Property Outline Fall 2009 I. What is Property? a.

Property as a absolute right against the world versus property as as a collection of rights (bundle of rights) with content that varies according to context and policy choices b. Trespass to Land i. Any intentional intrusion that deprives another possession of land (even if only temporarily) ii. Jacque v. Steenberg Homes, Inc. 1. Facts: Easiest route to put up mobile home through Ps property, P denied multiple requests, fear of AP (irrational), D went through property anyways, no harm 2. Rule: a. Elements of Trespass: (1)must be intentional, the act (2) physically enter the property, (3)no harm necessary b. Right to exclude is a fundamental property right (categorical/essentialism view) 3. App/ Holding: harm in every trespass even if no damage to the land, it infringes upon the rights of the landowner to trespass. USSC precedent one of the most essential sticks in the bundle of rights that are commonly characterized as property Dolan v. City of Tigard. Nominal damages support punitive damages c. Trespass/Nuisance Divide i. Hinman v. Pacific Air Transport (Trespass) 1. Facts: D operates a commercial air line whose aircraft enter Ps airspace sometimes at low altitudes 2. Rules: a. No property right to airspace except so far as one may actually use (ad coelum doctrine impractical, absolute ownership of the sky would make flight impossible) b. Property as a bundle of rights varying in context according to the necessary policies of air travel (utilitarian/functionalist view) c. Type 3 Calebresi and Malamud Rule: Property Rule for the Defendant (see below) d. Dominion: Property, must be capable of exclusive possession. Without possession, no right can be maintained. Air and ocean are incapable of private ownership. Only possess it while you use it then reverts back to public domain 3. App/ Holding: Bundle of Sticks: property is a bundle of sticks enabling you to remove certain parts. Function of air travel outweighs exclusive right to airspace. ii. Hendricks v. Stalnaker (Private Nuisance) 1. Facts: Incompatible uses of the well and the septic system 2. Rules: a. Nuisance: anything which annoys or disturbs the free use of ones property, or which renders its ordinary use or physical occupation uncomfortable b. Elements of private nuisance i. Intent (know or should know that something would interfere w/ use and enjoyment) ii. Harm (interference with use and enjoyment) iii. Interference must be substantial iv. Interference must be unreasonable: gravity of harm outweighs social value of the activity alleged to cause harm c. When Neither use unreasonable must balance the interests of the landowners 3. App/Holding: since the installation of the septic tank and the well were reciprocal nuisances so only one could stay. Although both parties have the intent to install their well or septic tank and they know it will substantially impair their neighbors use and enjoyment of each others land they determined that when balancing the two partys interests, the septic tank was more unreasonable because it required drainage and therefore granted the injunction to the Stalnakers to keep their well. Balance owners competing interests. Here it is slightly in favor of the well. d. The Problem of Social Cost; Property and Equity i. Coase Theorem (search for efficient outcomes)

Basics: In the absence of transaction costs parties will agree to maximize net wealth. Baseline entitlement irrelevant; two parties will find the most efficient joint use of the resources (always most valuable use, come to agreement that is mutually beneficial) 2. Extension of Coase: courts should try to resolve cases in the most efficient way. Almost amorally. In issues of incompatible uses, courts should give entitlements to minimize transaction costs and be clear (parties will negotiate in the shadow of the law) 3. Criticisms Entitlement matters, People dont negotiating well (Jaque), holdouts, free-riders, lack of full knowledge, Endowment effects (people overvalue what the own), Assembly problems (Hinman): can't expect airlines to negotiate with everyone, bilateral monopoly issues (only one person to negotiate with), Assumed awareness of the law ii. Repeated Trespasses: Baker v. Howard County Hunt 1. Facts: Fox hounds trespassing on Ps small farm, scared chickens, bit wife, P shot at them. Trespasses not continuance but part of the same course of conduct (foxhunting) 2. Rules: Injunctive relief granted; rights of landowner are paramount to County Hunt activities a. Injunctions (P must usually satisfy the traditional requirements of equity to obtain injunctive relief) i. Granting Injunction/ Maxims of Equity: ii. No adequate remedy at law: damages are insufficient to deter or resolve issue. Action seriously interferes with enjoyment iii. Coming in with clean hands: Plaintiff hasnt done something lawfully bad in return to defendant 3. App/Holding: Since damages wont suffice in repeated trespass, and Baker has clean hands since he shot the dogs only to protect his property and not out of maliciousness, the permanent injunction preventing the dogs and hunt club from entering is granted. e. Equitable Remedies 1. Types of Injunctions a. Prohibitive: not do something b. Mandatory: Do something c. Declaratory (relief explaining exactly what the legal rights are in a circumstance) 2. Violation of an injunction: can be held in contempt (fine, misdemeanor, or jail) f. Property and Equity i. Building Encroachments 1. De minimis (trifling; so insignificant that a court may overlook it)(nominal damages only) 2. Pile v. Pedrick Bright Line Rule (categorical) a. Facts: Poor survey; factory built intruding 1 and 3/8 inches onto Ps property beneath the surface; P refused offer for party wall; P refused to collect damages on permanent trespass and insisted D take down wall from Ds side b. Rules: i. Bright Line Rule=injunction to remove: D has no right, at law or in equity, to occupy land that does not belong to them ii. If a structure even accidently encroaches on the property of another, it can be ordered to be taken down from the Ds side and bearing all the costs (categorical/essentialism) iii. Good faith irrelevant iv. Type 1 Calebresi Malamud Rule: Property Rule for the Plaintiff (see below) c. App/Holding: Since the wall encroached on neighbors land, even by a couple inches, that still is an encroachment and is prohibited. Grant injunction, Wall must be torn down and rebuilt on the correct parcel of land. 3. Golden Press, Inc. v. Rylands (majority rule for good faith violators) a. Facts: Foundation runs several inches under the surface onto Ds property b. Rules Fact-Specific Adjudication: i. Factors for determining whether to grant damages or injunction for removal: 1. Good faith: must act in good faith to have the possibility of paying damages rather than mandatory removal of encroachment

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Degree of trespass: barely encroaches or not Burden on Defendant to remove the encroachment: i.e. if a significant burden to remove while encroachment is minimal ii. Restatement of Torts: "Where defendant's encroachment is unintentional and slight, plaintiff's use not affected and his damage small and fairly compensable, while the cost of removal is so great as to cause grave hardship or otherwise make its removal unconscionable, mandatory injunction may be properly denied and plaintiff relegated to compensation on damages." iii. If encroachment is deliberate and constitutes a willful and intentional taking of anothers land, equity may require its restoration regardless of the expense iv. An unintentional encroachment may not warrant a mandatory injunction if the encroachment is unintentional and slight (only damages) (utilitarian/functionalist) v. Crystal clear rule turned to mud in fairness to good faith violators (liability rule) c. App/ Holding: Since the neighbor got a survey and build the structure in good faith believing it was on their land, the degree of trespass in very minimal as it is several feet below ground, and the burden of removing the structure would be prohibitively expensive, the good faith violator must give just compensate to the neighbor for the cost of the land where they intruded. ii. Property Rules versus Liability Rules 1. Calabresi & Melamed (modes of protection for entitlements) a. Property Rules (holder must consent before entitlement is transferred) supports injunctions i. Must buy in voluntary transaction ii. State lets parties decide how much entitlement is worth iii. Works with Coase theorem b. Liability Rules (only court can take away entitlement)(damages) supports damages i. Cannot be transferred or destroyed by parties themselves ii. Changes in entitlement decided by the state iii. Covers high transaction costs iii. Ex Ante/ Ex Post Problem 1. Ex ante: analysis of a situation before some critical event: determining fairness by policy concerns a. Focuses on incentives and future conduct (aligns more closely with categorical view) 2. Ex Post: analysis of a situation after some critical event: thinking back about fairness and rights a. Focuses on fairness and distributional concerns b. Courts are naturally drawn to ex post because this is how controversies are presented to them (fact specific, aligns more closely with functionalist view) g. Restitution unjust enrichment (non-bargained-for benefits) i. Elements 1. An enrichment of the D 2. At the expense of the P 3. Under circumstances that are unjust ii. Windfall must be at the expense of the P iii. The mistaken improver 1. Producers Lumber & Supply Co. v. Olney Building Co. a. Facts: P mistakenly builds house on lot that he sold to D, negotiations failed, P razed house b. Rule: i. It is only when a person places permanent improvements upon land belonging to another in a good faith belief that he is the owner of the land, that he has any remedy ii. Normal remedies for good faith improvers (liability rule)(utilitarian/functionalism) 1. let the true owner keep the land and pay the encroacher its value (an equitable award of restitution) 2. Transfer the lot to the encroacher for its fair market value 3. Sell the property at auction and divide the profits

2. 3.

II.

App/ Holding: Resorted to self-help and committed waste before a court of equity could determine the rights of the parties (cannot come to court with unclean hands and seek the equitable remedy of reimbursement for the amount he had enhanced the value of the lot) owed damages to the landowner for full price of the home. Original Acquisition (ways of acquiring property other than purchase or gift) a. First Possession (new root of title) i. When is first-in-time possession established? (point of capture) (VERY CONTEXT DEPENDENT) 1. Intent to control 2. Notice (physical demonstration of ownership) 3. Labor (Creation of Value) (Exploitation of Resource)(labor theory / Lockean) ii. Wild Animals (rules of capture for wild animals is relevant to other natural resources; ex. oil and gas) 1. Pierson v. Post (1805) a. Facts: P hunting fox with hounds; D w/ full knowledge of P intercepted fox killing and taking it b. Rules: i. Rule of Capture: Whoever mortally wounds/captures the fox owns the fox; Requires a. deprivation of natural liberty;AND b. certain control by their pursuer ii. Mere pursuit did not establish a legal right (intent insufficient) iii. Possession at the time of control or inevitable control (mortally wounding animal) (Exploitation of Resource) c. App/ Holding: Since D killed the fox and took it in his hands, he gained possession. P only gave notice and had intent which is insufficient 2. Ghen v. Rich (1881) a. Facts: Hunting fin-back whales w/ bomb-lances; sink and rise to the surface; whales identified later by lance; customary finding fee; D took whale for himself and sold at auction b. Rules: i. Bomb-lance holds the whale: If you kill it with clear proof then its yours. ii. Fast-fish, loose fish rule: whale goes to the salvager iii. Factors to consider when determining which rule to use 1. General maritime law 2. Universal custom that doesnt conflict with the law 3. Case is a very limited application 4. Industry will fail with rule changed c. App/Holding: (utilitarian/functionalist view) Custom applies very narrowly to protect industry. Considering the factors, the whaler has possession because w/o this rule the industry would fail. 3. Keeble v. Hickeringill (1809) a. Facts: Keeble makes money from catching ducks and has a duck decoy system to catch them. Neighbor, Hickeringill maliciously fires his gun on his own property near Keebles to scare his ducks away. b. Rules: i. Malicious Hindrance: Person who maliciously hinders another person in their trade or livelihood are liable for hindering them (protect investment, net social worth considered) 1. P had no possession of ducks but was still a willful disturbance (social utility rationale) ii. Fair Trade: People have the right to engage in their trade and law protects fair competition (setting up competing business next door is ok) iii. Benefits of fair competition: 1. more goods and services with better prices 2. wrong to purposely harm people without gaining anything 3. Protect activities that benefit social welfare c. App/Holding: Keeble may recover for the disturbance but not for the damage by loss of fowl since it is impossible to know the amount of ducks scared away. iii. Salvage Claims

c.

Abandoned or Lost Property a. Property is abandoned when an owner manifests an intention to relinquish all future claims of possession or ownership (I.e. having trees growing on a sunken ship) b. Eads v. Brazelton (1961) i. Facts: Riverboat w/ bars of lead abandoned; P marked area (buoys) and was called away; D placed boat over and raised the metal. Knew the lead was abandoned because trees were growing on the boat. ii. Rules: 1. Elements of Possession: (labor)(exploitation of resource) a. Due diligence: clearly positioning yourself to take it and diligently working towards consumption (notice and intent insufficient) b. Abandonment: owner relinquishes all claims 2. If not abandoned: Salvor: Person who salvages something owned and gets a generous proportion of the value of the salvages without ever owning it iii. App/Holding: Since the person who marked the spot and intended to take it did not exert due diligence to take it, the lead belongs to the person who put in the effort. 2. Exploiting Minerals: Pedis Possesio a. When exploring diligently and in good faith for minerals, exclusive right to work a given spot even before he makes a discovery (labor theory) iv. Splitting Entitlements: Popov v. Hayashi (2001) 1. Facts: Barry bonds hits record home run. Ball abandoned once left the field. Popov caught ball in his glove when the mob assailed him. Ball rolled to the side where Hayashi peacefully standing took it and established clear possession over the ball 2. Rules: a. Split Entitlement i. exclusive pre-possessory interest in being allowed to complete the catch without interference ii. exclusive first unambiguous possession b. Both have superior claim against the world; ball sold at auction and $ split 3. Caveat: Such decisions create wasteful and destructive racing behavior. First possession works best when a clear winner can be declared at a stage when other competitors are unlikely to compete effectively. 4. App/ Holding: Both own equally b/c Popov would've had full possession if there was no interference from the mob and Hayashi, not part of the mob first person to unambiguously establish possession. Sold the ball and split proceeds equally (Equitable Division and Law of Finders) b. Discovery; Johnson v. MIntosh (1823) (chains of title to determine who has stronger claim) 1. Facts: Indians sold land to Johnson ancestor, later, Indians grant land to US. US sells to MIntosh. Johnson sues for ejectment of MIntosh. 2. Rules: a. Discovery: unique right to possess an unclaimed thing b. Nomo Dat Non Quod Habet principle: cant give what you dont have. (When there are two competing chains of title, you must keep going back until you see who has the earlier claim. Under this, Johnson would win because he bought the land from the Indians before the US got it from the treaty) c. Dominion, established by discovery/conquest trumps the right to occupancy of Native Americans d. Labor theory of value: Possession through use and labor. Indians didnt use the land by farming so no dominion a. Necessity: Must rule in this way or it would cause crazy problems and would uproot American property system b. Reasoning: 1) reliance upon history, 2) disruptiveness of resettling, 3) prudent to preserve court legitimacy 3. App/Holding: Native Americans held incapable of transferring the absolute title of land to others because they were mere occupants and not in possession of it. c. Creation

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i. Information: International News Service v. Associated Press (1918) 1. Facts: INS obtaining AP news from legal sources (bulletin boards) and re-publishing it; East Coast AP news published early on West Coast by INS. Suit for unfair competition and appropriation 2. Rules: a. Information is a nonrival good b. Primary reason for creating property rights in information is to provide incentives for producing more of it, not to assure that it is allocated efficiently among potential users of it c. Lockean / Labor Theory Example i. Effort, expense, skill, and the just desserts d. Relativity of title: Only INS enjoined (not a right against the world) e. Common principle of competitors: each party is under a duty to conduct its business in a way that doesnt unfairly injure the other f. No absolute property in the news: News acquired by honest labor or lawful business is given the guard of property 3. App/Holding: quasi property because they are both selling it as such (postpones competition). Only INS enjoined because proved that they were hurting AP. Rest of the world can still copy and print info. 4. Holmes Dissenting: No property in un-copyrighted combinations of words (categorical/essentialism) d. Accession i. Principle of Accession: doctrine where you acquire property that is intimately connected with objects that are already our property, fruit of trees, offspring of cattle ii. Doctrine of Accession: common law doctrine: someone mistakenly takes up a physical object that belongs to someone else and transforms it through her labor into a fundamentally different object iii. Doctrine of Increase: General rules absent agreement to the contrary, Offspring of Cattle (the birth follows the belly)(partus sequitur ventrem) For domestic animals if you own the stock you own the offspring (Carruth) iv. Accesssion: Wetherbee v. Green (1871) (action of replevin is retaking property) 1. Facts: Wetherbee cut down trees; thought trees were his; made barrel hoops; Greens action for replevin to get all the barrel hoops. Original wood worth $25, the hoops altogether cost $800 2. Rules: Elements to Determine ownership in Accession a. Intent: Good faith/ bad faith distinction: i. Bad faith: improved item must revert back to the original owner (categorical) ii. Good faith: may keep if labor significantly improves item b. Transformation of the object: Significance and Value to determine title (labor theory) (functionalism) i. Labor insignificant and original object prominent--> title stays with original owner ii. Labor prominent and original object insignificant--> title goes to improver c. Factors in determining significance or prominence of improvement i. Improver significantly multiplied the value of the original product (wood into a piano) ii. Transformation of the product is of significant value or important to the improver (beam in a house from unintentionally taken wood) d. If title goes to improver: improver must pay damages equivalent to fair market value of the raw material(pre-transformation) to the original owner (liability rule for good faith improver) (see Golden Press) 3. App/Holding: Whetherbee took trees in good faith and the value of the improved object is 32 times the price of the wood alone. Therefore the labor is prominent and original object insignificant, and so Wetherbee must compensate Green for the cost of the trees but can keep the hoops v. Accession in Patent Law 1. Minor improvement to original invention: infringe 2. Significant improvement to original invention: still infringe on patent but entitled to a patent of their own 3. Radical improvements: exempted from liability to the original patent owner regardless vi. Ad Coelum Rule: Edwards v. Sims (1929)

Facts: Edwards discovers cave opening on his land, makes it a public attraction, neighbor sues for underground trespass. TC: orders survey to determine boundaries of cave. Edwards requests Writ of prohibition of survey order; cave possibly under Sims land; entrance on Edwards land 2. Rules: a. Ad Coelum Rule: whoever owns the land owns to center of earth and to sky(categorical) b. Rule: Unless there is prior division of estate, owner of land is entitled to free and unfettered control of his own land above, upon, and beneath the surface. 3. App/Holding: Ad coelum applies (he who owns the surface owns cave rights directly underneath land) Survey must follow through to determine bounds so that Edwards doesnt trespass on Sims land underground. 4. Dissent: Only have rights to what you can subject to dominion or use. Since only Edwards can access the cave since the entrance is on his land, he should own the whole cave regardless of whose land it is under. (functionalism)(see Hinman) e. Adverse Possession i. When an owner sits on their right to exclude, and the statute of limitations for challenging the original unlawful entry expires, original owner is barred from asserting the right to exclude and there is a new title in the adverse possessor (evolved from statutes of limitations doctrine) ii. The adverse possessor becomes the new true owner, and can exercise the right to exclude against all the world, including the original owner iii. Majority Rule for Adverse Possession: Lesee of Ewing v. Burnet (1837) 1. Facts: Man sells land twice, one owner possesses the land adversely and takes sues other owner to clear title. P had older title; D lived across the street, paid taxes on lot, brought actions against trespassers, gave rights to dig gravel; P stated that someday he wanted to reclaim lot 2. Rules: a. Elements of Adverse Possession, must possess for the statute of limitations period, possession that is: i. Actual: actually possession and asserting dominion over the land ii. Exclusive: excludes the true owner iii. Open and Notorious: giving notice to outside world and obvious you are claiming possession iv. Continuous: consistent occupation throughout statute of limitations v. Adverse: under a claim of right (i.e. no permission from owner) b. Unnecessary Elements i. No need for fence, building or other improvement ii. Residence is unnecessary iii. Use it for occupational purposes or cultivation 3. App/Holding: Since D actually, exclusively (TO didnt visit land), Open and notorious (public acts of ownership suffice: all the people in the area thought it was his), continuous for the whole stat of lims) and adverse under a claim of right since he wasnt technically the TO, so D now becomes TO. iv. Rationales for Adverse Possession 1. Personhood: Possessor may have developed reliance on the property through long-standing possession. Losing something that one has is relatively more painful than not getting something you don't own. (people project more value on their property) (Holmes: Adverse possessor has connection w/land) 2. Penalty: designed to discourage true owners from "sleeping on their rights." Private property requires a gatekeeper to protect the resource from abuse. If the gatekeeper fails their job, the resource may be looted as an open access commons (lumber). Adverse possession seen as firing bad gatekeepers and replacing them with more eager ones. 3. Efficiency; Reduces transaction costs: for determining title to assets that last a long time (like land) which can accrue various potential claims. If you had to investigate every claim to title no matter how old, it would impair the functioning of markets. Costs of proving or disproving claims invariably increase over time. Reduces the transaction costs of determining title assets that last for a long time v. Adverse Possession against the government 1. Presumption that adverse possession does not apply (high monitoring costs of public parks) 2. Historically government has treated squatters generously

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vi. The role of good faith: Carpenter v. Ruperto (minority rule of explicit good faith requirement) 1. Facts: Adverse possessor knowingly extended yard into neighbors cornfield, uses it as her own for 20+yrs. Marginally improves it, (bad faith, always knew it wasnt hers and sues to take possession via Quiet title action (declaration of court of who owns what) 2. Rules: a. Minority Rule: few states require Good faith in Adverse Possessors to gain title. Most states dont care about good faith or bad faith. (some even require bad faith) b. Objective facts usually much more compelling than subjective intent for adverse possession c. When knowledge of lack of title is accompanied by knowledge of no basis for claiming an interest in the property, a good faith claim of right cannot be established. However courts sometimes look more favorably on good faith actors in close cases. 3. App/Holding: Woman fulfills all elements of adverse possession, but her state (IA) requires Good Faith in adverse possessors so she is denied. vii. Tacking: Howard v. Kunto (1970) 1. Facts: Deeds of 3 properties did not correspond to where they built their summer houses, instead of switching, they sue to take others land. 2. Rules: a. Must Meet all Adverse Possession Requirements: i. Sufficient Continuity: sufficient when the land is consistently occupied during certain times of the year. Helps if there are permanent improvements on the land (i.e.home and dock) b. Tacking: adding of one's own period of land possession to that of a prior possessor to establish continuous adverse possession for the statutory period c. General Tacking Rule: tacking of adverse possession is permitted if the successive occupants are in "privity" (i.e. contractual relationship) (ex: sale, gift, running of deed between parties suffices) d. By limiting tacking to situations in which successive Adverse Possessors are in privity of estate the court permits tacking when A enters adversely and then sells to B who then sells to C e. Tacking of adverse possession from previous owners is permitted if it was intended to be in the deed and mistakenly omitted from the description (such as claiming more land than was in the deed) 3. App/Holding: Since owners occupancy their tract during summer months and created improvements upon the land, that constitutes uninterrupted possession. Did actually, exclusively, open and notoriously, and adverse under a claim of right too, so since all successive adverse possessors were in privity, can add all the years up to get adverse possession. viii. Disabilities 1. Typically, state statutes provide that the statute of limitations is tolled for owners suffering from certain narrow classes of disabilities, including being under age, insane, legally incompetent or sometimes in prison at the time the adverse possessor enters the property a. Disabilities arising later usually do not affect the running of the statute b. Disabilities in the same of successive owners cannot be tacked 2. Note: cant adversely possess government property f. Sequential Possession i. Multiple persons serially claim property on some theory other than purchase or gift ii. Property rights may be good against the world, but disputes over property usually take the form A v B, and courts usually ask only as between A and B who has the superior title iii. Good faith threshold may be crucial to injunction order (clean hands)(see Baker v. Howard County Hunt), or not to order an injunction and use a liability rule (see Golden Press) iv. Armory v. Delamirie (1722) (F1 v. C1) True owner versus finders versus converters (takers) 1. Facts: Chimney sweeper boy found a jewel and brought it to a jeweler to determine the value, the apprentice took the jewels from the sockets and only returned the sockets. 2. Rules: a. Finders rights subordinate to true owner but has more rights than anyone else b. Finder may have legal duty to

i. Not convert the object to the finder's own use; OR ii. Deliver the object to anyone other than the true owner c. Finder's title is a qualified: (does not become the owner)until the statute of limitations for recovery of personal property runs out allowing the finder to claim title by adverse possession 3. App/Holding: jeweler must either return the jewel or the jury will determine what the most expensive jewel that could fit in the socket would be and will find him liable for that amount v. Clark v. Maloney (1840) (F1 v. F2) 1. Facts: P found pine logs floating in river, moored them, D took them claiming he found them in river. Action of trover used to recover the value of personal chattels that are converted 2. Rules: a. General Rule: first finder of chattel may keep the item against everyone but the true owner b. For the First Finder to get the property back he must show the items were i. His property; AND ii. Converted by defendants to their own use c. When not abandoned, loss of chattel does not change the right of property. So, previous owner has more rights than subsequent finders or converters 3. App/Holding: P showed better title to the logs since he never abandoned them, so he may keep them against all the world but the rightful owner 4. Rationale: desire to create a stable rule, splitting entitlement would create confusing precedent vi. Anderson v. Gouldberg (C1 v. C2) 1. Facts: Two converters: both trespassing and cutting down third party logs. Coverter 1 takes trees and leaves them outside, then converter 2 claims title. Converter 1 sues to get trees back. 2. Rules: a. Even when a person wrongfully obtains property from another, the first converter still has better title to the property than anyone else (including other takers) but still subordinate right ti the true owner b. Complicated set of facts, court applies easy test: He who has better title/possession wins 3. Holding: even if a person wrongfully takes anothers property, the bad faith taker still has more right over the chattel than any subsequent finders/converters other than true owner III. Owner Sovereignty and its Limits a. Protecting the Right to Exclude i. Civil Actions 1. Developed out of writ system a. Trespass (used to vindicate the interest that a person in actual possession has in exclusive possession of land) b. Ejectment (used to vindicate the interest of a person who has title to land against a person wrongfully in possession) c. Detunue (when P alleged unjustly detained specific goods which remained in the Ds possession) d. Trover (to allege that D had wrongfully converted the Ps goods to his own use) e. Replevin (originally used when a landlord seized personal property of the P for unpaid rent) f. Trespass to chattels (when the D interfered or injured the property in some manner falling short of conversion while it remained in the property of the P) 2. Principal actions for protection of personal property today are: replevin, conversion, and trespass to chattels 3. Intel Corporation v. Hamidi (2003) a. Facts: D sent mass emails to Intel employees over the company intranet that complained of Intels bad business and hiring practices. Intel unsuccessfully tried to block Hamidi but failed, so suing for injunction. b. Rules: i. Trespass to chattel requires injury to 1. the owner's right of possession 2. Harm the value of the personal property (i.e. computer)

ii. Decisions finding electronic contact to be trespass to computer systems generally involve some actual or threatened interference with the functioning of the computers. i.e. can prove he is sending malware, viruses, or Trojans that materially harms computers, then likely can grant injunction. iii. Theory of impairment by content: Some servers were able to sue spam companies because the large amount of spam actually impaired the functioning of their servers (property) and were granted injunctions App: no discernable difference in performance of Intels computers. So cant succeed on impairment c. App/Holding: Intel retains its right to exclude people from their intranet, but they cant get an injunction without showing injury to the chattel or their possession of the chattel. No such thing as nuisance to chattel ii. Self-Help 1. Permitted to greater or lesser degrees to vindicate the right to exclude 2. Right to exclude Right to injunction a. Courts are unlikely to order injunctions or other remedies that do not accomplish much (see Hamidi) b. Courts are also unlikely to be too liberal with self-help remedies as they resemble lawlessness (see Berg) 3. A person in possession of property can generally use reasonable force to prevent or terminate an unlawful entry or other trespass upon land or a trespass against moving property 4. Berg v. Wiley (1973) a. Facts: D leased property to P for restaurant, reserved the right to retake possession should the lessee fail to meet lease conditions; P broke lease; D locked P out when she left for the night and re-let the property b. Rules: i. Majority Rule: landlord may rightfully use self-help to retake leased premises form a tenant in possession without incurring liability for wrongful eviction provided 2 conditions are met 1. Landlord legally entitled to possession when a tenant holds over after the lease term or where a tenant breaches a lease containing a reentry clause 2. The landlord's means of reentry are peaceful ii. Minority Rule: self-help is never available and must use judicial process to dispossess a tenant who is in possession and has not abandoned or voluntarily surrendered the premises iii. Damages awarded to tenant for wrongful eviction: where LL either has no right to possession or non-peaceably removed the tenant or both c. App/ Holding: P did not abandon or surrender the property (so Ds entry was not peaceful). D could only repossess by suit through judicial system. 5. Williams v. Ford Motor Credit Company a. Facts: Ps ex-husband stops car payments; Repo men take Mustang in the middle of night w/ little objection b. Rules: In a repossession after default: a secured party may proceed to take collateral property without judicial process if this can be done without breach of the peace c. App/Holding: No breach of peace when P neither gives permission nor objects to repossession. Ford had the right to take the care but ex-husband must reimburse ex-wife for cost of the car b. Limiting the Right to Exclude (necessity, custom, public accommodation laws, and Antidiscrimination laws) i. Necessity: Ploof v. Putnam (1908) 1. Facts: P caught on lake in sailboat during storm, moored on Ds dock, Ds servant unmoored the boat; crashed on the shore destroying ship and injuring those onboard 2. Rules: a. Necessity: an inability to control movements in the proper exercise of a strict right that justifies entries upon land and interferences with personal property that would otherwise be trespasses (everyone bears own loss) (functionalism) Shift in entitlement out of necessity (the ship-owner has a right [more than privilege] to dock) i. Animals: cannot be withdrawn instantly, allowed to trespass to drive off sheep as long as D does best to recall dog

ii. Highway obstruction: traveler may pass upon adjoining land out of necessity without being a trespasser iii. Save goods: may enter other's land to save goods from being destroyed by water or fire iv. Save Human Life(special force): assaulted in peril may run through another's land, may sacrifice other's property to save his and other's lives 3. App/Holding: Because of necessity to save life, P had the right to moor on Ds dock. Since D unmoored P and caused P physical and material injuries, D must compensate P for all those damages. ii. Vincent v. Lake Erie Transportation 1. D docked his boat through storm (Court held D was justified in docking but must pay for dock damage) iii. Custom; McConico v. Singleton 1. Facts: D hunted on P's unimproved rural land with explicit prohibition from P. 2. Rules: a. Custom: something well known and universally exercised for a long time, license may be implied from habits of the country i. When custom applies, trespass permitted, even with landowner protest b. Posting Laws: peeps may hunt on rural land unless prominent sign prohibit c. Fencing-In Laws: owner of livestock must fence in to protect neighbors d. Fencing-Out Laws: landowners must fence out harmful livestock 3. App/Holding: No injury to land so customary regime of the right to hunt on unenclosed and uncultivated lands holds iv. Public Accommodations 1. Owners of public accommodations have a much more qualified right to exclude 2. Subject to a general duty of nondiscrimination among customers a. Obligation to serve any person who requests service, provided it was available (cannot refuse service) b. Must charge customers only reasonable rates for the services they provide i. Different customers can be charged different prices as long as each fell within zone of reasonable charges 3. Definition of public accommodations expanding (closely tied with Civil Rights Act) a. Originally a very narrow list of business generally associated w/ travel (innkeepers, common carriers) b. Often have some form of monopoly 4. Uston v. Resorts International Hotel, Inc. (1982) a. Facts: D excluded P from their casinos for card counting b. Rules: i. Balancing the interests of the property owner and the patron (right to exclude versus the right to access) ii. General Principle: the more private property is devoted to public use, the more it must accommodate the general public and less it can exclude iii. Public Accommodations Duty: not to act in an arbitrary of discriminatory manner toward person who come on their premises. Also usually duty to remove disorderly or otherwise dangerous people from the premises 1. Applies to all property owners who open their premises to the public iv. Exceptions (when public accommodators may exclude), i.e. disorderly, intoxicated 1. "disrupts the regular and essential operation of the premises"; OR 2. "threatens the security of the premises and its occupants" c. App/Holding: Absent regulation making technique against the rules, cannot exclude P 5. State v. Schmid a. Facts: Distributing literature on a private university campus b. Rule: When a property owner opens their premises to the general public pursuant to their own property interests, they have no right to exclude people unreasonably Weak right to exclude and strong right to access c. Holding: People may distribute literature if no rules specifically bans

State v. Shack a. Reversed trespass conviction of attorneys and social workers entering property to assist farm-workers b. Strong right to exclude and a strong right to access c. Holding: farm owners dont have the right to exclude gov employees who provide health and legal services to migrant workers 7. Brooks v. Chicago Down a. Expert handicappers excluded from racing track b. Market forces that preclude outrageous excess give weight to right to exclude over right to access v. Anti-Discrimination Laws 1. Shelley v. Kraemer (1948) a. Facts: Neighborhood agreement restricting occupancy to Caucasian race; 35 years later an African American family is sold property in neighborhood w/o knowing of restrictive covenant. Neighbors sue. b. Rules: i. Judicial enforcement of discriminatory covenants between private parties constitutes government th action and is therefore barred by the Fourteenth Amendment (14 Amendment: No state shall make or enforce a law which shall abridge the privileges or immunities of US citizens, nor deny any citizen of equal protection of the laws.) ii. State action necessary for enforcement private agreement which would result in denial of equal protection of the laws iii. Excluding a trespasser does not have such an imposition on core property rights as ouster c. App/Holding: Can have covenants on the deed but they are unenforceable b/c would constitute state th action and violate 13 amendment. Shelleys may stay. 2. Fair Housing Act: Civil Rights Act of 1968 a. Prohibits a range of discriminatory behaviors against members of protected classes: i. Refusal to rent or sell ii. To discriminate on terms iii. To make or print notice or ad that shows discriminatory preferences (always applies, no exceptions) iv. To discriminatorily claim unavailability incorrectly (lying about availability) v. For profit, to attempt to induce any person to sell or rent discriminatorily vi. To discriminate because of handicap of the renter, buyer, intended resident, or any association b. Must be 1) Protected class, 2) qualified to rent, 3) try to rent, 4) denied, 5) with the property available i. If the above is satisfied the burden shifts to the D to provide a legitimate, nondiscriminatory reason c. Refusal to rent to a protected class at any moment counts as a violation. i. Potential evidence: Rental history, interaction between LL and P i.e. reason for refusal, LL can negate facts as a defense d. Craigslist ad for roommate w/ gender preference hypo: falls under privacy and association rights i. Fair Housing Act only enforceable within constitutional limitations e. Exceptions i. Mrs. Murphy exception: renting out a few rooms in a single family home where LL lives there too. Home cannot be intended to have more than 4 single families. ii. Religious organizations, private clubs, elderly communities f. Ps under FHA May not need to show discriminatory intent and discriminatory effects suffice g. 3 purposes of Antidiscrimination laws: i. Increase housing opportunities for people in protected classes ii. Eliminate indignity suffered iii. Eliminate social message of inferiority h. Attorney General v. Desilets (1994) i. Facts: Strict Roman Catholic D refused to rent property to unmarried cohabitating couple ii. Rules:

6.

Marital Status is not necessarily a protected class: Some states have laws against unmarried sex, and can conflict with religious rights. Married couples also get more benefits under law than unmarried couples. Considered less important than other types of discrimination. 2. Balancing Test: Balance State interests against the nature of the burden on the D 3. Contextual framings of the benefits and burdens are crucial: a. Discrimination against marital status (Majority Argument); Cohabitation (Dissent Argument) b. Renting apartments (Majority Argument); Free exercise of religion (Dissent Argument) iii. App/Holding: There is a general state interest is the elimination of discrimination in housing based on marital status. Commonwealth must show protecting cohabiting couples is more important that Ds religious freedom. (unlikely for cohabiting couple to win) c. Other Powers of the Sovereign Owner i. Licenses 1. Closer to contract than to property (right between two parties and not beyond)(usually cannot get injunctive relief, only damages) 2. ProCD Inc. v. Zeidenberg (1996) a. Facts: P uses price discrimination in selling database; D bought restricted consumer version and resold information in violation of the 3 shrink-wrap licenses inside. ProCD sues for injunction b. Rules: i. License is not copyright, so it isnt a right against the world, but it is a contract between two parties for the two bound parties to comply with the agreement. Has right to exclude people from certain actions as per the license agreement. c. App/Holding: ProCD may not use the consumer version and resell it, they must purchase the commercial version if they wish to continue the internet business. d. Limits on Owner Sovereignty i. Abandonment 1. Considerations of social welfare may override owner sovereignty regarding the right to abandon property 2. Pocono Springs Civic Association, Inc. v. MacKenzie (1995) a. Facts: D purchased vacant lot, couldnt sell, tried to give property to D as gift, tried to sell again, stopped paying taxes, wrote letter to abandon, P sued for community fees b. Rules: i. If a person DOESNT have perfect title: Property is abandoned when owner has voluntarily relinquished all right, title, claim, and possession with the intention of terminating ownership without vesting it any other ii. Traditional Rule: Real property cannot be abandoned (D had perfect title) 1. Fee simple absolute must be sold or transferred 2. Doctrine of abandonment only applies to imperfect titles iii. Failure to possess land, pay taxes, or intention to abandon dont matter c. App/Holding: D has perfect title to the land so they cannot abandon and must continue to pay taxes ii. Destruction: Everman v. Mercantile Trust Co. (1975) 1. Facts: Will directs expensive house in nice neighborhood to be razed upon death 2. Rules: a. Destruction Rule: Person may be enjoined to stop destruction of property if (functionalism) i. There is no good reason for the destruction; AND ii. the act is against public policy b. Acts are against public policy when: they have a mischievous tendency so as to be injurious to the interest of the state apart from illegality or immorality c. Courts will almost never order the destruction of property causing substantial loss in value 3. App/Holding: Since Will stated no good reason for the razing of the house, the state may intervene and prevent the razing. Injunction to neighbors granted because would cause great loss in value to society. iii. Transfer

1.

Permits owner to shed gatekeeper responsibility Two types a. Quid pro quos (owner relinquishes title in exchange for a reciprocal transfer; ex. $$) b. Gifts (owner relinquishes title in favor of another w/o explicitly receiving anything in return) 3. Lauderbaugh v. Williams (1962) a. Facts: Lake Watagwa Association agreement to only sell to members (3 members can veto) b. Rule: i. Common law rule against restraints on alienation: Owner may not transfer property to another on condition that the transferee will not retransfer ii. Absolute restraints on alienation are void iii. A limited and reasonable restraint may be valid iv. Standardless, discretionary restraints on alienation are suspect b/c of the possibility of discrimination (see Shelley) c. App/Holding: Not enforceable: Restriction is unlimited in time is subject to the whim and caprice of the Lake Assoc. member which could unjustly deprive Mrs. Lauderbaugh from alienating her land. IV. The Forms of Ownership a. Present and Future Interests in Land (see practice worksheets) i. Freehold Possessory Estates (leases are non-freehold estates) 1. Fee Simple Absolute: complete ownership in real property. No natural end. Owner can designate a successor owner (gift, sale, will), If owner died intestate, statute will designate a. Language to signify to A and his/her heirs i. A person does not have heirs until death (no interest while living) ii. If language is ambiguous courts will assume fee simple absolute (unless it is clear that a lesser estate was intended) 2. Life Estate: Limited duration (comes to a natural end with death of named person, usually the holder of the estate) a. Followed by a future interest in Remainder or Reverter b. Language to signify to A for life (implied reverter); to A for life then to B (remainder to B) c. Alienable by gift or sale (estate pur autre vie: life estate measured by named persons lifespan) i. New owner loses property right when named person dies 3. Fee Tail: Creates a nontransferable life estate to be followed by blood descendants until line ends a. If A dies without issue the fee tail ends b. Language to signify to A and the heirs of his/her body c. Eliminated by statute in most states 4. Defeasible Fees (interests like a fee simple absolute except they may end on the happening of some named contingency)(future interests become possessory when such contingency occurs) a. Fee Simple Determinable: Fee simple ends automatically upon the occurrence of a named event, then i. Possibility of reverter: grantor or grantors successor gets property in fee simple ii. Language to signify to A as long as or to A while iii. (i.e. "O grants blackacre to VULS law school as long as it is used for in the instruction of law, then to O") iv. Stat of lims for adverse possession when event triggers b. Fee Simple Subject to Condition Subsequent i. Interest can be ended by the occurrence of a named event (not automatic, option of grantor) 1. Must be ended by action (self-help or lawsuit) 2. Power of termination (Grantor has right to reenter and take the premises via self-help or suit ii. Language to signify to A but if or to A provided however iii. "O grants Blackacre to VULS, but if it is not used for the instruction of law, then O has the right to reenter and take the premise") iv. Clock does not start for adverse possession but still cannot sleep on rights (laches, same as AP)

1. 2.

Fee Simple Subject to Executory Limitation: upon named event, interest goes to a 3 party who has an executory interest (either springing or shifting) i. Language to signify To A, but if then to B (executory interest to B) ii. "O grants Blackacre to VULS as long as it is used for law instruction, then to Springfield Animal Hospital.") iii. No reversion to the grantor ii. Future Interests (besides fee simple absolute, other estates do not continue indefinitely and create future interests) 1. Interests Retained by the Grantor a. Reversion: rights go back to the grantor i. Follows the natural end of a life estate or when the owner has not disposed of the entire fee ii. If there is no other interest following a life estate the reversion goes to the original grantor iii. Language to signify to A for life (implied reversion) (owner has not disposed of entire fee) 1. O grants to A for life, then to O Reversion to original grantor b. Possibility of Reverter: interest reverts to grantor upon occurrence of built in limitation i. Interest of the grantor reserved following a fee simple determinable ii. Grantor gets back property automatically if the limitation is met iii. Language to signify O grants to A as long as then to O 1. If grantor dies, his successor will take (by will, intestacy, or sale) c. Right of Entry / Power of Termination i. Right of the grantor following a fee simple subject to condition subsequent ii. Grantor has option to take action (nothing happens automatically) iii. Language to signify O grants to A but if then O has the right to reenter and take 2. Interests Created in Grantee (third party, not grantor) a. Remainder: follows a life estate and remainder receives property in fee simple i. Follows the natural end of a life estate (not to grantor) ii. Indefeasibly vested 1. Identity of the takers is known 2. No other contingency 3. Language to signify To A for life, then to B iii. Contingent: Uncertainty to the takers 1. Remainder is vested a. If fails to vest in interest and no other interests then supporting reversion 2. Language to signify To A for life, then to B if (interest is vested) a. To A for life, then to his children and their heirs (uncertainty to the takers) 3. Vested Subject to Complete Defeasance: upon occurrence of a condition, interest can shift to someone else. (Marge grants Blackacre "to Homer for life, then to Bart; but if Bart fails to graduate from high school by age 19, then to Lisa") aka. "Condition subsequent" therefore, Lisa has a "shifting executory interest" 4. Vested Subject to Open: Marge grants Blackacre "to Homer for life, then to his children and their heirs" and at the time Homer is the father of Bart and Lisa, but not yet Maggie, so Bart and Lisa are "subject to open" b/c Homer could have other children, therefore, Bart and Lisa have "vested remainders subject to partial divestment" because with each additional child, their interest is reduced from (1/2 to 1/3 to 1/4 etc) After Homer dies, Bart, Lisa, and Maggie will own Blackacre in fee simple absolute b. Executory Interest i. An interest in a transferee (not retained by the grantor) that divests or cuts short a previous interest ii. Language to signify to A but if then to B (third party) iii. Springing executory interest: if the executory interest divests an interest in the grantor (Marge grants Blackacre "to Bart for life, remainder to Lisa 5 years after his death.") therefore, there is a reversion to Marge that would be possessory during the 5 year gap after Bart's death. Lisa has "springing" executory interest b/c it divests the reversion in the grantor (Marge)

c.

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iv. Shifting Executory Interest: like above, but auto shifts to 3 party upon condition 3. Vesting a. An interest vests in possession when the interest becomes a present possessory one b. An interest can vest in interest before it vests in possession b. Maintaining the System i. Conservation of Estates 1. Whenever a transfer is made all of what the grantor had must be accounted for 2. Ensuring that all the pieces of the estate are accounted for as grantors often convey less than full interest a. If a holder in fee simple dies without heirs the property escheats to the state (relatively rare) 3. Estate Planning a. Williams v. Estate of Williams (1993) i. Facts: Will provides estate to daughters during their lives, and not to be sold during their lifetime and if any one of them marry their interest ceases and the ones that remain have full control. Each daughter had 1/3 life estate defeasible and with an executory interest when the other daughters die or marry and the successors have executory interest for taking care of their mom. ii. Rules: 1. Rule of Construction: language of a single sentence is not to control as against the evident purpose and intent shown by the whole will when a predominate purpose of the testator is expressed, courts must to effectuate that purpose and to construe all subsidiary clauses as subordinate to the main purpose. 2. Intent: function of construing a will is to ascertain and carry out the predominant purpose and intent of the testator. very important in holographic wills (handwritten by testator) b. App/Holding: Intent is clear b/c evidence that author was careful and thorough: GA devised life estates to the 3 daughters. Evidence: during their lives, limits duration to their unmarried state, testators purpose is accomplished after they marry or die then grantor intended his heirs to inherit thru intestate succession c. City of Klamath Falls v. Bell (1971) i. Facts: Corporation conveyed land in gift to city for library; deed provided city should hold the land so long as it complied with the condition (use as library), and if not pass to Schallock and Dagget and heirs. Executory interest violates RAP, replaced with possibility of reverter ii. Rules: 1. Minority: some states rule that grantor may not alienate a possibility of reverter even if they rd attempt to give 3 party an executory interest. 2. For Corporations: even if corp. dissolved, possibility of reverter remains and will go to shareholders and their heirs. iii. App: Deed created a fee simple determinable, executory interest violated rule against perpetuities 1. Grantors retained possibility of reverter (passed to heirs of shareholders)(same result) 2. A failed attempt by a grantor to transfer his possibility of reverter does not destroy it 3. Fit language into the limited menu (just because executory interest was impermissible does not give city fee simple) (strike problematic language and reevaluate which form of ownership still exists) iv. Holding: For corps, must revert to shareholders. Only shareholders were the grantors, so it goes to their heirs. Becomes fee simple determination w/ possibility of reverter ii. Disclaimer 1. Gifts are only valid if accepted (it takes two to transfer) 2. No obligation to accept a property interest (potential recipient can refuse property)(goes to next interest) iii. Numerus Clausus: catalog of estates is finite and closed. Property, unlike contract is not freely customizable by parties but rather is standardized into a closed set of approved forms. (building blocks rationale) 1. Merrill and Smith; Conclusion: numerous clauses strikes a rough balance between the extremes of complete regimentation and complete freedom or customization and this leads to a system of property rights that is closer to being optimal than that which would be produced by either of the extreme positions.

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Three classes of people are affected by creation of idiosyncratic property right: (1)Originating parties (participants who create the fancy), (2)potential successors, and (3) other market participants. People within the zone of privity (1+2) have decided to take on the extra burden on the fancy but it creates problems for (3) rd other market participants by disproportionally raising information costs. i.e. If Monday only watch exists, 3 parties must investigation for type of right they want, whether to repair it, and riskier (clouds on title may exist). 3. Rationale: Limits confusion from new modes of ownership, prevents excessive fragmentation (too many vetowielding co-owners and holdout behavior will cause a resource to be underused) Limited menu of forms; fewer bizarre property types; complicated conveyances are uniformly sorted 4. Johnson v. Whiton (1893) a. Facts: Man wills property to 5 grandchildren, 4 have fee simple, one may have fee tail. All trying to combine interest and sell. Sue to determine whether 1 has fee tail or not. Will conveys: to my granddaughter and her heirs on her fathers side b. Rules: i. Fee Tail Rule: If it is obvious certain heirs got fee simple, even if it sounds like another heir got a fee tail, it cannot be true and all have in fee simple since fee tails are illegal now and won t give fee tail unless 100% clear ii. A man cannot create a new kind of inheritance (granddaughter has fee simple absolute) iii. Appears similar to a fee tail which has been abolished c. Could have used precise vocabulary of the estate system to effectuate this conveyance d. App/Holding: Fee tails are not recognized and cant create a new form so it is a fee simple absolute and they may sell it. 5. Garner v. Gerrish (1984) a. Facts: Landlord leases premise to tenant. for and during the term of quiet enjoyment from 1977 which term will endGerrish has the privilege of termination *sic+ this agreement at a date of his own choice. Also, Landlord may reenter if rent not timely paid. Lease provides that lessee has power of termination at the date of his own choice and landlord does not b. Life Tenant Lease Rule: Lease which expressly and unambiguously granted to tenant right to terminate, and did not reserve to landlord a similar right, does not create a tenancy terminable at will of either party, but instead created a determinable life tenancy on behalf of tenant. c. Holding: Since only T has the right to terminate, created a determinable life tenancy. c. Mediating Conflicts Over Time i. Waste: Brokaw v. Fairchild (1929) 1. Facts: Will conveyed 4 NYC mansions to each of 4 children in a life estate followed by contingent remainder in other 3 mansions; son wants to raze untenable house and put up apartments (greatly increase value) 2. Rules: a. Waste: any act of the life tenant which permanently injures the inheritance b. General Rule for what life tenants (LT) may do: LT may do whatever is required for the general use and enjoyment of his estate as he received it btu may NOT exercise acts of ownership such as demolition. LT may erect new edifice so long as they do not materially injure any existing improvements to the land. Or can change the property so long as they change it back before the tenancy expires. c. Ameliorative Waste: Increases market value but permanently changes property d. Only those with future interests can sue for waste (indefeasibly vested remainders or reversions) e. Waste can be affirmative or dismissive (damage from failure to repair may constitute waste) 3. App/Holding: Materially changing the nature of the building considered waste whether the value of the property is enhanced by the alteration ii. Valuation of Interests 1. An amount in C in the future equals the present value P times the discount factor r, applied for the requisite number n of time periods, i.e. C = P(1+r)^n a. or in reverse from a future nominal amount to calculate the present discounted value, i.e. P=C/(1+r)^n 2. Value of future interest depends on the life expectancy of the life tenant

2.

iii. Restraints on Alienation 1. General: Courts do not usually uphold determinable fees that restrain alienation (limit transferability) 2. Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano a. Facts: Deed reads: said property is restricted for the use and benefit of the second party, only; and in the event the same fails to be used by the second party or in the event of sale or transfer *then to grantor] b. Restraint on alienation is void, but language is disjunctive and land use restriction is valid i. Created a fee simple subject to condition subsequent w/ regards to land use (w/ reverter) c. App/Holding: Valid to restrict the use of land, even if such restriction hampers or even completely impedes alienation. But cant restrict the sale of land. So Mountain brow lodge can sell the land ,but they are still the only people who can use it. 3. Courts may permit restraints on land even if they impede transferability a. Often look to marketability i. Damages/Injunction v. Forfeiture 1. Forfeiture remedy has hugely negative impact on whether a property is marketable ii. Number of potential buyers potentially affected 1. Restrictive small universe of potential buyers under clause will likely be deemed invalid iii. Surrounding land restrictions (In Toscano, property used as parking lot for lodge) iv. Improvements 1. Does a restriction disallow improvements on the property v. Charity exception (limited transferability from charity to charity often excepted) iv. Rule Against Perpetuities (see practice worksheets) 1. Purpose is to prevent Dead Hand Control 2. Strict Rule: No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest 3. Step 1: RAP only applies to the following interests: (1)contingent remainder, (2)executory interest, (3)remainder subject to open. DOES Not apply to vested interests or interests retained by the grantor: reversion, possibility of reverter, power of termination 4. Step 2: look through the pool of possible measuring lives: anyone alive and affects vesting at the time the will is created a. RAP lasts up to 21 years after the death of the measuring person. If the interest does not definitely vest within that time, its void b. Includes a child born after measure persons death if they were already conceived, and Measuring people cant be subject to open c. Interest is void if the burden of keeping track of measuring lives is too great (to my heirs after the death of last person in NY phone book 5. Step 3: choose one person as the validating life. Make sure that w/ crazy scenario, all interests vest w/I RAP (unborn widow, fertile 80 yr old, after born wife. a. Measuring lives: Do not have to be specifically mentioned in deed, can be implied in the grant, may not have any special connection to the property (ex. living heirs of Queen Victoria) b. Solution: insert perpetuities savings clause: refers explicitly to the possibility of invalidation under the Rap and specific a backup plan 6. Step 4: if a invalid clause exists, rewrite the will by striking out the bad part and adding a possibility of reverter to O at the end 7. Exception: doctrine of cy pres: saves gifts to charity from RAP or wastefulness by substituting a similar charity, also ok w/ Rap if executory interest from one charity to another. 8. Examples of Rule Against Perpetuities a. O devises to A for life, then to B if B survives A. Rule does not apply; A has a life interest and B has a contingent remainder in fee simple absolute. Os heirs have a reversion interest (if B does not survive A).

O conveys to A so long as the property is used for commercial purposes, then to B. Rule against Perpetuities renders Bs contingent interest void because it is unknown how long the property will be used for commercial purposes. c. O conveys to A for life, then to B. O is 93 and in poor health, A is 10 years old. Rule does not apply and ages are not important; A has a life estate and B has a vested remainder in fee simple absolute. d. O conveys to A for life, then to As first child to reach 25. At time of conveyance, A has one child, age 24. Rule applies and renders the interest in As children void because As first child could die and A could die, making it conceptually possible that the interest might not vest within As life plus 21 years. A has a life estate, and As first child has a contingent remainder. e. O conveys to A upon As marriage to B. Rule does not apply because the uncertainty will be resolved within As life plus 21 years. O has a fee simple subject to As springing executory interest; A has a springing executory interest in fee simple absolute 9. Merger rule i. O grants to A for life and then O separately conveys his reversion to A ii. Courts hold that conveyances can be merged (this would be a fee simple) 10. Limiting Future Interests a. Rule in Shelleys Case: At common law, if the same instrument created a life estate in A and gave the remainder only to As heirs, the remainder was not recognized, and A took the life estate and the remainder. Most jurisdictions have abolished this rule. i. Effectively abolished Fee Tails b. Doctrine of Worthier Title: A remainder in the grantors heirs is invalid and becomes a reversion in the grantor. E.g., if O grants Blackacre to B for life, then to the heirs of O, B has a life estate, and O has a reversion, not Os heirs. This doctrine is generally treated as a rule of construction (i.e., it does not apply if intent to create remainder in heirs has been clearly manifested). It applies only to inter vivos transfers (not wills), and only if the word heirs is used. It is not recognized in many jurisdictions. c. Destructibility of Contingent Remainders: At common law, a contingent remainder was destroyed if it failed to vest before or upon the termination of the preceding freehold estate. Not widely recognized V. Co- Ownership and Conflicts Between Co-Owners a. Co-Ownership i. Tenancy in Common: separate but undivided interest. Separate: independently descendible, conveyable, and devisable; No right of survivorship; Undivided: each tenant in common must have the right to possess the whole property. No requirement of equal share. 80, 15,5. (usually presumed unless otherwise specified) 1. ex. (C and D and E are tenants in common and D dies, Ds interest goes to Ds heirs) 2. Creating tenancies in common: Easiest to create (To A&B (they do not have to have the same interests) to A&B in common to A for life, to B 1/8 interests) ii. Joint Tenancy: Same as tenancy in common but also includes right of survivorship: surviving joint tenants automatically acquires the interest of other joint tenants that die (cant will to heirs until last survivor has fee simple). Therefore, the last joint tenant alive owns in fee simple. 1. Requires (4) units at creation: a. (1) Time: each interest must vest at the same time, b. (2) Title: each must acquire title by the same instrument or adverse possession (never intestate succession), c. (3)Interest: each must have the same legal interest in the property (fee simple, life estate, lease, but not same fractional share), d. (4) Possession: each must have the right to possess the whole. i. Any joint tenant can sever the joint tenancy (sell it for $1 and buy it back so that it is a tenancy in common) (one party can unilaterally change the form of the ownership this way) 1. To get the unities and joint tenancy back, cotenant has to sell and buy back as a joint tenancy 2. Ex. (C and D and E, D dies, Ds share dissolves and the other joint tenants assume a half portion)

b.

iii. Tenancy by the Entirety: only for married couples, each owner has a separate and undivided interest, and possession of the whole, also includes right of survivorship. But, neither spouse can transfer or encumber their share without the consent of the other. No unilateral exiting. (5 requirements: up+ marriage) iv. Community Property: for married couples in South and West. All property acquired during the marriage automatically becomes community property. Each spouse has the right to possess community property and may transfer property in and out with the others consent. Property acquired before the marriage is separate, but may become community property. a. Partition (most important legal remedy available to concurrent owners) (usually not used for future interests see waste) v. Each cotenant has an automatic right to terminate a co-tenancy at any time 1. Partition in Kind: Division of physical property according to the parties respective interests a. Owelty (payment to correct imbalances in a partition in kind 2. Partition by Sale: Division of proceeds according to the parties respective interests vi. Delfino v. Vealencis (1980) 1. Facts: Tenants in common; Ps seek partition to sell residential property; D runs garbage business and lives on land. 2. Rules: a. Partition by Kind (physical partition) is preferred when possible. Consider: size, area, structures, present and future use, zoning, whether someone using land for home, business, livelihood. b. Partition by sale between tenants in common should be ordered only when 2 component are satisfied: i. The physical attributes of land allow for practicable and equitable partition (see above) ii. The interests of all parties are better served by a partition by sale c. Side Note: party requesting partition by sale has the burden to demonstrate the sale will promote the owners interests d. Owelty: payments to correct imbalances in partitions of land 3. App/Holding: Partition in Kind (physical partition)more practicable because interests of D not accounted for (home and business on property) so D gets to keep house and business on the 1 acres and D must pay owelty to other tenants in common to compensate them for lose in revenue b/c selling land as residential. b. Contribution and Accounting: Gillmor v. Gillmor (1984) vii. Facts: Tenants in common; grazing issue resulting in alleged ouster; both parties could not graze simultaneously. P wants damages for loss of revenue from exclusion from property to graze. viii. Rule: 1. Co-Tenants Rights: right to free and unobstructed possession without liability for rents for their use and occupation. Co-t only liable if interferes with other co-tenants right to occupy, use, and enjoy. 2. Establishing Ouster: must demonstrate that activity necessarily excludes cotenant a. Exclusive use alone is not necessarily an ouster (must exclude the use of other cotenant) b. Once there is an ouster, adverse possession clock starts ticking 3. Reimbursement for improvements: Generally, when Co-T in sole possession makes repairs or improvements to common property w/o consent from other co-Ts, improver has no right to contribution; Consider: ongoing or terminated relationship, necessary to prevent forfeiture(allowed), repairs and maintenance (unlikely), improvements (not awarded) 1. Exceptions: improver gets compensation from Co-Ts when (1) other co-Ts have stood by and permitted him to proceed to his detriment (2) If improver acted in good faith believing themselves to be sole owner ix. App/Holding: Grazing necessarily excluded other cotenant because of issue with overgrazing. Woman gets compensation for lost revenue from inability to graze and gets injunction to force other co-Ts to allow her to graze. However, excluder repaired fence and wants compensation. Court divides the repair consts by the percentage of interest to each party, so cost of repairs is subtracted from womans damages. VI. Entity Property (allows managerial function to be concentrated w/ specialists while use is spread over larger group) a. Possessory Interests i. Leases (financingclosely related to loan, risk-spreadingnew ventures, and specialization functionsmanagerial LL) ii. Lease Types (numerus clausus principle applies; limited menu; ambiguous language will be put into category)

Term of Years: lease for fixed time that ends on specific date (no notice by either party to terminate relationship) (notice=length of rent cycle) statute of frauds (in writing) usually applies. 2. Periodic Tenancy: lease that auto renews (each party required to give notice to terminate lease) (must give minimum 6 month notice to end or length of period of recurring rollover) 3. Tenancy at Will: tenancy that lasts as long as both parties wish to continue (either party can terminate at any time for any reason) Notice equal to the period of time at which rents are made is required in most jurisdictions 4. Tenancy at sufferance: when tenant remains in possession after their right has ended after original entry was permitted. Differs from trespasser because original entry was not wrongful (often not regarded as a true tenancy) 5. Rationale for appeal: (1) de facto financing devise which allows owner to lend possession for rent, (2) risk spreading devise: allows tenants to have flexibility (pull up stakes and leave rather than property tying them down) landlord also spreads risk by leasing to multiple tenants, (3)form of entity property where complex assets can be integrated and professionally managed 6. Warranties/ covenants: covenant to pay rent T LL; covenant to peaceful enjoyment LL T (LL may not permit to trespass, or T doesnt pay rent);Covenant to repair (independent); warranty of Habitability LL T, (if breached, T doesnt need to pay rent); Duty to mitigate LLT iii. The Independent Covenants Model 1. Assumption of independent covenants provides that all covenants must be performed without regard to whether other covenants have been or can be performed 2. Paradine v. Jane (1647) a. Facts: Term of years lease; prince w/ army kicked tenant off land; claims to not owe rent for that period b. Rules: i. Covenant to pay rent and covenant to use and enjoyment: Most basic covenants (LL must not interfere w/ quiet enjoyment during lease term and tenant must pay rent) ii. Assumption of independent covenants provides that all covenants must be performed w/o regard to whether other covenants have been or can be performed 1. If the LL fails to perform a covenant to repair, the tenant must continue to pay rent but can sue 2. Remedy of Distraint (LL could enter w/o permission and take things to collect the rent c. Rationale: Lessee would have captured windfall profits and therefore accepts risks of losses i. Exception if complete destruction of property: by outside forces terminates the lease and removes the tenant from obligations to pay rent d. App/Holding: Tenant still required to pay rent because LL did not interfere with Ts use and enjoyment and did not break covenant. Outside disasters are risks that T must bear. 3. Smith v. McEnany (1897) (step towards covenant dependency) a. Facts: P built on edge of Ds leased property; treated encroachment as eviction; LL (P)sues for rent. b. Rules: i. Right to Exclude: if the LL permits something to encroach on Ts leased land, then LL breaches covenant for quiet enjoyment and T doesnt need to pay rent. T has the right to use and enjoyment of the whole property. ii. Does not absolve tenant of other covenants besides rent (duty to repair) iii. Actual eviction or ouster by the LL is an exception to the rule of independent covenants from Paradine. If the LL evicts the tenant, then the tenants covenant to pay rent is suspended as long as the eviction lasts. Court here found that partial ouster completely absolves the tenant from paying rent, rather than just reducing the amount owed. iv. Property Rule: Partial ouster by LL completely absolves the tenant from performing the covenant to pay rent c. App/holding: LL broke covenant to provide full possession of the property so T doesnt need to pay rent from time wall constructed by T liable for not repairing the premise, so subtract damages 4. Sutton v. Temple (1843)

1.

Facts: Tenant refuses to pay rent, LL sues Leased eddish for livestock; paint chips in manure; spread over property; killed livestock Tenant refused to pay rent, LL sues. b. Rules: i. No implied warranty of fitness that the leased premises will be fit for the tenants intended purposes ii. Distinguished from Smith v. Marrable house and furniture supposed to be livable and can easily see. c. Holding: tenant cannot escape their obligation to pay rent whether premises are fit for their intended purpose or not (caveat lessee). Tenant must pay all the rent for the whole period of the contract. iv. Exception to Independent Covenants 1. Forfeiture Clauses a. Clauses in leases providing that upon the tenants violation of enumerated covenants in the least (most crucially the covenant to pay rent) the tenants interest in the lease would be immediately forfeited i. Two Forms modeled after defeasible fees 1. Fee simple determinable 2. Fee simple subject to condition subsequent (retake and reenter) 2. Constructive Eviction (exception to independent covenants recognized for actual evictions by the landlord) a. Severely depresses value of tenancy b. Landlord misfeasance sufficiently serious to cause a reasonable tenant to vacate i. Tenant is excused from further payment of rent (pro-tenant doctrine) ii. Can include situations over which LL has no control c. Blackett v. Olanoff (1977) (nonfeasance)(inaction of LL violates lease)(extends Smith v. McEnany) i. Facts: Tenants in this case were disturbed by a nightclub that the LL leased next door and didnt enforce a noise restriction in that lease. Therefore, b/c residential tenants right to quiet enjoyment of the premise was substantially diminished, LLs actions constituted constructive eviction. ii. Doctrine of Constructive Eviction applies when: T were very substantially deprived of quiet enjoyment of their leased premises for a substantial time. So, Ts implied warranty of quiet enjoyment was violated (by loud music and disturbances from nearby lounge LL leased to other T.) not reasonably habitable, no difference between nonfeasance and malfeasance iii. App/Holding: Though LL didnt create the condition, LL had the power to not enter lease or correct it, b/c foreseeable that clash of interests would occur. So, allowing the lounge to move in amounted to constructive eviction of the residential tenants. (when LL in control of condition that will foreseeably cause problem, but still allows the substantial condition to continue const. evic.) 3. Doctrine of Surrender a. If tenant vacates premises w/ the intention never to return, there is a mutual release of further lease obligations by implied contract (contractual release of liability) (pro-tenant doctrine b. Moment of Acceptance i. When the landlord takes some action recognizing that the tenant has surrendered the lease ii. Tenant is liable for the full amount of rent owed up to the moment of acceptance, but not thereafter iii. Usually original lease distinguished as a matter of law by the landlords reentry c. In Re Kerr (1939) i. Facts: Tenant in 2 year lease went bankrupt and stopped paying rent. LL relet premises to new tenant but for a reduced price with several months free at the beginning. LL re-let and sued for rent i. Rules: Both are Pro-Tenant 1. Doctrine of Surrender: Tenants state of mind must be to abandon the leasehold; LLs must be to accept the abandonment and retake. Tenant is only liable for full rent until moment LL accepts the surrender. (if LL relets that signifies surrender) 2. Reenter and relet clause: tenant remains liable to the LL for expected damages if the LL cannot with reasonable effort relet the premises at a rent equal to or higher than the original rent reserved. ii. App/Holding: bankrupt is only liable to LL for the amount of rent before LL relet the premises v. The model of Dependant Covenants (modern landlord-tenant law) 1. Dependant Covenants: Medico-Dental Building Company of Los Angeles v. Horton and Converse (1942)

a.

2.

Facts: Lease agreement stated no other pharmacy in the building; physician began selling drugs in building. The lease had a specific rider which makes a difference b. Rules: i. General Rule of bilateral commercial contracts 1. Breach sufficiently serious (goes to essence of consideration): can rescind from the lease and terminate further performance of the contract. (shifting from hard property doctrines to softer contract doctrines) 2. Breach of less serious covenant (doesnt go to essence or not materially sufficient to justify rescission): promisee entitled to sue for damages only. 3. Those features of the lease which are strictly contractual in their nature should be construed according to the rules and interpretations of contracts generally (leases from property to contract) ii. Options of Defendant (pharmacy) 1. Could rescind the lease, not pay further rent 2. Continue under lease and at end of term sue for loss of profits (sue for damages) 3. Could have treated the violation of the covenant by P as putting an end to contract for purposes of the performance and sued for damages (rescind as a forward going measure, and sue damages back) iii. App/Holding: Since the agreement that no one else in the building sell drugs goes to the essence of the consideration under the lease, the contract is terminated and T does not need to pay rent. IWH (Implied Warranty of Habitability) a. Continuous obligation to the tenant to maintain the premises in accordance w/ all applicable law b. Only urban residential housing (usually not extended to commercial leases) c. Not waivable (even for lower rent) and automatically implied in all leases (departs from contract doctrine in this regard) d. Javins v. First National Realty Corp. (1970) i. Issue: Whether housing code violations which arise during the term of a lease have any effect upon the tenants obligation to pay rent ii. Facts: Tenants refuse to pay rent. LL sues T for rent. Ts claims they dont have to pay b/c 1500 housing reg violations. iii. Rules: Legitimate expectation that the apartment will be fit for habitation for the period for which it is rented (more like a consumer of goods and services) 1. Rent dependant on LLs performance of IWH: Under contract principles, the tenants obligation to pay rent is dependent upon the landlords performance of his obligations including his warranty to maintain the premises in habitable condition 2. Implied warranty of Habitability (nearly all states, but only residential leases): By signing the lease, LL undertakes duty to maintain the premises in accordance with Housing regs or T doesnt need to pay rent. (Implied in all res. Contracts) 3. Jury/Judge must find: (1) vios existed during period rent past due; AND (2), how much of the rent is suspended for LLs breach of IWH. 4. Remedies for violation of IWH a. Tenant can vacate w/ no further obligation b. Order directing specific performance of IWH c. Action for damages for breach of IWH d. Set-off against rent liability reflecting the LLs violation of IWH e. Some jurisdictions allow the withholding of all of the rent until IWH correct or permits the tenant to arrange for repair i. Impact of the IWH crucially relies on enforcement (very spotty)(market tends to sort) 5. Doctrine of retaliatory eviction: LL may not retaliate against a tenant for reporting code violations or attempting to organize a tenants union. (even if it is a periodic tenancy and it is at

a.

the end of the lease) Cannot give notice to terminate if a court concludes the termination was motivated by a desire to punish the tenant for asserting rights under housing code 6. Illegal Lease Doctrine: (minority) If LL leases property that is subject to one or more code violations, so that the premise is rendered unsafe and unsanitary, then the lease is void and has no effect. (bad b/c LL can evict tenant right away) iv. Holding: leases of urban dwelling should be interpreted like a contract. Warranty of habitability is a warranty LL must give to T as set by Housing Regs. Breach of warranty allows T to access usual remedies for breach of contract. Violations cant be de minimis and T not pay rent. After LL repairs, T must pay rent 3. Duty to Mitigate a. A landlord seeking damages from a defaulting tenant is under a duty to mitigate damages by making reasonable efforts to re-let an apartment wrongfully vacated by the tenant b. Sommer v. Kridel (1977) i. Facts: Ds plans changed; wrote letter to abandon; LL did not respond; did not re-enter to exhibit and denied inquiries. LL then sues for all the rent. Before LL relet a year or so later. ii. Rules: 1. Duty to attempt to re-let the premises and mitigate damages (from property to contract) 2. Assessing if LL used reasonable diligence to re-let: whether LL offered or showed the apt to any prospective tenants or advertised in newspaper. (no rule, each case must be judged on its own facts) 3. LL required to carry the burden of proving he used reasonable diligence in attempting to re-let a. LL in better position to provide evidence (showings, employed realtor, ads) iii. App/Holding: No response to surrender was acceptance. Since LL could have avoided the damages which hevent actually accrued, T does not need to pay any damages to LL. c. Relationship between surrender and mitigation of damages i. Duty to mitigate may arise earlier than surrender (surrender is complete release of liability) 1. Many courts will provide 1 month grace period for duty to mitigate (subtract new rent after) 2. Can argue for both failure to mitigate and surrender simultaneously 3. Many tenants in this situation are judgment-proof and going to court is expensive vi. Assignment and Sublease (transfer of tenant interests) 1. Sublease: LL has fee simple, then carves out a lease for the prime tenant, who carves out a sublease from a subtenant, then sub-sublease, st 2. Assignment: LL carves out lease from fee simple to a prime tenant, who alienates the prime lease to 1 nd assignee, who alienates to 2 assignee. Every successive assignee steps into the shoes of the previous assignee and enters direct relations with the original LL 3. Two Sources of LL-T obligation a. Privity of contract: obligations that come from being a party to a binding bilateral contract (written lease) so LL and subtenant no privity b. Privity of estate: 2 conditions: i. (1) parties must have interests directly carved out of each other (nested), AND ii. (2)one party must be in actual possession of the property. When both conditions satisfied, parties are both bound by privity of estate and privity of contract. st c. In Assignment: LL and prime tenant both priv of contract and estate, when Prime T assigns to 1 st assignee, original LL in privity of estate with 1 assignee, but not privity of contract. Assignee 1 is only in privity of contract with prime tenant (and whoever they assign too.) In assignment, then the Prime T assigns, the parties in privity of estate are bound to the obligations that touch and concern the land in st the original leasehold interest. Also, L may prefer assignment because 1 A must pay rent to you, but if 1st A defaults, prime T still on the hook via privity of contract st 4. 2 concepts relevant to Assignment: i.e. if LL enters lease with Prime T, who assigns lease to 1 A.

Assumption: occurs when 1 A expressly agrees as part of an assignment agreement to be bound by the st terms of the original lease, therefore, 1 A agrees to be bound by privity of contract and privity of estate. However, Prime T also still bound by privity of contract b. Novation: when the parties agree to erase any privity of contract liability on the part of the prime st tenant. So when prime T agree to assign to 1 A, and LL agrees to novation, Prime T is totally off the hook (no more privity of estate and novation erases privity of contract) 5. ** Assumption and Novation act independently, so you can have one or the other, or both together, or none)** 6. Assignment and Sublease: Jaber v. Miller (1951) a. Facts: Jaber rented from original owner; transferred lease to Norber and Son for remainder of lease for promissory notes; Jaber reserved right to re-enter if no payment; no provision for fire; Miller obtained lease from Norber and didnt want to pay Jaber after fire burned down building; Miller argues payments were rent under a sublease so that the fire provision would apply to him and Not an assignment b. Rules: i. Traditional doctrine: If the instrument purports the lessees estate for the entire remainder of the term it is an assignment, regardless of intention (if even one day less of entire term, then sublease) ii. New rule: Intention of the parties is to govern in determining whether an instrument is an assignment or a sublease (look at title of agreement, words in agreement, and intent of parties) c. App/Holding: Jaber and Norber intended an assignment and not a sublease (same result as old rule) so Miller must continue to pay the $700 notes to Jaber. Evidence of assignment: instrument called contract of assignment and only uses the word assignment rather than sublease gave promissory notes rather than rent. 7. Assignment and Sublease: Kendall v. Ernest Pestana, Inc. (1985) a. Facts: Ernest has assignment sublet to Bixler tried to assign to Kendall; Ernest refused assignment b. Rules: i. Law generally favors free alienability of property ii. New Rule: Lessor can withhold consent only where the lessor has a commercially reasonable objection to the assignment 1. Property (restraints on alienation and leases as conveyances)(forbids unreasonable restraints) 2. Contract (Recognition of contract principles of duty to good faith and fair dealing) iii. Commercially reasonable factors: 1) Suitability for use; 2) Legality of use; 3) Need for alteration of the premises; 4) Nature of occupancy iv. Denying consent based on personal taste, convenience, or sensibility is not commercially reasonable 1. Cannot deny consent in order that the LL may charge a higher rent than originally contracted for) v. Lessee entitled to capture windfall gains or losses (see Paradine v. Jane) c. App/Holding: Since clause restricts alienability and Pestana has no good reason to deny the lease, Pestana must allow Bixler to assign to Kendall vii. Cooperatives, Condominiums, and Common-Interest Communities 1. Forms of entity property in which multiple persons enjoy possessory interests 2. Often present complicated governance issues a. Organize themselves collectively in order to manage common areas and shared facilities i. Usually through some combination of basic organizing document and elected governing body 3. Reasons to own (customizing space, market, control over community) 4. Condo Governance: Nahrstedt v. Lakeside Village Condominium Association, Inc. a. Facts: P moved into condominium complex w/ 3 cats against pet restriction in project declaration/master deed; homeowners association enforced restriction and fined P; alleged pet restriction unreasonable b. Rules: i. 2 categories of use restrictions: 1. (1) restrictions in the master deed: strong deference,

a.

st

Rationale: protect general expectation of condo owners, creates stability and predictability, and reduces litigation costs over exceptions to rule, if restriction recorded in original declaration it is presumptively valid unless it is arbitrary, violates a fundamental constitutional right, or violates public policy. (Bundle of Rights) b. All covenants and restrictions in declaration are enforceable unless unreasonable (i.e. arbitrary, burden on use of land substantially outweighs restrictions benefits to residents as a whole, or violates fundamental public policy, or is arbitrary 2. (2)rules created by condo board or their interpretation of rules (less deference) c. App/Holding: reasonable to have a pet restriction (i.e. allergies, cleanliness)if approved to have it in master deed, presumed to be reasonable. P may not keep the cats in the condo. th 5. Co-op Governance: 40 West 67 Street v. Pullman a. Facts: D is crazy tenant in co-op; accuses and harasses old upstairs neighbors; have meeting to vote D out, evicted D; D refused to leave b. Rules: i. Business Judgment Rule: where courts exercise restraint and defer to good faith decisions made by boards of directors in business settings. (applies to co-op board) ii. RPAPL 711(1): LL only has right to terminate tenant occupancy during the term of the lease if LL establishes w/ competent evidence to the satisfaction of the court that the tenant is objectionable iii. Elements to allow board to vote and evict D: so long as the board acts for the purposes of the cooperative, w/in the scope of its authority and in good faith iv. An shareholder tenant must prove the board acted 1. Outside the scope of its authority, or 2. In a way that did not legitimately further the purpose, or 3. In bad faith c. App/Holding: Since board followed the procedures and evidence board provides is reasonable, they have the authority to evict D. 6. Note on housing cooperatives: Unusual legal animal (buildings is owned by an entity, usually a corporation, in which the residents own shares and the corporation grants a perpetual lease) (part corporation and part lease) VII. Title Records and the Transfer of Property a. Title Records i. Nemo Dat Quod non Habet (you cant give what you dont have) VERSUS Good Faith Purchasers for Value (often in opposition to nemo dat)(title recording tries to balance these principles) ii. Recording (Ex Post Approach) (take deed you want to record to the recording office and the registrar makes no attempt to approve)(no check for competing claims) (files organized by transacting parties names and indexes to reconstruct)(occasional back-end costs) iii. Title Search and Chain of Title 1. Performing a title search involves tracing the series of transaction from would-be transferor back to a root of title and then tracing forward a. Look in grantee index to find transferor and follow backwards and then forwards through grantor index b. Recording Acts i. Race (original type of recording act)(only 2 states still use race recording acts) 1. first person to record their deed is TO (doesnt matter if bought before or after other person or good faith) 2. O sells to A and then sells to B, but B records before A, then B has title 3. Creates an exception to the nemo dat principle and no relationship to good faith purchaser for value st a. 1 party to record wins even if they have actual notice of prior conveyance 4. Strong incentive to record 5. If no one records, goes to Nemo Dat owner ii. Notice (states evenly split between Notice and Race-Notice) 1. A subsequent good faith bona fide purchaser for value wins unless she has notice (actual, constructive, or inquiry)

a.

a. Recorded interest gives constructive or record notice 2. Incentive to record immediately in order to be protected from subsequent good faith purchasers iii. Race-Notice 1. A subsequent good faith purchaser wins only if he has no notice AND records before the prior instrument is recorded a. Must satisfy both conditions for title b. If either condition is not satisfied than the nemo dat holder wins c. Similar to race statute but solves the problem of the unscrupulous subsequent buyer iv. The Shelter Rule 1. Exception for certain transferees who otherwise would be barred from obtaining title because they are not good faith purchasers for value a. Ex. O conveys to A, who does not record. Then O conveys to B who gives value and has no notice of the prior conveyance to A. B then records. Then A records. Then B gifts the land to C. i. C wins against A because shelters under Bs rights 1. Otherwise B would have less than full ownership 2. Original Owner Exception (if B transfers back to O then A would win) a. O cannot shelter under Bs rights (fear of collusion and has notice because he conveyed) v. Problems 1. O conveys to A. O then conveys to B, who has no knowledge of As deed. Then A records. Then B sells to C a. Race: A wins, first to record b. Notice: C wins because C shelters under Bs full property rights who had no notice when he buys so he is a subsequent purchaser for value in good faith and then can transfer to C. (shelter under Bs rights even though C has constructive notice)(once you have full title you can convey full title) c. Race-Notice: A wins, B does not record before A 2. O conveys to A. O then conveys to B, who has no knowledge of As deed. Then A records. B then records and sells to O a. Race: A wins, first to record b. Notice: A wins, original grantor cannot shelter under Bs rights c. Race-Notice: A wins, records before B 3. O conveys to A. O then conveys to B who has actual notice of the deed from O to A. B records , and then A records. Then B sells to C. a. Race: C wins, first to record shelters under Bs rights b. Notice: A wins, B had notice so no title to shelter C c. Race-notice: A wins, B had actual notice vi. Good Faith Purchaser for Value: Hood v. Webster (1936) 1. Facts: Widow conveyed land to Hood; then sold to Webster for $1; Webster recorded first; Race-Notice Act 2. App/Holding: Webster not a good faith purchaser for value; peppercorn transaction the $1 consideration is insignificant. Satisfies the rest of statute (but no substantial value to evidence a good faith transaction) Hood gets title b/c said would pay her $200 a year. Hood still wins even though didnt pay her a dime. c. The Limits of Title Searches i. Adverse Possession Mugaas v. Smith (1949) 1. Facts: P is adverse possessor since 1910; neighbor D buys title in 1941 w/o a description that included the AP. P sues for quiet title action to keep the adversely possessed land. 2. Rules: a. Recording does not extinguish AP b. The fact that P had ceased to use the land in question in such a way that her claim of AP was apparent did not divest the title she had acquired (does not have to fly flag forever over adverse possession) c. Adverse possession affects the subsequent purchaser even if they have received no actual notice d. Bad faith adverse possessors are more likely to record quickly 3. App/Holding: AP wins and gets to keep the strip of land. ii. Wild Deeds (deeds outside the chain of title and cant be traced back) Zimmer v. Sundell (1941)

Facts: McCanns convey to Raab and then to Gage, Gage never records and sells to P who recorded; so when D recorded their conveyances, the Ps recorded deed had no apparent connection w/ or derivation from the McCanns title (P had fugitive deed)(because Gage did not record, could never find in index) 2. Rules: a. Good faith purchasers for value who record first are protected under the race-notice statute i. Exception: excludes from protection those who may purchase from strangers to the title ii. P purchased from grantor who had no recorded title going back to root (Grantor was a pure stranger to the title so far as the record disclosed b. Most courts agree, cannot benefit from the recording acts exception to nemo dat if traces ownership to a wild deed st 3. App/ Holding: although under stat P would be TO because innocent and recorded 1 . However, this only works if one could rely on the titles on record and trace it back to the grantor. Since the deed from McCann Gage wasnt recorded until after P and D recorded, P couldnt have relied on the record, so invalid claim. Raabs are TO. VIII. The Law of Neighbors a. Nuisance i. Invasion of anothers interest in the private use and enjoyment of land, and the invasion is actual and substantial, direct, and unreasonable 1. Reasonableness is balanced w/ competing interests (balancing interests) a. Three basic approached to balance interests and determine reasonableness i. Objective Threshold of Badness (conflated w/ invasion) ii. Becoming worse (trend over time of a particular use) iii. Cost benefit analysis ii. Trespass/ Nuisance Divide: Adams v. Cleaveland-Cliffs Iron Company (1999) (air particles, vibrations, and noise) 1. Facts: Ps live near nations largest mine. Dust, noise, and vibrations constantly bother them. They sue for nuisance and trespass. 2. Rules: a. Trespass: invasion of possessors interest in excusive possession of their land. Requires (1)direct (2)entry onto (3)Ps land (4)by a tangible, physical object i. Dust isnt tangible and is just ambient part of circumstance of space ii. Direct invasion requirement: Enough that an act is done w/ knowledge that it will to a substantial certainty result in the entry of foreign matter b. Nuisance: interference with possessors use and enjoyment of their land. Requires proof of i. (1)substantial harm resulting from Ds ii. (2)unreasonable interference that causes iii. (3)substantial harm to use or enjoyment of the property iv. (4) Employ balancing test between benefit to D and harm to P. 1. Factors a. (1) Badness: conflated with invasion, b. (2) Becoming worse: look at the trend, it there is a change for the worse that goes against them. c. (3) Cost Benefit: cold cost benefit analysis. If the benefits dont outweigh the harm, then it could be a nuisance (could be quantitative.) c. 4 tests between trespass and nuisance: i. (1) whether Ds intrusion occurred with D on or off the Ps land, ii. (2) whether the harm was direct or indirect, iii. (3) invasion by intangible or tangible thing, iv. (4) deprive P of possession or use +enjoyment. d. Damages: recovery in trespass is appropriate for any appreciable intrusion onto land while recovery in nuisance is appropriate for only substantial and unreasonable interferences w/ Ps right to quiet enjoyment

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App/Holding: Not a trespass because not a Direct invasion or with a tangible object. Also not Nuisance as per jury verdict in lower ct. likely b/c not substantial harm to use and enjoyment iii. Remedy Issues: Boomer v. Atlantic Cement Company Inc. 1. Facts: D owns cement plant, private nuisance to residents in the area 2. Rules: a. Disparity in $ consequences: If it would cost a substantial economic loss to an grant injunction, then can issue injunction that is vacated upon payment of permanent damages for all harm to home value. b. Permanent Damages: If there is a significant nuisance but injunction would be strongly against economic efficiency, then can grant permanent damages 3. App/Holding: Injunction granted which shall be vacated upon payment by D for permanent damages to the decreased housing value (High transaction costs (injunction and removal of cement plant) persuades courts to adopt liability rule)(Type 2 Calabresi Malamud Rule: Liability Rule for the Plaintiff) 4. Departure from mandatory injunction rule because of a large disparity in economic consequences (ex ante approach) (damages are scaled to loss in market value) iv. Coming to Nuisance: Spur Industries, Inc. v. Del E. Webb Development Co. (1972) 1. Facts: Webb develops Sun City near cattle feed-lock; sues for public nuisance 2. Rules: a. Public nuisance dangerous to public health: Any condition or place in populous areas which constitute a breeding place for flies, rodents, mosquitoes, which are capable of transmitting diseases to people. 3. App/Holding: Spur may be enjoined (b/c public nuisance that manure creates health issue for nearby residents) but Webb must indemnify (Type 4 Malamud Rule: Liability Rule for the Defendant) (Developer must buy out the feed-lock that was there before the residences) 4. Distinct from other coming to the nuisance cases a. Brought people to the nuisance to the foreseeable detriment of Spur, so must indemnify for a reasonable cost of moving or shutting down b. Easements i. Nomenclature 1. Nuisance: tort approach to resolving neighborly conflict. Coase theorem situation 2. Easements: property approach to giving some use and enjoyment rights. Should be in writing b/c informality between neighbors can cause conflict 3. Covenants: contract. About giving the use of property 4. Easement Appurtenant: easement that belongs to another parcel of land. I grant Matt the right to walk through my land to access his adjacent land, he has an easement appurtenant that belongs to his land "blackacre" that is carved out of my land "whiteacre." a. Benefit of the easement belongs to whoever happens to own blackacre and burden of the easement belongs to whoever happens to own whiteacre. b. Blackacre= dominant tract and whiteacre the servient tract 5. Easement in Gross: easement that belongs to a particular grantee rather than belonging to the land. So I grant Matt the right to go skiing on my land, so the easement belongs to him and not whoever owns his land "Blackacre." So if Matt sold his land to Paul, Paul doesn't have the right to ski unless he gets his own easement 6. Profit a prende: right to enter on the land of another in order toe extract something of value such as timber, fish from a lake, or fruit or trees. (same rules as easement appurtenant) License remains irrevocable as long as the profit continues to last. 7. Affirmative Easement: permits the easement holder to perform some affirmative action on the land of another (i.e. permitting action on servient track that otherwise would be trespass or invasive nuisance) Almost all easements are affirmative. a. Common law recognized 4 types: (1) Blocking sunlight , (2) Interfering with the flow of air, (3) Removing lateral support for a building, (4) Interfering with the flow of water 8. Negative Easement: permits the easement holder to demand that the owner of the servient tract desist from certain actions that might harm the easement holder 9. Private easement: authorize specific named parties (people or entities) to use land for a designated purpose

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10. Public easement: authorize the general public to use land for designated purposes (beaches, bike trails) Public can hold negative public easements like scenic or conservation easements ii. Intro : Numerous clauses applies to easements: Baseball Publishing Co v. Bruton (1938) 1. Facts: Man intends to lease space on a wall to display an advertisement and mails contract to Wall owner who doesnt accept the money. The man continues to send him checks and display the advertisements. After 3 years the wall owner takes down the advertisement. Man sues wall-owner to get the right to display the ad. 2. Rules: Must determine which numerous clauses box the agreement fits into. 3. App/ Holding: Not a lease because he only has the right to display the sign on the wall and doesnt gain possession of the wall itself. Not a license because licenses are revocable at the will of the possessor of the land. So it should be an easement since it gives the man a certain right to the property. Actually easement in equity since in equity a seal is not necessary to the creation of the easement since this is an unsealed contract. iii. Creation 1. Easements by Implication and Easements by Necessity: Shwab v. Timmons (1999) a. Facts: P wants easement by necessity over Ds property so Ps can drive to their parcel of landlocked land. Lake on left, bluffs on right, property above and below. Only way to drive is across neighbors land. Plaintiffs divided and sold the part of the land that used to have road access. They created the landlocked parcel themselves and wasnt conveyed to them in that manner. b. Rules: i. Elements to create an Easement by Implication: 1. Common ownership: 2. Severance: single parcel gets severed 3. Necessity: that arises at the moment of severance b/c the parcel has no access to a public road: necessity for the easement must be so clear and absolute that without the easement the grantee cannot enjoy the use of the property granted to him for the purposes similar properties are devoted 4. Prior use: Part of the land must be in use at the time of severance (quasi easement) ii. (i.e. had driveway that went over the land, then severed, can still use the driveway as a driveway) iii. App: parcels werent landlocked at the time it was conveyed to Ps. Ps created the landlocked parcel themselves by conveying the parcel that had access to the road. iv. Elements to create an Easement by Necessity: 1. Common Ownership 2. Severance: single parcel severed 3. Very Great Necessity arises at that moment: also requires continuing necessity for the easement v. App: no necessity if Ps can access the land by water or walking over the bluffs c. Holding: no easement by implication or necessity for P. 2. Easements by Prescription: Warsaw v. Chicago Metallic Ceilings Inc. (1984) a. Facts: Company builds land near boundary, uses Ds land to drive trucks around property for 7 years without Ds permission. D builds a building on that portion of land so P cant use it. P sues for injunction to remove the building to regain access to the road. b. Rules: i. Elements to Create an Easement by Prescription: 1. Open and Notorious 2. Continuous: used the path on a regular basis 3. Adverse under a claim of right 4. For an uninterrupted period of 5 years 5. Certain and definite line of travel used repeatedly over time: slight deviations allowed but not substantial changes in path ii. Rationale: allows for prompt termination of controversies before the possible loss of evidence and in stabilizing long continued property uses. (1) Land use is favored over disuse, (2) Reduced litigation:

preserve the peace by protecting a possession maintained for a statutorily deemed sufficient period of time c. App: Ps have openly used Ds land to make turns for 7 years on a nearly daily basis and all the trucks turn in the same place, so meets all five elements. d. Holding: P has created an Easement by Prescription over the part of Ds land that they have used to make turns. D must completely remove the structure from that portion of their land and must not interfere with Ps use of the easement for the purpose of turning trucks around 3. Easement by Estoppel: Holbrook v. Taylor (1976) a. Facts: Owner uses part of Ds land as road to transport mine material (1944), mine closes 1949), then owners built tenant home (1957). Tenants and P uses road again. Home burns down (1961). Ps sell to new Ps (1964) who builds their home on three acres of the property. Ds give Ps permission to improve the road. Ps spend $100 to widen, place culverts, and red cinder gravel. Ds want Ps to buy land for $500, Ps refuse. Ds place metal wires so they cannot use road. Ps sue D for easement by prescription and estoppel b. Rules: i. Elements to create an Easement through Estoppel: 1. True owner gave permission 2. New user relied on that permission to improve the land on the faith and strength of the license 3. To revoke the permission would be inequitable ii. No statute of lims: so can happen very quickly (1 week even) when all elements met. iii. Rights a person gains through estoppel: they get an irrevocable license to what was originally granted permission to do forever so long as it is always used for that purpose. It is also usually transferable to the new owner because it runs with the land. iv. * Where the licensee has exercised the privilege given him and erected improvements or made substantial expenditures on the faith or strength of the license, it becomes irrevocable and continues for so long a time as the nature of the license calls for. c. App/ Holding: Since D gave permission to improve the land and use it as a driveway, the license to use the roadway for that purpose may not be revoked because the use of the roadway was established by estoppel (since P spent money to improve land) 4. Negative Easements: Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five Inc. a. Facts: Hotel builds giant towers that cast shadow on neighbor hotels pool. Neighbor hotel sues for injunction b. Rules: i. Owner's rights: a property owner may put his property to any reasonable and lawful use, so long as he does no thereby deprive the adjoining landowner of any right of enjoyment of his property which is recognized and protected by law and so long as his use is not such a one as the law will pronounce a nuisance. ii. There is no legal right to the free flow of light and air from the adjoining land. Where a structure serves a useful and beneficial purpose, it does not give rise to a cause of action either for damages or for an injunction under the maxim of sic utere tuo ut alienum non laedas. Even though it causes injury to another by cutting off the light and air and interfering with the view that would otherwise be available . iii. Ancient Lights: rule only applies if the sunlight has fallen on a window for 20 years c. App/ Holding: No right to sunlight. Fontainebleau may keep towers and neighbor gets no compensation. It does not matter whether the addition to the Fontainebleau may have been constructed partly out of spite. Mixed motives usually leads to no liability. Pure spite can sometimes lead to greater intervention. iv. Termination of Easements : 1. by deed, 2. expiration of the term in a contract, 3. determining easements when the event occurs (like in a will), 4. Merger (if a single owner purchases the dominant and servient tract),

5. terminated by prescription (i.e. putting up a rope and stat of lims runs), 6. Estoppel (abandonment, giving permission to someone to use the land and they improve it), 7. Terms of recording statutes (if easement not recorded with the deed and someone sells the land), 8. Eminent domain v. Misuse of Easements: Penn Bowling Recreation Center v. Hot Shoppes Inc (1949) 1. Facts: Penn Bowling is overusing their easement in a way that interferes with the servient tracts use by parking rather than driving, and overuse by using path to get equipment to other parcels of land outside the dominant tenement 2. Rules: a. Non-dominant tract use: not allowed. An easement can only be used by the dominant tract and cannot be used by parcels of land near the dominant tract but not part of the original dominant tract in the original agreement b. Rationale: using an easement beyond its scope (geographic scope, scope of use, etc) constitutes a continuing trespass: remedy for a continuing trespass is an injunction. A harsh automatic injunction rule sets up the right incentives for ex ante negotiations. In this case, plaintiff could have avoided the problem by trying to bargain up front 3. App: the dominant tract may not block the easement and land associated with the dominant tract but not part of the original dominant tract may NOT use the easement at all. 4. Holding: Until it is clear that the use of the easement is used solely by the dominant tract and no other unauthorized parties, there will be an injunction to prevent the use of the easement. c. Covenants 1. Covenants in leases run to successors of the original landlord or tenant if the a. landlord and tenant intend that they will run; AND b. covenant is one that touches and concerns the land. ii. Equitable Servitudes: Tulk v. Moxhay (1848) 1. Facts: seller sells land and includes covenant for buyer to always maintain the solely as a square garden. Buyer purchases and intends to build buildings on the land. Seller files for injunction to force buyer to keep and maintain the garden as one. 2. Holding: All purchasers with notice of covenant must conform to the covenant. 3. Reasoning: One is bound to perform an obligation of which he has notice. If a person has notice, then they have an obligation. 4. Rationale: it would be unfair for someone to buy the land with notice then sell the land the next date for a higher price without the covenant. iii. Real Covenants: Neponsit Property Owner's Association, Inc v. Emigrant Industrial Savings Bank (1938) 1. Facts: Neponsit developed land in Queens and conveyed the land with a covenant for the owner to pay $4 a year for the maintenance of the community which will run until 1940. All subsequent deeds and all deeds in the community contained this exact covenant. D purchases the land at a judicial sale and fails to pay the $4 a year. The home owners assoc. places a lien on the land and brings foreclosure proceeding to get the owed money. 2. Reasoning: D got right of common enjoyment with other property to the beaches, public parks, and roads. To enjoy these rights, they must be maintained. To maintain the land, the grantor takes $4 a year from each property owner. That burden of cost affects the value of the property through affecting their enjoyment of the access to beaches, parks, and roads. 3. Requirements for a covenant to run with the land a. Intention by both parties: It must appear that grantor and grantee intended that the covenant should run with the land b. Touching concerning land: It must appear that the covenant is one "touching" or "concerning" the land with which it runs i. Courts have high discretion ii. Prof. Bigelow's definition of touch and concern: a promise that effects the advantages and the burdens of the owners of the parcels of land wither benefited or burdened by the promise.

Holding: Since the original grantor and grantee (1)intended the covenant to run with the land and (2)the covenant may properly be said to touch and concern the land of the defendant, burden of paying $4 a year runs with the land. Therefore, the company may foreclose the property to exact the fee. iv. Requirements for Covenants to Run 1. Issue with covenants: whether the benefits and burdens of the deal between the original parties will run with the land, extending to successors of those parties. 2. Requirements for Real Covenants to Run a. For burden to run i. Intent for burden to run ii. Notice iii. Horizontal privity iv. Vertical privity v. Touch and concern b. For benefit to run i. Intent for the benefit to run ii. Vertical privity iii. Touch and concern 3. Equitable Servitude Theory a. Three elements must be met for burden of a promise to run w/ the land i. (1) intent by both original parties for the burden to run w/ land ii. (2) notice to successive Os of burdened land iii. (3) promise has to touch and concern the land b. For benefit of a promise to run w/ the land (1) intent and (2) touch and concern rd 4. 3 Restatement: more contract oriented approach. Abolishes touch and conern and privity requirements. Enforceability is default subject to limitations of no writing or public policy violation. a. Rationale: parties may contract as they wish and courts will enforce their agreements without passing on their substance because it is in the public interest to recognize that individuals have broad powers to order their own affairs. v. Notice and the Common Plan Sanborn v. McLean (1925) In subdivisions, covenants trace back to a deal between the developer and original purchasers 1. Facts: couple (D) buys plot in residential neighborhood. Begin construction of gas station next to their house on the plot of land. Neighbors (P) sue for injunction 2. Rule/ Following the Common Plan : One must follow the common plan if they can easily see that the whole neighborhood is residential and could easily discover that some of her neighbors are restrictive covenants stating the plots can only be used for residential purposes, then even if their deed has no restrictions at all. a. Notice: constructive notice given when whole neighborhood is uniformly residential and when homes are continually sold, they remain solely residential all during the past 30 years. 3. Holding: couple must use the land solely for residential purposes. If the gas station building can be used for any purpose within the restrictions, it doesnt have to be torn down. 4. Reasoning: many of the homes in the neighborhood had restrictive covenants and the neighborhood with 98 houses all remained residential for past 30 years. All the houses have the right to continue enjoying the benefits of the restrictive covenants. vi. Conservation Easements: negative covenants in gross that restrict the future development of land (negative b/c prohibit servient Landowner from engaging in certain activities, covenants b/c doesnt fit into 4 type of negative easements, and gross b/c power to enforce restriction not given to another landowner but to local gov or land trust. 1. Negative covenants in gross probably dont run with the land since they dont meet the privity requirement. 2. Conservation easements exist only b/c legislation authorizes them and are a new form of property 3. Reasons for rapid proliferation of conservation easements a. Perpetual conservation easement is designed to give peace of mind to current landowners worried about their beloved property being sold to developers by their heirs b. Significant tax benefits: donations are tax deductable for the loss in value of the land with the covenant.

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i. Requirements: land must 1. Be restricted for one of several general purposes: outdoor recreation, wildlife habitat, scenic enjoyment, agricultural use, or historical importance. 2. Donation must be perpetual ii. Enviornmentalists concerned with preserving local environmental values see conservation easements as a potentially powerful tool in combating commercial development 4. Criticism: dead hand control, donor over-valuing their easement for tax-deductions, sometimes given to people with no public benefit created, public pays for it through tax $ and foregone development opportunities but have no say in the process b/c done through individual LO negotiations. vii. Termination of Covenants: 1. Changed Circumstances: Bolotin v. Rindge (1964) a. Facts: P owns some unimproved lots which are subject to deed restrictions that require the lots to be used solely for single, private residences which expire in 1970. All the lots but those 4 have been improved with single family residences. P sues for declaratory relief against tract wide restrictions to single-family residential use. b. Rules: i. A court will declare deed restrictions to be unenforceable when, by reason of changed conditions, enforcement of the restrictions would be inequitable and oppressive and would harass plaintiff without benefitting the adjoining owners ii. A building restriction will not be enforced where changed conditions in the neighborhood have rendered the purpose of the restrictions obsolete. But if the original purpose of the covenant can still be realized, it will be enforced even though the unrestricted use of the property would be more profitable to its owner. iii. Restatement of Property: a promise as to the use of land is binding upon successors of the promisor only if the performance will result in benefit in the physical use or enjoyment of the land. Physical use or enjoyment= must make the use or enjoyment more satisfactory to the physical senses and not enough that the income from it is increased. c. App: no finding that purpose of the restriction is obsolete and that enforcement of the restriction will no longer benefit the D. (no adverse monetary effects alone is insufficient) d. Holding: Remand to determine D derives benefit from restriction remaining 2. Abandonment, estoppel, public policy: Peckham v. Milroy (2001) a. Facts: P lives in residential community. Ds family moves in and begins operating day-care business in the home although the house is subject to a restrictive covenant prohibit gthe use fo the property for business purposes of any kind. b. Rules: i. Abandonment 1. Requires proof that prior violations have eroded the general plan and enforcement is therefore inequitable. 2. A covenant is abandoned when it has been habitually and substantially violated, but a few violations do not constitute abandonment ii. App/holding: 1,550 homes and only 4 businesses. Violations are neither habitual nor substantial and 4 constitutes a few, so it doesnt constitute abandonment iii. Laches 1. Requires 3 elements a. Knowledge of reasonable opportunity to discover on the part of a potential P that he has a cause of action against a D; AND b. An unreasonable delay by the P in commencing that cause of action; AND c. Damage to the D resulting from the unreasonable delay 2. App: Ds intended to remodel for reasons other than a day care so cost to remodel couldnt come from Mr. Peckhams delay in bringing suit. iv. Equitable Estoppel

IX.

c. Takings a. Eminent Domain: government power to take peoples land for just compensation i. Intro th 1. 5 Amendment: Nor shall private property be taken for public use without just compensation + Due Process Clause together protect US citizens from unfair takings 2. Gov Compromise: Ordinarily, Property Rule which protects owners right to exclude and must have owners consent to use or buy the property. Eminent Domain is Liability Rule, so government can buy the land for just compensation. 3. Entities who have eminent domain powers: Fed gov, state gov, municipalities, counties, certain agencies, common carriers, public utilities, and some people if specifically conferred the right from the gov. 4. Standard Eminent Domain Requirements: a. Condemning authority must show it has been delegated the power of eminent domain by legislature b. The delegated power is broad enough to encompass the proposed project c. The exercise of eminent domain is necessary to complete the project d. Proper procedures have been followed for making these various statutory determinations e. Project must be for public use f. Condemning authority must offer just compensation g. Required to give Notice to the Land owner h. Must give landowner the opportunity for a hearing 5. Additional requirements a. Applies to urban renewal or economic development takings: Property must be blighted ii. Public Use Requirement Kelo v. City of New London, Connecticut (2005) 1. **Property cannot be condemned and retransferred to a commercial entity when the sole rationale is economic development. 2. Facts: City counsil of New London, CO granted authority to purchase property via eminent domain to nonprofit org. Plan to build marina, shops, docks, offices, museum to revitalize distressed city. Nonprofit negotiates will all parties, but negotiations fail with nine petitioners who own 15 properties. Landowners sue for injunction saying the taking violates the public use requirement. 3. PP: TC: permanent injunction for those properties in the park area and denied relief for properties in office space area. App: held that all of the proposed takings were valid. USSC: affirm 4. Rules a. Sovereign may not take entitys property solely to transfer it to another entity even though the original owner is paid just compensation i. No purely private takings allowed under the public use requirement. City cant take under the pretext of public purpose when its purpose is to bestow a private gift b. State may transfer property from one private party to another if future use by the public is the purpose of the taking c. Broad Rule: public use= public purpose subject to strong deference of the courts to determine.

Requires 3 elements: that must be proved by clear and convincing evidence a. An admission statement or act inconsistent with the claim asserted afterward; and b. Action by the other party in reasonable reliance on that admission, statement, or act; and c. Injury to that party when the first party is allowed to contradict or repudiate its admission, statement or act 2. Silence can lead to equitable estoppel: where a party knows what is occurring and would be expected to speak, if he wished to protect his interest, his acquiescence manifests in his tacit consent. 3. App: P did not stay silent. He complained to the county and D, D also cant prove they relied on Ps acquiescence Holding: Restrictive covenants in residential neighborhoods are enforceable

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i. Berman v. Parker: Area condemned for redevelopment. Man who owns department store sues for injunction. Agency says the area must be planned as a whole for the plan of redevelopment to be successful and deferred to agency judgment and affirmed eminent domain. ii. Hawaii Housing Authority v. Midkiff: court unanimously upheld Hawaiian statute that takes land from a and gives to B to reduce concentration of land ownership. Explained that the States purpose of eliminating the social and economic evils of a land oligopoly qualified as a valid public use. 1. Only the takings purpose and not the its mechanics matters in determining public use 2. Legislature has broad latitude in determining what public needs justify eminent domain iii. *Public purpose depends on a private partys future use of the concededly non-harmful property that was taken. iv. Concurring Opinion: rational basis review: courts should strike down a taking that by a clear showing is intended to favor a particular private party, with only incidental or pretextual public benefits. d. App: The Citys determination area was sufficiently distressed to justify a program of economic rejuvenation is entitled to the courts deference. Plan also likely will provide appreciable benefits to the community like new jobs and tax revenue. e. Holding: Therefore, the plan unquestionably serves a public purpose, so the takings satisfy the public use th requirement of the 5 amendment. f. Dissent: Public use requirement: Government may compel an individual to forfeit her property for the public use, but not for the benefit of another private person. This requirement promotes fairness and security. g. 3 categories of taking that comply with the public use requirement i. Sovereign may transfer private property to public ownership (i.e. for road, hospital, or military base) ii. The sovereign may transfer private property to private parties, often common carriers, who make the property available for the public use (i.e. railroad, public utility, or stadium) iii. In certain circumstances, takings that serve a public purpose also satisfy the Constitution even it the property is destined for subsequent private use. (Berman and Midkiff) 1. In Berman and Midkiff, the relevant legislative body found that eliminating the existing property use was necessary to remedy the harm. So a public purpose was realized when the harmful use was eliminated. Plus, the taking directly achieved the public benefit. (Incidental benefit, like tax revenue, more jobs, and improve aesthetics, dont constitute public use) 2. App: Kelo and Derys well-kept homes are not the source of any social harm. b. Regulatory Takings (a.k.a. inverse condemnation doctrine): if the government regulates property in an especially severe way, the regulation will be deemed a taking of private property, just as if the government exercised eminent domain, and thus must provide just compensation to the property owner i. Intro 1. When police power goes too far, and may stray into eminent domain, the regulatory takings doctrine applies and forces the government to provide just compensation to the land owner just as if they had taken the property via eminent domain. a. Regulatory Takings adopts a liability rule rather than property rule approach to protecting property 2. Regulatory Takings Doctrine is the most powerful constraint of the government 3. *Government can impose servitudes on property owners without compensation ii. Pennsylvania Coal Co. v. Mahon (1922) Origins of the Regulatory Takings Doctrine 1. Facts: surface owners signed a deed to conveying their mineral rights to the mining company that included a covenant waiving the common-law right of subjacent support (the company must make sure their activities dont cause damage to buildings and land on the surface) 2. Rules: a. 3 factors to consider whether a police regulation goes too far beyond police power and must be regarded as eminent domain (where just compensation must be provided) i. The diminution in value caused by the regulation ii. The need to protect the public against nuisance-like harms iii. Reciprocity of advantage among property owners

If surface owner wants to regulate sub-surface owners rights to ensure that it doesnt harm their surface property (like a house), then the surface owner must provide just compensation to the sub-surface owner for them to keep sufficient supports if they want protection. c. The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. 3. App: Harm to a single house is not common or public, so cannot use eminent domain, if they want to regulate another property owners rights they must provide just compensation. 4. Holding: So far as private persons or communities have seen fit to take the risk of acquiring only surface rights, we cannot see that the fact that their risk has become a danger warrants the giving to them greater rights than they bought. So, they must pay just compensation if they want to prevent property owner from enjoying their property to a certain extent. a. Mining company doesnt need to contribute to a fund to pay compensation to surface owners of mining companies that go bankrupt. Even with this ruling, the company continues to pay subsidence damages to surface owners where they mine. 5. Dissent: the act protects citizens from nuisance and danger so police power should extend to ensure the public is protected from those real dangers. The potentially harmful property owner shouldnt be paid compensation for them to stop using the land in a harmful manner to other property owners. When private citizens invoke the Kohler Act, the government should help them if it is a reasonable harm. c. Penn Central Transportation Co. v. City of New York (1978) 3 new factors to consider for takings i. Facts: Penn Central owns the Terminal which is designated a historical landmark. Penn Central then enters a 50 year lease agreement with UGP who wants to build a high rise on top of the Terminal. As the law requires, they submit the plans to the Commission for approval but are denied twice because they think it would destroy the dramatic view of the building. Penn and UGP did not seek judicial review of the denial and filed suit in NY state court saying it was a "taking." ii. PP: TC: granted injunction and declaratory relief. App: reversed b/c although deprived of the property's most profitable use, they weren't deprived of the property itself. NY Ct of last resort: affirmed, USSC: affirm c. Rules: i. 5th Amendment: nor shall private property be taken for public use without just compensation. ii. USSC defined purpose of 5th Amendment: a guarantee designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole iii. Context: Whether a particular restriction will be rendered invalid by the government's failure to pay for any losses proximately caused by it depends largely "upon the particular circumstances in that case." iv. 3 Factors of particular significance when determining if something is a "taking 1. The economic impact of the regulation on the claimant 2. The extend to which the regulation has interfered with distinct investment backed expectations 3. Character of the governmental action v. Difference between taking and not one: Taking found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. vi. Government may execute laws or programs that adversely affect recognized economic values. i.e. taxing power d. P Claim #1: gov took "air rights" so they are entitled to just compensation i. USSC: No, "Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particulate segment have been entirely abrogated. e. P claim #2: constitutes a taking b/c significant diminished value of the Terminal site. i. USSC: Diminution in property value, standing alone, cannot establish a "taking." 1. i.e. 75% diminution and 87.5% diminution, not considered taking f. P claim #3: a taking b/c Landmarks law more severely hurts certain owners in comparison to others. i. USSC: just because some parties are harmed more than others doesnt mean it is a taking g. P claim #4: this case is like Causby where gov invasion of airspace destroyed the use of the farm beneath. i. USSC: the NY law has not impaired the present use of the Terminal and the law doesnt exploits the parcel for city purposes. Not like Causby at all. h. App: Not a taking. Since the impact isn't that severe. They have not taken their air rights, its just that they can't built 53 floor building, likely can use the space for other things, also the fact that the rights are transferable to 8 other parcels, at least one of which can build new office buildings shows that there was some valuable compensation.

b.

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Holding: Application of NYC's landmark law has not effected a taking of Penn's property. The restrictions imposed are substantially relation to the promotion of the general welfare and not only permit reasonable beneficial use of the landmark site but also afford appellants opportunities further use to enhance not only the Terminal site, but also other properties. j. Dissent by Rehnquist, the Chief Justice, and Stevens: the NY law constitutes a taking. i. Property: Property is the entire group of rights in the person's ownership. Penn central absent the permission of the Commission must forever maintain its property in its present state. ii. Taking: Since deprivation to the owner has occurred, the commission has taken substantial property rights from Penn. iii. 2 examples that Don't constitute a taking 1. A prohibition simply upon the property for purposes that are declared, by valid legislation, to be injurious to the health, morals, or safety of the community, cannot, be deemed a taking. a. Rationale: That legislation doesnt disturb the owner in the control of his property for lawful purposes. b. App: Penn wants to use the land for lawful purposes but is prevented 2. Average reciprocity of advantage: like in zoning where people may be harmed but are in other way benefited. In this case, Penn is harmed by the millions and are getting very little benefit in return iv. Just Compensation: the fifth amendment does not allow simply an approximate compensation but requires a full and perfect equivalent for the property taken. 1. Should remand to determine if transfer Development Rights are "just compensation" as in full and perfect equivalent for the property taken. k. Notes: i. Mahon's three factors to determine if a "taking" exists 1. Diminution in value 2. Whether the measure is designed to regulate a nuisance; AND 3. Reciprocity of advantage. ii. Penn Central's 3 new factors 1. Economic impact of the regulation 2. Its interference with reasonable investment backed expectations 3. Character of the government action: reciprocity of advantage considered iii. Zoning: zoning is not a taking on its face but may constitute a taking if the value of the property becomes near $0 iv. Abrogation: to abolish or take as nonexistent 1. Penn Central Main Point: the government can abrogate an owner's right to destroy property without incurring any taking liability, at least when the financial burden is not too extreme. 2. Abrogation of the right to sell is not a taking 3. Elimination of the right to transmit property upon death will presumptively be regarded as a taking 4. Abrogation of the right to exclude is regarded as particularly serious for takings purposes v. Context is extremely important in each Takings case vi. Scalia: a regulatory taking generally doesn't occur so long as land retains substantial (albeit not its full) value. vii. Commentators find 2 unintended consequences of freezing buildings for historical preservation 1. Persons who own buildings that are potential targets for historic preservation designation may rush to demolish them before they are protected; AND 2. Persons who are contemplating commissioning the construction of new buildings may turn down dramatic or innovation designs out of fear that they will be rewarded with a historic preservation designation. Loretto v. Teleprompter Manhattan CATV Corp. (1982) Permanent physical occupation= taking . Facts: Jean Loretto purchases buildings and discovers the existence of the cable. In 1976, on behalf of all owners of real property in the state on which Teleprompter has placed CATV components. i. Statute: LL may not interfere with the installation of cable television facilities upon his property or premises and may not demand payment from tenants for permitting CATV or demand payment from CATV than is determined to be reasonable. LL may require CATV or tenant to bear the cost of installation and to indemnify for any damage caused by the installation. LL entitled to one-time $1 normal fee. $1 b/c price that the little property would cost if condemned. ii. PP: TC: SJ for teleprompter, App: affirm, Last Resort: Affirm, USSC: reverse iii. Rules: i. Main Rule: A permanent physical occupation authorized by government is a taking without regard to the public interests that it may serve.

ii. 3 factors to consider: (1) economic impact of the regulation, (2) degree of interference with investmentbacked expectations, (3) character of the governmental action iii. A taking may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. iv. When the physical intrusion reaches the extreme form of a permanent physical occupation, a taking has occurred. v. Pumpelly v. Green Bay Co: D's construction of a dam that permanently flooded P's property constituted a taking. 1. Rationale: Where real estate is actually invaded by super induced additions of water, earth, sand, or other material, or by having any artificial structure placed on it, so as to effectually destroy or impair its usefulness, it is a taking within the meaning of the Constitution. vi. Northern Transportation Co v. Chicago: city's construction of a temporary dam in a river to permit construction of a tunnel was not a taking even though the P's were denied access to their premises b/c the obstruction only impaired the sue of the property. vii. Difference between the two cases: In Pumpelly, there was a physical invasion of the real estate of the private owner and a practical ouster of his possession. In Northern, there was no entry made upon the P's lot. viii. US v. Causby: frequent flights immediately above a landowner's property constituted a taking 1. Since the flights were so frequent at such a low altitude that respondents could not use their land for any purpose, their loss was complete. Its the same as if the US gov entered the surface of the land and taken exclusive possession ix. Con: When the character of the government action is a permanent physical occupation of property, out cases uniformly have found a taking to the extent of the occupation without regard to whether the action achieves an important public benefit or has only minimal impact on the owner. x. Determining which test to use: So long as these regulations do not require the LL to suffer the physical occupation of a portion of his building by a third party, they will be analyzed under the multifactor inquiry generally applicable to non-possessory governmental activity. xi. Traditional rule: a permanent physical occupation of property is a taking. xii. 3 factor test used when state imposes restrictions upon an owner's use of his property IV.App: Teleprompter's cable installation on appellant's building constitutes a taking under the traditional test. The installation involved direct physical attachment of plates, boxes, wires, bolts, and screws to the building, completely occupying space immediately above and upon the roof and long the buildings' exterior wall. V.Holding: Reverse. The statute constitutes a taking because it allows a third party to enter people's property to place permanent fixtures on the buildings without permission or any say by the landowner. VI.Dissent by Blackmun, Brennan and White: would affirm. Statute allowing cable box doesn't constitute a taking i. USSC #1: permanent physical occupation is a per se taking b/c it uniquely impairs appellant's powers to dispose of, use, and exclude other from her property 1. Dissent: states traditionally and constitutionally have exercised their police power to require LLs to provide utility connections, mailboxes, smoke detectors, fire extinguishers, and the like in the common area of the building. ii. USSC #2: statue unconstitutionally alters appellant's right to control the use of her one-eight cubic foot of roof space 1. Dissent: If mailboxes are considered ok, then cable boxes should too. iii. USSC #3: statute has deprived appellant of her power to exclude the occupier from possession and use of the space occupied by the cable 0. Dissent: 2 flaws. (1) assumes that tenants dont' have a property interest in that space and (2) suggests gov police law can't take away 1/8 cubic foot of property owner's space that she isn't using. VII. Lucas v. South Carolina Coastal Council (1992) Total loss of economic benefit of property= taking a. Facts: 1986, Lucas purchased two beachfront lots for $975,000. 1988, Beachfront Management Act enacted which prohibited Lucas from building occupiable improvements anywhere on his lots b. PP: TC: yes a taking. When bought no restrictions, after Act, Lucas deprived of any reasonable economic use of the lots and rendered the lots valueless. Ordered gov to pay just compensation in the amount of $1,232,387.50. Supreme Ct of SC: reversed: ruled that when a regulation respecting the use of property is deigned to prevent serious public harm, no compensation is owing under the Takings Clause regardless of the regulation's effect on the property's value. USSC: Reverse, a taking c. Rules: (Scalia w/ majority) i. Rationale for takings doctrine: "while property may be regulated to a certain extent, if regulation goes to far it will be recognized as a taking.

ii. Ct generally engages in ad hoc factual inquiry except for 2 per se instances 1. Loretto: Regulations that compel the property owner to suffer a physical invasion of his property. In general (at least with regard to permanent invasions) no matter how minute the intrusion, and no matter how weighty the public purpose behind it, we can required compensation." 2. Lucas: where there exists categorical treatment appropriate is where regulation denies all economically beneficial or productive use of land. iii. (There are two discrete categories of regulatory deprivations that are compensable under Fifth Amendment without case-specific inquiry into public interest advanced in support of restraint; the first encompasses regulations that compel property owner to suffer physical invasion of his property, and the second concerns situation in which regulation denies all economically beneficial or productive use of land.) iv. Difficult issue to determine when there is enough diminution but don't have to worry about that here because 1. Fee simple gets strong protection at common law 2. TC found that Lucas's land is without value because of the regulation v. When owner of real property has been called upon to sacrifice all economically beneficial use of property in name of common good, that is, to leave his property economically idle, he has suffered a taking within meaning of Fifth Amendment. vi. Where state seeks to sustain regulation that deprives land of all economically beneficial use, it may resist compensation only if logically antecedent inquiry into nature of owner's estate shows that proscribed use interests were not part of his title to begin with. d. App/Holding: Since the South Carolina Beachfront regulation deprives Lucas of all "economically beneficial use" of his property it constitutes a per se taking and the government is liable to him for "just compensation." e. Justice Kennedy Concurring: Nuisance law is to narrow to include regulatory takings f. Justice Blackmun Dissenting: find no clear historical compact or understanding of the citizens justifying the new takings doctrine that the legislature can't deprive a property owner of the only economically valuable use of his land. i. 19th century, state gov often felt free to take property for roads and other public projects w/o paying compensation ii. 1802 citizens were bound to contribute as much of land as by law of the country were deemed necessary for the public convenience iii. Courts have been less likely to find that gov action constitutes a taking when the affected land is undeveloped. g. Justice Stevens Dissent: Court's rule is arbitrary. i. If value diminished by 95% not a taking but 100% a taking but the value of the land isn't zero. Lucas can still use it for fishing, camping or sell to neighbor as a buffer. ii. Criticizes that the majority takes an ex post perspective without considering the ex ante policy issues. iii. Generality of the Beachfront Management act is significant. Act regulates the coast line of the whole state. The act applies to owner who have developed their land who cannot rebuild if their home is destroyed nor can they build storm surge walls and they msut refill the beach with sand. h. Notes: i. 3 categorical per se rules for Takings liability 1. Regulations that permit permanent physical occupations always constitute a taking (Loretto) 2. Regulations that deprive owners of "all economically beneficial or productive use of land" also constitute a taking a. 2 meanings of "economically beneficial" or "productive i. When the land has a fair market value of zero (not the case in Lucas) ii. When the gov has denied eth owner the right to build on or otherwise economically extract value from the land (like in farming) but gov often does this 3. Formal exercise of eminent domain: Rule: when the gov physically takes possession of an interest in property for some public purpose, it has a categorical duty toe compensate the former owner regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof. ii. Temporary deprivation of benefit: regulations that temporarily deprive owners of all economically beneficial use should be assessed under the ad hoc test of Penn Central.