Property II Outline

The Purchase Contract

Purchase Contract: The parties negotiate and sign a written purchase contract, and prepare to
consummate the transaction. (Boiler plate).
Brokers v Lawyers:
The traditional rule followed by the MAJORITY of courts is the broker is entitled to a
commission when he or she produces a buyer ready, willing and able to the seller’s terms,
even if the sale is NOT complete.
The growing trend and MINORITY of courts hold that
commission is not earned unless the contract of sale is performed.
Brokers: Generally get 5-7% of the total price of the sale.
Benefit of an Attorney: Negotiating the deal, drafting the sales contract, evaluating title
documents, issuing the title opinion, advising the client about zoning, tax, and other issues,
negotiating the terms of finances, helping the client satisfy contract conditions, handling the
closing, litigating any dispute that arises.
Role of the Broker: Negotiates the deal, prepares the contract, handles the transaction until
the closing, and sometimes supervises the closing.
Statute of Frauds: In general, an oral agreement for the sale of an interest in real
property is not enforceable. It requires:
Essential Terms: the essential terms of the contract (usually the identity of the parties,
the price, and the property description) must be set forth in a writing.
Writing: the writing can be a formal contract of an informal memorandum.
Signature: the writing must be signed by the party sought to be bound.
Exceptions:
Part Performance: some combination of payment of money, transfer of possession and
making of improvements.
Takes Possession
Pays at least part of the purchase price; AND
Makes improvements to the property.
Many jurisdictions require that the buyer take possession and either pay the purchase
price or make improvements. Some require payment AND either possession or
improvements.
Equitable Estoppel
 One party acts to his detriment in reasonable reliance on another’s oral promise; AND
Serious injury would result if enforcement is refused.
Usually applied if the complaining party has relied on the oral agreement by selling
another property or by refusing other offers for the property in dispute.
Policy Reason for the Statute of Frauds:
Prevent Fraud
To insure informed decision making
To minimize administrative costs.
Marketable Title aka Merchantable Title
The MAJORITY rule is that the presence of any encumbrance makes title unmarketable
(unless the contract specifies that the buyer is to accept the property with encumbrances or
restrictions)
The mere existence of zoning ordinances and similar laws does not render title unmarketable.
However, an existing violation of a zoning ordinance will render title unmarketable.
In every contract for the sale of real property, the seller expressly or impliedly promises that
she will deliver marketable title. Marketable title is defined as title reasonably free from doubt
as to its validity. The buyer and seller can specify whatever standard they would like, but
absent that, marketable title is the standard.
Marketable title concerns the title of the property, not the physical condition of that property.
Title is unmarketable if:
The seller’s property interest is less than the one she purports to sell;
The seller’s title is subject to an encumbrance (may lessen value--- like a mortgage);
There is reasonable doubt about either (1) or (2).
Insurable Title- One which a title insurance company would be willing to insure at normal
rates. Since title insurers evaluate risk ( and may therefore ignore minor title defects), an
insurable title standard may provide less protection than a marketable standard.
Record Title- refers to the title that appears in the public land records. Even if a seller has
record title, her title may be invalid; for example: title obtained through a forged deed is void.
This does not protect against title defects that are not reflected in the public record, ie. Adverse
possession.
Equitable Conversion:
Absent an express risk of loss clause, the traditional doctrine of equitable conversion places
the risk of loss on the buyer as equitable owner during the executory period of the contract.
Executory Period: Period of time between the contract
signing and the closing.
Three Approaches:
Traditional Rule: Buyer bears the risk of loss.
Massachusetts Rule: Seller bears the risk of loss as the legal owner.
Uniform vendor and Purchaser Act: The party entitled to possession bears the risk of
loss. Risk remains with seller until either possession or title is given to buyer.
Duty to Disclose
Seller’s duty
Under the Common Law, disputes concerning the physical condition of the property
applied the rule of caveat emptor except in cases where the seller made an express
warranty that the premises were free of defects or the seller committed fraud by
affirmatively misrepresenting the condition of the premises.
Caveat Emptor: “Buyer Beware,” the seller had no duty to disclose defects to the
buyer. The buyer had compete responsibility to assess the condition of the premises.
The seller was only liable if:
Affirmatively misrepresented the condition of the property,
Actively concealed its defects, or
Or owed a fiduciary duty to the buyer.
Implied Warranty of Quality: under this approach, the developer of a newly
constructed residential property, impliedly warrants that the property is fit for its
intended use. (applies to builder/developer )
Implied Warranty of Quality: Why it is NOT limited to the Initial buyer:
Latent defects will not manifest themselves for a considerable period of time.
Mobile society means that the builder knows the home may likely be sold.
Ordinary buyers (both original and later buyers) are not in a position to discover
defects since they have limited ability to inspect and little knowledge about
construction.
Extension of the obligation to subsequent buyers will not change the basic obligation
of the builder.
Limiting warranty to first buyers may encourage sham first sales.
 Duty of the Seller to Disclose Off Site:
Proximity of the condition,
The magnitude of the risk it presents, AND
The gravity of the threatening harm.

Modern Rule: The seller/brokers/attorneys of residential real property is obligated to

disclose defects he knows about that:
Materially affect the value of the property, and
Are not known to or readily discoverable by a buyer.
Objective Standard: Based on what a reasonable buyer would deem important. (used
most)
Subjective Standard: What a particular buyer deems important.
The buyer is entitled to rescind the contract as a matter of equity.

Policy Justifications for imposing duty to disclose on Sellers:

The average buyer is making an investment in what will likely be their most significant
asset.
Modern buyers are unsophisticated and wouldn’t know the different between a joist
and a rafter.
A seller should not be able to subject an unknowing buyer to health or safety risks.
The disclosure duty imposes no costs on the seller.
Prospective Buyers
Has no duty to disclose facts which materially affect the value of the property.
Waiver of Duty:
“As Is” and “Non-Reliance” Clauses---
Majority Rule: A clear waiver will be enforced in most
jurisdictions.
The Closing
A typical closing:
The buyer pays the purchase price to the seller, and executes a mortgage and promissory note
for the lender;
The lender advance the loan funds; and
The seller transfers title to the buyer by delivering the deed.
Escrow Agent: In some states the closing is supervised by an escrow agent, this a neutral third
party who receives the purchase price, the deed, the mortgage, the promissory note, and any
other documents needed to consummate the transaction. He distributes funds based on the
escrow instructions.
Statute of Frauds: You cannot orally transfer real property.

The Deed
The transformer must manifest an intent to immediately transfer title to the grantee.
It must be delivered and in compliance with the statute of frauds., + acceptance.
However, it does not have to be recorded in order to be effective to transfer the property.
A deed is only effective when it is delivered. If the deed is signed and not delivered, it is not
effective.
Death Escrow: Most jurisdictions find an effective delivery, if the grantor is unable to retrieve
the deed.
Revocable Deed:
A valid delivery may occur if the grantor hands the deed to a third party with an express
provision that the grantor may revoke the deed at any time.
There is a modern trend of upholding revocable deeds.
The Mortgage
A conveyance of an interest in real property as security for performance of an obligation.
The mortgagor is the borrower of the money, the mortgagee is the lender.
A promissory note is a contract by which the borrower promises to repay the loan on certain
terms and conditions.
The mortgage gives the lender the right to a special remedy if the borrower defaults:
foreclosure. Foreclosure:
Judicial
Non-Judicial
What does Foreclosure Do?
Extinguishes the borrower/mortgagor’s title and invests title in the foreclosure sale purchaser;
Eliminates all subordinate liens or interest that are subsequent to the mortgage being
foreclosed;
May result in a deficiency judgment against the borrower/mortgagor.

Price inadequacy at the foreclosure sale is NOT enough to set aside the sale unless the price is
“so grossly inadequate as to shock the conscience of the Court.”---In general, a sale for ½ the
fair market value would not need the standard that courts have set for an insufficient sales
price.
Mortgage Collapse Reasons:
Fraud
Reductions (and in some cases the elimination) in the use of lawyers for buyers and sellers in
the residential real estate market.
Introduction of new “designer” mortgages----(a) fixed rate, (b) adjustable, (c) balloon and
interest only.
Introduction of new players in the market including “mortgage brokers”
Elimination of traditional “neighborhood” lending sources leading to unhealthy competition
among lenders.
Liar Loans or “no doc” loans---behavior of loan applicants, mortgage brokers, appraisers and
lenders to make loans to person who could not afford the loan.
Use of residential homes as an ATM machine
Unprecedented expansion of the secondary mortgage market
Deregulation.

Deed of Trust:
- Creates a three party relationship.
The borrower (trustor) executed a written instrument conveying legal title to a neutral third
party (the trustee), as security for an obligation owed to the lender (the beneficiary).
- If the trustor duly repaid the loan, the trustee would reconvey title.
-If the trustor defaulted on the debt, the trustee would conduct an auction sale of the property;
after the sale of the trustee would repay the beneficiary and affected creditors and distribute
any remaining sales proceed to the trustor.

Installment land contract: Vendor(pay the seller directly) and Vendee. Vendee agrees to pay
in installments, and the Vendor retains the title and Vendee takes possession.
- The buyer promises to pay the purchase price in installments over a period of time.
- The buyer CAN take possession of the property, but the seller RETAINS title until all
payments are made.
What happens, upon default of a land installment contract?
- The traditional rule is that the vendor (seller) may cancel the contract, retake
possession of the land, and retain all installments paid by the vendee, without any foreclosure
sale or judicial action.
- Modern Law holds that the land installment contract will be equated with the
mortgage, at least where the vendee has paid a SUBSTANTIAL PART of the purchase price
before default.
- Where the vendee has merely paid a minimal sum, or abandons the property after
default, forfeiture provisions can seemingly still be enforced.

Title Theory: Common Law mortgage was viewed as a transfer of title from the mortgagor to
the mortgagee. Under this approach , the mortgagor remained in possession of the property,
but the mortgagee held title until the loan was repaid.
Lien Theory: Majority follow. The mortgage is seen as a conveying only a securyt interest,
which gives the mortgagee the right to foreclose on the property, not as the transfer of title.
Both the title and possession remain with the mortgagor until and unless foreclosure occurs.
Remedies for Breach
Specific Performance
Buyer’s Remedy: Courts have traditionally held that damages are an inadequate remedy for
the seller’s breach of a contract to sell real property. This has evolved because land is “truly
unique.”
Seller’s Remedy: Is a seller entitled to specific performance? Perhaps illogically: yes.
However, when damages are sustained are readily measurable, then no.
Role of Hardship: Courts equate hardship with “impossibility.” A court may deny specific
performance if there is a undue hardship on the defendant.
Other Remedies
Damages: The non-breaching party can obtain damages, usually calculated as the difference
between the contract price and the fair market value on the date of the breach. “Benefit of the
bargain” damages, some courts consider whether the seller acted in good faith
Rescission: The innocent party may rescind the contract and receive restitution. Rescission
restores the parties to their original positions. (a buyer may seek restitution damages, and
recover her deposit)
If the seller breaches a contract, the buyer may be entitled to remedies-
1) Specific Performance- This decree mandates that the breaching party perform the sales
contract. Will only be awarded if the usual remedy of money damages is inadequate.
- If specific performance would cause unusual hardship to the breaching party, the
court may refuse to compel performance and only award damages.
- It was once thought that specific performance was the appropriate remedy because
land is unique, and cannot be duplicated. In modern time, upon breach for the sale of an
apartment, even if an identical apartment is available the buyer can compel the seller to
perform under a suit for specific performance, even though an identical apartment is
available for purchase at the same price.
2) Money Damages- Calculated as the difference between the contract price and the fair
market value of the property at the time of the breach.

3) Rescission and Restitution- The NON-BREACHING party may rescind the contract and
obtain restitution. Rescission cancels the contract. The law requires that the parties return the
performance given to the other (RESTITUTION).

Title Assurance
Elements of a Valid Deed:
(1) identification of the parties (grantor and grantee),
(2) adequate description of land,
(3) words indicating a present intent to convey, and
(4) the grantor’s signature.
Deed/Title Covenants:
The weakest and least effective method of title assurance.
General Warranty Deed: the grantor warrants title against all defects, whether they arose
before or after he obtained title. This offers the best protection, because the grantor promises
that the tiel is free from all defects at the closing, regardless of when they were created.
Special warranty deed: the grantor warrants title against all defects that arose after he
obtained title. Limits the grantors assurances only to any title defects that arose during his
ownership.
Quitclaim Deed: the grantor makes no warranties about title, so the grantee receives only
what grantor has, if anything. Offers no assurances. Even though the quitclaim deed offers
no covenants or warranties of title, a quitclaim deed is just as effective as a warranty deed in
actually transferring whatever title the grantor has.
(*) The Only distinction between warranty deeds and quitclaim deeds lies in the remedies (or
lack there of ) the grantee has if the title fails; there is no difference in the quality of the title
conveyed.
Under General and Special Warranty Deeds specific title covenants (protect against defects
discovered after the closing, unlike the implied covenant of marketable title, which applies to
defects discovered before closing----recovery based on marketable title is barred once the
grantee accepts a deed.)
Present
Covenant of seisin: a promise the that grantor owns the land;
Covenant of right to Convey: A promise that the grantor has the LEGAL right to convey;
Covenant against encumbrances: a promise that there is no encumbrances on the land.
Future
Covenant of Quiet Enjoyment: A promise that the grantee’s possession of the property will not
be disturbed by anyone holding superior title. Damages must be shown as a condition
precedent to recovery for breach. It is not enough that there has been a breach. The measure
of damages if the cost of removing the encumbrance or the reduction in the value of the land
with the encumbrance (not to exceed the purchase price).
Covenant of Warranty: A promise that the grantor will defend the grantee against any claim
of superior title. In many states this obligates the grantor to pay the costs of defending title
against third parties, including reasonable attorney fees. The grantee will be able to recover
costs ONLY IF the third party claim prevails.
Covenant of Further Assurances: A promise that grantor will take all future steps reasonable
necessary to cure title defects that existed at closing.
Present covenants versus Future Covenants
Present:
Are breached at the moment the deed is delivered;
May be barred as a basis for the suit because the statute of limitations begins to run on the
date of delivery of the deed;
Allow a suit against the grantor immediately even though no person is asserting a superior
title and no superior title holder is taking action to oust the grantee;
Runs only in favor of the immediate grantee.
Future:
Are breached only when the grantee has been ousted by someone with superior claim.
Allow a claim to be filed years after delivery of the deed since the SOL does not begin got run
until a breach has occurred.
Run with the land allowing a remote grantee to sue any prior person in the chain of title that
has given a warranty deed.
Rule Regarding Recovery for Breach of Future Covenants
A successful suit alleging breach of a future covenant
Requires that the covenant actually be breached (either
the grantor refues to act or defend the title against a third party asserting a superior claim or
the grantee has been ousted by someone with superior title)
The statute of limitations does not begin to run until a 3rd
party asserts a superior title.
The covenant runs with the land so that a remote grantor
may be liable.
Damages/Remedies
Measure of damages for breach of a present covenant in the case of the covenant of seisin and
the right to covey is a fraction of the purchase price representing the percentage of the price
for which tile fail.
*Recovery is limited to the purchase price of the land.
Measure of damages for breach of the covenant against encumbrances is the cost of removing
the defect if that is possible, and if not, the difference between the fair market value with and
without the encumbrance fixed at the time of the breach.
Why are deed covenants ineffective?
Present covenants do not run with the land so remote grantors may not be liable for defects.
Suits based on future covenants may only be brought if there has been an actual ouster.
The recovery is limited to the price paid, not the present value of the land.
Recovery depends on locating the grantor and finding the grantor solvent.
The Recording System:
Title Opinion: based on a search by an attorney or other professional, who will conduct the
search and give her a written opinion on the state of title. The attorney will inspect the
records to learn if (a) if the seller holds a fee simple absolute and (b) whether his title is
subject to any encumbrances or other defects.
Purpose of Recording Acts: (1) Protect against fraud; (2) promote certainty in the transfer of
interest in real property ant to promote the use of real estate as security for loans by
encouraging parties to avoid costs by: (a) placing documents affecting land in the public
record; and (b) making diligent inquiry.
The government functions as a custodian of the records, but leaves the process of determining
title exclusively to title searches.
The searcher must (1) locate the recorded documents that affect title to the parcel and then (2)
evaluate their legal significance.
Constructive notice: You should have found it and could have found it if you searched.
What if the title was never recorded? That will make the purchaser a bona fide purchaser, a
person who acquires title without notice to the adverse claim and pays valuable consideration.
Recording has NO EFFECT on the validity of a deed or other instrument.
A deed or other instrument is effective between the parties without recording.
(*) Recorded Documents that Do Provide Constructive Notice
(1) Invalid acknowledgement: Majority rule: with regards to the notice of going to a notary, if
the notary falsely places their stamp on the deed, then the grantee records, and a later
purchaser is a bonafide purchaser.
A later purchaser has no reason to suspect any flaw in the acknowledgment and the cost of
investigating each acknowledgement would be too high. So they are the bona fide purchaser,
The minority rule, says that the acknowledgment is not valid so the later later purchaser (the
one from the true owner) would be the bona fide purchaser.
(2) Improper Indexing: Even if the deed or other document is incorrectly indexed or lost by
the indexing clerk, it still provides constructive notice.
(*) For Policy reasons, the recording acts protect the subsequent bona fide purchaser. Any
grantee can protect her title simply by recording the deed. But if she faisl to record, she runs
th risk that a lter buyer will qualify for the bona fide purchaser protection.
Recorded Documents that DO NOT provide constructive notice-
1) Invalid acknowledgment- If the acknowledgment is defective on its face or altogether
absent, the document was NOT entitled to recordation, and is deemed unrecorded. A problem
arises when the acknowledgment appears on its face to be valid, but suffers from a hidden
defect.
Does the deed give constructive notice to a later purchaser, that there was in fact a deed b/w
the grantor and grantee?
MAJORITY RULE- YES. A later purchaser has no reason to suspect any flaw in the
acknowledgment, and the cost of investigating each acknowledgment in the chain of title
would be too high.
MINORITY RULE- NO. The grantor-grantee deed, is NOT VALID, because the
acknowledgment is invalid. Therefore, a later purchaser, who purchases the deed from the
TRUE GRANTOR is IN FACT a bona-fide purchaser.
2) Incorrect Name- If the name of the grantor or the grantee is so different on the deed as
opposed to the actual names of the grantor and the grantee, then this will not allow a later
purchaser to truly research the title no matter how diligently he may search. THIS IS
CONSIDERED OUTSIDE THE CHAIN OF TITLE, and does NOT provide constructive
notice to a later purchaser.
HOWEVER, under the doctrine of idem sonans, when an improperly spelled name sounds
substantially like the true name, the spelling error is IGNORED. E.G.- Denise Berry and
Denise Bery. Thus a title searcher must search not only under the correct name, but also
under all variations that sound like the correct name.
3) Incorrect Property Description- A deed that contains a materially defective property
description does NOT give constructive notice.

How to Search a Title:

Grantor/Grantee Index: The most commonly used method. Every recorded document is
indexed in two places: the grantee index and the grantor index. In the grantee index, each
entry is organized alphabetically by the grantee’s last name; in the grantor index is organized
by the grantor’s last name. Along with the parties’ names, an index entry will contain the type
of instrument, the time of recordation, the location of the recorded document, and a brief
description of the property involved.
First, establish a chain of title, for the parcel. Start with the grantee(the current owner) and
tracing ownership back deed by deed in the grantee index until the searcher reaches the point
where the land was owned by a sovereign such as a the federal government. Or the local
custom may bed to perform a less intensive search, like only go back 40 years.
Then the searcher moves over to the grantor index. Beginning with the first grantor in the
chain, the searcher moves forward in time, looking under each grantor’s name, deed by deed,
to see if he conveyed an interest to anyone who is not in the known chain of title. Typically
the searcher examines all entries in the grantor index under each grantor’s name from (1) the
date he received his interest until (2) the date the deed conveying his interest to a grantee was
recorded.

Tract Index: Each parcel of land is assigned a unique identifier, sometimes called a parcel
identification number. Every document affecting that parcel is typically filed in a folder
under its unique number. A title search can simply examine the documents in the folder to
assess the state of title.
Two Major Defects:
They do not conclusively establish title; and
Even purchasers who scrupulously search the records may lose title due to unrecorded
interest which are outside the scope of the recording acts.
Torrens System
Under the torrens system, title is passed by registration in a government agency. In order to
set up such a system, the ownership of each parcel of real property must be determined by
litigation. Once the court determines the state of title, the property is registered with the
government agency, which issues a certificate of title to the owner. The owner can transfer
his interest only by registering title in the name of the buyer. Unregistered interest are
invalid, except for a few exceptions (lease holds). In theory the Torrens System is more
efficient than a traditional recording system. However several factors contributed to the
demise: (1) it was not mandatory; (2) the initial judicial determination of title was expensive;
(3) statutory and judicial exceptions undermined its effectiveness.

Common Law Rule: The Default Rule

First in Time ; First in Right.
O, owner of blackacre in fee simple absolute,
conveys Blackacre to A. Five days later, O conveys Blackacre to B….A owns
blackacre.
Race Recording Statute:
Protects the party who records FIRST, regardless of notice. This eliminates the need for
testimony about who knew what and how.
Notice Jurisdictions:
 An unrecorded instrument is void as against any
person who subsequently takes an interest in the same property without notice of that
unrecorded instrument.
Hypothetical: O conveys Blackacre (vacant land) to A. A does not record. Later, O sells
Backacre to B and executes a deed to B. B does not Record.
Answer(s): Under Common law: A owns Balckacre.
Race Jurisdictions: A owns Blackacre.
Notice Jurisdictions: B owns Blackacre.
Race-Notice Statutes:
Under these statues, the subsequent purchaser wins if he
or she takes without notice of the prior uncredorded and instrument AND records first.
What is notice?
Actual Notice: knowledge of a prior interest.
Record Notice: Notice of any prior interest that would be discovered by a standard search of
the public land records.
Inquiry Notice: Notice of any prior interest that would have been obtained by investigating
suspicious circumstances.
(*) A Forged Deed is Void. A deed induced by Fraud is voidable by the grantor.
However, if a deed is induced by fraud, and the grantee
coveys title to a bona fide purchaser,t eh subsequent purchaser prevail.

Title Insurance: If the buyer suffers a loss from a title defect that existed on the effective date
of the policy, he receives compensation from the title company.
ALTA Owner’s policy:
Cover Page: Setting forth the scope of the coverage
provided.
Schedule A: Stating the name of the insured party, the maximum amount insured by the
policy , and the estate that is insured.
Exclusion and Exceptions: Listing specific items that are excluded or excepted from coverage.
Exclusion: is any potential risk that the company is unwilling to cover in ANY policy, such as
claims that could be discovered by a physical inspection of the land.
Exceptions: A problem that concerns the particular parcel, which the title company discovers
by searching it’s computerized version of the public land records. Ie. Easement.
Conditions and Stipulations: Specifying procedural requirements, such as the time and
manner for making claims.
Two obligations of the insurance company:
Duty to defend: to pay attorneys fees and costs necessary to protect the owner’s title as
guaranteed by the policy, even if it is not completely clear that the potential defect is covered
by the policy.
Duty to indemnify: to compensate the owner if a loss occurs.
A title policy insures the quality of the owner’s title, not the market value of the land.
Contamination is not an encumbrance and does not render title unmarketable.
EASEMENTS
An easement is a nonpossessory right to use land in the possession of another. A person
cannot hold an easement in his own land. Land cannot be used unless the owner has
adequate access to it, which may require an easement across land owned by another.
Although most easements are the product of an agreement, courts will sometimes impose an
easement with the consent of the burdened owner.
Creating an Easement:
Express Easement: The most common type of easement. Must satisfy the statute of frauds.
Express Easement by Grant: This arises when the servient owner grants an easement to the
dominant owner.
Express Easement by Reservation:This arises when the dominant owner grants the servient
land to the servient owner, but retains or reserves an easement over that property.
Traditionally this could only be reserved by the dominant owner. Most modern decisions allow
this easement to be reserved in favor of a third party.
Well-Drafted Easement:
Identify the parties;
Describe the servient land and the dominant land (if any);
Describe the exact location of the easement on the servient land; and
State the purposes for which the easement may be used.
Special Terminology:
Property: Greenacre, the land benefited by the easement, is called the Dominant Tenement or
Dominant Land. B’s land which is burdened by the easement, is the servient tenement or
servient land.
Parties: A, the easement holder, is called the dominant owner. B, the owner of the servient
tenement is the servient owner.
Appurtenant or in gross: An appurtenant easement benefits the holder in her use of a specific
parcel of land, the dominant tenement. A’s easement is appurtenant because it benefits A in
her use of Greenacre. An easement in gross is not connected to the holder’s use of any
particular land; rather, it is personal to the holder. Most easement are appurtenant.
Affirmative or negative: An affirmative easement allows the holder to perform an act on the
servient land. A’s easement is affirmative because it allows her to cross B’s property. A
negative easement allows the holder to prevent the servient owner from performing an act on
the servient land. Most easements are affirmative.
(*) You could not reserve an easement for a stranger to the conveyance.
Easement in Gross v. Appurtenant
In Gross: Only involves one parcel of land--- a servient estate (the burdened land). Is usually
freely transferable if the easement is commercial in nature.
Appurtenant: Involves two parcels of land---a servient estate and a dominant estate. The
easement can only be used for the benefit of the dominant estate. Is automatically transferred
upon the sale of the dominant or servient land.
(*) Unless the parties otherwise agree, an appurtenant easement is automatically transferred
with ownership of the dominant and servient estates.
(*) An easement in gross is non-transferable unless it is of a commercial nature.
(*) The Restatement § 4.6 (1)© suggest that transferability should depend on the parties
intentions and not dependent on the characterization as “in gross” or appurtenant.
License or Easement:
License: an informal permission that allows the holder to use the land of another for a
particular purpose. But it is not classified as an interest in land and, accordingly, can be
revoked at any time.
Profit: Specialized form of easement. A right to enter the land of another to remove minerals,
gravel, timber, game or other natural resources.
Easements by Implication:
 Easement implied from a plat:
Easement implied from a necessity (sometimes called a
“way of necessity”):
Common grantor
Severance of one portion of the land
After severance, it is necessary to pass over one parcel to reach a public street or road from
the other parcel
Note: There is no requirement for quasi-easement, e.g. that there was a prior usage on the
land.
Majority View: Strict necessity is required, e.g., the owner has no legal right to access.
Minority (Restatement) view: Reasonable necessity is required, e.g., the easement is beneficial
or convenient for the use of the dominant land.
Berge view (also the minority view): Dominant owner must lack reasonably practical access.
Easement implied from prior use:
A common grantor conveys a physical part of the land to another.
Prior to the conveyance, there was a usage on the land that amounted to a quasi-easement
that was permanent or continuous.
After the conveyance the continued usage is more of less necessary.
The usage is apparent.
Policy Justifications:
The presumed intent of the parties; and
The policy favoring the productive use of the land.
Prescriptive Easements:* think adverse possession.
Open and notorious;
Adverse and hostile;
Continuous;
For the statutory period.
Presumption of Adverse Use:
Use of a way over the land of another for the prescriptive period raises a presumption that the
use is adverse.
Use of a way over the land of another for the prescriptive period is presumed to be permissive
unless there is direct and specific proof that the use is adverse.
No presumption either in favor of adverseness or permissiveness.
Prescription by a large but definable group: such as a hiking club, is generally allowed, even
though not all members hike on a continuous basis.
Minority Rule: Hold that the public at large cannot
obtain an easement by prescription.
When the public at large obtains an easement by prescription, some courts allow it on the
theory of an implied dedication.
Licenses:
Right to use or occupy the land of another without being
deemed a trespasser.
Usually revocable.
Automatically revoked on transfer of the servient land or death of the licensor or licensee.
Usually oral in nature but may be in writing.
Easement by Estoppel Rules
If the licensee incurs
(reasonable ) substantial expenses.
(with knowledge of the licensor)
In reliance on the continued ability to use the license,
The licensor is estopped form terminating or revoking the license.
How long should an easement by Estoppel last?
Only as long as necessary to avoid injustice.

Changes in the Easement

The general rule is that the intention of the parties is expressed int eh grant, determines the
scope of the conveyed interest.
The standards governing the court’s inquiry regarding the changes in the proposed use of the
easement may include:
The manner, frequency and intensity of the proposed change over time to accommodate
technological development.
Default Rules Regarding Scope:
Unless contrary inetnion is evident:
The owner of the servient estate may make any use of the burdened proerpty that doesn’t
unreasonably interfere with the rights of the easement holder.
The owner of the dominant estate may make any use of the easement including maintenance
and improvement that is reasonably necessary to enjoy the easement and which doesn’t cuase
unreasonable damage to or interfere with the use of the servient.
Maintenance issues:
Traditional Rule: The owner of the dominant estate has the right (obligation) to maintain the
easement in a condition suitable to allow access.
The owner of the servient estae has no obligation to maintain or repair the easement.
There is an exception to this rule: If the owners of both the dominant and the servient
estate use the easement (such as a roadway) on a continuing basis, then thei share the
responsibility for the cost of the maintenance of the easement.
Most courts have interpreted the original easement as one that allowed for the
transmission of communication signals, abroad enough category that would allow
divisibility of the easement to include cable television.
Exclusive Easement vs. Non-exclusive easement
If the servient owner retains the privilege of sharing the benfit conferred by the easement
it is a non-exclusive easement and therefore not subject o apportionment by the owner of
the dominant estate.
If the servient owner grants an exclusive easement, divided utilization of the rights
granted are presumptively allowable.
Termination of an Easement:
-Abandonment by the owner of the dominant estate. (Must clearly manifest an intent to
relinquish the easement---Objective Standard)
-Release of the easement by the owner of the dominant estate: The easement holder may release
the easement to the servient owner by executing a delivering a writing that complies with the
statute of frauds.
-Merger- where the dominant estate and servient estate are owned by one individual or entity. If
one person obstains title to both the easement and the servient land, the easement terminates
under the doctrine of merger.
-Misuse of the easement: In some jurisdictions, if the holder seriously misuses the easement, it
may be ended through forfeiture.
-Condemnation of the servient land also terminates the easement. In this event, the easement
holder is entitled to just compensation.
-Estoppel: an easement ends if the servient owner substantially changes his position in
reasonable reliance on the holder’ statement that the easement will not be used in the future.
-Adverse Possession/Prescription.
Negative Easements: Disfavored under English Common Law
Examples:
Agreements not the block windows for light, Agreements regarding flow if air in a definded
channel, Agreements regarding flow of water in a defined channel, Agreements regarding
removal of support from a building.
Conservation Easements:
A new kind of negative easement---the conservation easement has become popular within the
last few decades.
Restricts the development and use of the servient land in order to preserve open space, farm land,
historical sites, or wild and undeveloped land.
Real Covenants and Equitable Servitudes:
Both PRIVATE promissory obligations respecting land use that are enforceable not only
between the original parties but also by and against the original parities’ successors in interest
merely because they have succeeded to the original parties’ property.
Real Covenant:
A promise concerning the use of land that benefits and burdens both the original parties to
promise and their successors. The remedy for breach is money damages.
(1) Compliance with the Statute of Frauds
(2) Intent to Bind Successors: The original parties must intend to bind their successors. The
needed intent is usually found in the express language of the document.
(3) Touch and Concern: It must relate to the enjoyment, occupations or use of the property.
(4) Notice: the successor must have notice of the covenant. Actual notice, record notice or
inquiry notice.
(5) Horizontal Privity: Relationship between original parties to the promise.
 a. Mutual Interests: In some states, horizontal Privity
requires that the original parties have mutal interests in the affected land (landlord-tenant,
or owners of the dominant and servient lands in easement)
b. Successive interest: In other states there must be a grantor-
grantee relationship between the original paties, so they have successive interest int eh
affected land.
c. No requirement: an increasing number of states have
abandoned the requirement, this the modern rule.
(6) Vertical Privity: Concerns the relationship between an original party to the promise and
his successor. Vertical Privity exists only if the successor receives the entire estate that
the original party had.
(*) All must be satisfied for burden to run.
(*) notice and horizontal Privity do not have to be satisfied for benefit to run.
Equitable Servitude:
Requirements:
(1)