PROPERTY II OUTLINE

SPRING 2010

PROFESSOR FRITZ
I. LANDLORD & TENANT: PAGE 361
o Free-Hold Estates: Livery of Seisin grants life estate (Fee, Feetail, Life Estate)
o A) Non-Freehold Estates: Leasehold Estates (also called tenancies)
 Definition: holder of possessory interest NOT holder of seisin, archaic ceremony
o T has possession but L retains seisin & reversion = lesser estate
 Historic Context: T was not seised in the land, but L retained seisin
 T maintained right to possession = low feudal dignity
 Modern Trend: Residential lease considered in K terms = T more rights
 Move away from hierarchical system placing L above T
 EX: under CL, no duty for LL to mitigate damages when T breaches
residential rental K because he retained right of reversion—Whereas,
under K Law there is a duty to “staunch the bleeding”
o Theme: tension btwn property & K Law
 Conveyance of a property interest + K imposing rights & duties
 Traditional CL: favors property law & L
 Modern Trend: introduces K notions, which impose new duties on L
 EX: new duty to mitigate damages
o Lease Characteristics: Lease v. License
 License: terminable at will (notice NOT required)
 Lease: K promoting alienability--allow fairly free transfers
 Creates L-T rights & responsibilities
 Traditionally no duty to mitigate a breached K
o Type of Estates: 1) estate for years, 2) periodic tenancy, 3) tenancy at will, 4)
tenancy at sufferance/hold-over
 1) Term of Years Tenancy: (Estate for Years) estate for fixed period, which is
computable by formula resulting in fixed calendar dates for start & end of
 Creation: Term is (expressly) created when it becomes possessory
o You must be able to calculate the max duration, BUT it can be
subject to earlier termination. (EX: L to T for one year, or until
LL can rent the premises for $1000/mo. )
 Hawkins: (unusual) allowed “end of war” to constitute a
term’s max duration
 Death of landlord does not affect the duration of period
o CL: usually any length, but some statutes limit duration (CA)
 Termination: due to fixed duration, no notice is necessary to end the
estate—it ends automatically at the end of the term.
 SOF: requirement of writing for any lease longer than 3 years
o Lack of writing results in a tenancy at will
o Most jurisdictions require writing for a lease longer than one year
 Childers v. Talbott (NM--1888) SOF governs, so 3 years except
where governed by statute

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  Uniform Owner-Resident Relations Act (UORRA) – governs
leaseholds in NM, includes obligation to provide a written lease
 2) Periodic Tenancy: lease for a fixed duration that continues for succeeding
periods, until either L or T gives notice of termination
 EX: To A from month to month beginning ------, automatically extended
for another period(s) without notice of termination
 Creation: Can be created by implication—Holdovers—by proffer &
acceptance of rent on set schedule (T stays put, continues paying rent, & L
accepts = periodic tenancy created)
o Death of landlord does not affect the duration of period
 Traditionally considered inferior to Estate for Years—uncertainty
 Termination/Notice:
 CL: ½ year’s notice required to terminate a year-to-year tenancy
(failure to terminate timely = additional contracted period)
o For tenancies > one year, notice of termination must be given
equal to period length, BUT not exceeding 6 months
o Periodic Rental Date: (PRD) specific date period begins or ends
 Notice must coincide with notice period/end of rental period =
terminates tenancy on the final day of the period
 Modern: Most jurisdictions hold 30 days notice is sufficient
 Short notice is sufficient for the following period (need not
coincide with rental period, but failure therewith = termination
at the end of the following period)
 Problem: If lease is “$1200 per year, payable $100 each month,”
jurisdictions split as to whether it’s a yearly or monthly lease
 Modern approach = monthly, promote alienability
 T.W.I.W. Inc. v. Rhudy: NM L fails to provide head & seeks to evict T
 BC 1st notice was coupled w/option to remain at increased
price, it was equivocal; 2nd notice unequivocal = good notice
 PRD is unknown = no knowledge of correspondence w/period
 3) Tenancy at Will: tenancy w/no fixed period, endures as long as L & T desire
 Creation: usually express
o CL: creation is at will of both parties, regardless of K language
o Modern: K understanding means ct may construe language giving
right of termination solely to T as a life estate determinable
 NOT tenancy @ will unless BOTH parties have right to terminate
 Cts don’t follow K language if lease gives L sole right; T may
always end tenancy
o May be created by implication. (EX: term fails SOF, but has proffer &
acceptance of rent.)
 Termination: ends when one party terminates it OR at the death of a
party (K no longer mutually desired; personal relationship)
o Terminable @ will of L or T.

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 Unilateral Power to Terminate: Under CL, once a tenancy at will has been
created, if the lease allows termination by one party, it is also at the will
of the other party
o Rebuttable presumption that some jurisdictions ignore.
o Note: Can be engrafted on a term of years or periodic tenancy
o EX: A lease by L to T for 10 years or until L sooner
terminate = term of years determinable
o Modern: Statutes usually require 30 days or time equal to the
interval between rent payments
o CL: no notice required
 Garner v. Gerrish: (NY) PAGE 365 Donovan owned house, which he
leased to T Gerrish; K allowed Gerrish termination rights; Donovan
dies & Garner executes his estate & tires to evict Gerrish, who refuses;
Garner commences summary proceeding for eviction
 K: “…for and during the term of quiet enjoyment from the 1st
day of May 1977 which term will end, Gerrish has the privilege
of termination this agreement at a date of his own choice.”
 I: Whether a lease which grants the tenant the right to
terminate K on date of his choice creates a determinable life
tenancy on behalf of the tenant OR merely establishes a
tenancy at will?
 P’s Argument: Lease created a tenancy at will because it failed
to state a definite term AND seisin was not given.
 D’s Argument: He always paid rent AND lease granted him
tenancy for life unless he elects to surrender possession during
his lifetime.
 H: Lease grants right to terminate to tenant and does NOT
reserve the same for landlord, which is a life tenancy.
 Reasoning: Tenancy at will would do violence to the original K.
o Historically, seisin had to be there to create a freehold
estate, BUT = dumb & antiquated notion.
 Gloss: Ct’s converting a non-freehold to a freehold creates as many
problems as it solves (tax consequences, loss of T’s rights, etc.)
 4) Tenancy at Sufferance: Created by holdover ONLY; T has only naked right of
possession and need not pay rent or be given termination notice
 Holdover: T had right to possession, but remains in possession (holds
over) after termination of the tenancy
o (No previous right to possession = trespass)
o CL gives L 2 options: 1) Eviction + Damages; OR 2) Consent
(express or implied) to the creation of a new tenancy
o Length of Period: determined by rent reserved in original K OR the
length of the total term BUT no more than one year.
o Pigeon Hole Problem: “where you start is where you end up”

TERM PERIODIC TENANCY

TENANCY AT SUFFERANCE TENANCY AT WILL
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  Under CL, each lease needed to fit into one of these categories.
 Result: Each lease is shoved into a box, if you eliminate 3, arguably its the
fourth BUT cts are NOW more willing to follow plain meaning w/o boxes
 Be aware of when you are playing the game, and when a lease
actually fits squarely into a specific box
 Phillpot; Myers: We should just be realistic and let the lease be
as it is stated without forcing it into a box (Candid Approach)

o E.g. “L to T for the duration of the war”

 Is it a Term? Hawkins ct said yes b/c end of war is “a collateral event
bound to happen” (he wishes), so it’s certain even if not calculable
 Is it Periodic? Seems unlikely, even if periodic payments, b/c clear
language does not establish periods
 Is it Tenancy at Will? Kalis ct said yes b/c it’s not a Term (cannot
calculate maximum duration from the outset), not periodic, and not
sufferance

o Defining the Lease: consider…intent, number of use restrictions, exclusivity of

possession, degree of control retained by granting party, presence/absence of
incidental services, etc.
o Conveyance: a lease is a conveyance that creates property rights because it
transfers possessory interest in land
o Contract: a lease is a K that creates contract rights because it usually contains
a number of promises under seal
 Restatement: A lease should be terminable by only one party

o B) Delivery of Possession: PAGE 384

 Hannan v. Dusch: (VA 1930) D to H for 15 years; On entry date an illegal holdover
prevented transfer of possession
 I: Whether, without an express covenant, there is an implied covenant to
deliver possession?
 D’s Argu: No LL duty to see that the premises were available for T’s entry
 English Rule: implied covenant = lessor must put lessee into possession
o Herpolsheimer: Lessee would not have agreed to the lease if he had
known that possession would not be granted upon K date
 Reasoning: Inconsistent with normal expectations: no
ones think they are buying a suit when signing a lease
 More reasonable to burden person with most
factual knowledge (lessor) to oust holdover T
 American Rule: recognizes lesee’s RTP, but NO duty upon lessor

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 o Reasoning: If the lessor must oust the holdover, we are holding
one individual responsible for another’s tortuous acts, which does
not happen else where and is wrong
 No legal obstacle to T’s possession = 3rd party is
wrongfully creating the obstacle in question
 Property Notion: seems counterintuitive ONLY because
instinct pulls us towards contractual thought processes
 Keep contract & property law SEPARATE!!!
 H: American Rule is enforced so that no implied covenant to deliver
possession exists.
 Reasoning: More unfair to make L responsible for a Tort L didn’t commit
than to make T take a COA against holdover T.
 Dicta: T could have requested an express covenant regarding deliver of
actual possession.
 NOTE: Restatement & Uniform Residential Landlord & Tenant Act (URLTA)
support the English Rule

o C) Transferability: Subleases & Assignments

 Terminology: POK v. POE
 Covenant: 2 Types
o 1) Dependent: Express contractual promise—dependent in K Law; OR
o 2) Independent: If L breaks a promise within K, T can sue BUT cannot
stop paying rent
 Privity of K: (POK) personal relationship between parties to K, allowing
them to sue each other but preventing 3rd party from doing so—
dependent covenants—
o Breach By one party justifies breach by another
 Privity of Estate: (POE) property based relationship
o Stems from the obligation of leasing an estate
o Mutual or successive relationship to the same right in property, as
between grantor & grantee or L & T
o Generally independent covenants, one exception
 Result: Dual sources of rental obligations
o Covenants may be express promises (contractual) and/or obligations
that pass w/ property, & are inherited by the successor in interest
o If T1 expressly assumes T’s covenants, T’s POK with L does NOT
disappear unless L allows T1 to step into the shoes of T (novation) or
expressly releases T

1. Sublet v. Assignment: Source of obligation btwn L/T and assignees or sublettees,

AND L’s ability to recover & from whom
a. Two Approaches:
i. Formalistic (still most commonly used)

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 1. Assignment = lessee transfers entire interest under the lease,
right to possession for entire term; need not be entire physical
property (partial assignment)
2. Sublease = transfer of less than entire interest, even 1 day less
3. If T conveys entire interest, but retains right to re-enter in case
of breach, jurisdictions split over whether it’s retention of a
sufficient interest to constitute an assignment
a. Modern view = it’s a contingent reversionary interest,
not sufficient to create an assignment
ii. Modern: consider intent of K parties
1. Words used are persuasive, but not conclusive (sometimes
parties may not understand terms of art)
b. Consequences of Assignment: T’s assignee is “successor in interest” to T’s
estate
i. Original promisee may enforce those covenants that run with the
state against the transferee
ii. Result: bound by ALL covenants that run w/estate in land, including
all promises made by T (if sufficiently tied to property)
1. Responsible for covenants not personally made, sometimes
distant & historical ones
2. EX: L leases to T, T assigns to T1; L is not in privity of estate
with T1,and may sue T1 if T1 stops paying rent
c. Consequences of Sublease: Sublettee is NOT successor in interest
i. POE: L & T and T & T1 BUT NOT between L & T1
1. Result: no property-based hook for L to proceed against T1
2. L—T Lease termination = Sublease termination
ii. L’s Rights:
1. Evict T1 & retake possession BUT can’t sue for rent
2. Statutory or equitable lien against T1 to recover rent, if T is
judgment-proof
3. Sue T1 under POK, IF T1 expressly promises to assume
covenants
a. Express covenants stick to T1 as long as the estate lasts;
b. POK continues regardless of where in the “chain” the
estate is transferred
4. Sue T1 as 3d party beneficiary under K bc T1’s promises to T
are for benefit of L
iii. Subrogation: substitution of A for B with reference to a lawful claim,
so that he who is substituted (A) gets the rights of the other (B) in
relation to the claim/rights/remedies
1. EX: L sues T, T may proceed against T1 under POE
2. Reasoning: One in possession is primarily responsible for rent,
but only comes into play when L sues
d. Ernst v. Conditt: (1964)
i. F: E leased land to R for go-cart track & R promised to clear land.
1. R transferred to C & C promised to fulfill all conditions of lease

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 2. C stopped paying rent, failed to clear land, & E sues C
ii. Conditt’s A: no liability b/c sublease (based on use if that legal term of
art and R’s express acceptance of personal liability amounted to
implied right of re-entry).
iii. H: Affirmed w/costs; Agreement btwn Rogers & D = assignment/lease.
iv. Reasoning: Under CL or Modern Rule, Rogers gave everything to
Conditt & didn’t reserve a right of re-entry.
1. Words used are not conclusive. Just bc they used the word
“sublet” doesn’t mean they intended its legal consequences
2. Intent: transfer R’s entire interest.
v. Gloss: Basically, ct bootstraps “intent” to formalistic analysis, by
saying C is liable based on POE—BUT CT IS WRONG.
a. Fritz: (Because) NOT a fulcrum issue—even if C not liable to E
under POE, express promise makes him liable under POK bc Es =
3rd party beneficiaries of C’s promises to R
vi. Other Possibility: Could have sued C under K theory: R also remains
liable under POK & Es could recover from him.

2. Restrictions on Transfers:
o CL: property should not be to “tied up”, so absolute prohibitions are narrowly
construed to encourage a free flow market & restriction are disfavored
 Presumption: transfers are ok, but L is NOT required to give any
reason for refusal (although the trend is in the other direction)
o Modern Trend: supports tenant rights, and requires reasoning from L
o Commercial v. Residential Lease: treated differently
 Residential: more personal = L should have more control
 More reason to continue using old property law than K
 BUT it’s not black and white
 Commercial: many large commercial apt complexes need to keep
housing freely alienable to ensure adequate supply
o Four Methods of Restrictions:
 1) Provision prohibits transfer;
 2) Provisions allows arbitrary denial of consent for transfer (L has
absolute right of refusal);
 3) Provision allows L to deny consent on reasonable grounds
 4) Provision requires T to ask permission before transfers, but it
silent w/ respect to basis on which L may deny consent
 If lease is silent, jurisdictions split.
 Majority allows arbitrary denials
 Minority holds that denial must be for commercially
reasonable reasons (e.g. no denying consent for transfer to
Planned Parenthood b/c you’re a religious crazy!)
 Rule Debate: L & T freely bargained that provision, BUT why
assume silence DOESN’T imply reasonableness?

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 o Don’t force L to accept T he doesn’t want in POE, BUT
increasingly viewed as K more than property
o Lessor should realize increased value of the property
 BUT L’s right is only reversionary—before
reversion, property is T’s to profit from however
T chooses
 Rule exists to protect L’s reversion, not his
current right to profits
 NM: follows minority in commercial context
o Allows denials for reasonable grounds such as
corporate image, commercial mix, etc.
o Rule in Dumpor’s Case: if lease 1) requires T to obtain L’s consent for
assignment, & 2) L agrees to assignment & 3) DOES NOT expressly require
consent for future assignment = covenant/obligation disappears
 Once permission is granted, it applies to all future assignments
 Only applies to assignments, NOT subleases
 Doesn’t apply in cases where T1 expressly assumes covenants of head
lease (then the covenant requiring consent still applies)
o Kendall v. Ernest Pestana: (1985) PAGE 395 minority opinion; commercial
 K: San Jose leases hanger space to Perlitches, who then enter a 25 year
sublease with Bixler; THEN Perlitches also lease to Pestana (subject to
the 25 year lease)
 Perlitches must pay increased rent every 10 years, and Bixler
would have an equivalent increase
 Bixler now wants to assign his interest to Kendall, but L Pestana says
no arbitrarily (possibly holding out for more rent)
 PH: TCH allows arbitrary refusal; AC reverses
 Pestana: I should be able to reserve transfer for an increased rent
because of increased property values.
 Court rejects this bc he will eventually be able to profit
o Since K forces the leasee to accept the risk of increased
OR decreased land values, by signing a fixed rental rate,
the consequences of the same cannot be avoided.
 Kendall: (1) property law favors free alienation, and P protected b/c K
is financially sound and covenant will keep B on the hook;
 (2) under contract law, there are implied covenants of good
faith, fair dealing, and denial on personal grounds or for higher
rent not reasonable. T took risk that land might decrease in
value; L must bear risk that it might increase
 I: May L arbitrarily say no to a legitimate transfer?
 H: NO. The transfer refusal is unreasonable if based upon grounds of
personal reasons or for a desire for a higher rent.
 Reasons for refusal must be commercially reasonable, or
objective. (Subjective reasons are not enough.)
 Gloss: Silence implies requirement of reasonableness.

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 o After Pestana:
 Commercial Leases: L can reserve the right to refuse transfer of the
lease for any arbitrary reason, but it must be: 1) In a written K; 2)
reasonable & fair; AND 3) freely negotiated.
 Residential Leases: Mixed Bag
 Here, L has a greater interest in control over who is leased too,
based upon personal nature of the relationship & proximity.
 But, not all residential leases develop from or into, even a
personal interaction…
 L lost the battle, but won the war…Now…
 Parties may freely negotiate clause allowing L to arbitrarily
deny consent
 Termination & Recapture Clause: parties may agree to clause
o If T seeks to transfer, L may bring end tenancy & enter
into new tenancy (w/proposed transferee) for better
terms
 Co-ops are special, b/c collective financial responsibility, cts
have allowed denials for reasons that go beyond purely
financial
 Cts may also consider unequal bargaining power (another
justification for reasonableness rule)
 3. Rights & Duties of T:
o T’s 2 Duties:
 1) Duty to pay rent.
 “Possession is the mother of rent”
 Regardless of K, possessing property creates an obligation to
pay rent; Traditionally independent of L’s covenants
 2) Duty not to commit waste.
 Purpose: protect L’s reversionary interest; deliver the property
back in substantially the same condition in which it was
received
 Applies to both residential and commercial leaseholds
 Includes an implied duty to make minor repairs, general
maintenance (carryover from larger duty to repair assigned to
tenants at old CL)
 CL: L could sue for damages, but b/c independent covenants, L
could not end the leasehold due to waste
 Modern: lease Ks contain clauses allowing L to terminate lease
if waste occurs; fuzzier; changes that improve the property
may not be considered waste
o Tenant permitted to make reasonable changes
reasonably necessary for reasonable use and enjoyment
(seems reasonable)
 Types of waste:

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 o Voluntary waste = affirmative act by T that damages the
premises (e.g. removing timber form the land;
sledgehammer party)
o Permissive waste = allowing damage to occur when T
could easily have prevented it (e.g. put a bucket under
the leak rather than allow it to wreck the floor)
o Ameliorative waste = substantial changes that improve
the property; still waste b/c in old common law when
title was based on land description, any changes
threatened the security of L’s title
o Law of Fixtures: (Fixture = moveable chattel)
 Rule: Fixtures belong to L NOT T = T may not remove them when
leaving
 Reasoning: (1) the more firmly something is affixed to the leasehold
(e.g. cement); AND (2) the amount of damage caused by the removal
 Exceptions: Trade fixtures (necessary for business, e.g. barber’s
chairs) are generally an exception, T allowed to remove
 But keep in mind:
 It may be waste to make the change
 It may be waste to remove the change if damage will result
 It may even be waste to remove it if no damage if the change
amounts to a fixture
o Tenant’s duty if premises destroyed:
 CL: if structures are incidental to leasehold, T still had to pay rent
under independent covenant, even if structures destroyed
 3 conventional exceptions (in which it is clear the building, not
the land, is what’s being bargained for):
o 1) If lease is for portion of building, and building
destroyed, then no liability
o 2) If lease for entire building, and building covers
entirety of property, then no liability
o 3) If lease is short-term, and access to the bldg is
therefore the entire point of the lease
 Modern Approach: T should be released from rent under K theory;
Impossibility of performance by L; Frustration of purpose for T
o Tenant In Possession:
 Self-Help: right to retake the premises without judicial process
 CL: L may use self-help to retake premises if—L is legally entitled to
possession AND L’s means of re-entry are peaceful.
 EX: Berg seems pretty peaceful, lock-out occurred when T off
premises, L accompanied by police, but ct held it wasn’t
peaceful enough = Heavy stress on peacefulness requirement
 Modern: NO self-help; L must resort to judicial process (summary
proceeding is “quick”, 6-9 months)

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  NM UORRA: requires use of summary proceedings in residential
context
 Residential vs. Commercial Distinction:
 Home is castle; even more unequal power relations in home
context than business
 Maybe more risk of violent confrontation in home BUT don’t
we want to avoid violence in either case?
 What if lease contains express provision that L may re-take if T
breaches?
 Some jurisdictions hold it’s a waiver of the right by the tenant
 Others hold that public policy of discouraging self-help means
it’s not a waiver
 All this only applicable if NO abandonment or surrender by T!!
 Berg v. Wiley: (1978) PAGE 403 [Tenant who Defaults]
 F: L Wiley attempts to regain possession from T Berg based
upon default (breach of head-lease) because T begins
remodeling without permission
 K: L to T for 5 years; L can retake possession at his option, if T
defaults; building changes must have prior approval
 DCH: reentry was not peaceable - he picked a lock, under
circumstances likely to provoke a breach of peace. LL had a
statute to provide remedy in 3-10 days.
 I: Was L entitled to self help, as stated in the lease, or was LL
wrong in locking out PL?
 H: YES.  Under the new rule, DF should have sought judicial
help in barring PL from premises.
 Reasoning:  Move away from CL to Moder interpretation.
o Hence, because LL failed to resort to judicial remedies,
his lockout of tenant was wrongful as a matter of law. 
o Lock-out caused damages, and equity dictates that since
the L caused that harm, he should pay for it. 
 Rule: Self-help not allowed. L can’t re-take w/o judicial
process.
 Result: T’s rights to possession strengthened and clauses
regarding the retaking of the property for breach of the lease
now require judicial intervention.
o Tenant Who Abandoned/Surrendered Possession: Goose and the Gander
 Abandonment: T leaves w/o justification or present intent to return,
and stops paying rent
 L’s options if T abandons:
o Do nothing, continue to collect rent
o Re-let for benefit of T (mitigate)
 If L does so, & rents for MORE than T was paying,
then T is entitled to the profit
(although many jurisdictions don’t follow)

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 o Accept implied surrender
 Surrender: premature termination of a leasehold, returning T’s
interest back to the holder of the reversion before tenancy would
naturally end
 Creation: May be express or implied:
o Express: express offer of surrender, express acceptance,
and reconveyance of the property
o Implied: abandonment = implied offer of surrender,
BUT implied acceptance hinges on intent of L in re-
taking the premises
 Acceptance: L’s actions imply termination of
relationship w/ T
 NOT: L re-lets for benefit of T, or indicates
intent to continue relationship
 Result: If offer of surrender accepted, then T has
no liability for future rent (sort of…)
 T liable for past rent + damages while in
possession AND damages for anticipatory
breach – profits L would have received
under the lease had T not breached
o BUT only if T 1. Refuses to
recognize the lease and 2. fails to
pay rent)
 Anticipatory breach damages = $ of lease
for unexpired term - FMV of unexpired
term
 Requirement: mutual agreement between lessor & lessee
o Presupposes ownership & indicates a transfer of title as
well as possession, but NOT a sales transaction
 Duty to Mitigate:
 CL: no duty to mitigate (b/c once property interest conveyed, L
supposedly has no more control over it)
o Restatement likes this approach b/c it deters
abandonment, which “leads to vandalism” (whaa?)
 Modern Approach: K theory, basic fairness demands that L
mitigate damages if he seeks to recover from defaulting T
 Traditional K: failure to mitigate results in damages reduced by
amount of loss that could’ve been avoided
o With lease, however, in many jurisdictions (but not all),
failure to mitigate lease means NO recovery
o Also, unlike K theory, here we shift the burden to L – L
must PROVE she mitigated in order to recover
o Reasoning for Duty: 1) Efficiency—no vacant properties
AND 2) Fairness—L in better position to re-let than T

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  Vacant Stock Rule: L must treat the apt as part of his vacant
stock; implicit assumption is that each apt may have qualities
that make it uniquely attractive
 Duty to mitigate governed by rule of reason: If L chooses to
mitigate, L must do so reasonably – not reasonable to rent
below mkt rate
o L only required to take reasonable steps to re-let
o Again, while it doesn’t entirely make sense to do so,
many jurisdictions differentiate btwn residential and
commercial
 Sommer v. Kridel: PAGE 410; decided w/Riverview Realty v. Perosio
 Facts: D entered into a 2 year lease with PL, never took
possession and bailed out a couple of days into the lease by a
letter to P, who did not respond. 
o 3d party was ready & able to take possession/lease that
same apt., but P refused.
o P did not show apt. to anyone from 5-1-72 until 8-1-73,
and took in a new T 9-1-73.
o P brought this suit 8-72, prior to re-letting.
 Issue(s): Is LL bound to mitigate damages, like K law, by
making reasonable efforts to re-let an apartment wrongfully
vacated by a tenant when the tenant also defaults?
 H: YES.  LL's do have an obligation to make a reasonable effort
to mitigate damages when a tenant abandons.
o Shows move away from traditional towards modern.
 Reasoning:  T received a present possessory estate & L had
future interest. 
o Acceleration clause takes away delayed payments, so
the amount is payable all immediately.  (Modern)
 It was due & owing to LL immediately so LL was
able to enforce the lease. 
o The LL might not want to take possession, because then
he would be in the position of accepting surrender. 
o LL was still entitled to rent.
o An ordinary residential lease (particularly where it is
for an apt) is more of a lease for goods and service than
a lease for land and so should be treated more like a K
and so the K doctrine of mitigation applies to it. 
 Rule: LL's must make a reasonable attempt to mitigate their
losses when a T surrenders or abandons their leased property.

 D) L & T’s Duties, Rights, & Remedies

o Landlord Duties: Under CL, L must maintain:
 1) Covenant to deliver possession. (Dutch)

13
 2) Quiet Enjoyment: (QE) Free from interference by L or agents
thereof
 Breached by eviction, or the legal fiction of constructed
eviction (rat infestation or turn off heat)
o T must have vacated the premises within a reasonable
amount of time from the actions that constituted the
constructed eviction
 This has always been available, and was never restricted.
 Scope: QU is breached when L’s behavior, “had the effect of
depriving the leasee of the beneficial use of the demised
premises by 1) positive acts of interference; or 2) withholding
something essential to full enjoyment, & included in the terms
of the lease”
 Limitation on L’s reversionary interest: Goes to both T’s
obligation to pay rent, and L’s tort liability
 Fitness of Premises: 3 Stages
 Caveat Leasee: Absent an express warranty, no fitness is
guaranteed because you accepted the land and the K price
o You can see the problems with the land.
o L need not make repairs: no liability absent negligence
o This is a harsh, old CL rule.
 6 Exceptions to Caveat Lease:
o Short Term Furnished Premises: designed for
immediate occupancy results in a duty to maintain and
repair the premises; limited to furnishings
o Expose Latent Defects: if you can’t see it, how else could
you know; limited to notification
o Maintain Common Areas: keep in habitable condition
because there is no individual incentive to maintain
these areas
o Promise Repairs Carefully: 1) Tort notion that if your
going to do something you must do it carefully; 2) T
relies on L’s, so they must be followed
o No Fraudulent Misrepresentation of Property: again
relies on things you cannot see theory
o Abatement of Immoral Conduct or Nuisances: (created
by other) L has control over other tenants, and
therefore and obligation to act upon that control
 Illegal Lease: Modern reform on QE, towards modern rule of
implied warranty of habitability
o L must put and maintain premises in habitable
condition in harmony with Housing Code or Fair Rental
Value conditions
o Conditions for Violation:

14
  L must have known or should have known of the
conditions causing code violations
 Violations must be substantial
 Must start at the beginning of the tenancy
 Even if T wins, he is still obliged to pay
reasonable rental value
 Remedy of Constructive Eviction.
 Definition: Actions of L, that so materially disturb or impair a
tenant's enjoyment of the leased premises that the tenant is
effectively forced to move out, terminates the lease without
liability for any further rent.
 CL: rent payment was to come from the crops, therefore if T
can’t grow the crops (b/c evicted), T can’t pay the rent
o Breach: Positive acts of interference that breach express
duty included in lease
o Doctrinal bridge from independence to dependence of
covenants; connecting conventional exception to
modern reforms
o Two Elements: 1) Breach must be significant enough to
warrant T’s leaving AND 2) T must leave w/in
reasonable time
o Risk: T must take a big gamble that the breach will
count and vindicate him, and that he left quickly enough
o Remedy: T may bring suit for equitable relief –
declaratory judgment that L has breached, that breach
is substantial, and that if T leaves w/in 30 days he will
have vacated w/in reasonable time; immunize T from
the risk (Charles E. Burt Inc. v. Seven Grand Corp.)
 Modern Construction: Any act or omission by the L, or
someone acting under authority or legal right from L,
which renders the premises substantially unsuitable for
the purpose for which they are leased, or which seriously
interferes with the beneficial enjoyment of the premises.
o New expansion of the remedy creates an independent
duty on L that the premises will be fit for the purposes
for which T leases them; the duty is not limited to any
specific covenants L enters into
o If this duty breached, and T doesn’t want to leave, T may
sue for damages rather than claiming constructive
eviction
 A jurisdiction may take a more generous or a more traditional
approach to defining the elements needed to invoke the
remedy
 Applies to BOTH residential AND commercial leases
o Reste Realty Corp v. Cooper: PAGE 422; QE & Constructive Eviction

15
 PH: DCH for D, sustaining defense of constructive eviction; AC
reversed; SC reverses AC
 Facts: D leased from P's predecessor in title commercial office space
 D found that due to an improperly graded, the space became
flooded every time it rained.
 Donnigan cleaned up each time it rained= aware of flooding.
 Donnigan corrected the problem, so P & D enter into a new 5
year lease.
 Donnigan told Wittman, ultimately his executor, about the
flooding and how to correct it.
 Donnigan dies. The flooding starts again, but now no one
responds to D's complaints, and a big meeting gets flooded
forcing D to flee to a nearby inn
 D asks that it be cleaned up, it doesn't get done, so D notifies LL
and vacates the premises.
 P acquires the building, and institutes this action
 P’s Argument: By remaining so long, D gave up right to constructive
eviction.  A reasonable time depends on the circumstances. Tenants
vacate at their own peril, and hence should be given some latitude.
 TC found the vacating occurred within a reasonable time.
 I: Did the flooding violate the express covenant of QE, such that it
would constitute constructive eviction
 If so, was D's covenant to pay rent dependent on QE covenant?
 H: YES.  This was a constructive eviction, which relieved D of the
liability for the rent claimed under the lease. 
 Reasoning:  Lease stated D accepted the place in its present condition.
 Reliance: D relied on the promise that the problem had been
corrected in singing the new lease.
 External Latent Defect: based on the driveway and the
foundation, NOT a part of the premises.
 P's breached the express (though it could be an implied)
Covenant of QE. DC found sufficient evidence that D's
departure from the premises was justifiable.     
 Possible Effects: Covenants of QE will be implied in commercial leases,
and L's duty to maintain the usability of the premises is increased.
 Rule: Constructive eviction serves as a substitute for dependency of
covenants
 Gloss: Ct could have gone w/ one of the conventional exceptions (duty
to disclose latent defects; duty to keep common areas in good
condition; duty to make promised repairs carefully – substantial
breaches of any of which would warrant constructive eviction)
 BUT instead ct EXPANDS traditional remedy of constructive
eviction, finding it includes not merely affirmative acts, but
ANY act or omission that makes the premises substantially
unsuitable for the leased purpose.

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 Implied Warranty of Habitability: (IWH) Controversial K term—Orally or in writing
o CON: drives up housing prices, encourages L’s to abandon old buildings, and
turns L’s into public utilities.
o Definition: Implied duty in every residential rental: that the landlord will
deliver over and maintain, throughout the period of the tenancy,
premises that are safe, clean, and fit for human habitation.
 Warranty Covers: latent AND patent defects; common AND private
areas
 Majority: Almost every jurisdiction has adopted (but some holdouts)
 Limit: IWH does not apply to ALL residential leases; often single-
family residences or long-term leases excluded
 Leases = dependent obligations, for the tenant to pay rent and for the
landlord to put and maintain the premises in habitable condition;
essence of bargain = decent rent for decent housing
o Purpose: Conditions T’s duty to pay rent on L’s duty to maintain a habitable
living space = Makes it easier for T to get L to make repairs
 Repudiation of caveat lessee.
 Acknowledgement that times have changed, Ts now rent to
obtain “safe, sanitary, and comfortable housing,” not arable
farmland
 Ts in position of unequal bargaining power
 Ts not equipped to make repairs
o Breach factors: 1) Violation of housing code requirements – if substantial,
prima facie breach; 2) Impact on health or safety, independent of codes
 Breach may result from acts of 3rd parties, even acts of god
 Focus on T’s entitlement, not L’s ability to control (e.g. garbage strike
that renders uninhabitable may allow rent abatement)
 Uses reasonably intended by parties extends only to basic
health/safety, NOT luxuries
o Exceptions/Qualifications: 1) Defects created by the T; 2) Minor code
violations not impacting health/safety; 3) T must show she notified L of
deficiency and allowed reasonable time for L to correct
o Warranty NOT waive able.
 Meet the warranty or suffer the consequences; no individualized
inquiry
 T may bargain for very low price, then not pay any rent and still
defend against eviction due to breach of IWH – NO WAIVER (Foisy v.
Wyman)
o Remedies: Once breach found, all K remedies available
 T may stay on premises, reduce/abate the rent, and use breach as
defense against eviction
 CL remedy of constructive eviction didn’t allow T to stay put.
 In some jurisdictions (not NM), T may make repairs herself and
deduct costs from rent (repair-and-deduct)

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  T may bring affirmative c/a for damages, with or w/o terminating
lease
 Damages: Difference between rent bargained for and fair rental value
 Punitive: only justified by willful & wanton violation—rare
 Compensatory: justified by T’s discomfort/annoyance, IF T
gave L timely notice
 Problem: what if it’s a dump, and L is hardly asking for anything?
Difference might be next to nothing; T might not get much in damages
(comes to close to allowing waiver)
 Difference between fair rental value of apt AS WARRANTED
and actual fair rental value
o Apt in breached condition is less valuable than it would
be in non-breached = guarantee of substantial damages
o Rent bargained for = evidence of value (but not
decisive; remember policy of no waiver of IWH)
o Hilder v. St. Peter: (1984) PAGE 431
 F: T cleaned the apt. that was gross, but L never gave her promised
refund; L promised to fix shit, but didn’t; T had to install her own locks
on the front door; Basically it’s a terrible place, electricity, heat, etc…
 Partial Constructive Eviction: Baby crib was in bedroom, but
roof was leaking, so the baby had to be kept in the living room
o But… she keeps paying the rent!
 DCH: Grants T entirety of the rent paid as breach of IWH, $1500 in
compensatory, but no punitive damages. L appeals.
 ST. SCH: The rental of any residential dwelling unit comes with an
implied warranty of habitability.
 Warranty covers all latent & patent defects in the “essential”
(vital to the use of the premises for residential purposes)
facilities of the residential unit—NOT including pools, gyms…
 Any substantial violation of an applicable housing code shall
constitute prima facie evidence of a breach of IWH
 Gloss: Ct could’ve gone w/ conventional exception (duty to make
promised repairs carefully), but established IWH instead. T need not
leave based upon IWH in order to sue for breach
 L’s Tort Liability: PAGE 440
o Traditional Rule: L not responsible for injuries on premises other than as
result of fraud, concealment, or covenant; T’s eyes are T’s protection
 L’s only liability arose if L breached the limited duty of care arising
from one of the conventional exceptions
 Negligent repairs,
 Unsafe common areas,
 Latent Defects: failing to inform T, when I shouldn’t have
reasonably known, of known latent defects present at time of
lease
o No duty to fix, just to warn.

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 
Public Use: L liable for injuries to 3rd party – NOT T – IF lease:
o 1) was for a public purpose; 2) problem existed at
outset; 3) L knew or should have known of danger; 4) L
knew T was not going to rectify the problem/T not
reasonably expected to fix it
 Violation of a safety law
o Modern Reforms: some states considered imposing strict liability
 Many impose generalized duty of care on L
 NM hasn’t imposed such a duty

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II. REAL ESTATE CONTRACTS PAGE 453
 The Contract of Sale: Process of Purchasing Property
o 1) Buyer-Seller K; 2) Temporal Gap/Executory period; 3) Closing (title transfer,
payment); 4) Post-closing problems (title assurance)
 Statute of Frauds: (SOF) writing requirement for enforceable K; new writing to re-
convey or change parties
o Low Burden: must state only price, property description, signed by party against
whom enforcement is sought (price may be reasonably inferred)
 BUT bare bones K’s might suck
o 2 Exceptions: part performance & estoppel
 Part Performance: Despite absence of a suitable writing, there was a K
such that failure to enforce it would frustrate reasonable expectations
 Allows for specific enforcement of oral agreements when
particular acts have been performed by one of the parties
 Must prove: agreement & detrimental reliance
o If agreement is admitted (Hickey) = first element met;
o If not, must show action taken by party that is unequivocally
referable to the oral agreement (action would not have
happened but for the agreement)
 Estoppel: Due to actions taken or investments made in reliance on K by 1
party, unconscionable injury will result if K is not enforced
 1 party induced to substantially change position on reliance
 Based on detrimental reliance, even if actual existence of
agreement unclear
 Note: Reliance must be reasonably foreseeable for either of these
exceptions
o Hickey v. Green: PAGE 474; Specific performance
 PH: Judge granted specific performance. This court remands to require
conveyance by Green only upon cash payment within a stated period.
 Facts: Green listed her lot S and Hickey offered to buy & build on it, Green
accepted (oral agreement) with consideration to be a $500 check. 
 BUT payee line was blank b/c of uncertainty as to whom to fill the
check out to
 Hickeys advertised their home for sale, & entered into an another
agreement, receiving another $500 check. 
 Later that month, Green tells Hickey she's selling to someone else;
a higher price was offered and denied.
 I: Does an oral agreement bar enforcement of SOF when one party has
relied to its detriment on property by selling its own house?
 H: YES.  An exception to the SOF is equitable estoppel
 Under CL fairness, the agreement must be enforced to prevent an
innocent party from being injured.

20
  Reasoning:   Green's conduct was obvious—she took a better offer after
knowing the original buyer wanted to buy/build.
 Balance of Equities: shows detrimental reliance by Hickeys
o (1) NO intent to memorialize sale by written agreement, as
the down payment was expected in check as discussed;
o (2) NO contemplation between buyers = no possibility the
Hickeys could misunderstand the circumstances;
o (3) Hickeys would be severely injured if the agreement
were not enforced b/c they already sold their home to a
subsequent purchaser.
 Rule: (Estoppel as an exception to SOF) K for transfer of an interest in
land may be specifically enforced notwithstanding failure to comply with
the SOF IF it is established that:
 Party seeking enforcement, in reasonable reliance on K, AND on
continuing assent of the party against whom enforcement is
sought, has so changed his position that injustice can be avoided
only by specific performance. (Restatement Second)
o Marketable Title: Real estate title that can be transferred to a new owner w/o claims
made on it by another party; implied condition of every land sale K
 Reasoning: buyers generally expect to receive property to which no one else can
lay claim; they do not expect that their ownership will later be challenged =
reasonably free from every risk of attack
 Compromise btwn what buyer & seller want bc it’s virtually impossible to
sell with “Perfect Title” (due to recording systems limitations).
 Implication: Unless K specifies that 3rd party has claims on the real estate, there
is an implied provision that seller has marketable title
 Outside Claims: (clouds & encumbrances) owner of title may have outstanding
debts or owe interest that has resulted in a lien being placed on the property.
 Lien gives the owner's creditor a qualified legal right to the property,
which remains in effect until the debt is settled.
 BC liens are long-lived (can remain in force across generations), many
states have tried to simplify land transactions by adopting marketable
title acts.
 Private v. Public Restrictions on Title:
 Private Restrictive Agreements: (covenants, easements) constitute
encumbrances that make the title unmarketable
o Can be waived by K – buyer may take “subject to all restrictions,
easements, encumbrances on record” etc.
o However, this clause is not a waiver of VIOLATIONS of those
restrictions, just the restrictions themselves (Lohmeyer)
 Public Restrictions: (e.g. zoning) NOT encumbrances; DON’T render title
unmarketable (b/c not property interests)
 Reason for Distinction: administrative convenience/cost – too
burdensome to seek out all the restrictions on a piece of land;

21
 o Practically, makes sense to limit discovery to private
restrictions
 Adverse Possession: Title based on adverse possession may be marketable, if K
doesn’t call for record title.
 Sellers would need to demonstrate that they had met all the elements of
adverse possession, such that:
o Outstanding claimants would not succeed if they brought a claim
o There is no real likelihood such a claim would be brought
 Catch is that agreement btwn buyer and seller that title is good is not res
judicata upon other parties – they may still challenge the title
 General Remedy: Ordinarily, K for’s real estate provide a remedy for a buyer who
later discovers that the title is not marketable.
 If the seller has failed to provide marketable title, the buyer is permitted
to rescind the sale—that is, to back out of K & receive a refund of the
money paid for the property.
 Specific Performance: Granted to buyer on grounds that each parcel of
land is unique, not fungible
o Granted to seller if difficult to prove “with reasonable certainty the
difference btwn K price & market price
 Lohmeyer v. Bower: PAGE 479 Rescission (equitable remedy) & Bower's cross-
complaint sought specific performance
 PH: TC rendered judgment for Bowers & decreed SP.  This court reverses
with directions to set aside K & render new judgment
 Facts: P's entered into real estate agreement w/D. 
o K said the land was merchantable, but after the agreement was
entered, P found that there was a restrictive covenant placed on
the lot of land by the original sub-divider. 
o Additionally, P's lawyer, after further examination, learned the city
placed a zoning ordinance regarding building to the end of a lot. 
o D's who built the house somewhere else, had it moved to the
deeded location. 
 I: Does a property subject to encumbrances or other burdens make the
title unmerchantable, OR, alternatively, if these encumbrances were
excepted by K provision that the title was subject to all restrictions &
easements applying to property?
 H: YES.  The violation of restrictions imposed by the ordinance & the
dedication declaration (not existence of the restrictions) rendered the
title unmarketable.  (No, to alternative argument.)
 Reasoning:  Party cannot convey more interest in land than it presently
has = D could not convey encumbered land & represent it to the contrary. 
o K, after rescission, should either be reworked so that the title is
marketable under the chain of title (under provision for more time
to fix the K), or the parties should go their own ways.
 Rule: Marketable title leaves no question as to who the owner is.

22
 o It is the title, which a reasonable buyer, knowledgeable of the facts
and their legal implications and acting in a reasonable manner,
would be willing to accept.
o A title insurance company should be retained to insure that the
title is marketable.
 Gloss: Ct finds those violations make title unmarketable b/c they expose
buyer to litigation. Sellers contracted to sell marketable title; therefore
contract is void
o Equitable Conversion: After parties have entered into K for the sale of land, the buyer
becomes the "equitable owner" before the delivery of the deed/closing.
 Reasoning: fairness; unique character of the property or the consequences of the
party not performing.
 Purpose: make a buyer the equitable owner of title to the property at the time
that they sign a K binding them to purchase the land at a later date.
 EX: If a house on the property burns down after K has been signed, but before
the deed is conveyed, the buyer will nevertheless have to pay the agreed-upon
purchase price for the land.
 Equitable conversion may also be found when a deed is given as security
for the payment of $, though deeds are given to secure the performance of
other obligations as well.
 English/Traditional Rule: at K signing, buyer becomes equitable owner
w/interest in real estate (seller’s is in cash) [Magic of Equitable Conversion]
 MA Minority Rule: failure of consideration if seller cannot deliver property at
closing
 Most pre-printed Ks place reasonability on seller until closing, since seller
more likely to be carrying insurance, and has more control over the
property since seller retains possession
o Exceptions to Caveat Emptor—Duty to Disclose Defects :
 Old Rule: Caveat Emptor [PAGE 13]
 Modern Rule: Increasing majority of jurisdiction impose duty on seller to
disclose all known material defects
 Johnson v. Davis: Seller has a duty to disclose all known facts materially
affecting the value of property, which are: 1) not readily observable & 2)
not known to the buyer
 Determine Materiality: 2 Tests
o Objective Test: reasonable person would attach importance in
deciding to buy
o Subjective Test: desirability of property to buyer affected
 Fraud: Nondisclosure calculated to deceive is equivalent to affirmative
misrepresentation
 Even if seller doesn’t know of defect, and asserts “no problem,” rescission
may be premised on basis of mutual mistake
o Random Rules: Some jurisdictions (CA), duty to disclose includes neighborhood
nuisances (such as loud or obnoxious neighbors)

23
  Stigma Statutes: no duty to disclose psychological/prejudicial factors
(murder, occupant w/ AIDS)
 CERCLA Liability: imposes extra duty on buyer to investigate
o BUT professional sellers/brokers have duty to disclose nearby
hazardous waste that may affect habitability--Duty doesn’t extend to
social conditions (e.g. drug dealing)
 Stambovsky v. Ackley: PAGE 484 Ackley sells house to Stambovsky, who finds out
that Ackley told publications that the house was haunted, creating bad
reputation that should have been disclosed.
 As a matter of law the house is haunted, as D is estopped from denying
the ghosts after publicizing their existence
 PH: Stam files for rescission from K; DCH dismisses; AC Reverses
 Buyer: Caveat emptor should be discarded bc he doesn’t even live there,
also no reasonable person could not discover this defect with eyes only.
 H: Where the seller created the defect that is not readily observable, there
is a duty to disclose.
o “As is” phrase of caveat emptor applies to reasonably discoverable,
physical features only.
 Johnson v. Davis: PAGE 488 Seller tells Davis there has never been a roof
problem, but the roof gushes water after a storm
 Suit: Davis sues for rescission, return of deposit, breach, fraud and
misrepresentation
 Rule: Seller has a duty to disclose 1) material defects; 2) that are not
readily seen; and 3) not known to the buyer.
 H: Caveat Emptor is discarded, and Johnson is liable for all.
 NOTE: Represents the modern trend, but not all jurisdictions are in line.
o Implied Warranty of Quality: (IWQ)
 Doctrine of Merger: Once the deed is accepted, K merges into it, & buyer has no
COA for any K provisions, that are not in deed
 Therefore, any guarantees made in K, not reflected in the deed, are
extinguished when the deed is conveyed to buyer of the property.
 Traditionally applies only to covenants of title.
 Increasingly falling out of favor.
 Exceptions: Fraud AND K obligations characterized as independent or
collateral to deed; therefore still enforceable post-closing
 Waivable: K may abrogate doctrine & provide that some or all terms of K
survive the closing and delivery of the deed.
 Post-closure Remedies:
 Difficultly based on the conceptual & doctrinal limitations of writs – the
pigeonhole problem
 If COA sounded in tort, no recovery for purely economic damages, only
actual physical injury (w/ the exception of misrepresentation)
 If COA sounded in K, recovery allowed for pure economic loss (e.g. house
is worth less); BUT K generally required privity btwn parties to bring suit
 Implied warranty of quality meant to overcome those difficulties.

24
  Warranty imposed on the builder in favor of subsequent buyers; imposes
liability for purely economic loss even w/o privity btwn builder and
buyer
 Prosser: “Freak hybrid born of the illicit intercourse of tort and contract”
 Suits on warranty arise post-closing, after acceptance of the deed
 Analogous to UCC’s implied warranty of merchantability for goods
injected into the stream of commerce
 Four principle limitations to warranty
 Defect must be latent (reasonable person wouldn’t discover)
 Warranty only extends for reasonable time period (generally 6 years)
 Warranty only guarantees average quality (customary skill & care); only
extends to defects caused by builder’s failure to use reasonable care
 COA only against a merchant-builder, NOT mere seller of the house
 Warranty of suitability also implied by Uniform Land Transactions Act
 Narrower than IWQ – only that no defects so serious as to make property
unsuitable for intended use – but applies to used as well as new
construction
 Lempke v. Dagenais: PAGE 494 [Bad garage trusses]
 F: D builds garage for X; X sells property to L; garage falls apart. L sues for
negligence & implied warranty. Ct rejects negligence b/c loss is purely
economic.
 H: IWQ extends to subsequent purchaser, since policy of protecting
innocent buyers applies equally to subsequent as to first purchaser;
builder shouldn’t escape liability merely b/c house sold – don’t encourage
sham first sales.
 Reasoning: Other reasons to extend IWQ = society increasingly mobile;
subsequent buyer equally ignorant of construction; latent defects
manifest over tie; builder on notice of duty to first buyer; builder in better
position than buyer.

25
III. TITLE ASSURANCE: PAGE 559
 Introduction: What are buyers’ methods of assuring themselves of the quantity and
quality of the Title they are receiving?
o Perfect Titles, as opposed to Marketable/Merchantable titles, are hard to come
by: enormity of previous titles/prior easements AND records are kept/accessed
is a shitty system.
o Meaning:
 Quantity – the amount of property, the property’s location
 Quality – the property doesn’t come w/ any restrictions that will restrict
its use (easements, covenants, etc.)
o Methods:
 A) Warranty:
 General Warranty: express statement by grantor that warrants
title against all defects in the title, whether they arose before or
after the grantor took title
 Special Warranty: seller warranties only against defects that arose
while seller was in possession
 Quitclaim Deed: no warranties; conveys whatever title grantor has
 B) Title Insurance: PAGE 623-624
 Definition: indemnity insurance against financial loss from defects
in title to real property AND from the invalidity or
unenforceability of mortgage liens.
 Result of deficiency of the US land records laws.
 Protects an owner's or a lender's financial interest in real property
against loss due to title defects
 It will defend against a lawsuit attacking the title as it is insured, or
reimburse the insured for the actual monetary loss incurred, up to
the dollar amount of insurance provided by the policy.
 Shortcomings = many exceptions and exemptions for defects not
covered
 C) The Recording System: The Porcupine PAGE 559
o Purposes of the System:
 1) Transparency of land ownership
 2) Preserve important documents
 3) BFP’s are protected against prior unrecorded easements.
 CL Rule: Prior in Time = Prior in Right.
 But if prior title is not recorded and new title is, Recording Act
Rule grants the title to the party who recorded, assuming
compliance with the Acts.
o Recording Acts: [O to A in time 1; O to B in time 2]

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 Rule: Subsequent buyers or purchasers are held to constructive notice of
all “recorded” documents within their “chain of title”.
 Purpose: protect BFPs & encourage recording
 If BFP performs the behavior necessary to qualify as a protected
person, then BFP prevails over “first in time, first in right”
 Until A records, possible that B may divest that title (analogous to
adverse possession)
 Major Problems: too many records, only goes back 25 years, gaps
 Applicability Requirements:
 Same property interest conveyed to A and B
 First conveyance to A not recorded
 B satisfies the behavior and conduct necessary for protection
under the act
 Priorities vs. Remedies: Recording act permits the possibility of reversing
the priority of ownership – subsequent purchaser gets the property
 Priority = who gets the land
 Regardless of priority, if same piece of property conveyed to 2
different parties, whichever one loses possession will likely have a
remedy – a c/a for fraud against the seller, for instance
 3 Types:
 Notice: First buyer doesn’t record; BFP takes w/o actual notice of
the earlier transfer; BFP does NOT need to record to gain
protection
 Race-Notice: First buyer doesn’t record; BFP has no actual notice
AND records before the earlier deed is recorded; Failure to record
first = no protection
 Race: First buyer doesn’t record; Subsequent buyer records first;
even if he has actual notice of the first deed (Only NC & LA)
 Time period to determine if no notice = when the money is proffered; if
buyer finds out about other deeds after she purchases, but before she
tries to sell the property, she still has no notice and is a BFP
o Mechanics of the Search:
 Search of Grantee Index: Search passage of property by grantee’s Sir
Name until the root source of the title is found
 Root Source of Title: point where you feel confident that further
encumbrance to title quality will not be found
 Search Grantor Index: Come back down the links in the chain of title
based upon the grantee index
 Look at the time between: 1) Time the title of the first deed was
executed; AND 2) Time that property is re-sold
 Search Tract Index: Come back down the links in the chain of title based
upon tract inde, BUT very limited, don’t exist at all in some places
 If gap btwn date of execution of deed and date of recording, must check
under both grantor’s and grantee’s names for that stretch – either may
encumber until recorded

27
o Chain of Title: legally required scope of search (by jurisdiction)
 A list of successive owners of a parcel of land, beginning from the
government, or original owner, to the person who currently owns the land.
 May include time period & document types
 Rule: Subsequent buyer is held to constructive notice of all “recorded
documents” that are within her “chain of title.”
 Including both the time period and the types of docs required
 Big I: is it “recorded”? Some jurisdictions hold that if doc recorded,
but mis-indexed, it is “recorded” (Luthi); others reject this rule
 Standard Search: from first deed in to first deed out under each
name, but some jurisdictions require more extensive search
 Purpose: To show marketable title to land that is free to transfer, a person
must know who had ownership of the land at any point in time.
 Seller should be able to trace the way in which each person came
into the chain of title.
 Abstract Title: contains a condensed history of the title to a piece of land
& a summary of conveyances; appears on public record so that title to
land can be checked.
o Luthi v. Evans: PAGE 565 Equitable COA for declaratory judgment to quiet title
 PH: TC for Burris bc deed inadequately described conveyed interests =
NO constructive notice; AC reversed bc description was sufficient to give
constructive notice to a BFP.  This court reverses.
 Facts: D acquired rights to Owens & Vanockers' oil/gas interest by
written K
 K: included All interests in Oil and Gas leases in Coffey County,
whether or not specifically enumerated. Recorded & filed.
 1975, Owen executed an assignment in a Kufahl lease (which was
not enumerated in the deed to Tours) to Burris.
 Prior to acceptance, Burris personally checked the records, and
obtained an abstract of title, no reflection od prior assignment.
 I: Does a "Mother Hubbard" clause to describe the property conveyed,
constitute constructive notice to a subsequent purchaser?
 H: YES. (Burris wins.) Based on statute, the recording of the assignment
from Owens to Tours did not describe with sufficient specificity conveyed
property, and was not sufficient to impart constructive notice to Burris.
 Other Options: To prevent subsequent purchasers from getting interest:
o 1) Take possession of the property; OR
o 2) ASAP identify specific property covered by filing an
affidavit with the register of deeds. 
 Reasoning: Mother Hubbard Clauses upheld in Kansas.
 Several interests with specific, or general descriptions capable of
being made specific, could be conveyed by one instrument, so
descriptions included in previous transfers of the same land apply
prospectively.

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 o Since the Mother Hubbard Clause was in the Kufahl K, its
still good in the new K.
 A subsequent purchaser with actual notice of the document takes
subject to the rights of assignee or grantor. 
o Burris was not a party to the instrument, and he was a BFP.
 Required description, by statute, not satisfied.
 RULE: SUBSEQUENT BUYERS ARE HELD TO CONSTRUCTIVE NOTICE
OF ALL “RECORDED” DOCUMENTS WITHIN THEIR CHAIN OF TITLE.
o Orr v. Byers: [Description by Government Survey] PAGE 574
 Facts: Orr obtained a judgment in excess of $50K vs. Elliott, but judgment
recorded a month later misspelled Elliott's name (with only one "t")
 Elliott acquired property subject to the lien (Orr' judgment lien),
then sold it to D Byers, but the title search failed to disclose the
abstract of judgment. 
 Preliminary title report did not identify Orr's judgment lien
against Elliott = judgment not satisfied from proceeds of the sale.
 Doctrine of Idem Sonas: idem sonans name allows a pleading to be
considered valid despite misspelling or other misidentification of a party.
 I: Does an abstract of judgment containing a misspelled name, impart
constructive notice of its contents under the doctrine of idem sonans?
 H: NO. Doctrine did not apply here; to require title researchers to check
every possible spelling would be too much of a burden. 
 The burden is on the judgment creditor to take appropriate action
to ensure the judgment lien will be satisfied.
 Reasoning: Eliot, Elliott and Elliot are idem sonans, BUT use of the
doctrine limited to establishing sameness of identity—never been applied
to give constructive notice to good faith purchasers for value in that state.
 Ignored Green, which allowed same first letter idem sonans, bc it
failed to consider searcher’s burden (know all alternative
spellings) & dispensed with the formalities of record notice. 
 Idem sonans is not applicable when the name is material, as here.
o For a name to be material, a variance must be such as has
misled the opposite party to his prejudice.
 The procedure was simple. They didn't have to change the whole
system of recording; P's attorney just had to spell the damn
name right.
o Shelter Rule: (CL) A grantee who has received an interest in property from BFP,
will also be protected as BFP, even if the grantee would not legally qualify
 Grantee is "sheltered" from other claims by grantor's status as actual BFP.
 Check out Shelter Rule Problems: Printed.
o Zimmer Rule: (only in race-notice jurisdiction) subsequent purchaser, who first
records, is ONLY protected if ALL prior conveyances in chain of title are recorded
 No Protection: for C where O  A, then O  B, B records with faulty
acknowledgement, B  C

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 Protection: O  A, A records with a faulty acknowledgement, which ct
says may NOT grant constructive notice to subsequent purchasers
 Problem: Who is in better position to protect herself?
 Subsequent purchaser who can find A’s recorded deed (albeit w/
defect) or subsequent purchaser who cannot find A’s deed, but
who records w/ defect?
 Question of notice vs. mere recordation (see below)
 Zimmer rule therefore undermines the policies of recording acts :
 Encourage recording (b/c it protects prior purchaser who didn’t,
and not subsequent, who tried to)
 Encourage title searches (b/c if defect in acknowledgement latent,
search does no good!)
 Leads to bad results
 Majority of jurisdiction DON’T follow Zimmer.
 If defect latent, then it does give constructive notice, BUT if defect
patent, then it doesn’t.
o Messersmith v. Smith: PAGE 583 equitable action for quiet title
 PH: TC found that the deeds were not procured through fraud or false
representation.  This court denied a petition for rehearing.
 Facts: Caroline & Frederick each inheirited undivided ½ interest in
property. (recorded before 5/7/1946) 
 1946: Caroline executed and delivered a quitclaim deed to
Frederick, who fails to record  
 May 7, 1951: Caroline conveyed to Smith by mineral deed
containing a warranty of title, a ½ undivided interest in all of the
oil, gas.  (recorded May 26, 1951. )
o Error in deed, Smith tears & executed another one. 
o Notary called Caroline over the phone for acknowledgment
= BFP records, but deed has defective acknowledgment
 May 9, 1951: Smith executed a mineral deed conveying ½ interest
in all the oil, gas. 
o Recorded & conveyed to Seale on May 26, 1951.
 Fred records after Smith and after Seale
 Seale’ A: purchaser w/o actual or constructive notice of P’s claim. 
 Under race-notice statute, has superior title.
 (P) Messersmith’s A: Denial. Mineral deed was void bc it was never
acknowledged, not entitled to record, and was obtained by fraud, deceit
and misrepresentation. 
 I: Did Smith, as a subsequent purchaser for value, have valid title to the
land conveyed to him by P Fred?
 H: NO.  The certificate of acknowledgment on the deed to Smith is not
conclusive of the fact of actual acknowledgment by grantor.
 Seems contrary to recording policy bc Seale recorded &
researched his chain of title.
 Fred did nothing, but Fred still wins.

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  Reasoning:  Here, the 1st deed, which was acknowledged was torn up for
error and the 2nd was not.  Thus, even though Seale may say he is a BFP,
the statutory requirements for recording of the title were not met.
 Since Caroline had conveyed to Frederick, she had no title.  Seale
has to rely upon his position as an innocent purchaser. 
 Since Smith's record was not entitled to be recorded (not
acknowledged), Seale was NOT a purchaser for good faith and
valuable consideration pursuant to the statute.
o Although there is evidence that 1st deed might have been
recorded, Seale's title is dependent upon instrument that
was recorded—not destroyed one.
 Zimmer Rule- in a race-notice jurisdiction, to be a BFP, you need to have
all of the deeds in your chain of title recorded
 Defects in Notice vs. Defects in Recordation
 Defects in recording in Luthi and Orr go to notice – the deeds
aren’t recorded such that they grant subsequent purchasers notice
 But w/ Messersmith, defect is highly technical; not about notice,
but mere formalities of recordation – form over substance
 If Messersmith had been decided in pure NOTICE jurisdiction, S2
would have prevailed, b/c he took w/o notice; in notice
jurisdiction, that’s all you have to do to satisfy the recording act
 Keep separate the issues that go to notice and to recording
o Chain of Title Problems:
 Basic Rule: Purchaser is responsible for ALL DOCUMENTS within her
legally defined chain of title; if they are properly recorded,
constructive notice is imputed & buyer receives no protection from
recording act
 Four typical problems arise, due to the drawbacks of the grantor-grantee
index: Wild deed; Buried language in deeds out from common grantor;
Early recordation; Late recordation
 Board of Education of Minneapolis v. Hughes: PAGE 590 equitable action to
quiet title; race notice jurisdiction
 PH: Trial court found for P; This court reverses
 Facts: (T1)5-17-1906 Hoerger executes and acknowledge a
deed with grantee left blank for $25, and mail it to D Hughes, who
fails to record.
o (T2) 4-27-09 Durea and Wilson pay Heorger $25 for a
quitclaim deed to the same lot, fails to record
o (T3) 11-19-09 D & W (real estate dealers) execute and
deliver warranty deed to P Board; 1-27-10 P records
o (T4) 12-16-10 D Hughes records
o (T5) 12-21-10 D &W record the quitclaim to them
 I: Did the deed from Hoerger to D Hughes become operative, &
would D be a subsequent purchaser who recorded first?

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  H: YES. The deed became operative when Hughes put in his name,
and he recorded before the prior purchaser. Hughes wins.
 Reasoning:  Even though D was a subsequent purchaser, he
recorded before D&W, prior purchaser.
o Even though P Board recorded first, there was no deed
from grantor to P, so P was a stranger to the title, and this
did not constitute notice to D of the prior conveyance to
D&W from the grantor.
o When he received the deed from the seller, D had implied
authority to insert his name as grantee, in the absence of
evidence showing the want of such authority.
 D's deed then became operative. When D’s deed was
recorded, there was a record of a deed from the real
estate dealers to P, but no record showing that the
real estate dealers had any title to convey.
 This was not notice to D of the prior unrecorded
conveyance by his grantor.
 He was a subsequent purchaser in good faith for a
valuable consideration, and he was thus protected
by the recording of his deed before the prior deed
was recorded.
 Wild Deed Rule: deed that does NOT name a grantee is a nullity,
and wholly inoperative as a conveyance, until the name of the
grantee is legally inserted; grantees should insert names and
record immediately.
o No constructive notice from wild deed
o Applies in notice or race-notice—goes to notice
 EVEN applies in a pure race jurisdiction – doesn’t
require notice, but does care about the constructive
notice of the fact of first recordation, which wild
deed doesn’t provide; therefore wild deed not
“recorded” so as to satisfy recordation requirement
 Problem would be solved by tract index
o This is considered the better rule for purposes of equity
 Guillette v. Daly Dry Wall Inc: action to enjoin to prevent D from erecting
an apartment building
 PH: TC for P; affirmed here with costs
 Facts: Original grantor subdivided land, & restricted land to single
family dwellings, via references in the deeds to a 1967 & 68 plan
o 8 deeds set out the restrictions or incorporated them by
reference.
o Guillette deed and one other contains a statement imposing
the same restrictions on grantors remaining property
o P's purchased 3 lots from grantor, with no reference to
deed restrictions, but did refer to the 1968 plan.

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 o P had a title examination and learned of the restrictions,
then obtained a building permit for an apartment building.
 I: s P bound by the deed restrictions when there was no reference
to the deed restrictions?
 H: YES. P's deed mentioned the plan.
o It was reasonable to require P's title examiner to check all
the deeds to the subdivision from the common grantor.
 Reasoning:  All the deeds from grantor were properly recorded.
Because the deeds described an interest in the grantor's remaining
land, it cannot be treated as unrecorded, and therefore D took
subject to the restrictions.
o D's deed mentioned the plan, which was a recorded plan; D
should have searched for it.      
 Rule: In similar situations, where the common grantor has not
bound his remaining land by writing, the SOF prevents
enforcement of restrictions against the grantor or subsequent
purchaser of a lot not expressly restricted. 
o If grantor binds his remaining land by writing, reciprocity
of restriction between grantor & grantee can be enforced. 
o This means that person takes title subject to the
restrictions in the deed to the earlier purchaser.  Each of
the several grantees, if within the scope of the common
scheme, is an intended beneficiary of the restrictions and
may enforce them against the other.
 Buried Language Rule: Deeds out from a common grantor may
be in a buyer’s chain of title = constructive notice of their contents
o EX: O  A, deed to Whiteacre, containing restrictions on
Blackacre; O  B, deed to Blackacre, no mention of
restrictions
 Is B responsible for deed to A? It depends on the
jurisdiction…
 Problem presents the same practical difficulties as
Luthi – index won’t note all the restrictions on other
land contained in a deed; you actually have to go
read the whole instrument (ALL of them)
 Since legal definitional chain of title = the search you
must perform for EVERY link in the chain, in these
jurisdictions you must search EVERY deed out from
EVERY prior grantor in your chain of title, b/c you’re
imputed constructive knowledge of the contents of
every single one of them
 Extremely burdensome; modern approach finds it
excessive; only a minority of jurisdictions require
such an extensive search
 This one a tract index actually wouldn’t fix

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 Early Recordation: you must extend the search a certain amount of time
prior to the standard search
 Recordation prior to actual transfer must be re-recorded upon
physical transfer in order to incur the protection of recording acts
 Minority rule by jurisdiction
 EX: A  B; O  A; equitable doctrine passes title directly through
to B once A receives title; A  C
o To find out that A has already transferred to B, C must
search the record under A’s name BEFORE A received title,
since A recorded his transfer early
 Modern approach: NO extended search for (how many?) years
before grantor received title
o Reasoning: Better to put burden on B to re-record title once
A actually receives it, or to put burden on EVERY
subsequent purchaser to do an extended search?
 One-time burden vs. repeated, going forward to all
subsequent purchasers
 Grantee has strongest incentive to ensure proper
recording in order to prevent recording statute from
cutting off her title and vesting it in subsequent BFP
 Again, tract index fixes
 Late Recordation: same, but you must search after the first deed
recorded out of original owner/grantor
 Minority rule by jurisdiction
 EX: O  A; O  B (B knew of transfer; not BFP); A records; B  C
o For C to find transfer to A, he must search the record after
first deed out from O, which is when std search stops (if B
were a BFP, C would be protected by shelter rule)
 Similar to Wild Deed: A “recorded” before C; but since A’s
recording is outside C’s chain of title (in a juris that doesn’t require
extended search), it’s not “recorded” such that it gives C
constructive notice, so even in a race-notice jurisdiction, C should
prevail
 Relationship Btwn Chain & Recording System: recording act only
protects subsequent buyers who satisfy certain behavior
o One piece of which (in all but race jurisdictions) is not
having notice; extending the chain of title extends that
constructive notice to more recorded documents
 And, once again, a tract index would fix (we’re so pathetic)
o Persons Protected by the Recording System: only protects subsequent buyers
who take without notice (Who is a BFP?)
 Rule: must have paid valuable consideration; Prior purchaser need ONLY
be seeking protection of Acts (not BFP)
 Protection based upon notice (problems for installment Ks)
 I: who gets the property & who gets the right to sue?

34
 Equitable Conversion: purchaser of real property becomes the equitable
owner of title to the property at the time he/she signs K binding him/her
to purchase the land at a later date.
 Seller retains legal title of the property prior to the date of
conveyance, but this land interest is considered personal property
o Right to payment of money NOT right to the property
 Risk of Loss: transferred to buyer – if a house on the property
burns down after K, but before deed is conveyed, buyer will still
have to pay the agreed-upon purchase price for the land.
o Such issues can and should be avoided by parties by
stipulating in K who will bear the loss in such occurrences.
 The above rule varies by jurisdiction, but is the general rule
 Partial Payment: (Majority) NOT BFP until full price has been paid—only
get restitution
 Three Options:
o Give the land to the prior claimant, restitution to
subsequent (not all jurisdictions would add on taxes as ct in
Daniels did)
o Split the baby – fractionate the interest in the property
(possibly by creating tenants in common), based on the
amount paid (huge practical problems, rarely followed)
o Give the subsequent buyer the benefit of his bargain, but
pay the balance to the prior claimant (approach followed in
Lewis)
 Pro tanto rule – protect the buyer to the extent of payments made
before notice, but no farther
o 3 methods of Application:
 (1) Award land to holder of outstanding interest &
award buyer the payments he or she has made
(most common)
 (2) Award buyer a fractional interest in the land
proportional to the amount paid prior to notice
 (3) Allow buyer to complete purchase, but to pay
remaining installments to holder of outstanding
interest
 Daniels v. Anderson: PAGE 598 equitable action for specific performance
 Parties: Buyer (Daniels) v. Seller (Zografos)
 PH: TC held for P; AC affirmed, as does this court.
 Facts: Adjoining landowner contended that he was a BFP of
contiguous parcel.
o T1: Recorded K for sale of 2 lots from J to D; with option for
right of refusal for adjacent parcel, but not in the deed
o 8 yrs later K where J is selling adjacent parcel to Z for 60K
 He pays 40 before he knows and 20 after

35
  PH: TC holds that award of contiguous parcel to L should not have
included the easement that adjoining L received from prior owner,
& L had no easement rights under 1977 K.
o The adjoining L contended he was a BFP, but had not raised
this defense until his appeal. 
 I: Was Zografos a BFP who took notice of the option and therefore
should be protected from having to convey to Daniels?
o Under the same law, at what stage does one become a BFP?
 H: NO. D had notice of the first refusal clause before he took title of
the property, and thus should be estopped from asserting any
rights as a BFP over P, and specific performance should be
granted.
 Reasoning:  Absent consideration of the equitable conversion
doctrine, the court turned to when Zografos became a BFP. 
o During executory period, the buyer can NOT rely solely on
public records & ignore actual notice of an outstanding,
unrecorded interest. 
o However, the courts are split as to whether or not a BFP is
still a BFP upon receiving notice prior to paying full price. 
 Some say partial consideration is not enough, but
many courts have relaxed this harsh rule. 
 Instead they apply a pro tanto rule, which protects
the buyer to the extent that they have paid prior to
notice.  This court recognizes this rule. 
 Ct gave land to holder of interest and forced
Daniels to pay D, TC did not abuse discretion
 Rule: A BFP takes title to real property without notice of the
interests of others. 
o Any notice prior to payment of any consideration = pays at
own risk w/ respect to holder of outstanding interest. 
 That buyer is not a BFP.
 Lewis v. Superior Court: legal action for SJ; CA = Race/Notice
 PH: TC denied motion for SJ; AC held that the lis pendens was not
properly recorded until it was indexed, which was the day after
the title passed to P's. 
 Facts: P's purchases property from Shipley in February 1992 by K 
o A few days before P's acquired title, Shipley was given
notice (lis pendens) of Fontana’s suit against it, but not
indexed.
o 2/25: Lewis pays 350K on K and receive
o 2/28: Closing/Deed recorded + Give note for $1.5 million
o 2/29: Lis pendens is indexed by Fontana = recorded
o March: Lewis pays balance & do million dollar renovations
o Sep: Served in Fontana’s suit and learns of lis pendens

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 I: Does a purchaser of property take constructive notice of a lis
pendens action when deed was indexed the day after title was
acquired?
 H: NO. Where little of the purchase price remained unpaid, or
where substantial improvements had been made prior to notice,
equity demanded that petitioners retain the property and that the
defrauded party be limited to money damages.
o The claims against the seller all involved alleged fraud and
conversion, not disputes over title, and that therefore the
lis pendens was invalid.
 Reasoning:  (balanced equities) It would be inequitable to force a
purchaser to check the record after he has already acquired title. 
o P's paid cash for such property, requiring no equitable
interest to be held for them; they owned the land upon the
conveyance of the deed.
o Because Fontana had pending litigation (lis pendens), this
puts everyone on notice that there is an existing suit. 
 Doctrine of lis pendens: application of the statute
of Quia Emptores- CL doctrine that existed long
before recording statutes. 
 Problem: (applying doctrine with the recording
statutes) In order for a subsequent owner or
purchaser to be bound by the doctrine, there had to
be notice in the public records.
o If it has been recorded, the whole world has constructive
notice; however in this case, although the notice was
recorded, it was not indexed until after the buyers . 
 Burden: shifts from buyer to the one doing the
recording—not just record BUT record it early
enough to make sure it is properly indexed. 
 Gloss by Fritz: Lewis should be granted full protection of
recording statute even though he had not paid all the purchase
price at the time lis pendens was indexed (officially recorded). 
o This ct refuses to let indexing of the lis pendens act as
constructive notice—bc buyer invariably checks seller’s
title when he initially ponies up cash to buy property (not
at later installment periods).
o AH HAAA Moment: Assumption that Lewis was subsequent
in time to Fontana (namely that Fontana's initial filing of
the lis pendens on Feb. 24 made it prior in time). 
 Lewis's Consideration: helps establish him as a BFP
is only relevant & only arises if Lewis is a
SUBSEQUENT buyer claiming protection of Acts. 
 If Lewis is first in time he wins even if he is a donee 

37
  CL rule of "first in time" prevails unless that
result is reversed by some subsequent party
gaining the protection of the recording act.
 Considering Lewis subsequent to Fontana =
consequence of CA's rejection of Luthi Rule--in CA
the index is part of the record.
 When Fontana's lis pendens was indexed, the Lewis
deed had already been recorded.
 Therefore, under CA's race/notice recording
statute, Fontana did not win the race to record and
loses to a subsequent buyer WHO FIRST RECORDS.

o Inquiry Notice: form of constructive notice, different than actual or recorded

 Elements: 1) Suspicious fact that generates an obligation for further
inquiry; AND 2) Reasonable inquiry based upon the suspicion would have
revealed the interest in question (so your held to it)
 This is actually easier to prove than actual notice because you have
less evidentiary concerns.
 2 Kinds: 1) Based on suspicious fact in records; 2) Suspicious fact based
on 3rd party possession of the property in question (most common)
 Reasoning: Buyer won’t buy a “pig in a poke” – will check out the
property beforehand, look for possibility of unrecorded interests like
easements, adverse possession, etc.
 NOT big additional burden to require buyer to make inquiries of
anyone found in possession
 Although this argument much harder to sustain when expanded to
facts in the record; much less clear-cut, heavier burden
 Ideally inquiry notice should only be applied where suspicious fact
visible/obvious
 Lingering questions = what’s sufficiently suspicious to trigger
inquiry? How far does inquiry need to go?
 Harper v. Paradise: PAGE 604 equitable action for declaratory judgment
to quiet title; Race Notice in GA
 PH: TC granted DV for appellee; Reversed in this court.
 Facts: 2/22: Susan Harper conveys by warranty deed to daughter
in law Maude a life estate with a remainder in Maude's named
children, for $5 + love and affection. Maude lost this deed.
o 1927: Grantor Susan Harper dies
o 3-19-28: Maude records deed from Grantors heirs who
execute an instrument meant to re-deed the property to
Maude. This deed refers to the lost deed.
o 2-27-33: Maude Harper executes and records a security
deed to Thornton for a $50 loan implying a FSA

38
 o 1936: Thornton forecloses on the property for the default
of the $50 loan, receiving an executed and recorded
sheriff's deed.
o 1940: actual possession by the Thornton chain of title
o 1955: Unbroken chain of title from Thornton to appellee's
paradise, who took by warranty deed recorded in 1955    
o 1957: One of the appellant remaindermen finds the original
deed in an old trunk, records 7-57
o 1972: Maude Harper dies, and her life estate ends
 I: Did the reference in the 1928 deed constitute constructive notice
& raise duty to inquire into 1922 deed, such that Paradise should
have known his interest was in a life estate pur autrie vie?
 H: YES. The recorded 1922 deed raised at least a duty in Thornton
to inquire as to grantor's interest in the land. 
o Reversed with direction to enter judgment for appellants
(remaindermen).   
 Reasoning:  The 1928 deed incorporates reference to the 1922
deed, hence Maude must have taken with knowledge of it.
o These references are a disclaimer warning others of the
remainderman's interest in the land.
o Claims statute protecting purchasers for value w/o notice
of unrecorded deeds. However, the 1928 deed refers to the
1922 deed, hence there is constructive notice.
 The 1928 deed gave notice to check the other deeds
it mentioned.
o Since they are not claiming that such an inquiry would be
futile, it is presumed that due inquiry would have
discovered the existent facts.
o Paradise and predecessors did not establish prescriptive
title by adverse possession because prescription does not
begin to run in against the Remainderman until the life
estate ends.
 Rule: A deed in the chain of title, discovered by the investigator, is
constructive notice of all other deeds, which were referred to in
the deed discovered, including an unrecorded plat included in the
deed discovered.
 Waldorf Ins v. Eglin National Bank: Inquiry Notice by Possession
 F: 1972 C takes out mortgage on condos w/ E.
o 1973 (April), W contracts to buy condo #111 from C,
contract not recorded.
o 1973 (Oct) & 1974 (June), C takes out additional mortgages
from E, secured w/ condos including #111.
o 1974, C grants W quitclaim deed to condo #111, in
exchange for writing off a debt.

39
 o 1975 quitclaim recorded.
o 1976 E forecloses on the condos. E argued W’s possession
was equivocal; ct disagrees, irrelevant that other people in
possession weren’t owners.
 H: W prevails as first in time (except as to 1972 mortgage). E
doesn’t get protection of recording statute b/c inquiry notice.
 Note: Ct wastes time mulling over issue of consideration from W to
C – BUT W IS PRIOR, NOT SUBSEQUENT PURCHASER, SO
CONSIDERATION IRRELEVANT.
 Rule: When a third party, who is not the grantor, is in possession
of a conveyed property, the grantee has been granted inquiry
notice AND must look into it.
o This is a low burden because you should be out there
checking your purchase out anyway.

40
IV. SERVITUDES: PRIVATE LAND USE ARRANGEMENTS [THE SWAMP] PAGE 667
 Terminology:
o Dominant vs. Servient:
 Dominant estate = the land that gets the benefit of the easement
 Servient estate = the land that bears the burden of the easement
o Appurtenant vs. In Gross:
 Appurtenant = easement that benefits & affixes to a particular tract of
land; benefits L based on that person’s status, not personal
 There must be both a dominant and servient estate
 Presumption in favor of appurtenant
 “Octopus sinks its tendricals into the land, & stays as the burden.”
 In gross = personal benefit to the easement holder, not affixed to any
dominant estate
 There will not be a dominant estate (only a servient)
 Classic example = utility easements (not tied to any land owned by
utility, but to utility as a business)
o E.g. right to fish in a pond on another’s land
o Affirmative vs. Negative:
 Positive = gives easement holder the right to do something on the
servient estate (e.g. walk across it)
 Negative = gives easement holder the right to prevent the servient owner
from doing something on the servient estate (e.g. building restrictions)

 Historical Context:
o Characteristics: private agreements NOT public restrictions (zoning/nuisance)
 non-possessory rights that control use of land, for benefit of L+
o Three Screws or Servitudes: doing the same thing with different sets of rules,
which cannot be consolidated because of the large number of future interests
already created based upon the original sets of rules
 Easements: 12th-13th Century
 Agrarian world, medieval mindset: limitation on abstract thought
made easements less useful during industrial revolution
 Real Covenants: 17th-18th Century
 Developed to overcome easement limitations (in tandem w/K
theory) BUT also have limitations
 Equitable Servitudes: Developed by equity cts to get around restrictions
on real covenants
 NOTE: Why can’t we weave them all together today?
 3rd Restatement attempts to; NM has embraced
 Problem of retroactivity, reliance, any changes affect vested
interests
o KEY of Servitudes: RUNNINGNESS

41
  I: Is this restriction on land binding on successors to the restricted land,
such that subsequent parties get the burden or the benefit?
 Every restriction contains both a burden and a benefit
 Complicated with reciprocal restrictions (dual burdens &
benefits)
 Do the burdens & benefits “run” with the land?
 With easements, the answer is always “yes”

(1) Easements conceived of as a grant of a property interest

(2) E.g. A granting B the stick from her bundle that would allow
A to prevent B from trespassing across A’s land; once
granted, that stick stays with A’s property bundle
(3) We’re capable of thinking of them as promises, but
medieval landowners were not
 Harder question with covenants & equitable servitudes

 Easements:
o Limitations: CL favored positive = only recognized 4 negative easements
 Types:
 (1) Light (not scenic views)
 (2) Air (free flow to the property)
 (3) Lateral support of a building
 (4) Flow of an artificial stream
 US Expansion: willing to recognize negative easements for scenic
views, solar collection, & conservation

 Reasons: CL reluctant to expand beyond these 4

 Affirmative easements give better notice.
o England had no recording acts.
o Concern about burdening land with hidden encumbrances.
 Negative easements were recognized by prescription.
o Doctrine of Ancient Lights: American cts rejected
o Concern about creating undue restrictions by prescription
 Affirmative easements look like the grant of a property interest,
while negative obligations look like promises.
 Easements limited to passive duties on owner of servient estate =
some situations won’t fit within the easement paradigm
o EX: A promises B to plant and maintain trees on A’s land –
 NOT positive easement, b/c B has no right to do
anything on A’s land
 NOT a negative easement b/c B not preventing A
from doing anything

42
 o These situations must be enforced outside of the easement
theory (as covenants or servitudes)
o Duration: may be given in fee simple, life estate, term of years, defeasible, etc.
o Easement vs. profit or license:
 Profit = right to take something off land of another (timber, minerals, etc.)
 License = permission to do some act that would otherwise constitute a
trespass (enter the land of another); revocable at will
o Creation of Easements:
 Express Easements: 3 ways of creation
 1) Express creation by grant in a writing (deed or other
instrument)
 2) Express reservation or exception of interest.
o O sells land, want to reserve some right in it (e.g. right of
way)
o Exception = excepting some interest in the land from the
conveyance; old common law had a problem with this b/c
you can’t have an easement in your own land, so you didn’t
have that interest to withhold
 3) Estoppel: Landowner grants a license revocable at will
o But if licensee undergoes substantial expenditures in
reliance on that permission, ct may hold the license has
become irrevocable – functionally identical to an easement
 ALL EXPRESS: subject to SOF & Recording Acts; seller has no duty
to disclose encumbrances; buyer held to constructive notice of
chain of title; burden runs w/property
o W/ambiguous lang—appurtenant is favored over in gross
 CL: prohibits reservation in favor of a third party
o Only parties to a deed may take advantage of it; based on
feudal notions
o In jurisdictions that still apply this rule, you can get around
it with a straw deal – use two pieces of paper instead of one
 EX: M grants the property to the church in fee
simple, and the church grants it to P, reserving an
easement for itself (or grant property to P, P grants
easement to church)
o Some jurisdictions no longer apply this rule (3d
Restatement)
 Reservation: re-grant, from grantee back to grantor (b/c how can
you reserve a property interest that doesn’t exist until the
transfer?)
 Willard v. First Church of Christ, Scientist: PAGE 672 equitable action to
quiet title.
 PH: TC judge quieted Willard's title.  Here, reversed.
 Facts: McGuigan owned adjacent lots 19 & 20; let church park on
lot 20. 

43
 o She sold lot 19 to Peterson.
o Willard expressed an interest in buying lots 19 & 20, and he
and Peterson signed a deposit receipt for the sale of the 2
lots, one from Peterson, the other from McGuigan. 
 When he agreed to sell lot 20 to Willard, Peterson
didn't own it, so he made an offer to McGuigan. 
 She said she'd sell if the church could continue to
use it for parking. 
o Willard paid and got Peterson's deed 10 days later. 
o Willard then recorded the deed, which had no mention of
the easement provision, although Peterson did mention to
Willard the church would want to use lot 20 for parking
(but not about the clause).
 I: May a grantor, in deeding real property to one person, effectively
reserve an interest in the property to another?
 H: YES. In this case, such a reservation vests the interest in the
third party.
 Reasoning:  TC follows CL rule that "one cannot 'reserve' an
interest in property to a stranger to the title" BUT now they want
to give effect to the intent of the grantor, and rule frustrates the
grantor's intent.
o BC it produces an inequitable result (original grantee
presumably paid a smaller price for title to the property) 
o Knowledge: Willard couldn't say he had no knowledge of
the easement, as land was being used as such while he was
in the negotiating process, and after Willard acquired title.
 Test: balancing of equitable and policy considerations:
o Injustice which would result from refusing to give effect to
the grantor's intent (vs.)
o Injustice, which might result by failing to give effect to
reliance on old rule & policy against disturbing settled titles
 Note: probably intended an in gross easement, but the language
created an appurtenant
 Holbrook v. Taylor: dual equitable cause of action: estoppel and
prescription.  Appellant wants to quiet title.
 PH: TC for P.  This court affirms.
 Facts: 1942: appellant bought tract of land. 
o 1944: permission granted to someone to cut road on
appellant's land to haul coal. 
o 1949: roadway not used as much; road closed. 
o 1957: appellants built a tenant house; tenants use road
o 1961: tenant house burns down.
o 1964: appellees Taylors buy land adjacent to Holbrook. 
Appellant let appellees use the easement (haul road) to

44
 move their stuff in, and watched as they improved on the
road by widening it. 
 After appellants constructed their new home, they
continued to use the roadway as before. 
 Only after the appellees improved the road of
egress/ingress was the suit for the quiet title, as
Holbrook wanted Taylors to sign a form relieving
Holbrook of all liability on the road.
 I: May appellee raise the claims of estoppel and prescription to an
easement when the land in question was used as such for various
purposes on and off again since 1944?
 H: YES.  When the land owner or previous landowners granted
permission for use of an easement, & watched while the current
party spent substantial $ in reliance on this representation, the
original landowner is estopped from revoking license.
 Reasoning:  
o Intent: (part of prescription claim)  Here, the land was
granted permission by appellant since 1944 to be used as
an easement, which gave the appellees to feel as if they had
license to be on the land as well. 
 They acquired an interest by improving land by
building the $500 worth on the ingress/egress road. 
 This building was done in reliance on the road being
property of both parties (mentioned above). 
 No dispute as to who could use roadway until 1970 
 Agreed tacitly (w/o consent) to allow the use of the
easement, and thus should not be denied now.
o Implied Easements: created by circumstances, NOT express statement
 Note: Exception to SOF that undercuts purpose of the recording system,
due to the lack of documentation
 Elements: (1) unity of ownership of the alleged dominant and servient
estates; (2) the roadway is a necessity, not a mere convenience; (3) that
the necessity existed at the time of severance of the two estates
 Use by express, implied permission or license (no matter how long
continued) cannot ripen into an easement by prescription
o Reasoning: user as of right, as distinguished from
permissive user, is lacking.
 Types: 1) Necessity; 2) Prior use (quasi-easement); & 3)
Prescription
 Van Sandt v. Royster: PAGE 682 equitable action for injunction (enjoin D)
 PH: TC for D.  Here, affirmed.
 Facts: P bought a tract of land, which was closest to the main
sewer, and had an underground connecting drain. 
o Adjoining tract of land sold through conveyances to D, & a
third tract, adjoining the second tract was sold.  (19, 20, 4)

45
 o All shared the connection. 
o P's home was flooded one day with sewage, and he
discovered the sewage line, which caused the problem ran
underneath all three homes. 
o Thus, this suit for injunction against 2 adjoining
landowners to stop using the pipes; of course, DF's are
vehemently against this.
 I: Does an adjoining L who shares a lateral sewage drain
(connection) have the right to enjoin his neighbors with the
contention the sewer, which was an easement NOT described in
his deed, when the pipes from the adjoining L’s cause sewage to
accumulate in his basement?
 H: NO.  Common sense would lend P adjoining landowner to make
a thorough inspection of land, which he did, & know that a sewage
connection was a necessary part of the modern plumbing system
 Reasoning:  After wrestling with old CL, the court decided to go
with common sense & common practice. 
o An easement created by implication arises in an inference
of the intentions of the parties to a conveyance of land. 
o The inference is drawn from the circumstances under
which the conveyance was made rather than from the
language of the conveyance.  The easement may arise in
favor of the conveyor or the conveyee.
o Here, PL purchased with actual notice.  Thus, PL was
charged with notice of the lateral sewer.
 Rule: Where one grants a parcel of land to another, by a deed
containing full covenants of warranty and without any express
reservation, there can be no reservation by implication, unless the
easement claimed is one of strict necessity. 
o Standard for Discovery: "known or should have reasonably
known with reasonably prudent investigation."
o Here, apparent means reasonably discoverable.
 Fritz’s Gloss: [Flushed with pride – the sewage easement] – Three
lots share sewage spur to main line; the third one in line floods.
o 1) Easement by Prior Use: follows Restatement, not
requiring strict necessity for implied reservation (b/c the
other houses could dig new connections to the main line),
but also considers price, difficulty of alternatives &
expectations of both parties.
o 2) Buyer was NOT a BFP: easement was discoverable upon
reasonable inspection of plumbing (stretching “apparent”)
 Easement by Prior Use: (EBP) Elements
 1) Land begins in common ownership
 2) Land is severed into 2+ parcels with separate owners

46
 
3) Prior to severance, part of land was subject to an apparent and
continuous use for benefit of another part of the land
o Quasi Easement: legal falsity creating easement within
one’s own land
 4) Reasonably expect to continue: Continuation of easement is
reasonably necessary to continue to easement for quiet enjoyment
o Not absolute necessity: different from easement by
necessity
 Application: Continues even when there are other ways to achieve
the same goal = preferable to EBN
 Reservation v. Grant: easement in favor of grantee or grantor?
o Grant: Conveyance of quasi-dominant parcel—CL requires
lesser “probable intent of parties” standard
o Reservation: conveyance of quasi-servient parcel, reserved
by grantor—CL requires strict necessity standard
o Presumption: intended continuation of known existing uses
o Restatement 3d Merges Standard: only 1 factor considered,
 Includes: terms of conveyance; consideration given;
whether claim is made against simultaneous
grantee; extent of necessity of the easement;
existence of reciprocal benefits; extent to which
manner of prior use was or might have been known
to the parties
o Express Easements: DON’T CONFUSE with grant-reservation
distinction in express easements…THERE:
 Easement can be created by Grant = writing OR
 Reservation v. Exception: Express Easement by
reservation or exception of interest (EX: O sells land,
want to reserve right of way)
 Expecting interest in land from conveyance
o Easements by Necessity: (EBN) traditionally limited to public access
 Elements:
 1) Land begins in common ownership
 2) Land is severed into 2+ parcels with separate owners
 3) Severance creates the necessity of an easement by land locking
one of the parcels, depriving it of certain use (EX: public access)
o Necessity must arise at moment of severance
o Parcel of land that creates the necessity, bears burden of
easement
 Application: Easement ends when necessity ends; traditionally limited to
public access
 Termination: ends when necessity ends (unlike easement by prior use)
 EX: Situation where lot split into multiple tracts, landlocking one

47
  Easement across the last one sold; the one that caused the
necessity
 If all sold at once, then easement may be placed across any of
them;
o Requires owners to negotiate an agreement, pay one
burdened by easement (equalize valued & distribute
burden)
 Othen v. Rosier: PAGE 689; equitable action for injunction
 PH: TC for P.  AC reversed.  On appeal, this court affirms.
 Facts: Othens and Rosiers own adjoining lands.  Rosier built a dam
along the southern end of a fence (road), which was in between
both properties before both parties purchased their tracts. 
o The dam created an accumulation of water & prevented
Othens from going to a road to the western Beltline Road. 
 I: Does the creation of a dam to inhibit water flow, which sits on
the southern end of a shared road, well before the parties moved
there, also inhibit ingress and egress on what P says is an
easement of necessity and of prescription?
 H: NO.  The intent of the original owner was NOT for a joined use
of the easement, AND the easement itself was permissive, not
prescriptive in nature, as there was no adverse possession.
 Reasoning:  (Ignores all newer roads) Focus on original grantor's
intent upon first conveyance
 Gloss by Fritz: [Elusive search for parcel that landlocked 53 acres]
o 1) No easement by necessity: Since O’s parcel is landlocked,
by definition he has an easement of necessity SOMEWHERE
– the question is over what parcel?
 Ct holds O failed to carry burden of showing that it
was R’s parcel that landlocked O’s (since both were
part of much larger commonly held land, and at
original sale of R’s parcel, there may well have been
other possibilities for access to O’s);
 “record nowhere shows that roadway was a
necessity” at the time of the severance.
o 2) No easement by prior use: many jurisdictions would
allow if O could show apparent and continuous use of the
road since before severance (quasi-easement, of
reservation, at time of severance); but TX follows old
common law, requires strict necessity for implied easement
by reservation
 We already determined that such evidence is
lacking.
o 3) No easement by estoppel: TX follows jurisdictions that
don’t imply easements that way (others might find this

48
 based on O’s expenditure on house, etc. and permissive use
of the road while he built it AND the Holbrook cases).
o 4) No easement by prescription: ct takes extremely narrow
view of “exclusive” element
 B/C O & R both used the road, O’s use wasn’t
exclusive.
 Most cts would find a prescriptive easement here.
o Easements by Prescription: Limited right in land that is NOT owned or
possessed, (analogous to adverse possession) BUT ‘use’ right, NOT possessory
 Rule: Easement is established by use 1) for a required time period, 2) that
is open & notorious, 3) and adverse, 4) and continuous OR prevented
from continuing use of the easement by TO.
 Elements:
 Open and notorious use: To give the landowner notice
o NM says this element satisfied if servient owner knows or
use should have been apparent (open OR notorious)
o Restatement: allows open OR notorious
 Exclusive use: Key to this element is claiming right for own,
individual use; most cts don’t find that simultaneous use by others
undermines this element (unlike Othen ct)
 Adverse to landowner: (claim of right) Use may not be
permissive
 Continuous for the required time period (usually 10-20 years)
o Need not be truly continuous, regular use by complaint ant
is sufficient
o Land owner must allow the use without interruption
o No need for common ownership of the land here
 Rationales:
 English – fiction of the lost grant (minority jurisdiction in
US)
o If use existed for at least 20 years, ct created fiction that
grant had been made but lost
o Required curious combination of acquiescence (landowner
must acquiesce in use), but not permission (because then
the use wouldn’t be adverse)
o Under this theory, a “letter of protest” objecting to use
would rebut the notion of acquiescence, & DENY the
easement
 American – adversity
o Analogize to adverse possession
o Under this theory, a “letter of protest” objecting to the use
that fails to effectively stop the use will NOT prevent an
easement
o No negative easements via prescription

49
  Prevention of Easement: Effectiveness standard
 Landowner must effectively stop the use by: Physical barrier OR
Legal action that successfully deters use OR Grant permission,
make use no longer adverse
 Matthews v. Bay Head Ass: PAGE 701 Public Prescriptive Easements
 Gloss: Ct puts an end to “elitist” beach access restrictions
 F: BHIA owns access routes to beach, leases much of the dry sand;
restricts access to its property to its members during peak
summer hours.
 H: Public has right to access foreshore area.
o For this right to be meaningful, public must be allowed to
both: 1) cross the BHIA beaches to reach the foreshore, and
2) exercise reasonable use of the BHIA beaches as
necessary for reasonably enjoyment of the foreshore (“the
complete pleasure of swimming must be accompanied by
intermittent periods of rest and relaxation beyond the
water’s edge.”)
 Note: Ct stretches the public trust doctrine pretty far; probably in
part b/c BHIA is a quasi-public entity.
o Divisibility of Easements:
 Appurtenant: Benefits & burdens pass automatically with the land
 In Gross: Profits in gross generally assignable even @ CL (right to fish,
mine)
 CL: held easements in gross NOT assignable (considered more
personal obligations)
o Ct in Miller (1938) argued that with development and
commercial exploitation, common law rule doesn’t make
sense; better basis is the intent of the parties (e.g. there, use
of “heirs and assigns” language indicates intent to allow
assignments)
 Modern Rule: allow assignability as a matter of course of all
easements EXCEPT recreational (those are more personal)
 Divisibility of In Gross Easements:
 General Rule: exclusive (only one party can use it; the other gives
up all use rights) = divisible. [non-exclusive, then not divisible]
 One Stock Rule: doctrine of Mountjoy’s case (Miller)
 Miller v. Lutheran Conference & Camp Ass.: PAGE 709 equitable action for
injunction.
 PH: TC issued the injunction.  This court affirms, with costs.
 Facts: P Frank formed a company with brother Rufus and other
area residents to dam off the water and sell the rights to swim, ski,
and bathe in the water (and sell ice) back in 1899. 
o Rufus had ¼ interest in the land and a ¼ interest in his
joint business with Frank. 

50
 o Rufus died, and his subsequent executors and heirs sold a
license to D Lutherans in 1929 to use the said waters for
skiing, swimming, boating and bathing. 
o However, P failed on his obligation to pay the mortgage,
resulting in a seizure of the property. 
o The property was sold through a foreclosure sale to
Katherine Miller, who claimed the rights to the bathing
were never granted to anyone originally, b/c the original
mortgage failed, which included the first assignment to
Rufus.
 P’s Argument: contends if there ever were a right to bathing
which vested in Frank, it would have been as an easement in gross
(see below). 
 D’s Argument: contends that the 1899 deed should have been
construed as transferring the bathing as well as the boating and
fishing privileges
o BUT if Frank did not obtain them by grant, acquired by
prescription = all their rights were alienable & divisible.
 I: Does the assignee of a easement in real property have the right
to further assign rights in another assignee who takes to those
same rights?
 H: NO.  The assignee cannot divide the assignment in an easement
in gross; instead he must share them. 
o Rufus and the church had to share the land alike. 
o One cannot convey a share in the common right.
 Reasoning:  EBP granted bc no one raised an objection to Miller's
bathing in the water for the statutory period.
o Intent: intent to share in the business together (3/4 and
1/4 interest)
 NOT Frank's intent to grant, or Rufus' to receive, a
separate right to subdivide and sublicense the
activities on the lake. 
 As Mountjoy Doctrine said, "as one stock."
o Thus, Frank acquired title to boating & fishing privileges by
grant & bathing by prescription. 
o Frank made a valid assignment of 1/4 interest to Rufus, but
CAN’T be used commercially under without agreement of
both Frank & Rufus (acting as one stock).
 Rule: DOCTRINE OF MOUNTJOY: If an assignee decides to assign his
rights further, he "must assign his whole interest to one, two, or
more; but then if there be two or more, they could make no
division of it, but work together with one stock."
o Right of a grantee may be assigned, but if to more than one
person, the two parties must work together as one

51
 o If there is a division, easements must be exercised as an
entirety; they must work it as one stock
o This is a check that prevents surcharge of the easement
o Any one holder of the divided easement has veto power
over the others in use decisions
 Gloss: [No bathing for the Lutherans in lovely Lake Naomi!]
o H: 1) Easement given to F was in gross, not appurtenant;
 2) Both easements transferable, despite CL – intent
of the parties should rule;
 4) Easement divisible, but F & R must work as
“common stock.”

o Scope of Easements: limits on burden on servient estate; reasonable check

 Determined by intent of the parties, includes accommodation for reasonable
change and development. (3d Restatement)
 Result: Accommodates changes that are evolutionary, not revolutionary
 Right of way originally designed for horse and buggy may now be
applied to cars (Connolly v. McDermott)
 Key: look to the purpose of the easement: is new use consistent with
original purpose? Foreseeable? Consistent w/ burden servient owner
would reasonably expect to assume for failing to bring COA?
o Express: can specifically state scope; language will control (many
problems can be avoided by good drafting)
o Implied: implies scope of reasonable use
o Prescriptive: more limited than easement by grant, necessity, or
prior use
o Limits on Scope: 2 general rules
 1) Easement appurtenant may ONLY be used to serve dominant
estate. (estate with the tendricals in it)
 Use for non-dominant parcel can result in loss of easement
o (EX: famous bowling alley-luncheonette case; luncheonette
addition built on non-dominant land, if easement used to
reach it, easement lost)
 Appurtenant may serve ENTIRETY of dominant = subdivision of
dominant estate does NOT create a per se surcharge
o Surcharge: use that exceeds reasonable expectation of
parties as to burden (excessive use)
o Rule: forseeability + amount of burden; No bright-line test
 Discretion of court to use equity to find a surcharge
or to deny an injunction. (Voss)
o Test: what the parties bargained for
 Lack of increase in overall burden is not relevant
o EX: Easement on A to reach B, where parties never
bargained for using easement to reach C, regardless of

52
 burden; that simply wasn’t in the “property stick”
transferred from estate A to estate B
 One party can’t unilaterally change bargain terms.
 2) At CL, serivent owner could not change location of easement w/o
consent of dominant owner. (If both parties agree, easement may be
moved)
 Restatement (3rd): relaxes this rule; servient owner may change
location unilaterally IF change does not:
o 1) Significantly lessen utility of the easement,
o 2) Increase burdens on dominant owner, OR
o 3) Frustrate purpose of easement
o Reasoning: promote development of the servient parcel
 Limit: Easement for right of way does not extend to utilities; that
exceeds foreseeable scope of original use (ingress & egress)
 Remedy: Traditional remedy for overuse of easement = injunctive
relief; but ct has discretion to deny injunction, grant damages if it
finds that to be more equitable in the specific case
o Brown shows us that you may not be able to count on black
letter law; court there embraced a fairness approach,
denied injunction, where law would have supported one
 Brown v. Voss: PAGE 716 Equitable action of injunction; MINORITY RULE
 PH: TC denied Voss injunction and gave each party $1 in nominal
damages.  AC reversed.  This court reverses, reinstating TC
 Facts: (1952) original predecessors of tract A granted to owners
of tract B an easement running on its property for ingress and
egress to tract B. 
o Tract A acquired to DFs in 1973. 
o P's bought tracts B & C in two separate transactions in
1977, & tract C was never a party to original easement. 
 D’s Argument: P's have no right to maintain use of easement for
use of tract C just because they bought adjacent land. 
 P’s Argument: not abuse of right to easement, & is just trying to
build a house bordering on tracts B & C.
 I: Does the holder of a private road easement have the right to
traverse the servient estate to reach a subsequently acquired
parcel, when there is no increase in burden on the servient estate?
 H: NO. (generally) However, here P's never abused their rights to
the easement, so although as a matter of law they can’t use the
easement for both tracts of land, the injunctive relief not equitable.
 Reasoning:  Nno abuse of the general rights associated with the
easement as granted in the original agreement. 
o P's had already spent some $11K, and it would be
inequitable to stop them now, AND incidentally landlock
their property. 
o Plus, D already got $1 in damages previously.

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  Dissents: If there was a technical abuse of the law, then there was
an abuse of the law. 
o Misuse of an easement is trespass. 
o Damages would continue to mount for each trespass to get
to tract C, & for D should be entitled to injunctive relief. 
o An injunction would merely require Browns to acquire
access for their use of tract C. 
 One such way would be to condemn a private way of
necessity as per WA regulatory code.
 Gloss: 1) Use of easement to serve non-dominant parcel was
misuse of the easement;
o 2) Fact that burden not increased is irrelevant;
o 3) BUT Vs not entitled to injunction, since its an equitable
matter, and denying the injunction would cause no
hardship to V (no increase in burden), while granting it
would cause great hardship to B. Damages may be available
o Termination of Easements: Eight ways to lose your easement
 1) Terms of the grant: Express easement may be time-limited, or limited by
condition (e.g. so long as dominant parcel used for school purposes)
 2) Merger: If servient property bought by dominant owner, both parcels under
single ownership, easement disappears (you can’t have an easement in your own
land)
 3) Attempted severance of appurtenant easement: If dominant owner uses for
non-dominant parcel, the easement disappears
 Or if dominant owner attempts to share the easement, allow someone
else to use it, easement also disappears
 4) If easement of necessity, easement ends when necessity does
 Unlike quasi-easement (by prior use), which is premised on intent of the
parties
 5) Doctrine of surcharge: When use of easement exceeds reasonable use
 Could be easement servicing non-dominant land, but so integrated w/
dominant it cannot be segregated
 If use exceeds scope, then easement lost
 6) Release: Dominant owner gives the stick back to servient owner
 Reconveyance = release of the interest
 7) Prescription: Dominant owner fails to use easement; servient owner obstructs
so easement cannot be used; dominant owner fails to bring c/a w/in requisite
time period
 8) Abandonment: Nonuse alone is insufficient; Must be coupled w/ act
demonstrating unequivocal intent to abandon
 Preseault v. US: PAGE 725 [Rails to Trails derailed]
 COA: Ps sue for taking when rail-trail put through their backyard.
 H: 1) RR acquired right to land as easement, not fee simple, even though
deed to land over one parcel reads like a fee simple (VT law was that
rights acquired through eminent domain are limited to what the RR

54
 needs; only an easement is necessary for its purposes).

o 2) Scope of the easement does not encompass recreational use –

originally purpose was the commercial transportation of goods &
people via rail, a private enterprise rather than public, and
entailing a significantly different degree and nature of burden than
that originally bargained for.
o 3) Easement was abandoned – RR pulled up tracks in 1975, didn’t
create trail until 1985. Non-use coupled with act of removing the
tracks are sufficient to constituted abandonment; there are other
explanations for contrary evidence (that RR still collected fees for
use of land, didn’t tear down bridges, etc.)
o 4) This was a taking – even if easement hadn’t been abandoned, it
would be since trail use exceeded scope of easement – the govt
never had that property right. Since easement was abandoned,
servient owners held the entire fee simple at time govt put trail in;
classic case of govt taking a property right from a fee simple
landowner.

 Covenants Running with the Land: Real Covenants & Equitable Servitudes
o REAL COVENANTS: enforceable at law
 Evolution of Real Covenants:
 Negative easement may be construed as property right or promise
 Historically: negative easements were limited to only 4; AND
easements don’t cover active duties by servient owner (EX:
plant/maintain trees)
 K only enforceable against the parties (non-assignable)
 Efficient land use requires promises that run with the land,
enforceable against subsequent takers, so that adjacent L’s can
minimize harmful externalities from conflicting uses
 Enforcing promise against original parties can be done through CL;
only when transfers occur, need to determine if burden/benefit
runs
 Characteristics of Real Covenants: must be in writing, subject to SOF;
Cannot arise by estoppel, implication, or prescription
 Runningness: Remote takers of the land may receive the benefit or
burden of the original promise, if the elements are met
o Reciprocal Promises: covenants often involve mutual
benefits & burdens (EX: A & B promise each other to limit
their land use to SFR)
o Covenants run with the ESTATE in land, not the land itself
 Test: Evaluate elements independently for benefit and burden;
sometimes one may run, but not the other (look to see which is
seeking to be enforced)

55
  Remedy for breach: monetary damages
 Real covenants less common than equitable servitudes in caselaw
o Reasoning: want the promise enforced, not damages
 Elements of Real Covenants: (RC)
 Intent: covenant run with the land
o CL Magic Words: “A and assigns promise” showed intent
o Modern: “touch and concern” - if covenant touches &
concerns land, as opposed to personal promise, ct finds
intent to run
 Privity of Estate: This is the SILK GLOVE—AH HA Moment.
o Horizontal Privity: relationship between original promisor
& promisee
 English CL: only landlord-tenant sustains RC
 US CL: “mutual & simultaneous interest in land”
 EX: Easement Appurtenant
 Modern US CL: expanded rule to include grantor-
grantee relationship
 Today, any of the three gets you horizontal privity.
o Vertical Privity: relationship between original party to
contract & assignees; successor in interest to the estate
 “Octopus in the Wagon” has demonstrable
physicality satisfying touch and concern standard
 Intent may be implied based upon privity
 Covenant must Touch and Concern the land:
o CL focused on physicality of the promise
o Evolved to slightly more abstract understanding, focus on
how the promise affects the land (paying dues to maintain
may be sufficient)
 Notice: Modern law requires notice; recording acts come into play
o Old CL: runningness occurs regardless of notice
 Runningness of Burden vs. Benefit: Privity Requirements
 Many jurisdictions impose stricter std on burden running than
benefit (similar to stricter std for easement by reservation than by
grant); want to be cautions about imposing lasting burden on land
o I: Is claimant a successor to original promisee or promisor?
 Burden:
o First Restatement: horizontal privity required, AND taker
must be “successor in interest” to estate for burden to run
o Third Restatement: No requirement of horizontal privity
 Distinguishes negative & affirmative covenants:
 Negative covenants run w/possession (like
easements)
 Affirmative covenants run to successors in
interest & adverse possessors

56
  Burden runs to lessees if more reasonable for
lessee to take care of it than lessor
 Burden runs to holder of life estate only up to
the value of the life estate
 Benefit:
o First Restatement: No requirement of horizontal privity,
AND taker must be “successor in some interest” but need
not be successor to all
o Third Restatement: No requirement of horizontal privity
 Distinguishes negative & affirmative covenants:
 Negative covenants run w/possession, like
easements.
 Affirmative covenants run to successors in
interest & adverse possessors
 NOTE: Distinction between burden & benefit less relevant today.

o EQUITABLE SERVITUDES: enforceable at equity

 Elements of Equitable Servitudes: 1) Intent for the promise to run; 2)
Touches & concerns the land; 3) Subsequent taker takes with notice –
either actual or constructive; AND 4) No need for privity
 BUT some jurisdiction require that party seeking to enforce have
vertical privity w/ original promisee;
 However, most allow enforcement by 3rd party beneficiary
 Distinguishing Between Real Covenants & Equitable Servitudes:
 Real covenants run w/ the estate in land, equitable servitudes run
with the soil itself (octopus)
o Therefore ES will travel even w/ lesser estate (term of
years)
o ES more like an easement in that way; cts often confusingly
refer to them as “negative easements”
 Facially indistinguishable; no way to definitively tell the difference
from language used
o Differences lie in requirements and remedies
o A promise relating to land may be both or either BUT it may
not meet the privity requirements of a covenant
 Best sign = what remedy is sought? If injunctive, it’s being
enforced as an equitable servitude; if monetary damages, then real
covenant
o Note that if awarded, injunction may be sold
 Tulk v. Moxhay: PAGE 746 [Chancellor to rescue of park in Leicester
Square]
 F: E makes 3 promises to T:

57
 o 1) Keep & maintain grounds in proper repair (affirmative
promise);
o 2) Keep in open state, uncovered w/ buildings (negative
promise); &
o 3) Allow T’s tenants to use the garden (attempted
reservation of an easement in a 3rd party).
 I: E sells to M, deed lacks covenants but M has actual notice of
them; M seeks to violate covenants.
 H: T cannot win at law, but the covenant must be enforced in
Equity.
 Reasoning: 1) First promise lacked horizontal privity (must be L-T
at English CL); 2) Negative easements limited to 4 under English
CL; 3) Reservation for 3rd party void.
o Chancellor rules that promises enforceable in equity since
M took with notice, & presumably paid less for property bc
of restrictions.
o This situation resolves legal obstacles and concerns: no
need for privity; no need to expand negative easements; not
imposing invisible burden b/c notice requirement.
o Equitable Servitudes Implied by Common Plan or Scheme: Creation of Covenants
 Implied Reciprocal Negative Easements: “If the owner of two or more
lots, so situated as to bear the relation, sells one with restrictions of
benefit to the land retained, the servitude becomes mutual, and, during
the period of restraint, the owner of the lot(s) retained can do nothing
forbidden the owner of the lot sold”
 The Big Squirrel.
 Elements: Common owner subdivides a piece of land, with intent
to develop under a common plan; AND
o Seller places burden on lot(s) sold that benefit all of them,
not the grantor personally
 Common Scheme: If common plan exists, then restriction
burdening lots also carries benefit b/c it is reciprocal; it attaches to
all lots still held by grantor
o Rationale: all lots benefit from the restrictions, therefore all
must bear the burden
o Evidence of Common Scheme: vehicle for implying ES
 Restrictions in deed (grantor’s covenant)
 Uniform development/use (all lots used for SFR)
 Plat – restrictions noted in recorded subdivision plat
 Brochures, ads, statements buyers relied on
o Grantor’s Covenant: “explicit intent to create mutually
enforceable benefits and burdens on all lots in the
subdivision
 Notice: may be constructive, either from record or inquiry notice,
based on common development of other lots in subdivision

58
 If common plan or scheme CANNOT be identified: 9 LOT PROB.
o Then lots sold w/ burden are not mutually benefited (so if
Lot #1 sold w/ SFR restrictions, Lots #2-9 are benefited,
but not burdened; #1 may never enforce restrictions
against them)
o Key: benefit or burden on lot must exist at time of sale for it
to be enforced later
o If common plan or scheme existed before Lot #1 sold, then
burden implied on the rest (as in Sanborn)
o Similarly, if Lots #1-4 sold w/o restrictions, Lots #5-9 sold
w/ restrictions, #1-4 may only enforce if common plan or
scheme can be found
o Catch is that it’s easier to find evidence of a common plan
or scheme after several lots are sold than after only the first
is sold (difficulty of making covenants run backwards)
o Property must be burdened or benefited at time of sale,
either through restriction in deed, or existence of common
plan or scheme; burden or benefit may not be imposed
after the fact

 McQuade v. Wilcox: [Classic creation of implied equitable servitude

by grantor’s covenant]
o W subdivided lots, included in all but the final deed language
restricting use to SFR and restricting all of W’s remaining
lots to SFR. Purchaser of final deed had no actual notice.
o MI follows rule including deeds out from common grantor in
chain of title; therefore purchaser had constructive record
notice of the restriction.
o Therefore purchaser was bound by the restriction as an
equitable servitude.
 Saborn v. McLean: PAGE 751 [Implied equitable servitude even
without grantor’s covenant]
o F: O owns all land, subdivides and begins conveying with
deeds that restrict to SFR but do not contain clause
restricting grantor’s other property.
 O sells lot 86 w/o restriction; buyer has no actual
notice of restrictions.
 Rest of lots sold, some w/ restrictions, some w/o.
 M acquires lot 86 and seeks to build gas station.
o I: Is there an implied, reciprocal ES for the subdivision?
 Was there notice?
o Rule: For “implied reciprocal negative easement” to exist
and burden lot 86, common plan or scheme had to have
arisen before first sale of lot from common grantor.

59
 o H: Sale of other lots w/ restrictions plus consistent
residential development over time sufficient to show
common plan.
o Reasoning: No record notice, BUT open, uniform residential
use of other lots = notice to inquire about restrictions;
 Inquiry would have revealed the restrictions
o Note: Since MI includes “buried language” in deeds out
from common grantor in chain of title
 BUT this is far less revealing since they lack the
grantor’s covenant
o Validity & Enforcement of Covenants: Scope
 Touch & Concern Requirements:
 MUST HAVE BOTH real covenants & equitable servitudes, for
either the burden or the benefit to run
 Classic covenants that touch and concern: Promises to make
repairs, improvements to the land OR Restrictions on land use
 Harder cases, but still usually found to touch & concern.
o Promises to pay $ to do something related to land (use or
improve); US courts find that such promises touch and
concern when they increase the value of the land payer’s
land (CL didn’t recognize such promises, other than
promise to pay rent)
o Restriction on type of business activity (e.g. avoid two
businesses of the same type in shopping center)
 Modern Trend: Shift away from requirement of physicality
o Apply Bigelow test: “If the covenantor’s legal interest in
land is rendered less valuable by the covenant’s
performance; or if the covenantee’s legal interest in land is
rendered more valuable by the covenant’s performance,
then the covenant touches and concerns land.”
o 3rd Restatements: eliminates the requirement altogether;
replaces w/ requirements that the covenant not violate
public policy be being unconscionable, arbitrary, spiteful,
capricious, or an unreasonable restraint on trade or
alienation (otherwise, let the covenant run)
 Intent: empower cts to mediate tension btwn certainty of title and
necessity of lifting burdens that no longer make sense (don’t want
burden to exceed the value of land, etc.)
o Did it make sense for covenant to run when it was made?
o Have circumstances changed such that it no longer makes
sense for the covenant to run?
 Neponsit Property Owners’ Ass v. Emigrant Savings Bank : PAGE 755
 [Bank acquires lots during Depression, wants out of annual fees]

60
  F: D buys from N, covenants to pay annual fee; D conveys to Bank,
subject to covenant. Bank refuses to pay, NPOA (N’s assignee)
moves to foreclose.
 H: Covenant does touch and concern land . Sufficient privity btwn
N & NPOA, despite lack of ownership b.y NPOA
 Reasoning: fees decrease value of lot to improve common areas in
subdivision (even though NY cts had followed English up until this
case; ct does not explicitly overrule those cases, just allows this
covenant to run anyway).
o Agent for the property owners benefits from the covenant,
o Only “blind adherence to ancient forms” would justify
refusing to allow NPOA to sue on it.

a. Supplemental Rule: If the benefit is in gross, the burden does not run
i. Majority embraces; some jurisdictions reject (Third Restatement
rejects)
ii. Preference that any promise that burdens land benefits other land
(may be easier to identify beneficiaries that way)
iii. Logical emergence from English common law
(1) Analogy btwn equitable servitudes and negative easements, and
they don’t recognize easements in gross (although we do – but
whoever wants logic in property law?)
(2) English common law requires a dominant estate for easements
(although legal fictions stretch what counts as an “estate”); so
therefore covenants w/o a dominant estate should not run
iv. Okay for burden to be in gross (as in Neponsit)
v. Under supplemental rule, both sides must touch and concern,
regardless of which is seeking to be enforced
 Caullett v. Stanley Stilwell & Sons: PAGE 768 [Ct rejects grantor’s covenant
reserving right to build on the lot]
 H: Covenant 1) too ambiguous and vague to be enforceable; 2)
Doesn’t touch and concern b/c it’s a personal promise (but it’s
pretty tied to the land…); and 3) The benefit is in gross ($$ to the
builders, not tied to land), so the burden does not run.
o Scope General:
 Scope of easements determined by intent of parties, reasonable
expectations
 Scope of covenants determined by the terms of the agreement
 Presumption: land may be used as desired, consistent w/
agreement
o Most covenants are mutual, both benefit and burden
 Fair Housing Act Limits: Prohibits discrimination in sale or rental to any
disabled individuals
 Handicap: physical or mental impairment which substantially
limits one or more of a person’s major life activities

61
  Violation of FHA may consist of: (1) Discriminatory intent; (2)
Disparate impact; OR (3) Failure to make reasonable
accommodations;
o Reasonable Accommodations: reasonable if
 (a) NO fundamental alteration in nature of program
 (b) NO undue financial or administrative burden on
D
 Constitutional Limits: Restrictions on rights to acquire, enjoy, own, &
dispose of property as desired are prohibited by 14th EPC
 Enforcing such covenants is state action, they are NOT enforceable
 Most action now in zoning/FHA, but © analysis still applies where
those don’t work (EX: GA restriction on sale to Yankees)
 Hill v. Community of Damien Molokai: PAGE 773
 [Albuquerque AIDS hospice as family]
 Neighbors argued AIDS group home violated SFR covenant, & FHA
didn’t apply – ct disagreed.
 H: Reversed, injunction vacated. Group home allowed.
o Residential = living as traditional family, sharing meals,
support, etc. Health services provided as they would be to
any disabled family member. Nonprofit, not commercial
like rooming houses excluded in covenant.
o Family not defined in covenant; ct will not read extra
restrictions by implication (presumption of flexible use by
owner), and strong public policy in favor of broader
interpretation (incorporate disabled individuals into the
community). Burden of extra traffic irrelevant b/c covenant
does not speak to traffic.
o FHA applies: no intent, but clearly a disparate impact (ban
on group homes would restrict inclusion of disabled
individuals into community)
 Failure to make reasonable accommodation by
refraining from enforcing the covenant despite some
financial burden on neighbors
 Shelley v. Kraemer: PAGE 781 [Racially restrictive covenants
unenforceable]
 F: Black couple bought home in MO w/ covenant restricting
occupancy by non-white person for 50 years
 PH: neighbors sued to enforce; trial ct upheld covenant;
 H: S.Ct. ruled trial ct’s action violated EP.
o Covenant remains on title and can be voluntarily adhered
to BUT cts may not enforce.
o Could also have invalidated under CL rule against
unreasonable restraints on alienation (restricts who seller
may sell to, & which buyers may buy = unreasonable).
o Termination of Covenants:

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 Merger – same rationale as w/ easements
 Change of Neighborhood/Conditions Doctrine: Restrictive covenants
remain enforceable unless their purpose has been substantially thwarted
 Requirement: Changes must affect land within the subdivision, not
merely around it
 Rationale: Economic – border lots inherently less valuable than
interior; lifting covenant based on outside change would give
buyers of those lots something they didn’t bargain for
o Policy – if subdivision not looked at as a whole, then it will
be nibbled away, bit by bit, as change creeps inwards
(domino theory of subdivisions)
 Two Possibilities:
o Changes sufficient to thwart, covenants unenforceable; but
property owners may still be entitled to damages = lost
value
o Changes not sufficient to undermine value of covenant to
holders; covenant enforced w/ injunction
 Waiver/Abandonment: If subdivision rife w/ inconsistent uses, neighbors
sat on hands, covenants might become unenforceable
 Requirement: Inconsistent uses must be sufficient to constitute
general consent to abandonment by property owners
 Affirmative covenants may not be abandoned (MacKenzie)
 Covenants & Freedom of K:
 Traditional Rule: enforce four squares of K, regardless of the public
good; parties should receive what they bargained for
o So long as it still benefits promisee & change of
neighborhood not met, damages should not be substituted
for injunction if promisee seeks injunction
 Modern Rule: makes less sense today, with zoning, systematic land
use planning, attempt to achieve public purposes
o EX: change in zoning in Rick may reflect public opinion that
land is better used for industrial purposes
o Even if covenant originally made sense, it may over time
come to burden the public interest; parties may misjudge
the future
 Third Restatement & MA: statute reject injunctive relief for
covenants that don’t serve the public interest (but beware
backlash after Kelo)
o § 7.10 Modification & Termination- Changed Conditions
 Allows ct to modify or terminate covenants if land
no longer suitable for those purposes (but doesn’t
apply to covenants held by public bodies)
 Focus on unconscionability
o § 7.12 Modification & Termination of Affirmative Covenants

63
  Covenants to pay money or provide services
terminates after reasonable time;
 May be modified if value becomes disproportionate
to value if estate (but not common interest
communities or conservation easements)
o MA applies damages rather than injunctive enforcement for
covenant violations in most situations
 Zoning Doesn’t Trump: Zoning = permissible; covenants = mandatory
 Direct Conflicts Rare: zoning almost invariably permits higher,
more restrictive use (think concentric circles)
 If Conflict Arises: (& zoning overrides) it may constitute a taking
o RC and ES are property interests
o Affirmative covenants tenacious and powerful
 Unlike feudal services, they attach to/threaten all L’s assets = ct’s
unwillingness to find and enforce them (Neponsit)
 Western Land Co. v. Truskolaski: PAGE 786 [No shopping center for the
Reno Sub divider]
 F: Subdivision w/ SFR; originally surrounded by ag, other
residential.
o Reno population booms & street bordering subdivision
becomes major artery
o Subdivider wants to lift SFR restrictions from corner lot
and put in a shopping center, AND city agrees to zoning
change.
o Neighbors sue to enforce.
 H: Purposes of covenant have not been thwarted.
 Reasoning: All land still residential in the subdivision, AND values
of less density, noise, traffic, still served by covenants.
o Irrelevant that property would have “greater value” if used
for shopping center, so long as restrictions have not lost
their value to covenantees.
o Use of two homes as home offices too remote, not current;
insufficient to constitute waiver or abandonment.
 J: Western Land may still develop, but consistent w/ the SFR
restrictions (think townhouses, duplexes, etc.)
 Rick v. West: PAGE 790 [Mrs. West holds out] Rescission of original
covenant due to changed conditions
 PH: TC for D.  This court affirms.
 Facts: P is subsequent grantee of fee simple in a large, who is
trying to sell the land in question (including D's property) to a
hospital, but D refuses. 
o P wants to get D off the land & order her to sell the land as
it is no longer bound by the covenant.
 I: Is the refusal of an originally covenanted party to a tract of land
to sell back to the grantor that tract in order for the grantor to sell

64
 the land in total to another party allowable by the assertion that
the covenanted party agreed to use the land for residential
purposes and has no strayed from the covenant's terms?
 H: YES.  When one owner of a group of many decides to enforce its
restrictive covenant to the point that the original grantor cannot
benefit from the sale or use of the entire property, it is the right of
the covenanted party to be protected at law
 Reasoning:  Equities balanced in D's favor. 
o When original P decided to grant residences to others, he
included the covenants. 
o D relied upon this representation and has a right to
continue to rely upon them (equitable estoppel). 
o NOT a matter of equity for the hospital but for the
landowner, as despite her insistence in remaining on the
land, she deserves to be protected by the original covenant.
 Rule: By the settle doctrine of equity, restrictive covenants in
respect of land will enforced by preventive remedies while the
violation is still in prospect, unless the attitude of the complaining
owner in standing on his covenant is unconscionable or
oppressive. 
o Relief is not withheld b/c the money damage is
unsubstantial or even none at all. 
 Gloss: Ct holds for W – it is not about balancing the equities,
determining best use for site. So long as covenant not
unconscionable, promisee may enforce.
 Pocono Springs Civic Ass v. MacKenzie: PAGE 793 [Take this lot, please!]
 F: M buys lot w/ covenant that permits assessment of dues.
o Subsequent sale of lot falls through bc septic system
impossible in that soil.
o M trys to abandon lot: negates obligation to pay dues
 1) Reconvey to P; P won’t accept.
 2) Gift to P; P won’t accept.
 3) Stopped paying taxes & foreclosed: tried sheriff’s
sale, would go w/ covenant, but no one bought.
 4) Mailed letter to all interested parties that they’d
abandoned interest.
 H: Ct refuses to allow abandonment. M outta luck – assessments
due!
o 1) SOF means all transfers must be in writing;
o 2) Public Policy: don’t want L’s sneaking out of
responsibilities & liabilities (tort, CERCLA, etc.);
o 3) If people can abandon land at will: undermines
recording system, leads to disputes over ownership,
uncertainty, disorder, etc.

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 Ideas they could have tried: Restatements escape clauses no good
b/c don’t apply to common interest communities or association
dues
o Modification & termination won’t work b/c covenants still
valuable to other members; BUT maybe if neighbor buys
their lot, maybe merger, only liable for single assessment?
o Or try to soften up the association, convince them they
want to take it back – threaten to sell to NAMBLA for their
weekly picnics…

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V. JUDICIAL LAND USE CONTROLS: LAW OF NUISANCE
 Substantive Law: Determining Whether a Nuisance Exists PAGE 639
o Elements of Nuisance:
 1) Substantial: large monetary loss; observable physical damage;
physical/emotional harm caused by land in question; costly/difficult to
avoid harm; long duration/unremitting harm (need not be unceasing bc
seasonal nuisance exist)
 Knowledge is not dispositive, but is a considered factor when
using “coming to the nuisance”
 2) Physical or Emotional harm suffered by those on land in question.
 3) Intentional AND Unreasonable; OR
 Intentional: knowledge of causal effect between his actions &
resulting negative effects = intent
o Knowledge/Intent NOT trumped even when all reasonable
precautions to prevent harm were used
 Unreasonable Factors: customary activity or suited to the land;
disagreeable effects; LDM as to disturbance; societal importance of
activity; value of activity to D; permitted or denied by zoning
 4) Result of negligent, reckless, or abnormally dangerous activity.
o Principles of Nuisance:
 Sic utere tuo alienum non laedas: One should use one’s property without
injuring another’s property (Dog Chasing His Tail—Circular)
 Idealistic, consider method for balancing conflicting land uses
 Nuisance is both TORT and PROPERTY law.
 Tort- liability arises from fault
 Property- right to exclude form land is one of the most venerable
property rights (Invasion of the Bundle of Sticks)
 Nuisance v. Trespass
 Trespass: physical invasion of land
o EX: Polluted stream = trespass, BUT polluted air = nuisance
 Nuisance: invasion of land that is NOT trespass
o Reasoning: Although these are technically physically,
traditional reasoning does NOT view them as such.
o Classic Agents: noise, dust, smoke, odor, insects, vibrations
o Impact: difficult to create a bright line test
 Martin v. Reynolds: fumes are trespass, but the court
will go no further; suspect holding because the court
used nuisance-type reasoning
o KEY: UNWANTED INTRUSION; need not prove damage
 Public v. Private:
 Private: affects single individual/small number of ppl’s enjoyment
of a private right not common to the public

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  Public: must affect a considerable number of people
o Test: 1) P must still be owner of affected land AND 2) show
“special injury” which is a private injury that grants
standing
 Government need not show special injury
o Public may be private BUT private can’t be public.
 Nuisance per se: Malicious acts & illegal conduct
 Nuisance per accidens: “right thing in the wrong place” that is highly
situational & dependent upon context
 Test: What is reasonable use under totality of the circumstances?
o 3 Alternatives for determining whether a nuisance exists:
 Jost v. Dairyland: analyze level of D’s interference with P’s land use
 Tipping Point Theory: once magnitude of interference crosses
some threshold, D is liable for nuisance
 Restatement 2nd Torts: gravity of harm v. utility of conduct; utilitarian
 Traditional: balancing equities; weigh reasonableness v. substantiality
Test: P’s burden resulting from failure to grant injunction v. D’s
burden + Public’s burden (if injunction closes factory =
unemployment = public burden)
Intent to choose lesser social harm BUT:
o Inherent overlap w/Utilitarian approach, when considering
social utility AND
o Some results impose economically inefficient burden on D,
which implies a Jost approach
o Morgan v. High Penn Oil Co: [Oil refinery a nuisance to the trailer park]
 COA: civil action to recover temporary damages for a private nuisance,
AND equitable action to abate such nuisance by injunction.
 PH: TC grants P $2500 in damages & enjoined D's from further use
 Facts: Oil refinery established in 1950, but L bought composite tract from
separate smaller conveyances in 1945
 P’s land has a home, restaurant, accommodations for 32 trailer’s
 Oil refinery emits sounds & noises both unreasonable to neighbors
of ordinary sensitivities. 
 Noises were at all hours of the day, smells came 2-3 times weekly. 
 I: Does a neighboring oil refinery's existence on a neighboring tract of
land to P/L represent a nuisance when the refinery's smells & noises
pervade P/L’s tract?
 H: YES.  Nuisance. To allow D's to continue use of oil refinery to the extent
that it is would present the threat of an irreparable injury to P's.
 Under this standard, both temporary damages & permanent
injunction are appropriate.
 Reasoning: establishing the refinery so close to P’s land was intentional
and unreasonable because they knew or should have known there would
be a hindrance on the enjoyment of land. 
 Substantial Impairment to P's use & enjoyment of the land, which

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 should result in temporary damages and a permanent injunction. 
 If allowed to continue, there could be permanent damages, and the
court does not tolerate this.
 Rule: Nuisance law is a combination of property and tort law:
 Property: interest in use/enjoyment of land
o Private Nuisance: any substantial & non-trespassatory
invasion of another's interest in QE of land by any liability
forming conduct
o Liability:
 Intentional: when their conduct is unreasonable
under the circumstances of a particular case; OR
 Unintentional: when conduct is negligent, reckless,
or ultra hazardous
 Tort: invasion of another's interest in the QE of land is intentional
in the law of private nuisance WHEN the person whose conduct is
the basis for liability:
o Acts for the purpose of causing it,
o Or knows that it is resulting from his conduct,
o Or knows that it is substantially certain to result from his
conduct.
 Gloss: Ct. cites Restatement, but does not compare harm and utility.
 Remedies:
o Four Options: 1) Injunctive Relief; 2) NO Relief; 3) D pays damages but NO
injunction (Boomer); 4) Injunction but P must pay D damages (Indemnity—Spur)
o Injunctive v. Damages:
 Injunction: economically efficient IF considered “for sale” by P
 D must pay P what it is worth for P to give up the property right of
excluding the nuisance = difficult
 Damages: court makes that calculation for P, which is essentially ct-forced
sale of the property right to sue for nuisance
 Permanent Damages: de facto servitude on P’s property = runs with land
o Estancias Dallas Corp v. Schultz: PAGE 646 [Elderly couple wins relief from “jet
engine” AC unit 55’ from their door]
 PH: P chooses injunction over damages; TC grants P’s injunction
 ACH: Affirms because the equitable balance was implicit
 Reasoning: 1) No evidence injunction would harm public (no housing
shortage) AND 2) P’s harm (decreased property values) was substantial
 BUT if ct had truly looked at the economics, damages to P only
$22,500, while costs to D $150,000+
 Take Away: Injunction is economically inefficient, which is presumably not
in the public interest. (Implies a Jost approach.)
o Boomer v. Atlantic Cement:
 F: D operates cement plant; P = neighboring L complaining that dirt,
smoke, & vibrations from the plant are a nuisance to his property
 I: Whether the ct can resolve litigation between private individual

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 property owners in equity, or whether it should channel private litigation
into broad public objectives?
 PH: TC denies injunction & grants P damages; AC affirms & remits to
grant injunction until D pays the damages
 H: Marked disparity between cost of injunction and effect of a nuisance
does NOT bar an injunction.
 An injunction will follow when substantial damages exist.
 Rule: Resolve litigation in equity.
 Rationale: Permanent damages to P was determined, justice is served by
granting an injunction pending full payment of damages.
 CJA - where nuisance is of such permanent & unabatable character
that a single recovery can be had, (including all past and future
damages) there can be but one recovery
 Theory of Damage: servitude on P’s land by D’s nuisance. 
o Payment by D & acceptance by P of permanent damages
shall be compensation of the servitude on the land.
 Dissent: A nuisance which results in substantial continuing damage to
neighbors must be enjoined. 
 Allowing continued pollution by D upon the payment of
permanent damages is compounding a serious national problem.  
 The effect is to give license to a continuing wrong, bc the plant may
continue to cause harm to its neighbors so long as they pay for it.
 Gloss: [No injunctive relief from the cement plant nuisance]
 Weigh the Equities: plant employs 300 people, worth $45 million.
 Possible Outcomes: Ct could (1) require abatement in near future
(but will technology develop in time?); or (2) grant injunction
conditioned on payment of permanent damages (as seen here)
 Note: decision only binds the parties; other affected persons may
still sue, and the govt may bring a public action.
 Defenses:
o 1) Coming to the Nuisance: not absolute, BUT relevant factor, especially if P had
knowledge
o 2) Because injunctions are equitable remedies, the ct can be flexible/creative in
serving “justice”
o Spur Industries v. Del E. Webb Development : PAGE 656 [Phoenix sprawl runs up
against a feedlot]
 F: Developer buys cheap land in agricultural area 15 miles out from
Phoenix, & plans to develop as retirement community (Sun City).
 D operates feedlot in that area, which affects the area by odors &
flies, developed sues.
 H: BOTH public & private nuisance.
 Grants injunctive relief bc many innocent parties were affected.
 BUT since developer “came to nuisance” & lured “innocent”
buyers, he must indemnify feedlot owner, pay damages for
reasonable amount to relocate operation.

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 Reasoning: Fair and reasonable resolution under the circumstances.

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