Property Outline Part 2

Transcription

1 Property Outline Part 2 Professor: Megan Ballard 1. Introduction a. Schemas of Property Law (Friedland) i. Bundle of Rights (Friedland) 1. Possess 2. Transfer 3. Use or Occupy 4. Exclude Others ii. Rights are Limited, Not Absolute 1. Rights of others can create limitations iii. Relationships 1. Limitations and rules exist about the relationships of people s rights 2. Residential sale and purchase agreement 3. Landlord/Tenant 4. Relativity of Title: the property rights of a person vary depending upon the party against whom they are asserted. iv. Different people can have different rights in the same property 1. Rights may be disaggregated v. Value (subterranean) b. Terms i. Real Property: Land and things affixed to land ii. Personal Property: All other property iii. Title: formal right of ownership c. Policy Considerations i. Certainty 1. Fair: the law is applied the same to every person 2. Predictable: creates less workload for the courts 3. Confidence in investment ii. Flexibility 1. Allows for fairness in an individual situation 2. Allows easier change in law 3. Broad application which prevents loopholes Page 1 of 37

2 2. Initial Acquisition a. Discovery i. Generally: the European theory of first in time, first in right, creates a property interest for the first party to discover and lay claim to unclaimed property. ii. Justifications 1. Locke s Labor Theory 2. First in Time First in Right iii. Discovery Rule: discovery allowed the European sovereigns title of the land if it was not previously discovered by another European power. iv. Johnson v M Intosh 1. Facts: Plaintiff sues defendant for land which both have title to. Plaintiff had title issued by Indian chiefs and defendant had title given by US government. 2. Goal: to promote stability and clarity in the ownership of land under US control. 3. Holding: the US government will not recognize titles to land purchased by Europeans from Indians. 4. Reasoning: a. First in Possession: This is the way it s always been. Title has always been transferred this way. i. Marshall traced it from gov t to gov t, not from family to family. b. Native American occupancy of no legal import i. Labor Theory: mere hunting isn t enough to give you rights. ii. Not exerting common property rights (e.g. held land communally) c. They are savages, so they must not own it. i. Property is power and it is also whatever the government says it is. ii. There are a lot of racial overtones in ownership of property. d. Because the Indians had no legal title then they could not convey that title. b. Capture i. General: exclusive control justifies property rights. ii. Wild Animals 1. Generally: animals caught on public grounds are owned once mortally wounded but animals on private property belong to the property owner. Page 2 of 37

3 2. Pierson v. Post (fox hunt) a. Facts: Plaintiff was hunting a fox on unowned land. Defendant interfered by killing the fox before plaintiff could. Plaintiff sues for trespass on the case. b. Goal: to kill foxes and create a predictable rule. c. Holding: a hunter does not have a property right in an animal unless he mortally wounds, ensnares or captures the animal. d. Reasoning: i. Clarity in who owns a hunted animal will avoid quarrels and litigation. 3. Keeble v Hickeringill a. Facts: Plaintiff owned decoy pond. Pond was for capturing ducks. Defendant neighbor, fired guns on his property for the purpose of scaring ducks away. b. Goal: promote industry and work c. Holding: a person is liable (unless the person is engaging in market competition) for non beneficial actions which cause harm to another s livelihood. d. Reasoning: i. The productivity of shooting a gun does not outweigh the productivity of duck hunting 1. Not a nuisance claim because it promotes industry 2. Social good of duck dinner is welcome 3. Equal competition creates just as much social good and would be justified iii. Natural Resources 1. Oil & Gas ( fugitive resources ) I drink your milkshake, I drink it all up! a. Whoever captures the oil first has ownership over it. 2. Water a. Constructive Possession b. Surface water in a water course first in time applies c. Riparian states (eastern states) Water rich. May take water for any reasonable use. d. Prior appropriation (western states) controlled by state statute. e. Percolating waters groundwater that is not in a channel. Use the reasonable use doctrine water must be used solely on the overlying land if use elsewhere would cause hardship to other Page 3 of 37

4 landowners with access to the common underground pool of water. c. Creation i. Investment of labor can increase a person s property claim (INS, Moore) ii. Summary The investment of labor by AP was enough to create a property interest as against other competitors but not against people. iii. Possession can be a basis for initial acquisition and property claim (M Intosh, Pierson, Cheney) iv. INS v. Associated Press (reproducing news articles) 1. Facts: The complainant (the Associated Press) and the defendants (INS) are both involved in the news collection business. The collected news is distributed by the parties to newspapers around the county. Both parties are in direct competition with each other. The defendants were involved in collecting news posted by the complainant on bulletin boards and newspapers and then reproducing this news as their own work. This action was filed by the complainant arguing that this copycatting of the news constituted unfair competition. 2. Goal: To promote market competition and fair business. To promote the dissemination of the news. 3. Issues a. Does AP have a property interest in their news? b. Does AP abandon their right by posting on bulletin boards? c. Is INS engaging in unfair business competition by selling AP s news? 4. Holding: between two competing news services, the systematic misappropriation of hot news stories by INS was sufficient to justify an injunction against the INS until the commercial value of the stories had dissipated. 5. Reasoning: So when a plaintiff has by substantial investment created an intangible thing of value not protected by patent, copyright, or other intellectual property law, and the defendant appropriates the intangible at little cost so that the plaintiff is injured and plaintiff s continued use of the intangible is jeopardized, an action for misappropriation will lie. a. Relativity of Title: the property rights of a person vary depending on who they are asserted against. v. Cheney Bros. v Doris Silk 1. Summary: Without a common law right or statute, a person s invention is not their property because this avoids monopolies. 2. Facts: Cheney, a silk manufacturer, puts out many new patterns each Page 4 of 37

5 year. Most patterns have a life of only 1 season, making it impossible to secure design patents. Def copied one of PL s most popular designs and undercut the price. PL sued Def for damages under property law. Trial court dismisses PL s, PL appeals 3. Goal: to incentivize competition so we do not end up with a monopoly 4. Issues: a. Does PL, w/o common law right or statute, have a property right sufficient to prevent another from copying its chattel? b. Is a person s property limited to the chattels embodied by his invention? 5. Holding: Because PL couldn t secure a patent on its patterns, PL could not recover as a result of Def s copying it. Others may imitate these at their pleasure. 6. Reasoning: Court distinguished INS precedent doesn t apply here. a. Difference from INS: Monopolies suck (Ballard s words). b. We want to incentivize social good in whatever way that may be to distribute news, or make clothing for us vi. Smith v Chanel, Inc. 1. Goal: freedom to imitate without losing incentive for people to develop new devices 2. Holding: The court held that a perfume company could claim in advertisements that its product was the equivalent of the more expensive Chanel No Reasoning: This helps drive fair costs for products in society. vii. Moore v Regents 1. Summary: Moore did not have a property right to his cells once they left his body. 2. Facts: Doctor used his patient s liver and blood for research and made a lucrative cell line from his unique blood and cell type without the patient s consent. 3. Goal: Promote research, allow legislature to change the rules of property, avoid moral issues resulting from sale of human body parts 4. Holding: Recognition of property rights in ones cells would necessarily entail a right to sell ones own body tissue for profit and there is concern about the sale of organs and body tissue. Moore did not have a property right to his cells once they left his body. 5. Reasoning a. Court s i. Liability would chill research. Page 5 of 37

6 ii. Breach of disclosure duty is sufficient compensation. iii. This is up to the legislature to make a decision. iv. The court had never done this before (they had not awarded possession to removed body parts) v. The Cell line is part of the Defendant s invention (Labor Theory) vi. He shouldn t have expected to control his cells anyway because there were already statutes covering how removal and disposal was supposed to take place. vii. Conversion is a strict liability tort. Courts wary about allowing a strict liability for cells and blood. b. Moore s i. Labor theory: there is nothing that is more owned by a person than their body and cells. ii. The cells were unique and that is why they are valuable. d. Right to Exclude i. One of the rights of an owner which is most essential. ii. Recognized by the tort of trespass iii. Jacque v Steenberg Homes 1. Facts: A mobile home going over a person s property when owner refused to give him permission. 2. Goal: To legitimize a landowner s right to exclude. 3. Holding: Def driving over the land is liable for trespass. The right to exclude others from his or her land is one of the most essential sticks in the bundle of rights that are commonly characterized as property. 4. Reasoning: a. When landowners have confidence in the legal system, they are less likely to resort to self help remedies. b. The right to exclude is meaningless if it is not protected by the state. iv. State v Shack 1. Facts: Pltf, owner of farm employs migrant farmworkers and houses them. These farmworkers are visited by defs SCOPE who is there to help better their lives with legal and health services. Pltf refused them to go on his property to help without them being in his office with him present, and they said they had a right to be there. He filed a suit for trespass. 2. Issue: Did gov t workers have a right superior to farmer s right to Page 6 of 37

7 exclude? 3. Holding: Yes, Pltf s property right is limited based on the relativity of who he is excluding. 4. Reasoning a. Property rights serve human values. They are recognized to that end, and are limited by it. Title to real property cannot include dominion over the destiny of persons the owner permits to come upon the premises. b. Their well being must remain the paramount concern of a system of law. c. A man s right in his real property of course is not absolute. 3. Acquisition by Find a. General rules are: i. The title of the finder is good as against the whole world but the true owner or a person rightfully granted possession. (Armory v Delarmie) ii. Definitions: 1. Finder: a finder must be in physical control of the property and have the intent to assume dominion over it. 2. Lost: property has been parted with either casually, involuntarily, or unconsciously. 3. Mislaid: property has been intentionally placed but unintentionally left or forgotten. 4. Abandoned: property has been intentionally relinquished, given up, or released and is no longer in the possession of the prior owner. 5. Treasure Trove: is considered coins or money that is concealed in the ground or another private place with the owner presently unknown. b. How to: c. Was the property Lost? i. Yes, is the object on the premises of another? 1. Yes, did the owner exercise control over the property? (Hannah v Peel) a. Yes, was the object imbedded in the soil? i. Yes, owner of premises has greater rights of ownership over everyone except the TO. (Ad coleum to whosoever the soil belongs, he also owns to the sky and to the depths.) ii. No, was the finder an employee AND acting within the scope of employment? 1. Yes, someone who acts as an agent or servant of another, finds not for himself but for the Page 7 of 37

8 person he is serving (usually). 2. No, the finder has greater rights of ownership over everyone except the TO. b. No, was the finder an employee AND acting within the scope of employment? i. Yes, someone who acts as an agent or servant of another, finds not for himself but for the person he is serving (usually). ii. No, the finder has greater rights of ownership over everyone except the TO. 2. No, the title of the finder is good as against the whole world but the true owner or a person rightfully granted possession. ii. No, was it mislaid? 1. Yes, was it found on premises owned by another? a. Yes, owner of premises has greater rights of ownership over everyone except the TO. b. No, the finder has greater rights of ownership over everyone except the TO. 2. No, was it abandoned? a. Yes, finder has rights to ownership over everyone. b. No, finders rules do not apply. d. Policy reasoning i. Society has to do this because people don t walk around carrying proof of all they own or possess. (i.e., your pants, your watch, your laptop, etc.) ii. Protecting owners (owners always win against possessors) iii. Ensuring owners of mislaid property will get the property back once they remember where they placed it. iv. Efficiency in entrusting others with goods. e.g., Dry Cleaner who launders clothing and did not give it back without proof of ownership, Neighbors borrowing tools and not returning them. v. Protecting honest behavior (see Hannah v. Peel) e. Armory v. Delamirie i. Facts: A chimney sweeper s boy found a jewel and took it to the defendant s shop to find out what it was. He gave it to the apprentice of the shop who removed the stones and asked his boss how much it was worth. He then tried to pay the boy for the stones who didn t want the money. ii. Goal: To protect the little guy/ finder from other s taking property away (excluding true owner) iii. Holding: The finder of lost property holds it in trust for the benefit of the true Page 8 of 37

9 owner, and has rights superior to those of everyone except the true owner. f. Hannah v. Peel i. Facts: owns a large house that was taken by the government to house soldiers, and has never lived in it. The π, a soldier found a brooch in a house that he was stationed at, hidden on window ledge. ii. Goal: Determine whether owner of property has possession of items found on it iii. Issue: If owner has not moved into house, have they taken constructive possession of the items in there. iv. Reasoning: When the owner is not in possession of a home where unaware property was found, the finder is awarded possession. The court reviewed the following cases to make this decision: 1. Bridges v. Hawkesworth a business invitee who finds lost property on the floor of a shop has right of title less than that of the owner, but superior to that of the shopkeeper. (Found money on the floor of the shop). 2. South Staffordshire Water Co. v. Sharman potentially two rules: (a) owner of land retains a superior right to title against a finder of anything attached to or under the land; and, (b) if a man finds a thing as the servant or agent of another, he finds it not for himself, but for that other. (Employee finds 2 rings at the bottom of a pool he was cleaning. Company sued for the rings and wins). 3. Elwes v. Brigg Gas Co. Similar to (a) above: Items found in the ground under an owner s property belongs to the owner, superseding any claim to title by a finder. g. McAvoy v. Medina i. Facts: Plaintiff found a pocketbook on a table in the defendant s shop. Plaintiff gave it to the defendant and told him to hold onto it, advertise it, and try to give it back to the owner. Owner never showed up to claim the pocketbook and Plaintiff wanted the pocketbook back. ii. Goal: We want the true owner to be able to recover his property when he misplaces it and the best place is at the premises where it was misplaced. iii. Holding: The court held that since the property was not considered lost McAvoy never held title to the pocketbook before giving it to Medina. iv. Reasoning: The pocket book was placed voluntarily on the table and accidentally left. The plaintiff, although the first to see it and pick it up did not by this acquire the right to take the property from the shop. Instead it was rather a duty of his to make the barber aware of the find. 4. Acquisition by Adverse Possession a. Generally Page 9 of 37

10 i. Adverse possession is a method for a possessor to claim title against the original owner of land or chattels. ii. Adverse Possession creates a statute of limitations in which an owner may bring a trespass suit. b. Elements (Brown v. Gobble) 1. Statutory Period 2. Actual 3. Open & Notorious 4. Exclusive 5. Continuous 6. Hostile 7. Under Claim of Title/Right or Color of Title ii. Statute of Limitations 1. The SoL varies from state to state; from 5 to 21 years. 2. If an owner does not, within the statutory period, take legal action to eject a possessor who claims adversely to the owner, the owner is thereafter barred from bringing suit for ejectment. 3. EXCEPTIONS a. Disabilities: of the owner can toll the statutory period if specified in the statute and must exist when the adverse possessor first possesses. i. Infancy ii. Insanity iii. Imprisonment b. Government: nobody can adversely possess against the government. iii. Actual use of property 1. Used for enjoyment, cultivation, residence, or improvements. 2. This triggers the cause of action and starts the SoL running. 3. Requires the type of possession that an ordinary owner would use. (Kunto) iv. Open and Notorious 1. The adverse possessor s occupation must be sufficiently apparent so that the true owner had (or should have had) notice that the property was claimed by another. (majority) a. MINORITY RULE: An owner must have actual knowledge of a minor encroachment (Mannillo rule). v. Exclusive 1. The property was used only by the adverse possessor and no others Page 10 of 37

11 were allowed to enter or claim ownership. 2. The adverse possessor may allow others to enter land without defeating exclusivity. 3. Uses land in a manner that reflects dominon and control over the land. vi. Continuous 1. The property was enclosed, maintained or cultivated during the requisite S/L timeframe. Use should be what a general user would use (summer home only need occupation during the summer, etc). Neighbors and others would assume that the user was the true owner of the property. 2. Tacking: An adverse possessor can tack onto her own period of adverse possession any period of adverse possession by predecessors in interest (privity). If there is no privity, then tacking will not be allowed. a. Predecessors in interest include: i. Blood (family member), ii. Contract, iii. Deed or Title, and iv. Will vii. Hostile 1. The possessor does not have the true owner s permission to be on the land. 2. Required intent of an adverse possessor: a. The Objective Standard: The state of mind of the adverse possessor is irrelevant. The Connecticut Doctrine. b. The Good Faith Standard: The adverse possessor thought they owned the land. c. The Aggressive Trespass Standard: The adverse possessor thought they didn t own it, but intended to make it theirs. Also known as the Maine Doctrine. viii. Claim of Title or Color of Title 1. Claim of Title: claim the property even though they did not have title, 2. Color of Title: have an instrument giving the appearance of title but by law is not valid. c. Mistaken improver: someone who, in good faith, mistakenly builds on land belonging to another. (Manillo) i. Common Law: Anything built on the wrong land became the property of the landowner. ii. Modern Rule: 1. The courts apply balancing test between: Page 11 of 37

12 a. Harm to True Owner: losing use of property (market value or subjective value decline) b. Harm to Improver: cost of removing the structure 2. Result a. If the loss of removing is less than the loss of property use then the improver must remove. b. If the loss of removing is greater than the loss of property use then the court may force a sale iii. How TO 1. Did a person mistakenly build on another person s land? a. Yes, Does the jurisdiction follow the common law? i. Yes, anything built on the wrong land became the property of the landowner. ii. No, under modern rule: is the harm to the true owner greater than the harm to improver? 1. Yes, the improver must remove the improvement. 2. No, then the court may force a sale b. No, not a mistaken improver situation. d. Policy Arguments: i. To reward those who use the land productively. The law helps those who help themselves. ii. To allow an adverse possessor repose by barring claims after a certain amount of time, thus honoring their expectation. Certainty. iii. Since it may be difficult to prove title, possession in fact protects ownership. e. Brown v. Gobble i. Facts: Gobble adversely possessed 2 feet of property owned by Brown for 9 years. Previous owners also adversely possessed the same 2 feet of land for the previous 50+ years. ii. Holding: The court allowed Gobble to tack their time to meet the S/L requirement of 10 years. f. Mannillo v. Gorski i. Facts: Gorski built a sidewalk onto the Mannillo s property by 15. Subsequently, Mannillo sued for ejectment and Gorski claimed adverse possession. ii. Holding: The court held (i) that an entrant onto another s property need not have a hostile intent (the ME doctrine) to meet the requisite hostile element of adverse possession, and, (ii) an owner must have actual knowledge of a minor encroachment in order to meet the open, visible and notorious element. Page 12 of 37

13 g. Howard v Kunto i. Facts: Owners of riverfront property all had title to land their houses were not occupying. As a result, Howard sued Kunto to quiet the title and eject them from the property. ii. Holding: The court held that continuous possession does not require an owner to use the property more than a general user would to meet this element. Also, tacking is permitted when owners and predecessors mistakenly omit deed information. 5. Adverse Possession of Chattels a. Rule: same as AP b. Alternatives to AP of Chattels i. Discovery Rule: The statute of limitations does not begin to run on the owner of stolen goods as long as the owner continues to use due diligence in looking for them. The cause of action accrues once the owner knows, or reasonably should have known through due diligence, where the stolen goods are. Including the identity of the possessor. ii. Demand Rule: The statute of limitations does not begin to run on the owner of stolen goods until the owner knows who has the goods and makes a demand for return of the goods. Once the owner demands for the return of the property, the S/L begins to run. This is known as the New York rule. c. Policy Arguments: i. The owner should make reasonable effort to find stolen property, but should not have to pay for more than what is required ii. Purchasers should lessen the risk of buying stolen goods by inquiring into its origin. Bona fide purchasers of stolen goods are not protected against the claim of the owner unless the S/L has run. d. O Keeffe v. Snyder i. Facts: O Keeffe noticed paintings were stolen 30 years before she found out who possessed them. She sued for replevin and, because she did not diligently search for the missing artwork, the S/L ran and she was barred from pursuing the claim. ii. Holding: The statute of limitations begins to run upon the discovery of the dispossession, not when the person finds the actual owner. It is the original owner s job to take reasonably prudent action as any other owner would when she feels a painting has been stolen. 6. Acquisition by Gift a. Definitions i. Gift: a voluntary, immediate transfer of property without consideration from one person (the donor) to another person (the donee). Page 13 of 37

14 ii. Inter Vivos: Gifts made during the donor s life when she is not under any threat of impending death. iii. Causa Mortis: Gifts made in contemplation of immediately approaching death. A gift causa mortis is revoked if the donor recovers from the illness that prompted the gift. b. Generally: The three necessary elements for a gift of chattels are: i. Intent: the donor must intend to make a gift; 1. The donor intends the gift to take effect immediately, irrevocably, and unconditionally. The gift can be for either a present possessory interest or a future interest (see Gruen v. Gruen). ii. Delivery: the donor must deliver the chattel to the donee; 1. Delivery of the chattel is required. This can be done in 3 ways: a. Actual delivery: Physically handing over the item such that the donee has dominion and control over it. b. Constructive delivery: Actual manual delivery is impracticable; donor surrenders the means of obtaining possession and control. (e.g., key to a car, garage code) c. Symbolic delivery: Actual manual delivery is impracticable; donor hands over some object that is symbolic of the thing given. (e.g., writing, birthday card, toy car) iii. Acceptance: The donee must accept the chattel. 1. The gift takes effect immediately upon delivery, subject to the right or the donee to repudiate the gift. c. Policy Arguments: i. Delivery of the chattel impresses the donor with the legal significance and finality of the act. Once she hands over the object, she realizes it belongs to another. The donor must feel the wrench of delivery. ii. It avoids fraud by giving reliable, objective evidence of the donor s intent to give. The presence of the object in the donee s hands substantiates his claim of a gift. iii. Requiring delivery protects the unwary donor from making improvident oral statements. d. Newman v. Bost i. Personal property capable of manual delivery must be delivered, otherwise there is no gift. Symbolic delivery is not sufficient; constructive delivery will suffice only where actual delivery is impractical; there is no clear intent to deliver the contents of furniture when the furniture itself has value [gave key to desk to mistress and she wants the life insurance policy inside]. e. Gruen v. Gruen Page 14 of 37

15 i. Intent established through letter; delivery is not necessary until the interests vests at his father s death (father maintained life interest); delivery here is symbolic; acceptance is implied because the item is valuable. [Father wrote son letter saying that he wanted to give his son a painting for his birthday but hold on to it until he died; held, this creates a life interest in father and remainder is future interest in son]. 7. Estates & Future Interests (See other outline) 8. Concurrent Interests a. Themes i. Different people own different rights in the same property ii. Relationships among people iii. Concurrent Interests: a present or future interest that is held and may be asserted concurrently with an equal or identical interest of another person. b. Co Owners i. Remedies 1. Partition: judicial remedy to terminate a joint tenancy or tenancy in common according to share. (Delfino v Vealencis) a. Types i. In Kind: property is physically distributed ii. By Sale: sell property and distribute money (forced sale) b. Factors for determining type of partition (Delfino) i. In Kind is preferred by courts (but they rarely follow it) unless: 1. Inequitable or impractical a. Physical characteristics of the property (Size, Shape) b. Location of buildings c. Number of co owners d. Location of parcel a person wants to keep 2. Best Interests of the Parties a. Zoning issues speculative at best b. No proof of losing business c. Fail to approve division plans d. Sell going to harm defendant 2. Accounting: (receivings) equitable action where one or more co owner can petition the court to state the income of the property and give plaintiff her share. Page 15 of 37

16 3. Contribution: (expenses) court forces co owners to contribute to expenses a. Injunction against Waste: one co owner cannot commit waste and to prevent waste a co owner may file for injunction ii. Rights Between Co Owners cause of action created when rights ignored 1. Ouster: cause of action created by a co owner s interference with another co owners right to possess the property. (Spiller) a. Applies to joint tenancy and tenancy in common. b. Occupier does not have an obligation to pay rent to co owners unless he ousted them. c. Constructive Ouster: when restrictions on space make co possession impossible i. Domestic Battery: constructively ousted 2. Rent: co possessor not liable for rent unless by agreement, Lease to Third Party (action is to sue for accounting), and ouster a. All states require a cotenant who collects rent from a 3rd party must account net expenses for these amounts to the co tenants. 3. Carrying Charges/Expenses: bills that must be paid for retaining ownership must be shared (action for contribution) a. Sole possessor typically has to pay all carrying charges b. e.g. Property taxes, Mortgage c. The other co owners will have a cause of action against the one who doesn t pay up. 4. Necessary Repairs a. Majority: no right of contribution for necessary repairs i. If property is going through partition, accounting or sold then the paying party may get back money for the repair. b. Minority/Bar: a co owner can compel for contributions if the co owners are notified in advance of the needs of repairs. i. Costs must be reasonable 5. Improvement: no right of contribution for improvement, may be able to recoup the value of the improvement when sold. Note: not the cost of the improvement but the value increase of the property. iii. Types 1. Tenancy in Common (co tenants) a. Definition: type of concurrent interest in which two or more people own equal and undivided interest in property, with equal rights to use and possess the property. Page 16 of 37

17 b. Characteristics i. We assume equal shares 1. If conveyance says otherwise, there can be unequal shares ii. Regardless of percentage of ownership, each has an equal right to possess the whole iii. Each co tenant s share can be devised, descendible, or alienable iv. e.g. O conveys to A, B and C as tenants in common. 1. We assume they each own ⅓ 2. If any party transfers share, then the next party is a tenant in common and has a ⅓ share. c. Rights i. No survivorship rights between the tenants in common. 2. Joint Tenancy (Joint Tenants) a. Definition: type of concurrent interest in which two or more people own equal and undivided interest in property, with equal rights to use and possess the property. b. Characteristics i. Creation: 1. Common Law: Four Unities a. Time: joint tenants interests created at the same time b. Title: same instrument/deed c. Interest: all interests are created at same time with identical shares d. Possession: each tenant has the right to possess the whole (one can voluntarily give up exclusive possession to the other) 2. Contemporary: Grantor Intent a. Statutes require grantor to show intent to create joint tenancy. b. Courts sometime ignore equal shares requirement, if equity demands so. i. Buying property with someone, and you paid most of the prices, the court may award you a bigger share. Page 17 of 37

18 ii. Presumption towards Tenancy in Common, if unclear or ambiguous iii. A joint tenant may sever the joint tenancy, unilaterally by conveying from themselves to themselves. (Riddle) iv. E.g. To A and B as joint tenants with the right of survivorship and not as tenants in common. c. Right of Survivorship i. Surviving joint tenants will automatically own the share of the deceased joint tenant ii. Purpose: to avoid probate and automatically instill complete ownership iii. A mere expectation and depends on the estate surviving (Riddle) d. Judgments/Lien (Harms v Sprague) i. Mortgage does not sever joint tenancy ii. Jurisdictional Difference: whether a bank owns title to a mortgaged house or a lien against the house may determine whether Joint Tenancy was severed. 1. Title Theory: does sever joint tenancy 2. Lien Theory: does not sever joint tenancy 3. Tenancy by the Entirety a. Only created by a husband and wife b. Has 4 unities of joint tenancy plus a right of survivorship c. It takes both parties to convey as a whole d. Divorce terminates because of requirement that parties be married e. Exists in fewer than half the states f. Property can t be attached by separate creditors of a spouse c. Marital Interests i. History 1. Wife s property became property of husband 2. Wife and husband were 1... and the husband was the one 3. Husband owned all property of the wife and could be attached by creditors of the husband 4. Husband owned the labor of the wife and kids 5. Wife received support and protection from husband 6. Married Women s Property Act (19th century) a. Husband still head of house and owed support b. Wife equal, held down house, is owed domestic support Page 18 of 37

19 ii. Separate Property States (Common Law States) 1. Ownership/Control a. If one spouse earns it, or if the title is in their name, or acquired the property before marriage, then they can own it, sell it, or gift it alone. b. If both have title then they own it together. (e.g. acquired together, both on deed of home) 2. Death a. Elective/Forced/Statutory Share i. Protects the surviving spouse from total disinheritance ii. Gives option to choose between statutory share or take under the will 3. Divorce a. Generally: at divorce equitable division is the guiding principle in dividing the property. 4. Commingling a. No commingling of property, title determines ownership. 5. Debtor a. Split on whether creditors may collect a debt of an individual against property owned in tenancy by entirety. i. Majority: creditors of one spouse may not execute a judgment against the other (Sawada v. Endo) iii. Community Property (WA) 1. Generally a. Presumption that all property acquired during the marriage is community property (belongs to both husband and wife) b. Husband and Wife own half during their lifetime c. No Survivorship in Community Property d. Property owned in CP states can be characterized as separate or community property. 2. Separate Property in CP States: a. Acquired prior to marriage b. Inheritance/Descent taken under intestacy c. Devise land through will d. Bequest personal property by will e. Gift f. All issue and profits from separate property 3. Management and Control a. Cannot give anything away unilaterally Page 19 of 37

20 b. Cannot sell household goods, furnishings or appliances unilaterally c. Cannot buy or sell real property unilaterally 4. Death a. No right of survivorship b. Will can only give away half of the possessions c. Spouses may decide to own as joint tenants to create right of survivorship 5. Divorce a. Equitable division (same as separate property states) 6. Commingling a. Presumption is that all property is community property b. Burden is to prove separate property use (reliably trace out separate interest) 7. Migration a. When spouses from a separate property state move to a community property state (or the reverse) b. When going from CP to SP: the vested property right in community property is not divested by changing location. All new property acquired will be SP. c. When going from SP to CP: the SP rules apply. All new property acquired will be CP. i. Quasi Community property: if it would have been community property when transferred then the spouse has a protected interest. Created to prevent complete disinheritance of spouse immediately after moving to CP state. Forced share is not available in CP states so Quasi was created. d. Landlord Tenant i. Policy 1. Huge number of renters in society 2. Many tenants pay over half of their income in rent 3. Racial discrimination exhibited in percentage of property ii. Types of Leasehold Estates 1. Term of Years a. Certain Ending Point: estate that lasts for a period of time with a beginning and end fixed from the outset. i. Common Law: no limit on length ii. Modern: most states limit the term Page 20 of 37

21 b. Created by end date, number of days c. Can be terminated early if some specified event happens d. Death of landlord has no effect on duration e. Expires without notice 2. Periodic Tenancy a. Lease continues for succeeding periods until landlord or the tenant gives notice of termination. b. Creation: where the lease provides for periodic payments but no termination date. c. Notice of Termination i. Common Law: 1. Year to Year: half a year notice 2. Less Than Year: notice equal to the term but not more than 6 months. ii. Modern: most states have a 30 days notice statute d. Death of landlord has no effect on duration e. Annual rent specified = year to year tenancy 3. Tenancy at Will a. No Set Duration: a lease that endures as long as the parties want it to and ends when one of the parties wants to end it. b. Reciprocal Rule (Common Law): if one party is given the right to terminate at will then both have the right. (Not always followed, Garner) c. Ending: i. Death of either party ii. Assignment or transfer d. Most jurisdictions require 30 days notice before termination. 4. Tenancy at Sufferance a. Occurs when a tenant enters into a valid lease and then holds over past the end of the lease term. i. LL may elect to evict the tenant as trespasser and recover damages or ii. Extend the lease for a new term b. Tenant s holdover must be voluntary c. If a holdover tenant continues payment then usually the lease becomes a periodic tenancy, with a period based on payment. iii. Selection of Tenants 1. Historic Rule: a seller or landlord was free to sell or rent to whomever he pleased. Page 21 of 37

22 2. Civil Rights Act of 1866 a. Bars discrimination of race regarding public sales, private sales, and rentals b. Remedies i. Specific Performance ii. Damages 3. Fair Housing Act of 1986 a. Unlawful to refuse to sell or rent a dwelling to any person b/c of race, color, religion, national origin, sex, handicap, or familial status. b. Discriminatory preference in advertising is prohibited. i. Policy: trying to prevent racial discrimination by publishing because it can be seen by more people. More efficient than trying to prevent single person being discriminated against. c. Proving Discrimination i. Must show member of a protected class ii. Applied for and was qualified for dwelling iii. Denied rental of dwelling iv. Housing remained open for others to rent v. Then has burden to show refusal to rent was based on legitimate reasons having nothing to do with π s status vi. Then π has to show that the was lying and in fact has no legitimate reasons. d. Exemptions i. Private clubs ii. Religious organizations iii. Single Family Dwelling when person doesn t own more than 3 such dwellings UNLESS: 1. use a real estate broker or agent, 2. salesman, OR 3. advertise in a discriminatory manner. iv. Mrs. Murphy Exemptions 1. Leasing a unit in a building with no more than four families and in which the LL occupies. iv. LL Duty to Deliver Possession 1. Legal Possession: LL has a duty to transfer the legal right of possession. 2. Actual Possession Page 22 of 37

23 a. English Rule (Majority) i. LL has a duty to transfer actual possession. ii. If the previous tenant is holding over, then the LL is in breach and must resort to judicial action iii. Policy: LL is more likely to know if the previous tenant will move out and is in a better position to pressure him to do so. LL is more familiar with eviction process and can evict the holdover tenant at less cost. b. American Rule (Minority) i. LL had no duty to transfer actual possession at the beginning of the term. ii. The tenant has a legal action against the trespasser if they wish. (Hannah v. Dusch) 1. Policy: The american rule seems to be founded on the argument that the tenant has sufficient legal and equitable remedies available to protect himself against the third party wrongfully in possession and a greater incentive to use them than the landlord would have. v. The Tenant who defaults: 1. Generally: the only lawful means to dispossess a tenant who claims possession adversely to a landlord s claim of breach of a written lease is by resort to judicial process. (Berg v. Wiley) a. Unless Tenant has i. abandoned OR ii. voluntarily surrendered possession 2. Policy: This is to discourage landlords from taking actions into their own hands. (avoid self help) vi. The Tenant who has abandoned possession 1. LL Duty to Mitigate: A landlord seeking damages from a defaulted tenant who has abandoned the property for lost rent must make a reasonable effort to relet the premises. (Sommer v. Kridel) Can be done by: a. offering or showing the apartment and b. advertising the apartment or unit; c. there are no formulas for determining what is sufficient. 2. Common Law: LL may, but need not mitigate 3. Factors court will look at a. Whether advertisements were place Page 23 of 37

24 b. Whether any suitable replacements were rejected. c. LL does not have to accept less than market value 4. Policy: a. To allow the landlord to not mitigate would be unfair b. Mitigating damages promotes productive use of the property c. Also, helps to prevent property damage (vandalism) vii. Covenant of Quiet Enjoyment/Constructive Eviction 1. Generally: breach occurs when an act or omission of the landlord or agent that renders the premises substantially unsuitable for the purposes for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises. (Reste) 2. Elements a. Act or omission of LL (duty) b. Permanently (or substantially recurring) renders property unsuitable for leased purposes or seriously interferes with T s quiet enjoyment of the premises c. Tenant has to provide notice of the conditions to the LL. d. Tenant must allow reasonable time for repairs. e. The tenant has to vacate within a reasonable amount of time. (Shows that the suitable factor was not ok. Must vacate entirely) 3. Remedies: damages for difference in value paid and actual value. viii. Illegal Lease Doctrine 1. A housing code violation at the time the lease was made. Makes the lease illegal from the outset. a. Served a bridging function between Quiet Enjoyment and the Implied Warranty of Habitability 2. Tenant doesn t have to vacate (Can stay and pay lower rent) a. Policy: i. We don t want LL to make illegal leases and then be able to get out of the lease or evict the tenant. We want to reward the tenant by allowing them to stay in their apartment. ii. Tenants are usually low income, don t want to force them to find new living quarters. ix. Implied Warranty of Habitability 1. Generally: in the rental of any residential dwelling unit the landlord must deliver and maintain, throughout the period of the tenancy, premises that are safe, clean and fit for human habitation. (Hilder) Page 24 of 37

25 2. Tenant does not have to vacate. 3. Elements a. Defect creates more than trivial threat to safety or health of tenant b. Notice to landlord of defect and reasonable time to repair c. Defect exists for period which rent is challenged 4. Remedies a. Prospective reduction of rent b. Retroactive re payment of rent c. Compensated for reasonable repairs d. Punitive for willful and wanton breach e. Compensatory damages for discomfort and annoyance f. Injunctive relief 5. Policy a. We live in an urban society and lease agreements are entered into to obtain safe, sanitary, comfortable housing. b. The LL is better equipped to make the dwelling safe. x. Retaliatory Eviction 1. Common Law allowed LL to terminate lease or tenancy at will for any reason. LL could use this to get rid of tenant who tried to exercise rights 2. Modern approach Doesn t allow the LL to retaliate a. Policy we want to protect tenants and allow them to exercise their rights 9. PURCHASE AND SALE OF LAND a. Process i. Buyer Researches 1. Determine Price Range 2. Research Eligibility for Mortgage 3. Look at listings / consider a buyer s agent ii. Buyer submits offer iii. Mutual acceptance of offer iv. EXECUTORY PERIOD v. Closing b. Statute of Frauds i. Generally: ii. Exceptions: Some oral contracts for the transfer of real property will be enforced by courts under equity through the enforcement of specific performance. 1. Court will order specific performance in certain instances Page 25 of 37

26 a. Part Performance = any two of the following is part performance i. Take Possession ii. Made Improvements iii. Substantial part of the purchase price b. Promissory Estoppel (reliance): if a buyer has relied on the contract to his own detriment c. Adverse Possession iii. Specific Performance: an equitable remedy that is applied when money damages aren t sufficient where the court will order performance of the contract as it was agreed. c. Marketable Title i. Rule: When a title is not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable, prudent and intelligent person. (Lohmeyer) ii. Buyer investigates title during executory period iii. Conditions that make the title unmarketable 1. Violation of Zoning Restrictions a. Zoning Restrictions alone will not violate marketable title otherwise no one could ever transfer property. 2. Violation of Covenant 3. Covenants (almost always excluded by contract) d. Equitable Conversion i. During Executory Period (after mutual acceptance of a real estate contract), the court pretends the buyer owns the property ii. The buyer is viewed in equity as the owner from the date of the REPSA contract. iii. Once the REPSA contract is signed, each party is entitled to specific performance. e. Duty to Disclose i. Historic Rule: no duty on seller, caveat emptor, buyer must find out condition. 1. Exceptions: a. State Statutes b. Required to disclose material defects i. Objective test would a reasonable person attach importance to it in deciding to buy. ii. Subjective test whether the defect affects the value or desirability of the property to the buyer. 2. Must disclose material and latent defects(not common) (Johnson vs Page 26 of 37

27 Davis) ii. Modern Rule: most jurisdictions apply major exceptions to caveat emptor. iii. during executory period. 1. Policy: Requires the π use due diligence to discover defects but we want to protect the buyer if the seller doesn t disclose something. f. Implied Warranty of Workmanlike Quality i. Majority of Jurisdictions: Applies to first purchaser of new home. Doesn t apply to subsequent purchasers. 1. Exceptions: not first buyer but limited to a reasonable period of time (Lemke) ii. Elements: 1. Latent Defect: defect that is not readily observable 2. Discovered in a reasonable period of time iii. Policy: Fairness, protects innocent buyers g. Delivery of Deed i. General: the sale of land requires delivery of a deed ii. Elements of Delivery (mirrors gift delivery) 1. Intent: delivery must be made with grantor s intent to convey title 2. Physical Act: delivery must incorporate a physical act of delivery and acceptance 3. Acceptance: the grantee must have the intent to receive title. This is usually assumed. iii. Conditional Delivery 1. Requirements a. The grantor must grant the deed to a third party (escrow) to complete the transfer upon completion of the condition. (Sweeney bar) b. Grantor must have present intent to make an irrevocable transfer. (Rosengrant Bank) 2. If a third party is not used then the condition drops off because delivery has been executed. 3. If grantor lacked intent to make irrevocable transfer then transfer is void. h. Deeds i. Deed Types 1. General Warranty Deed When a grantor uses a general warranty deed, she is making all of the six promises, not just as to acts that she has taken to impair title, but also as to the acts of her predecessors. a. Most buyer friendly Page 27 of 37

28 2. Special Warranty Deed A grantor makes all 6 promises, but limited to protect the grantee only as to acts of the grantor. 3. Quitclaim Deed A grantor conveying property with a quitclaim deed makes none of these promises. It conveys whatever rights the grantor had, which may be none. a. Least buyer friendly ii. Covenants 1. Present Covenants: If they are ever going to be breached, it s at the time the deed is given to the buyer. a. Covenant of Seisin: I own what I m conveying to you b. Covenant against encumbrances: This is the grantor s promise that no mortgages, leases, liens, unpaid property taxes, or easements encumber the property other than those acknowledged in the deed itself. c. Covenant of the right to convey: This constitutes the grantor s promise that the grantor has the power to transfer the interest purportedly conveyed to the grantee. 2. Future Covenants: a. Covenant of Warranty: By this covenant, the grantor promises to defend against superior claims to the property and to compensate the grantee for any monetary loss occasioned by the grantor s failure to convey the title promised in the deed. b. Covenant of Quiet Enjoyment: The grantor promises by this covenant that the grantee s possession will not be disturbed by any other claimant with a superior title. c. Covenant of further assurances: Requires the grantor to take further steps to cure defects in the grantor s title, such as paying an adverse possessor to leave the property or paying the owner of an encumbrance to release the encumbrance. iii. Mortgages 1. Timeline a. Borrower gives lender mortgage and note i. Deed of trust: (treated in almost all respects as a mortgage) When a borrower conveys title to the land to a third party to hold in trust to secure payment of the debt to the lender. b. Borrower Defaults c. Right of Redemption: the right to pay lender back when in default. Ends with foreclosure Page 28 of 37