to
take any action. Neither the landlord may unilaterally terminate the estate for a term
before its natural end. (Of course, the parties are always free to mutually agree on an
early termination.)

If the estate for a term is for a year or more, it must satisfy the “statute of frauds.” This
means that there must be signed writing that: (1) states the term, (2) identifies the
landlord and tenant, and (3) describes the “demised” real estate by at least a property
address. The majority rule is that no such writing is necessary if the estate for a term is
for less than one year, i.e., a 6 month term can be oral. (Note that some states require
satisfaction of the statute of frauds regardless of length of the term.)

24
 Periodic Tenancy

This is a tenancy for a fixed term that will automatically renew unless either the landlord
or tenant provides a timely, written notice of termination. The two most common
periodic tenancies are the periodic tenancy “from year-to-year” and the periodic tenancy
from “month-to-month.” The year-to-year periodic tenancy requires a termination notice
of 6 months. The month-to-month periodic tenancy can be terminated with one month’s
notice.

The majority rule is that periodic tenancies need not satisfy the statute of frauds
(although some states require that they do). The most common application of the
periodic tenancy is in regard to a ”holdover” tenant. Let’s say that a validly created
estate for a term runs from January 1 to December 31, but the tenant doesn’t leave at
the end of the term. We’ll see shortly that this tenant is a tenant at sufferance. But if
the holdover tenant offers rent and the landlord accepts it, the tenancy at sufferance will
be converted into to a periodic tenancy. The question, of course, is what kind of a
periodic tenancy: year-to-year or month-to-month? The answer to the question is that it
depends on how rent was paid under the expired estate for a term; if it was due monthly
the new tenancy is a month-to-month periodic tenancy and if rent was due yearly the
new tenancy is a year-to-year periodic tenancy.

Tenancy at Will

This is a tenancy for an indeterminate time period; it will continue until either then
landlord or tenant provides one month’s written notice of termination. It is also the
“default” tenancy if one of the other tenancies fails due to the statute of frauds. The
termination need not be for cause; a party can terminate for any legal reason.

Tenancy at Sufferance

A tenant at sufferance was a former tenant for a term, periodic tenant, or tenant at will,
whose tenancy has ended, and is essentially waiting to get evicted. The tenant at
sufferance is not a trespasser because s/he lawfully came onto the property. S/he is
deemed to have non-freehold rights, but is of a status lower than the other tenants. At
common law, the tenancy at sufferance moniker was very important because the tort
laws were less kind to such a tenant who became injured on the property. Today,
however, the significance of the tenant at sufferance has diminished greatly because, in
most states, a persons lawfully on property, including a tenant at sufferance, are entitled
to a duty of reasonable care.

Freehold Estates

Fee Simple

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A fee simple estate is the largest estate known to the law,and is of potentially infinite
duration (it might last forever). Think of it as “Elvis,” “the Big Kahuna,” “top gun,” or
whatever other idiom you think means “the best.” Everybody wants the fee simple.
Because it can last forever, one can control it even after death. Most of us who “own”
our homes own in fee simple.

The owner of a fee simple estate has 5 “powers” or “rights.” No other estate or interest
has as many. They are::

 The right of “use”: The feeblest of the 5 rights, “use” allows physical
occupancy of the land. The reason that this isn’t so special is because all non-
freehold tenants have the right of occupancy. Indeed, even those having mere
“license” rights, which don’t even rise to the level of property rights have the right
of physical occupancy. For example, one who purchases a ticket to watch a
baseball game or play is there as a licencee, without any property interest in the
seat. Of course, the licensee at the game or play is allowed to physically occupy
the seat.

 The right to commit “waste”: Waste is an action that creates lasting or

permanent destruction of real estate or improvements attached to the real estate.
Only a fee simple owner (including the owner of a defeasible fee simple) is
allowed to commit waste on his property. All other freehold and non-freehold
owners do not have the power or right to commit waste.

Let’s digress for a moment to consider waste; it’s a favorite of the bar examiners.
In law school, and on the bar exam, waste usually falls into one of three factual
categories: (1) mining (any digging or drilling into the earth to extract minerals,
oils or gasses); (2)) cutting down trees for timber (but not crops, which are
planted with the purpose of being harvested); and (2) causing damage to any
permanent improvement on the land, such as a house. There are two types of
waste: voluntary and involuntary. Volantary waste is intentional waste.
Involuntary waste is waste by neglect, e.g., failing to take steps to abate a water
leak, which eventually leads to serious structural damages of the house.

There are two exceptions applying to waste liability. The first is an old one from
medieval England called “housebote, haybote and plowbote.” It allows a tenant
to take as much (but no more) timber from the land as is necessary to support
agricultural practices and the provision of shelter and warmth. It was apt in
agricultural, medieval England, but one must wonder whether it should apply to
modern economies that aren’t agrarian. The second exception is the
“ameliorating waste doctrine.” It holds that conduct which might otherwise be
considered waste is exempted if it actually increases the value of the real estate.
For example, although the razing of a dilapidated, unsafe barn would technically

26
 be considered waste, if its removal enhances the value of the real estate it would
be excused under the ameliorating waste doctrine.

One stray doctrine that often finds its way onto the bar exam merits discussion:
the so-called “open mines” or “supplanted use” doctrine. This permits a tenant to
continue a use the landlord had been making on the property even if it would
otherwise be considered waste. Thus, if a landlord had mined the property up
until leasing the land to a tenant, the tenant would be allowed to mine as well.
However, if the landlord had ceased wasteful activities, and supplanted them with
a non-wasteful use (or non-use), the tenant is not allowed to resume the wasteful
use. As you might suspect, this is a fact-driven question that often involves close
calls. Finally, a lease provision will ultimately control the issue. A landlord may
allow a tenant to commit waste although it otherwise would unlawful or prohibit
waste although it otherwise would be allowed.

 The right of “exclusive possession”: You already know that this is the most
important of all property rights. It is the right to control who gets to come on the
land, with or without rational support.

 The right to “profits”: At common law, this involved planting and harvesting
crops. Today, the right to profits is broader, although not extending into methods
considered waste.

 The right to “convey in two ways”: People owning property possess the
general right to sell or gift it. This they can do inter vivos: while living. Inter vivos
transfers are almost always created by deed. They can also alienate at death, by
will or intestate distribution (a state statutory scheme that provides for distribution
of property when one dies without a will). The legal fiction that makes this right to
alienate at death possible is the notion that a fee simple can last forever, and
thus will survive its owner’s death. Accordingly, a fee simple owner can control
the disposition of his or her land even though s/he has died.

How to Create a Fee Simple

At early common law (the middle ages), there was only one way to create a fee simple.
The grantor had to include words of grant, followed by one of the exact sets of words:
“and his heirs,” or “and her heirs,” or “and their heirs.” Thus, a grant “to A and her heirs”
created a fee simple while a grant “to A in fee simple,” or “to A forever” did not. Lacking
the “and his/her/their heirs” language, the latter examples would be deemed to convey
only a life estate. The reason for this is because the language of Estates in Land is the
equivalent of a foreign language; “and his heirs” just doesn’t mean what it appears to
mean in modern English. A translation of the “estates-in-land-ese” words, “and his
heirs,” into modern English is: “in fee simple.” Here’s why: at early common law, all
grant language was divided into “words of purchase” and “words of limitation.” “Words
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of purchase” told the reader of the grant the identity of the person receiving the estate or
interest; they answered the question, “who?” “Words of limitation told the reader of the
grant the estate or interest the grantee received; they answered the question, “what?”
Here’s an example:

words of words of limitation

purchase

to A ‫ ׀‬and her heirs

Please understand that the heirs of A get nothing because, at early common law, the
only meaning we could ascribe to “and her heirs” was “in fee simple.” Stated another
way, the words, “and her heirs” answered the question, “what?,’ rather than the
question, “who.”

More examples:

words of words of limitation

purchase

to A ‫ ׀‬for life

words of words of words of words of limitation

purchase limitation purchase

to A ‫׀‬for life and then ‫׀‬ to B ‫׀‬ and her heirs

In modern practice we don’t have to use the words “and his/her/their heirs” because we
presume that, unless the grantor expressly states otherwise, s/he has conveyed
everything s/he owned. Thus, if a grantor who owns a fee simple absolute conveys “to
A,” A gets a fee simple absolute despite the lack of “and his/her/their heirs” language. If
a grantor who owns a life estate conveys “to A,” A gets a life estate. But, if a grantor
who owns a fee simple absolute conveys “to A for life,” A gets only a life estate because
the grantor expressly granted something less than what s/he owned.
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The reason you have to learn the early common law rule is because, although not
required today, it still applies. Thus, although a grantor is not required to use the words
“and his/her/their heirs” to create a fee simile, if s/he does anyway it’s a fee simple.

Types of Fees Simple.

There are 4 different fees simple. The first is unconditional. The last three are
conditional or “defeasible.” Essentially, this means that the owner of one of the
defeasible fees simple can forfeit ownership by failing to satisfy a condition. And, once
again, all fees simple potentially last forever.

Fee Simple Absolute

As said, a fee simple absolute is a fee simple with no conditions attached. We’ve
already said that everyone wants to own in fee simple. We can add that, of the fees
simple, everyone would prefer a fee simple absolute; you get to own without worrying
about satisfying some condition imposed in the grant. A grant “to A and his heirs”
creates a fee simple absolute; the words of limitation tell us it’s a fee simple, and the
lack of any condition tells us it’s a fee simple absolute.

The “Conditional” or “Defeasible” Fees Simple

You may not be a seasoned law student yet, but you do know how to spot words of
condition. This is easy: but if, provided that, so long as, as long as, upon condition that,
if it happens that, and until are all words of condition, and the inclusion of any of them
in a fee simple grant will make the fee simple defeasible rather than absolute. And
again, the remedy for a violation of a condition in any estate or interest, including a fee
simple, is forfeiture of the estate or interest. But remember, someone always has to
have a right to ownership/possession along the estates in land time line. Accordingly, if
someone forfeits ownership and its concomitant right to possession for failure to satisfy
a condition, that possession is going to have to pass to someone else. It will be
important for you to determine whether the possession passes over to another “grantee”
or back to the original “grantor.” In this regard, the only way possession may move from
a forfeited estate to a grantee is through express words in the grant stating that it is to
go to another grantee. And, it’s also possible for a grant to have express words causing
the possession to pass back to the grantor upon forfeiture. But if the grant contains no
words stating that possession will pass either to a grantor or grantee upon forfeiture,
then the possession will automatically pass back to the grantor by operation of law.
Thus, if the grant reads “to A and his heirs, but if A ceases using the property for
residential purposes, to B and her heirs,” the possession will pass over to another
grantee upon breach of the condition because the grant contains express words saying
it will. And if the grant reads “to A and her heirs, but if A ceases using the property for
residential purposes, the grantor may reenter and repossess the premises,” the

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possession will pass back to the grantor upon breach of the condition because the grant
contains express words saying it will. And finally, if the grant reads “to A and his heirs
as long as the premises are used for residential purposes,” the possession will pass
back to the grantor upon breach of the condition because the grant no words stating
where possession will go upon forfeiture; it goes back to the grantor automatically, by
operation of law.

Fee Simple Subject to an Executory Limitation (FSSEL)

Here’s the methodology to determine a fee simple subject to an executory

limitation:

1. First, determine that the grant creates a fee simple. (You know how to do this:
words of limitation, presumption, etc.)

2. Then, determine whether there are words of condition attached to the grant; if
so, it eliminates the fee simple absolute. If not, it is a fee simple absolute.

3. Next, as described above, determine whether the possession passes over to a

grantee or back to the grantor upon forfeiture. If it passes over to the grantee,
it’s a fee simple subject to an executory limitation because that is the only
defeasible fee simple where possession passes to a grantee upon forfeiture.

Examples:

 “to A and her heirs provided that the premises are used for residential purposes.”
(1) It is a fee simple because of the words, “and her heirs.” (2) There are words
of condition – “provided that” – so it is not a fee simple absolute. (3) Upon
forfeiture possession goes back to the grantor because there are no express
words sending it over to another grantee. It is not a fee simple subject to
executory limitation.

 “to A and his heirs, but if the premises are not used for church purposes to B and
her heirs.” (1) It is a fee simple because of the words, “and her heirs.” (2) There
are words of condition – “but if” – so it is not a fee simple absolute. (3) Upon
forfeiture possession goes over to another grantee because there are express
words saying it does. It is a fee simple subject to executory limitation.

Fee Simple Determinable (FSD) and Fee Simple Subject to Contition Subsequent
(FSSCS)

Here’s the methodology to determine a fee simple determinable or fee simple subject to
condition subsequent:

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 1. First, determine that the grant creates a fee simple.

2. Then, determine whether there are words of condition attached to the grant; if so,
it eliminates the fee simple absolute. If not, it is a fee simple absolute.

3. Next, determine whether the possession passes over to a grantee or back to the
grantor upon forfeiture. If it passes over to the grantee, it’s a fee simple subject
to an executory limitation, and cannot be a fee simple determinable. If
possession passes back to the grantor, it’s either a fee simple determinable or a
fee simple subject to condition subsequent (in both, possession goes back to the
grantor upon default).

4. Finally, determine whether the forfeiture occurs automatically (by operation of

law) or if there are words requiring the grantor to take some action to effect the
forfeiture (action words). If the forfeiture occurs automatically, it’s a fee simple
determinable. If the grant requires the grantor to take steps to effect the
forfeiture, it’s a fee simple subject to condition subsequent.

Examples:

 to A and her heirs provided that the premises are used for residential purposes.”
(1) It is a fee simple because of the words, “and her heirs.” (2) There are words
of condition – “provided that” – so it is not a fee simple absolute. (3) Upon
forfeiture possession goes back to the grantor because there are no express
words sending it over to another grantee. It is not a fee simple subject to
executory limitation. (4) There are no “action words” requiring the grantor to take
action to invoke forfeiture. Accordingly, forfeiture occurs automatically, and this
is a fee simple determinable.

 “to A and his heirs, but if the premises are not used for church purposes the
grantor may reenter and repossess the premises.” (1) It is a fee simple because
of the words, “and her heirs.” (2) There are words of condition – “but if ” – so it is
not a fee simple absolute. (3) Upon forfeiture possession goes back to the
grantor because there are express words sending it back to the grantor. It is not
a fee simple subject to executory limitation. (4) There are action words requiring
the grantor to take action to invoke forfeiture: “may reenter and repossess the
premises.” Accordingly, the grantor must act to invoke forfeiture, and this is a fee
simple subject to condition subsequent.

A final word on fees simple: although the FSD, FSSCS and FSSEL are “conditional” and
subject to forfeiture, in the eyes of the law they are the equal of the FSA. Thus, all fees
simple are created equal. This is important to remember because it will help you
distinguish certain future interests from each other later on.

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NOTE ON METHODOLOGY: Do see the methodology we employ to approach estates
in land? I like to call it “the elimination game.” By looking for clues in the grant, we can
eliminate one or more of the 4 fees simple until there is only one left standing. It is
simple sequential logic employed by doctors attempting to diagnose an ailment by
asking about symptoms, and police officers attempting to solve a crime by examining
evidence at a crime scene. As we eliminate possibilities, we increase our odds of
coming to the correct conclusion. This is the method we’ll use throughout Estates in
Land, and much of Property law.

The Fee Tail

The purpose of a fee tail is to keep particular land within a family for as long as the
original grantee and his or her progeny continute to have children. (Children born out of
wedlock don’t count.) The fee tail is created by and grant to a grantee “and the heirs of
his/her body.” Unlike a fee simple, which an owner can alienate freely, the owner of a
fee tail was essentially prohibited from disinheriting children from succeeding to the land
by selling it out from under them. Thus, if a grantor made a grant “to A and the heirs of
his body,” and A had a child, B, at his death, the land would automatically pass to B at
the death of A. And if A attempted to convey the property out to someone other than B
while A was alive, the purchaser would only obtain a life estate for the life of A; the
property would still pass to B on A’s death. The practice of conveying fees tail was
always a bit odd and became downright bizarre when grantors started creating grants
such as the “fee tail male” (which caused land to pass only to male children). The fee
tail has also been associated with the concept of primogeniture: the passage of land on
to the eldest surviving male son to the exclusion of other siblings.

This method of ownership never worked all that well in common law England, and it
seemed particularly antithetical to the American experience. Today, all American states
either don’t recognize the fee tail, or allow a fee tail owner to destroy it by conveying out
a fee simple.

Most law professors no longer teach the topic and we don’t ever recall seeing it tested
on the bar exam..

Life Estates

A life estate lasts for the duration of the life of a natural person (not an animal, corporate
entity, or other non-human entity). It’s easy to spot a life estate because the words in
the grant will limit the duration to the life of a person, e.g., “to A for life,” or “to A for the
term of her natural life.” Unless told otherwise, or the facts make it clearly not the case,
you are to assume that the owner of the life estate is the “measuring life” which
determines its end. The owner of a life estate has only 3½ of the rights/powers enjoyed
by the owner of a fee simple. These rights are: use, exclusive possession, the right to
derive profits, and the right to convey only inter vivos (not upon death) in most

32
circumstances. Thus, the owner of a life estate has no power to commit waste on the
property.

Although it rarely happens, a life estate can be measured by the life of someone other
than its owner. So, if A owns a life estate and, while alive, sells that life estate to B, B
will own a life estate measured by the life of A (since the grantor set up the estate with A
serving as the measuring life). This is called a life estate pur autra vie (translation: life
estate for the life of another), and sets up the even rarer situation where the owner of a
life estate pur autre vie can pass it through his or her will upon death. Consider the
example immediately above. Later, B dies while A is still alive. Since B’s estate was
was a life estate pur autre vie and A, the measuring life, is still alive, the life estate has
not terminated and B can leave it to someone else in his will or by intestate distribution.
Of course, that estate will end whenever B dies.

One final scenario seems to come up frequently on the bar exam. Let’s say a grantor
makes the following grant through his will: “to A for life and then to B and his heirs.”
You should know enough at this point to determine that A has a life estate (present
estate) and B has a future interest. (We’ll later see that B’s future interest is an
absolutely vested remainder.) After the grant, A and B learn that the grantor was
responsible for an outstanding mortgage he had placed on the property. If no one pays
the mortgage, the bank will foreclose and A and B will end up with nothing. So, the
question remains: who pays the mortgage, A or B? Well, the answer is that they both
do. A is responsible for paying the portion of the mortgage attributable to interest, and
B is responsible for paying the portion of the mortgage attributable to principal. The
justification for this split arises from an analogy to the doctrine of waste. As you know,
the life tenant must keep up the property so that no permanent or lasting destruction
occurs. The mortgage analog of permanent or lasting destruction is foreclosure. But it
would be unfair to force a life tenant to make repairs that would increase the value of
property undeniably for the benefit of the future interest owner following him. Thus, we
won’t require a life tenant to pay principal, which would increase the equity in the
property for the following future interest owner rather than himself. One caveat: if, after
the above-referenced grant occurred, the life tenant himself went out and placed a
mortgage on the premises, the mortgage would only attach to his life tenancy (not to the
following future interest) and the life tenant would be liable for both the principal and
interest. Of course, a bank would not be wise in doing a mortgage transaction with a life
tenant without obtaining additional security. If the life tenant were to expectedly die, his
or her life tenancy would end, and any mortgage secured by that life tenancy would end
with it.

Future Interests

Future interests are ownership interests just as much as present estates. As you know,
however, the owner of a future interest will have his or her right of possession delayed
until a future time that may or may not ever come.

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There are five types of future interests:

 Reversion
 Possibility of reverter
 Right of entry for condition broken (“right of entry” or “right of reentry”)
 Remainder
 Executory interest

Once again, we are going to play the “elimination game” to determine

which future interest someone owns. It is important to determine the
present estate before embarking on a determination of the future
interest(s). Once you’ve found the present estate, you proceed to
determine the first future interest listed and, after making that
determination, proceed onto the next future interest (if there is one). This
is a very methodical process, and it is important that you don’t skip steps,
especially in the beginning.

Your first task in determining the identity of a future interest is to a discern

whether it is owned by the grantor or a grantee. The first 3 future interests
– reversion, possibility of reverter, and right of entry – are always owned
by the grantor. The last 2 – remainder and executory interest – are aways
owned by a grantee.

Let’s assume the following grant: “to A for 10 years.” We know that A has
a present estate because nothing is delaying his or her right of
possession. We also know that it is a non-freehold estate for a term
because the term is for a specified period. We also know that there is an
unnamed future interest lurking out there because we have to get to
forever, and a 10 year estate for a term doesn’t get us there. So, the next
step is to determine the unnamed future interest. We also know that the
future interest must be a reversion, possibility of reverter, or right of entry
because it is owned by the grantor. (Remember, the only time a grantee
owns a future interest is when there are express words creating one for
him; unnamed future interests are always owned by the grantor.)

The next step in the elimination game is to start narrowing down the future
interests owned by the grantor. To do this you ask the question: does the
future interest I’m examining immediately follow the grant of a smaller
estate or an equal estate? We know that we must begin with a fee simple
absolute, and we know that an estate for a term is smaller than a fee
simple absolute. (Remember the hierarchy?) The only future interest
owned by a grantor that follows the grant of a smaller estate is the
reversion. The grantor owns a reversion

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 Reversion: (1) is always owned by a grantor; and (2) will always
immediately follow the grant of a smaller estate rather than an equal
estate.

In practical terms, a reversion will immediately follow either a fee tail, life
estate or one of the non-freehold estates. It will not immediately follow a
fee simple of any kind.

Let’s move onto the possibility of reverter. Here’s a grant: “to A and his heirs as long as
A uses the premises for church purposes.” We need to start with the present estate,
which A owns. It’s a fee simple because of the words “and his heirs.” There are words
of condition, so it isn’t a fee simple absolute. Upon forfeiture it doesn’t go to another
grantee because there are no words expressly saying so. It’s either a fee simple
determinable or a fee simple subject to condition subsequent. There are no action
words requiring the grantor to take steps to effect the forfeiture; the forfeiture happens
automatically, so it’s a fee simple determinable. We know we aren’t done because we
must start with a fee simple absolute and end with a fee simple absolute. A fee simple
determinable isn’t a fee simple absolute. There is a lurking future interest owned by a
grantor.

The next question to ask is whether the future interest follows the grant of a smaller
estate or an equal estate. Grantor started with a fee simple absolute and conveyed to A
a fee simple determinable. Do you remember the “all fees simple are created equal”
rule? Although we all would rather have a fee simple absolute than a fee simple
determinable, the fee simple determinable is equal in the eyes of the law. So, this
future interest can’t be a reversion because it follows the grant of an equal estate, not
the grant of a smaller estate. It’s either a possibility of reverter or a right of entry.

To eliminate one of the two possibilities, ask the question: “does the future interest
owned by the grantor, which follows the grant of an equal estate, immediately follow a
fee simple determinable or a fee simple subject to condition subsequent” Only a
possibility of reverter immediately follows a fee simple determinable only a right of entry
follows a fee simple subject to condition subsequent. Here, the future interest is a
possibility of reverter.

Possibility of reverter: (1) is always owned by a grantor; (2) will

always immediately follow the grant of a equal estate rather than a smaller
estate; and (3) will always immediately follow a fee simple determinable
rather than a fee simple subject to condition subsequent.

Right of reentry: (1) is always owned by a grantor; (2) will always

immediately follow the grant of a equal estate rather than a smaller estate;
and (3) will always immediately follow a fee simple subject to condition
subsequent rather than a fee simple determinable.

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One more example: “to A and his heirs, but if A does not use the premises for
residential purposes, the grantor may reenter and take possession.” We need to start
with the present estate, which A owns. It’s a fee simple because of the words “and his
heirs.” There are words of condition, so it isn’t a fee simple absolute. Upon forfeiture it
doesn’t go to another grantee because there are words expressly stating that it goes
back to the grantor. It’s either a fee simple determinable or a fee simple subject to
condition subsequent. There are action words requiring the grantor to take steps to
effect the forfeiture, so it’s a fee simple subject to condition subsequent. We know we
aren’t done because a fee simple subject to condition subsequent isn’t a fee simple
absolute. There is a lurking future interest owned by a grantor. This future interest
can’t be a reversion because it follows the grant of an equal estate, not the grant of a
smaller estate. It’s either a possibility of reverter or a right of entry. And, because it
immediately follows a fee simple subject to condition subsequent, it’s a right of entry.

Distinguishing Between the Remainder and Executory Interest

Suppose instead of being owned by a grantor, the future interest is owned by a

grantee? It will be either a remainder or executory interest. So, we need one more rule
that distinguishes the two. Remainders always follow the natural termination of the prior
estate while executory interests always cut them short. Estates for a term, fee tails and
life estates naturally terminate (either at the end of the term or upon the death of the
measuring life). Therefore, a future interest owned by a grantee that immediately
follows an estate for a term, fee tail or life estate will be a remainder. (Of course, a
future interest owned by a grantor that immediately follows an estate for a term, fee tail
or life estate will be a reversion.) Fees simple are built to last forever, and never
terminate naturally. Accordingly, a future interest owned by a grantee that immediately
follows a fee simple will be an executory interest. A couple of examples:

1. “To A for life, and then to B and his heirs.” We start with the present estate. A’s
estate is clearly a life estate because of the language used. Now onto the
future interest. B is a grantee, so the future interest is either a remainder or
executory interest. The prior estate is a life estate, which terminates naturally at
the death of A. Therefore, B owns a remainder.

2. “To A and his heirs, but if A doesn’t use the premises for residential purposes
during his lifetime, to B and her heirs.” Once again, we start with the present
estate. It’s a fee simple because of the words “and his heirs.” There are words
of condition, so it isn’t a fee simple absolute. Upon forfeiture it does go on to
another grantee, so it’s a fee simple subject to executory limitation. Now the
future interest. Be is a grantee, so the future interest is either a remainder or
executory interest. The prior estate is a fee simple, which never terminates
naturally. So, B’s future interest cuts short the prior estate; it’s an executory
interest.

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Types of Remainders

Remainders are either vested or contingent. The difference is important because a

contingent remainder will require further analysis under the rule against perpetuities
while avested remainder will not.

To be vested, a remainder must meet all of the following three criteria:

(1) the owner of the remainder must be born;

(2) the owner of the remainer must be ascertainable; and

(3) the remainder interest must not be subject to a

condition precedent.

If any one of these criteria is not met, the remainder is a contingent remainder.

A grant “to A for life, and then to his surviving children” would create a contingent
remainder in the children on all three grounds if A had no children at the time of the
grant. First, obviously, they are not born. Second, they won’t be ascertained until they
are born. And third, there is a contingent precedent for them to take: they must survive
A. (More on conditions precedent in a moment.)

What about a grant “to A for life, and then to his heirs”? You need to know the legal
maxim: “there are no heirs of the living.” Although you may have a spouse and children,
your heirs are not fixed until death. Accordingly, and grant to “heirs” is a grant to the
unascertainable.

The hardest part of the “vested/contingent” test for most law students is to determine
whether a condition is a condition precedent, which makes the remainder contingent, or
a condition subsequent, which leaves the remainder vested. Here’s a trick that works
99.9% of the time: a condition precedent requires the owner of the remainder to satisfy
the condition prior to possession of the premises, while the condition subsequent initially
allows the owner of the remainder onto the premises but threatens forfeiture if s/he
doesn’t fulfill the condition.

Thus, “to A for life, and then to B and her heirs if B survives A” creates a contingent
remainder in B because B needs to meet the condition – surviving A – before B will
even be allowed onto the property.

But, “to A for life, and then to B and her heirs, but if C is living 10 years after A’s death,
to C and his heirs” creates a vested remainder in B. B is initially allowed onto the
property, but may lose it if the condition – C living for another 10 years – occurs.

37
You do need to know that a reversion will always follow a contingent remainder. Let’s
assume the following grant: “to A for life, and then to B and her heirs if B survives A.”
As we determined above, B has a contingent remainder. But what happens if B does
not survive A? We know that our inquiry must end on a fee simple absolute, not a life
estate. So possession will have to go somewhere. It will go back to the grantor
because there are no express words sending it to a grantee. And it will immediately
follow a smaller estate – a life estate – so it will be a reversion.

Types of Vested Remainders

There are three types of vested remainders:

 Absolutely vested remainders, where no words of condition are attached, and the
remainder is not owned by an open class of people.

 Vested remainders subject to artial divestment (vested remainders subject to

open), which occur when a remainder vested but is conveyed to an open group
or class of people (one in which more members may join after the grant).

 Vested remainder subject to complete civestment, where the person owning the
remainder might lose the entire interest upon the breach of a condition occurring
after he or she assumes possession.

So, our methodology with vested remainders is: (1) solve the present estate: (2)
determine that the future interest is a remainder; (3) determine that the remainder is a
vested remainder; (4) ask whether the vested remainder has a condition attached or is
granted to an open class. If the answer to both is “no,” it’s an absolutely vested
remainder. If the answer is “yes,” continue on; (5) if there is an open class or group, it’s
a vested remainder subject to open. If the remainder is in an individual or closed class
or group, but has a condition, it’s a vested remainder subject to complete divestment.

Some examples:

1. “to A for life, and then to B and her heirs.” What is the state of the title? A
obviously has a life estate and B has a future interest. B is a grantee, so s/he
owns either a remainder or executory interest. Since B’s interest immediately
follows the natural termination of a life estate, it’s a remainder. B is born,
ascertained, and there is no condition at all attached to he grant. In addition, B
is an individual, and thus not a member of an open class or group. B has an
absolutely vested remainder.

2. To A for life, and then to the children of B.” At the time of the grant, B is alive
and has one child, C. What is the state of the title? A has a life estate for
obvious reasons. B owns nothing. C has a future interest (delayed possession)
38
 and is a grantee; it’s either a remainder or executory interest. C immediately
follows the natural termination of A’s life estate, so owns a remainder. C is born.
C is ascertained (s/he’s named in the grant). There are no conditions attached
to the grant, but C is a member of an open class or group because B is alive and
can have more children. C has a vested remainder subject to open.

3. “to A for life, and then to B and his heirs, but if B doesn’t use the premises for
residential purposes during his lifetime to C and her heirs.” A has a life estate,
again for obvious reasons. B has a future interest and is a grantee. B’s future
interest immediately follows the natural termination of A’s life estate, and
therefore is a remainder. B is born and ascertained, but there is a condition
attached. The condition is a condition subsequent because B initially is allowed
on the property, but might lose it if he doesn’t adhere to the imposed condition.
The remainder is vested. Since there’s a condition, the remainder isn’t
absolutely vested. Since B is an individual, and not a member of an open class
or group, he owns a vested remainder subject to complete divestment. But
we’re not done. C has a future interest, and is a grantee. If C takes it will be
because B screws up while using the property. But, take notice of the “things
change” concept. B’s vested remainder subject to open will become a present
estate once B takes possession. At that point, it will be a fee simple because of
the words “and his heirs.” It won’t be a fee simple absolute because there is a
condition attached. And upon forfeiture for breach of the condition, the
possession will go to C, another grantee. B therefore will have a fee simple
subject to executory limitation. C is a grantee. C’s future interest will
immediately follow B’s fee simple (fees simple never naturally terminate).
Accordingly, C’s future interest will cut short the prior estate rather than following
it naturally. C owns an executory interest.

The Rule Against Perpetuities (RAP)

You’ve already made it to the big league. Understanding the rule against perpetuities is
like making it to the all-star game. The trick here is to follow the methodology; one
small misstep will throw you off.

The common law definition of RAP is “an interest in real estate must be certain to vest,
if at all, not later than 21 years after a life or lives in being, from the date the interest
was created.” RAP is essentially a statute of limitations for contingent future interests
(contingent remainders and executory interests). What makes it more difficult is that it’s
not a statute of limitations with a simple term of years; it combines a term of years with a
person’s lifetime. Its purpose is to promote commerce and prevent the clogging of titles.

Use the following methodology:

1. Determine Whether You Need to Even Engage in a RAP Analysis.

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All present estates are vested, and not subject to RAP. Of the future interests, only the
contingent remainder and executory interest are vested. Therefore, it you don’t have a
contingent remainder or executory interest in your grant, you don’t have to worry about
RAP, and need not continue.

2. Determine When the Period Starts to Run.

All causes of action are marked by a point at which the time period starts to run, and
RAP is no different. When it runs will depend on the type of transaction involved. If it’s
a deed, the RAP statute of limitations will commence when the deed is delivered. If it’s
a will, the RAP statute of limitations will commence when the testator dies, not when the
will is signed.

3. Determine Whose Life Is the Measuring Life.

Once you’ve determined the moment that the statute of limitations begins, you need to
freeze time (some call this the “snapshot” concept) and see who is a “life in being” for
use as the measuring life. So, assume the following grant: O conveys by deed “to A for
life, and then to B’s children who survive A.” At the time of the grant -- when the deed
was delivered – B is alive but has no children. We can use O, A and B as measuring
lives because all are lives in being at the delivery of the deed. If the contingent future
interest is certain to vest within 21 years after the death of any one of them, RAP will be
satisfied. But we can’t use the children of B as measuring lives because they were not
born when the deed was delivered, and therefore aren’t lives in being.

You can have a class or group serve as a measuring life as long as the class is closed
and you know to a certainty that every member is a life in being. If any one member of
the class or group may not be alive, then no one in the class or group may serve as a
measuring life, even if s/he is alive.

You may get more than one person capable of serving as a measuring life. An efficient
way of handling this is to first focus on the life most connected with satisfying the
condition causing the RAP issue. If the rule is satisfied using that person, you’re done.
If not, you have to move on to consider everyone else until the rule is satisfied. If the
rule isn’t satisfied using any one measuring life, the future interest violates RAP. In the
example above, the life most connected to the condition – surviving A – is A (with the
possible exception of the children themselves, who can’t serve as measuring lives
because they weren’t born when the deed was delivered. As we’ll see, using A as he
measuring life satisfies RAP because we’ll know the instant of A’s death whether any of
B’s children survived him (we don’t even need to wait the additional 21 years.) We
wouldn’t satisfy RAP using B as the measuring life because B could die the day after
the delivery of the deed, with A surviving more than 21 years. Whew!

40
4. Determine the Latest that the Contingent Interest Will Vest
Or Fail. If It Is More than 21 Years After the Death Of Any Applicable Measuring
Life, Then The Grant Violates RAP.

Consider this grant by deed: “to A and her heirs, but if B is living 30 years from this
grant, to B and his heirs.” A has a fee simple subject to executory limitation. B has an
executory interest. We need to examine B’s executory interest under RAP. At the
delivery of the deed, both A and B are lives in being, and can serve as measuring lives.
We’ll try B first because his life is more connected with the condition – continuing to live
for another 30 years – than is A’s. If B dies prior to the passage of 30 years, his interest
will fail at his death. But, if B makes it for the 30 years, he’ll be alive when he does.
Accordingly, the latest that the contingent remainder will vest or fail is at B’s death. B’s
executory interest satisfies RAP.

5. Cut Out The Offending Contingent Future And Act As If It Never Existed.

The following grant to B violates RAP: “to A and her heirs, but if the premises are ever
used for other than church purposes, to B and his heirs. (Use the methodology and
figure out why.) We have to take out B’s offending executory interest and all associated
language that would leave a grant that doesn’t make sense. We are left with the
following grant: “to A and her heirs.” The state of the title of that grant is fee simple
absolute in A.

Concurrent Estates

A concurrent tenancy (cotenancy) involves two or more people owning the land.

All cotenants own an “undivided interest in the whole.” This means that all own the
whole parcel, and all can use the whole parcel, either at the same time or separately.
Despite the “undivided interest in the whole” concept, each contenant owns a “fractional
share” which is usually, but not always, equal among cotenants. For example, two
cotenants each own a ½ interest, while three cotenants each own a 1/3 interest.

The relationship among cotenants is considered special; cotenants owe each other a
fiduciary duty. Courts will scrutinize transactions among cotenants closely to ensure
fairness and reasonableness.

There are three concurrent estates:

 Tenancy in common

 Joint tenancy

 Tenancy by the entirety

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 Tenancy in Common

A tenancy in common has no right of survivorship and allows any of the cotenants to
convey his or her interest without the permission of the others. It requires only one
“unity:” the unity of possession. (We’ll talk about the “unites” shortly.

This is the presumed estate when: (1) no particular cotenancy is expressed in a deed to
unmarried cotenants, (2) no particular cotenancy is expressed in a will leaving real
estate to cotenants, or (3) multiple children take real estate under intestate distribution
statutes.

Joint Tenancy

A joint tenancy does have a right of survivorship. The right of survivorship means that
on the death of a cotenant, his or her interest doesn’t pass through a will or by intestate
distribution. Instead, the surviving cotenant(s) continue to own the real estate free of the
interests of the dead cotenant. Like the tenancy at common, a joint tenancy allows any
of the cotenants to convey his or her interest without the permission of the others.

Consider the following question: “A and B own as joint tenants. Then, A dies with a
valid will that leaves all his real estate to C. What interest does C have?” The answer
is none. A will passes only property owned by the testator at his or her death. Because
of the right of survivorship, B became the owner of the whole estate by operation of law
upon A’s death, and A had no interest in the land to pass through his or her will.

In order to create a joint tenancy, one must satisfy the requirements of four “unities:” (1)
time, (2) title, (3) interest and (4) possession. Any less than four will render the co-
tenancy a tenancy in common.

Tenancy by the Entirety

A tenancy by the entirety can only be owned by two people who are legally married. It
does have a right of survivorship.

Unlike both the tenancy at common and joint tenancy, neither cotenant may individually
convey away his or her interest unless: (1) the parties get divorced, (2) one of the
parties first dies, or (3) both parties agree.

The tenancy by the entirety protects the parties from claims of creditors, but obviously
makes it more difficult to deal with their individual shares.

A tenancy by the entirety requires all five “unities:” (1) time, (2) title, (3) interest, (4)
possession, and (5) person/marriage.

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 The Five “Unities:”

1. Time: all cotenants must take at the same time

2. Title: all cotenants must take through the same instrument

3. Interest: all cotenants must take the same interest, e.g., a fee simple, life estate

4. Possession: all cotenants have the simultaneous right of possession and

possess on belalf of each other. This is what makes adverse possession by one
cotenant against another so difficult.

5. Person (Marriage): this is the common law legal fiction holding that, upon
marriage, the spouses become “one person.” This is what prevents one of them
from being able to “sever” (convey away his or her interest) a tenancy by the
entirety.

While the law of concurrent estates is fairly straightforward, law professors create
obfuscated fact patterns in an attempt to “get” the students. The trick here is to chart
out the fact pattern, and “follow the unities.” Let’s assume that A, B, and C all own as
joint tenants. Then, A sells her interest to D. Then B dies. In the end, what is the state
of the concurrent estates?

Try this:

AJTBJTC
↓
DTC(BJTC) D did not take at the same time, and through the same instrument,
↓ as B and C. S/he therefore cannot be a joint tenant with them. But,
↓ B and C continue to own as joint tenants between themselves.
↓
DTCC D and C own as tenants in common because they didn’t take at the
1/3 2/3 same time or through the same instrument. Upon B’s death,
surviviorship kicks in. C now owns two-thirds of the tenancy in
common, with D owning one-third.

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Modern Real Estate Transactions

The “Contract for Sale” (Also Called a “Purchase and Sale Agreement” or
“Land Sale Contract”)

The purpose of a contract for sale is to govern the behavior of the seller and buyer
between the time they reach an agreement until the land is actually transferred (which is
a real estate transaction rather than a contract transaction.) The death of one of the
parties will not terminate the contract for sale; his or her estate will have to complete the
transaction unless both parties agree to terminate the contract.

Statute of Frauds

All sales of land must be supported by a writing in order to satisfy the Statute of Frauds.
Typically, the parties will draft a Purchase and Sale Agreement, which will serve as the
contract between buyer and seller. The matters that must be contained in the contract
are: (1) the identity of the parties and (2) a description of the land. A written time for
performance is not necessarily required. If no time for performance is stated, the
parties will be required to perform within a reasonable time (given the circumstances
particular to the transaction). Moreover, even if a precise date and time for performance
is stated in the contract, the parties are not required to adhere to it strictly unless the
contract contains a “time is of the essence” clause. Absent a “time is of the essence”
clause, the parties may perform within a reasonable time of the stated time for
performance. Finally, unless an omnibus “time is of the essence clause” is included in
the contract such clauses will be strictly construed. For example, a “time is of the
essence clause” stated in the paragraph dealing with dates pertaining to mortgage
contingencies will not extend to the paragraph dealing with the closing date, or the
home inspection contingency date.

Exceptions to the Statute of Frauds

Most states do recognize a part-performance type of exception to the statute of frauds.

A minority of states recognize the “unequivocal referability” exception: the only possible
explanation for the parties’ conduct is the existence of an oral contract (a very difficult
standard to satisfy). Most states recognize the “hardship” or “estoppel” theory of part
performance: if acts of performance are done in reliance on an oral contract, and an
undue hardship would result if the contract is not enforced, a court will enforce the
contract despite a lack of writing.

Marketable Title

How Created

The execution of a contract for sale creates an implied covenant that the seller will

44
convey “marketable title,” a title that is reasonably free from doubtful questions of law or
fact. The only circumstance in which the seller is not obligated to deliver marketable
title is by an express and unambiguous provision in the contract for sale creating a
waiver of the obligation.

When the Seller’s Obligation Ceases

The seller’s obligation to deliver marketable title ceases when the contract for sale ends:
at the time the deed is delivered. Therefore, a buyer who wants to assert a breach of
the seller’s obligation to deliver marketable title must do so prior to delivery of the deed.
This is why it is so important for a buyer to do a title search and inspect the property
prior to the closing at which the deed is delivered.

What the Covenant of Marketable Title Requires

The seller is required to deliver a title that is:

1. Free from “encumbrances.” An encumbrance is a real estate interest such as a

mortgage, easement, lease, covenant running with the land, real estate
attachment, tax lien, etc.

2. Free from “defects.” A defect is a broad concept that involves technical

problems in the chain of title. Defects include mistaken names on a deed,
forgeries, typographical errors, mistaken descriptions of the real estate,
incompetency of the seller, and other technical problems that place the state of
the title into question.

It is said that a buyer does not have to purchase a law suit with the title, even a law suit
the buyer is likely to win. Thus, if an encumbrance or defect exists that is likely to lead
to a law suit, the buyer can declare marketable title and terminate the transaction.

The creation of the seller’s obligation to deliver marketable title also requires the seller
to deliver a fee simple absolute. A seller’s attempt to deliver any interest less than a fee
simple absolute will constitute a breach of the obligation to deliver marketable title.
(Remember that the covenant for marketable title can be waived, and the parties can
agree on less than a fee simple absolute.)

The seller has until the time set for the closing to obtain and deliver a marketable title.
In other words, the seller has until the closing to cure any title defects, or even to
acquire an ownership that s/he can pass to the buyer.

Finally, a seller is impliedly is given the right to use the money collected from the sale to
clear existing mortgages and encumbrances provided that, prior to the delivery of the
deed, the seller gives adequate assurances that the buyer’s interests will be protected.

45
 Equitable Conversion

Equitable conversion occurs when a valid and binding contract for sale is created. The
transfer of title is not a single, solitary act. Title is transferred more gradually than that.
Title is transferred in two stages: (1) the buyer obtains rights in the property the moment
contract (P&S) is signed; (2) the deed completes the process

There are two factual situations in which you have to worry about the concept of
equitable conversion: risk of loss or damage to the property and death.

As soon as the contract for sale is signed, "equitable conversion" kicks in and the risk of
loss transfers from seller to buyer. (Note: different states treat this issue differently, so
check your jurisdiction’s rules.) The buyer gets "equitable title,” which is “real estate.”
The seller retains "legal title,” which is "personal property.

Upon the death of one of the parties, the contract is still enforceable. If the seller dies,
the purchase price flows through the will as personal property; seller has "legal title" and
legal title is "personal" property. But if the buyer dies, the property will flow through the
will as real estate; the buyer has "equitable title" and equitable title is real estate.

Mortgages

Contract Law and Real Estate Law

At its core, a mortgage transaction involves two instruments, a “note” and a “mortgage,”
and two areas of law, contract law and real estate law. The note operates under
contract law and the mortgage operates under real estate law. Thus, the remedy
provided under the note is an action for breach of contract and the remedy provided by
the mortgage is foreclosure (selling the real estate to satisfy the amount outstanding on
the note). In short, the note creates the obligation to pay back the money borrowed and
the mortgage provides security in case the borrower fails to pay.

The mortgage instrument is an interest in real estate and must satisfy the statute of
frauds.

“Defeasible” Title

If a mortgagor pays off the mortgage in full, the mortgagee’s mortgage interest will
automatically “defease,” without the mortgagor having to secure a conveyance back, or
release, of the mortgagee’s interest. (Note: most states require that the mortgagee
provide a mortgage “discharge” or “release,” but this is purely for the purpose of
ensuring marketable title. Please note that this defeasible title rule applies to mortgages
in both title theory and lien theory states (see below).

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 Mortgage Theories

There are two theories of mortgages: the “title” theory and the “lien” theory. The title
theory holds that the grant of a mortgage is a conveyance of title to the bank; it is more
than a mere encumbrance or lien. Perhaps the nature of the mortgage as a
conveyance of title under this theory manifests itself best when combined with the rules
relating to joint tenancies. If A and B own as joint tenants, and one of them grants a
mortgage on his or her interest in a title theory state, the mortgage will “sever” the joint
tenancy (there is no longer unity of time and title) and convert it into a tenancy in
common. Under the lien theory of mortgages, the mortgagee holds a security interest
only. While the mortgage is an interest in real estate, its granting does not constitute a
conveyance of title. The example regarding a joint tenancy stated just above will not
result in a severance of the joint tenancy in a lien theory state because the mortgage is
not a conveyance of title.

Equity of Redemption

The “equity of redemption” or “right of redemption” gives the mortgagor the right to
redeem the land free of the mortgage by paying off the mortgage in full up until the
equity of redemption has been foreclosed (usually at the foreclosure sale). This
requires consideration of two additional concepts:

“Acceleration Clause:” An acceleration clause in a mortgage allows the mortgagee,

after the mortgagor’s default, to declare the entire outstanding balance of the mortgage
due and payable immediately. Usually, mortgagees invoke the acceleration clause prior
to foreclosing. Thus, the mortgagor will have to pay off the full mortgage to redeem,
rather than merely the outstanding monthly payments.

“Due on Sale Clause:” Mortgagees often include “due on sale” clauses in mortgages to
prevent a mortgagor from assigning the mortgage when s/he sells the property. The
due on sale clause allows the mortgagee to periodically update mortgage interest rates
to keep current with market fluctuations. It is used together with the acceleration clause
to force an immediate payment of the outstanding balance upon the sale of the affected
property. A due on sale clause is never implied; it only exists if expressly stated.

Foreclosure

Foreclosure is the bank's remedy to enforce its security interest or title in the real estate.
In most states, the right of foreclosure allows the mortgagee to sell the property at
auction and use the proceeds to pay off the outstanding balance on the note.
Technically, a foreclosure “forecloses” the mortgagor’s “equity of redemption.”

In foreclosing, the mortgagee must comply with some due process considerations:

47
 a. The mortgagee must notify mortgagor of the particulars of the foreclosure;
b. The mortgagee must notify all other interested parties (those with an interest in
the affected real estate) of the particulars of the foreclosure; and
c. The foreclosure must be conducted in a “commercially reasonable manner” so as
to generate sufficient interest that will bring a fair price (usually accomplished by
publication in local newspapers and advertisements).

Priorities

When a mortgagee forecloses, all subordinate interests are extinguished. Thus, it is

important to determine which interests have priority. The rule is straightforward: “first in
time, first in right.” The first-created real estate interest prevails over newer real estate
interests on the same property. The later interests will be extinguished if the interest
with priority forecloses. But, if a later interest forecloses, the “senior” interests will have
to be satisfied before the foreclosing interest can draw funds from the foreclosure sale.

There are three exceptions to the “first in time, first in right” rule:

1. Subordination: An agreement by the mortgagee to cause his or her “senior” real

estate interest to become “junior” to another real estate interest;

2. Failure to record in a timely fashion: An interest holder who fails to record loses his
or her priority over junior interests that subsequently were recorded properly;

3. Purchase money mortgage (PMM): A PMM is a mortgage taken for the purpose of
to purchasing the property. PMMs take priority over all other mortgages "recorded at
about the same time" regardless of the order of recording.

Deficiencies after Foreclosure

Sometimes after foreclosure the mortgagee is left with a deficiency, and will need to
attempt to employ the note to collect it (remember, the mortgage gets destroyed at
foreclosure). As we know, the mortgagor will be liable on a breach of contract action on
the note (s/he is in privity of contract with the bank/mortgagee).

What if, prior to the foreclosure, the mortgagor had sold the property without paying off
the mortgage? We know that the mortgagor can do this if the mortgage does not contain
a due on sale clause. We also know that the original mortgagor remains liable on the
note even if s/he attempts to assign away the liability (contracts create personal liability
that are not discharged upon assignment). And we know that the new owner will not
become liable under the note because s/he is not in privity of contract with the
mortgagee.

48
But it is possible for the new owner to become liable to the mortgagee; not through
privity of contract on the note, but through the theory of third-party beneficiary contract.
If the mortgagor and new owner make a contract for the benefit of the mortgagee, the
new owner will be liable to perform the third-party beneficiary contract, e.g., pay the
mortgage. If the mortgagor sells to the new owner, and the new owner only agrees to
“take subject to” the outstanding mortgage, this does not create a third-party beneficiary
contract, that the new owner is not liable to the mortgagee. But if the new owner agrees
with the mortgagor that s/he will “assume” the mortgage, the mortgagor and new owner
create a third-party beneficiary contract, and the new owner will be liable to the
mortgagee upon that theory.

Deeds

Transfer of Title by Deed

The purpose of the deed is to transfer title from grantor to grantee. Transfer of title is
accomplished when the the grantor intends to transfer title to the grantee, and delivers
the deed to the grantee, who accepts the transfer of title. Pay particular attention to the
following points regarding the three elements of intent, delivery and acceptance:

Acceptance: Acceptance is always presumed when the acquisition of the real estate
involved would benefit the grantee, unless the grantee expressly repudiates acceptance
of title.

Intent: The requisite intent is the grantor’s intent to transfer title immediately and
irrevocably, not the intent to transfer title at a later date.

Delivery: A manual delivery (grantor parts with control of the deed and grantee
acquires control of it always suffices. But two presumptions apply that will aid a finding
of delivery: (1) Possession – a grantee in possession of a deed it is presumed to have
been delivered the deed, and a grantor in possession of a deed is presumed not to have
delivered the deed; and (2) Recording – a recorded deed is presumed to have been
delivered. These presumptions are both rebuttable by evidence demonstrating a lack
of delivery.

Deed Formalities

The following elements must be present in a deed for it to be valid and effective:

1. Statute of Frauds: The deed must be in writing and signed by the grantor(s); it
cannot be oral.

49
2. Granting Language: The deed must manifest an intent to transfer title to the
grantee(s), although no particular or technical words are necessary.

3. Description: The deed must contain an adequate description of the real estate
conveyed. This may be as simple as an address (e.g., “123 Main Street, New
York, NY”) or a name (e.g., “Graceland in Memphis, Tennessee”), but the
description must unequivocally refer to a particular parcel or tract of land. The
most common description is a “metes and bounds, courses and distances”
description. When a “metes and bounds, courses and distances” description
contains conflicting language – e.g., “by the land of Jones one-hundred twenty
three feet (123.00’) to the stone monument,” and the stone monument is actually
120 feet – you should employ the following hierarchy of descriptions to resolve the
conflict: (1) natural monuments; (2) artificial monuments; (3) courses and/or
angles; and, finally, (4) areas, names and general descriptions.

4. Identify Parties: The deed must identify the grantor(s) and grantee(s) with
sufficient certainty for a third person to determine who the respective parties are.

Note that the amount of consideration (purchase price), a seal, and an

acknowledgement (attestation by a notary public) are not required for a deed to be valid
and effective. On the other hand, although an unacknowledged deed can be employed
to transfer title, most states will require a deed to be acknowledged (notarized) for a
deed to be recorded; recording is an important step for a grantee to protect his or her
rights in the property.

Types of Deeds

There are three different types of deeds:

1. General Warranty Deeds: The grantor protects the buyer from all encumbrances
and other problems regardless of whether those encumbrances or problems
were created while the seller owned the property or before the seller owned the
property. A deed that conveys “the usual covenants” is a general warranty deed
and conveys the first five of the covenants for title addressed in the next section.
In some states, this is called a “warranty deed.”

2. Special Warranty Deed: The grantor only protects the grantee from
encumbrances and problems created while the grantor owner the property, not
from defects or problems created before the grantor owned the property.

3. Quitclaim Deed: The grantor gives an "as is" deed, which does not give any
covenants or assurances to the grantee.

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 Covenants for Title

There are as many as six specific covenants found in a deed:

1. Covenant of Seisin: The grantor promises that s/he owns the property.

2. Covenant of the Right to Convey: In addition to owning the property, the grantor
promises that s/he has the right to convey it to the grantee.

3. Covenant against Encumbrances: The grantor promises that the property has
been conveyed to the grantee without any encumbrances (same definition as for
marketable title).

4. Covenant of Quiet Enjoyment: The grantor promises that there are no existing
real estate interests in third persons that will interfere with the grantee’s right to
exclude others. The mere existence of an offending real estate interest will not
breach this covenant; the third person must exercise the interest to challenge the
grantee’s right to exclude.

5. Covenant of General Warranty: The grantor promises to protect and defend the
grantee from the lawful claims and demands of third persons, and to compensate
the grantee if a third person has rights in the property.

6. Covenant of Further Assurances: The grantor promises to do such further acts

as may be necessary to perfect the title which s/he had purported to give to the
grantee. This is not one of the “usual covenants” given with the general warranty
deed; it must be granted expressly.

If you have not noticed, the last two covenants look more like remedies than substantive
covenants.

The first three numbered covenants are said to be “present covenants.” This means
that the statute of limitations (6 years) begins to run immediately upon the seller’s
delivery of the deed. The last three numbered covenants are said to be “future
covenants.” This means that the covenant against encumbrances is not necessarily
breached when the deed is delivered; instead, the covenant against encumbrances is
breached when a third person interferes with the grantee’s right of exclusive
possession.

The future covenants “run with the land,” which means they are binding against
“remote” grantors as well as “direct” grantors. The present covenants are only binding
against “direct” grantors.

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Some states are “”consideration paid” jurisdictions, which means that a grantor
breaching a covenant is liable up to, but not more than, the consideration paid by the
grantee. Other states are “consideration received” jurisdictions, which means that a
grantor breaching a covenant is liable only up to the consideration s/he received when
selling the property. Upon closer look, you will see that the “consideration paid” is the
same as the “consideration received” in regard to direct grants, but not as to remote
grants. For example, A conveys to B for $100,000 and then B conveys to C for
$125,000. As to B and C, the consideration paid is the same as the consideration
received. But as to A and C, the consideration paid by C is greater than the
consideration received by A.

Estoppel by Deed

“Estoppel by deed” is an equitable concept employed to prevent a person who fails to

transfer title, or who transfers less than is purported in the deed, from gaining as a result
of his or her fraud or misrepresentation. It is sometimes called “the doctrine of after
acquired title." When a grantor, who doesn't have title, or who has less title than he or
she is purporting to convey, subsequently obtains title, that grantor is estopped from
claiming that he lacked title when he sold it to the grantee. The concept only applies
when a grantor gives a general warranty deed. It does not apply to a special warranty
or quitclaim deed.

Recording

The purpose of recording is to provide buyers of real estate with a method of examining
the title history to ensure the title is not flawed. Because faith in the recording system is
vital to its effectiveness and sustainability, every transaction must be recorded to
present an accurate picture of title. Thus, the law will punish those who do not properly
use the recording system: although recording has nothing to do with the acquisition of
title to real estate, one’s failure to record will “estop” him or her from asserting title. In
order to be protected, a purchaser of land (or mortgagee or other interest acquirer) must
record the transaction within "the chain of title."

Types of Recording Systems

Recording systems vary from state-to state, but there are three basic types or recording
laws:

1. Notice statutes (“pure notice”): A subsequent bona fide purchaser (BFP) will
prevail over a prior grantee who fails to record regardless of whether the
BFP records.

2. “Race-notice statutes”: A subsequent BFP prevails over a prior grantee who

fails to record only if the subsequent BFP first records himself.

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 3. “Race statutes” (“pure race”): Whoever records first prevails, and one does
not have to be a BFP to be protected.

To be a BFP, one must: (1) take without “notice” of the prior transaction at issue, and (2)
pay “valuable consideration” for the real estate or interest in the real estate. Three
types of lack of “notice” will suffice: “actual notice” (actual knowledge of the prior
transaction at issue), “constructive notice” (notice given by properly recording the prior
transaction at issue), and “inquiry notice” (less than actual notice, but possessing
enough information as would cause the reasonable person to inquire further). “Value”
or “consideration” need not be the full fair market value of the real estate, but it must be
more than nominal value. Also, please note that a mortgagee is deemed to have paid
value by making the loan.

How do you tell the difference between the different recording statutes if you are
provided with actual statutory language on an exam? Look at the language!

Type BFP Language? “Who First Records”

(“without notice” and Language?
“pays value” or “pays
consideration”)
Notice Yes No
Race-Notice Yes Yes
Race No Yes

The Chain of Title

To be protected under the law of recording, one must do more than merely record; one
must record properly. The law will treat an improperly-recorded document as one that
has not been recorded at all (and this will lead to the estoppel punishment previously
discussed). To record properly, one must record it “within the chain of title.” This
means that a competent title examiner properly using a “grantor” and “grantee” index
will find the recorded documents. Documents said to be “outside the chain of title” (a
competent title examiner will not find them) are improperly recorded and treated as if
they had never been recorded (with the estoppel effect). Two actions will cause a
document to be “outside the chain of title are: (1) recording the document after the
grantor of the interest at issue has conveyed the property to someone else, and (2)
recording the document under the grantor’s incorrect name. An example of each
follows:

Recording Too Late: Alvin owns Blackacre and grants to Banker a mortgage in
the amount of $100,000. Banker fails to record the mortgage at that time. One year
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later, Alvin sells Blackacre to Calvin, who immediately records his deed. Two weeks
after Calvin bought the property, Banker records the mortgage and then attempts to
foreclose on it for failure to pay. Calvin will be able to enjoin the foreclosure because he
never had notice of Banker’s mortgage (his title examiner would not have found it
because it had not been recorded at the time Calvin bought the property). Banker will
be estopped from foreclosing on the mortgage.

Recording under the Wrong Name: Anna Smith, the owner of Blackacre,
married Jerry Jones and changed her name to Anna Jones. Five years later she
granted a mortgage to Banker in the amount of $100,000. Not knowing that Anna
Jones had formerly been named Anna Smith, Banker completed the mortgage with the
grantor’s name as “Anna Jones,” and then recorded it. One year later, Anna Jones and
Jerry Jones got divorced, and Anna resumed using her birth name: Anna Smith. Two
years after that, Anna Smith sold Blackacre to Carol and told her nothing about the
mortgage. Not knowing that Anna Smith had once been named Anna Jones, Carol’s
title examiner ran the title only under the only last name she knew, “Smith,” and found
no outstanding mortgage. Banker will not be able to foreclose on the mortgage
because, according to the records at the registry of deeds, the only name under which
Anna owned real estate was “Anna Smith.” Banker should have recorded the mortgage
under the name “Anna Jones, formerly known as Anna Smith,” and the deed would
have been indexed twice: once under Jones and once under Smith.

Easements

An easement is a non-possessory interest in real estate; its owner can use land or
prevent others from using it, but s/he has no right to erect permanent structures or
otherwise interfere with the rights of the person in actual possession. An easement runs
in perpetuity unless otherwise stated in the grant.

Appurtenant or In Gross

An “appurtenant easement” requires at least two or more parcels of land that are
adjacent or relatively near each other. The benefitted parcel (that whose owner gets to
enjoy the easement) is called the “dominant estate.” The burdened parcel (that over
which the owner of the easement can travel) is called the “servient estate.” An
appurtenant easement is not personal; it attaches to and stays with the dominant and
servient estates regardless of who owns them.

An “easement in gross” does not involved two or more parcels of land. While there is a
burdened estate, there is no benefitted estate because the easement in gross benefits a
person rather than another piece of land. “Utility easements” typically are easements in
gross because the utility company itself is personally benefitted, rather than a piece of
land.

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 Affirmative or Negative

All easements are either “affirmative” (granting a positive right to act, such passing
through another’s property) or negative (creating a prohibition from doing something on
the property such as building a structure that blocks a view).

Express or Implied

“Express easements” are created by negotiation and memorialization into a written

instrument creating the easement. They are subject to the statute of frauds and must
be expressed in writing.

“Implied easements” are not the product of negotiation and a written easement
document. They are imposed on the parties by a court, which is attempting to
implement the presumed intent of the parties. Assume that A owns a piece of land and
subdivides it into two parcels so he can sell the back lot off. The back lot is landlocked;
that is, it has no access to a street. A sells the back lot to B and then refuses to allow B
to traverse over his lot to get to the road. The parties could not have intended for B to
purchase a lot that he had not ability to get to, so the court will likely impose an implied
easement on the parties. Here are the requirements for the two types of implied
easements:

Easement by Implication:

 Common ownership with a subdivision: There must have been one lot, owned by
one person, that was subdivided into two or more smaller lots; and
 Quasi-easement; There must have been a road, driveway or some other means
of travel that existed when the lot was owned in common, and that connected the
lots in dispute; and
 Quasi-dominate estate: As required in appurtenant easements, one of the lots
existing after the subdivision is claimed to benefitted; and
 Quasi-servient estate: As required in appurtenant easements, one of the lots
existing after the subdivision is claimed to burdened; and
 Reasonable necessity: While the quasi-dominant estate need not be literally
landlocked, it would be a financial hardship, or otherwise very difficult, for the
owner of the quasi-dominant estate to gain ingress and egress by alternative
means.

Easement by Necessity:

 Common ownership with a subdivision: There must have been one lot, owned by
one person, that was subdivided into two or more smaller lots; and
 Strict or absolute necessity: The land of the person asserting the easement by
necessity must literally be landlocked.
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Methodology: When confronted with an implied easement, start with the easement by
implication. If the elements are satisfied you are done. If they are not (there is no
quasi-easement, etc.), go on to the easement by necessity.

Easement by Prescription

This is an easement by adverse possession. To obtain it, you need all of the elements
previously discussed in the section on adverse possession, with the exception of
“exclusive.” Any time you have an adverse possession claim that meets all elements
except for exclusivity, you will have an easement by prescription.

Scope of Easements

The key to discerning the scope of a particular easement is to determine the intent of
the parties originally creating the easement. This is easy if the easement is express
and the parties employed clear language in drafting the easement document. It is more
difficult if the language is vague or technological changes have made some of the
“scope language” obsolete. If the location of the easement is not supplied, the owner of
the servient estate will select the location, provided it allows sufficient width, length and
direction to meet the drafters’ original intent. If technology has changed the method of
use of an easement, then its owner can make use of new technology, although not
expressly provided for, e.g., s/he can use a car to pass over a general right of way
although automobiles did not exists when the easement was created.

Termination of Easements

Easements may be terminated in the following ways:

 Expressly: the owners of the easement draft a document expressly terminating
the easement; or
 By merger: in an appurtenant easement, one person becomes the owner of both
the dominant and servient estate; or
 Abandonment: the owner of the benefitted estate abandons the easement. This
requires more than a long period of non-use; there must also be some overt act
manifesting the abandonment such as erection of a fence across the easement
or tearing up asphalt that allows travel.

Profits

A profit is a non-possessory interest in real estate that entitles its owner to enter upon
land (a servient estate) and take soil, minerals or timber from the land. The rules
pertaining to easements generally apply to profits, e.g., one can have an affirmative or
negative, or appurtenant or in gross, profit.

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 Licenses

A license is a contract allowing someone the non-exclusive right to occupy land. Unlike
an easement or profit, it is not an interest in real estate, and generally need not be
supported by a writing satisfying the statute of frauds. Hence, licenses are deemed
personal to the benefitted party (the licensee); they do not attach to the land. Unless
otherwise provided, a license is revocable at will. Exceptions include: estoppel (relying
on the grant of the license, the licensee reasonably invested substantial money, time
and/or effort into the license, which s/he has not recouped), the right of a licensee to
retrieve personal property from the land within a reasonable time after the license has
been revoked.

Covenants Running with the Land

Covenants run either “at law” (so-called “real covenants”) or “in equity” (so-called
“equitable servitudes”). The plaintiff determines whether s/he wants to enforce the
covenant at law by either suing for money damages (at law) or injunctive relief (in
equity).

Requirements for Covenants Running at Law (3 Requirements):

Intent: The grantor must intend that the covenant “run with
the land” rather than merely be binding on the
immediate/direct grantee (which would only create a
“mere contract covenant.”

Look to the express words of the grantor to garner

his/her intent. If no language, look to see if the deed
is recorded.

Touch & Concern: For a covenant to be more than a “mere contract

covenant,” and form a real estate interest, it must
have some characteristic of a real estate interest.

There are three scenarios in which covenants "touch

& concern" the land:

1. affects the characteristics & nature of the land

2. all “use” restrictions "touch & concern" the land
3. affects the value of the land

Privity of Title/ If you are in the chain of title, you are in privity of
Privity of Estatetitle.

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 Three ways to break the chain of title:

 adverse possession
 eminant domain (condemnation)
 takings for failure to pay real estate taxes (tax takings)

Requirements for Covenants Running in Equity (3 Requirements):

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 Intent: The grantor must intend that the covenant “run with
the land” rather than merely be binding on the
immediate/direct grantee (which would only create a
“mere contract covenant.”

Look to the express words of the grantor to garner

his/her intent. If no language, look to see if the deed
is recorded.

Touch & Concern: For a covenant to be more than a “mere contract

covenant,” and form a real estate interest, it must
have some characteristic of a real estate interest.

There are three scenarios in which covenants "touch

& concern" the land:

1. affects the characteristics & nature of the land

2. all “use” restrictions "touch & concern" the land
3. affects the value of the land

Notice:
- actual
- constructive
- inquiry

Common Schemes

- Subdivision: A developer takes a large piece of land and divides it up into

a number of parcels.

- The developer wants the lots to essentially look the same.

- You can have a common development scheme even if it is not directly

referred to in the deed. Sometimes a uniform development plan can be
inferred by the geographical relationship of the lots to each other.

Did the grantor initially intend a common development scheme?

Look at the evidence…sometimes it is just geographical proximity

Appurtenance: Every lot in the subdivision has a benefit and

burden. The benefits and burdens are
reciprocal. All owners in the subdivision are
allowed to enforce the common scheme.

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