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I.

Fundamental Concepts
A. What is Property?
1. 2. Property is socially contingent: def. varies from culture to culture and, w/in cultures, over time. Theories of Property:
a. Lockes Labor theory
i. ii. Natural law premise: every person owns himself. BECAUSE you own your own labor, when you mix that labor with something unowned by anyone, you own resulting mixture.

b.

Other natural law theories:

i. ii. iii. Pre-political entitlement, something natural and eternally existing. Problem with this view is that conceptions of natural property rights vary greatly. Strength lies in fact that it is a near universal human trait to link possession of an object w/ ownership.

c.

Utilitarian theories:
i. ii. iii. iv. Hume contended that property was nothing more than self-interested acquiescence in social and legal rules. We accept legal proptection for others propert because we desire the same protection for our own. Bentham popularized Humes util. explanation, rooting property in the prot. of expecationa. Both theories rest on unarticulated premise that initial poss. (which is what is being prot.) is legit; Locke explained why this is so, they didnt.

d.

Utility and Efficiency:

i. ii. Economists explain property as efficient response to scarcity. Property internalizes externalities (growing crops).

e.

Custom

3.

Property Doctrine (property is what the court/legal system says it is)

a. b. c. Right to exclusive possession Right to exclusive use Right to dispose or transfer

B.

Ch. 1 First Possession: Acquisition of Property by Discovery, Capture, and Creation 3

1. Property has been justified as:
a. b. c. d. embodiment of ones labor on utilitarian or efficiency grounds by custom by reference to natural law

2.

Possession
a. b. c. d. Physical act v. legal conclusion Possession actual or constructive - of an object gives rise to presumption of ownership. Unowned things become property by 1st poss.: discovery, capture, or creation. Poss. is relative to other ppl.: 1st poss. genly. confers prop. rights super. to later pssessors, unless some other supervening pub. policy dictates contrary. Law governing claims of poss. of found objects (those abandoned, mislaid, or lost) is attempt to mediate between sometimes conflicting policy. Special rules apply to personal prop. because so easily transferable. Transfers of poss. can mean diff. things in diff. context: transfer

e.

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might be bailment, gift, or conveyance, depending on intent and circumstance.

3. 4.

Acquisition by Discovery Acquisition by Capture 18

a. Rule of Capture & WILD ANIMALS:
i. The usual method of acquiring property right in a wild animal is actually to actually possess it dead or alive. But sometimes, (dissent in Post) custom or public policy should contravene.

b.

Rule of Capture & OTHER FUGITIVE RESOURCES

i. Oil & Gas a. b. c. Courts initially applied legal doctrine pertaining to wild animals (because fugitive minerals appear to be similar to wild animals). Underlying issue in these cases is really how best to foster productivity by the efficient exploitation of oil and gas. Competing rules: i. ii. Barnard: underground reservoir of oil open to all drillers Union Gas & Oil: overexplotation of the unowned resource might be susceptible to an injunction recognizing tragedy of the commons: tendency to over-explot a common resource because full costs of the exploitation are not borne by each user Because fugitive resources are to be treated like wild animals, when they escape or are restored to their natural wild and free state, the dominion and individual proprietor ship of any person over them is at an end and they resume their status as common property. Hammonds at 206. a. But, inhibits efficiencies of storage of gas in natural underground reservoirs, because injected gas will then be open for capture by anyone who cares to drill into the reservoir.

iii.

ii.

Water a. English rule (adopted by some states): absolute ownership: each landowner over an aquifer allowed to withdraw freely w/o regard to effects on neighbors i. See Rest. 2d Torts ch. 41: Interference with the Use of Water (Riparian Rights). a. Although framed in property language, the rule was in reality a rule of capture, for a landowner's pump could induce water under the land of his neighbor to flow to his wellwater that was in theory the neighbor's property while it remained in place. An overlying landowner might sell water or grant his right to withdraw the water to another person, as he might with any other property. Intro Note Eastern states still follow some variant of riparian rights regarding surface water each owner of land along a water source (riparian land) has a right to use the water Riparian rights take little or not acct. of relative productivity of land water services, encourageing development of uneconomical bowling alley parcels of land perpendicular to the banks of a stream, and ration poorly when stream levels are low.

b.

c.

b.

Most other states follow American rule of reasonable use i. rule of capture w/ slight addition that wasteful uses of water, if they actually harmed neighbors, were considered unreasonable and hence unlawful like English rule, no rule of apportionment among overlying users now governed by legislative/administrative actions

ii. iii. c.

Western states i. ii. surface waters and some groundwater allocated according to explicit rule of first in time PRIOR APPROPRIATION person who first appropriates water and puts it to reasonable and beneficial use has a right superior to later appropriators

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Document1 5/2/2012 encourages premature development and excessive diversion rations poorly when supplies dwindle

Consequences of analogies of rule of capture between wild animals and resources Common property and the rule of capture p.52

5.

Externalities 46
a. b. Costs that are produced by an activity but not borne by the person reaping the benefits of the activity. Exist whenever some person makes a decision about how to use resources w/o taking full account of the effectssome of the costs or benefits that would result from a particular activity, for example because they fall on others. Resources tend to be misused/misallocated as a result. Transaction costs can worsen impact of externalities i.e. if a group offer is reqd. to alter land use, transaction costs may be sufficiently high to ensure offer doesnt occur.
i. When transaction costs become sufficiently high, the external effects of using resources are unlikely to be taken into account through any sort of bargaining process, and the resources are likely to be misused.

c. d.

e. f. g. h.

Freerider effect let the group make the payment to alter the other guys land use, but dont pay into the group Externalities are, in essence, a function of tx costs, and they encourage the misuse (the inefficient use) of resources. Pollution and the tragedy of the commons Tragedy of the Anti-commons

6.

Acquisition by Creation 56
a. Property in Ones Person p. 70
i. Property Rights: The Right to Include, The Right to Exclude a. b. c. d. Right to include and right to exclude, taken together, are necessary and sufficient conditions of fundamental right of transferability. Law of trespass protects right to exclude. Law of conversion protects right to exclude. But, right to exclude is not absolute (Wis. Sup. Ct. held that person has right to exclusive enjoyment of his own land for any purpose which does not invade the rights of another person; however, N.J. Sup. Ct. held that a landowners rights to exclude ended where migrant workers need for reasonable access by visitors began held that rights are relative.

b.

Property in Ones Ideas and Expressions: General Principles of Intellectual Property

i. Exclusivity a. Problem of imitation i. ii. Degree of exclusivity property owner has in exploiting intangible right. Law of misappropriation branch of unfair competition law that protects new ideas tries to answer question of when imitation is permissible and when it is not because it will destroy incentive to create.

ii.

1918, SCOTUS held that was misappropriation for INS to copy APs news and release it before AP could (substance and form of news); later courts have held that skilled imitation of Chanel No. 5 and seasonal fabric designs not misappropriation. Conflict between inefficiencies produced by a monopoly over creation (higher prices, less accessibility to a desired good) and both the sense of unfairness of allowing copycats to reap what they havent sown and the fear that, w/o protection, creators wont create.

iii.

c.

Property in Ones Persona

i. White v. Samsung Electronics America, Inc., 989 F.2d 1512 (9th Cir. 1992). 66 a. PROCEDURAL POSTURE: Plaintiff entertainer appealed from an order of the United States District Court for the Central District of California, granting summary judgment to defendant advertising agency in

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Document1 5/2/2012 plaintiff's action alleging infringement of various intellectual property rights under state and federal law. b. OVERVIEW: Defendant advertising agency prepared a series of advertisements for defendant electronic company. One particular ad depicted a robot dressed in a wig, gown and jewelry, selected to resemble plaintiff's hair and dress. Unlike the other celebrities used in the advertising campaign, plaintiff neither consented to nor was paid for the ads. Plaintiff commenced an action against defendants alleging infringement of various intellectual property rights under state and federal law. Plaintiff appealed the district court's grant of summary judgment in favor of defendants. The court affirmed the grant of summary judgment on the right of privacy claim, but reversed the judgment on the right to publicity and the Lanham Act claims. The court held that for the advertising to be effective, it must evoke the celebrity's identity. Defendants attempted to elevate its ad above the status of garden-variety commercial speech by pointing to the ad's parody of plaintiff. Defendants' argument was unavailing. Unless the first amendment barred all right of publicity actions - and it did not, then it did not bar the case. The court reasoned that plaintiff pleaded claims sufficient to go to a jury. OUTCOME: The court affirmed the grant of summary judgment on plaintiff's right of privacy claim, but reversed the judgment on the right to publicity and the Lanham Act claims because plaintiff pleaded claims sufficient to go to a jury. The term "likeness" in Cal. Civ. Code 3344(a) refers to a visual image not a vocal imitation. The common law right of publicity cause of action may be pleaded by alleging (1) the defendant's use of the plaintiff's identity; (2) the appropriation of plaintiff's name or likeness to defendant's advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury The right of publicity is not limited to the appropriation of name or likeness The specific means of appropriation are relevant only for determining whether the defendant has in fact appropriated the plaintiff's identity. The right of publicity does not require that appropriations of identity be accomplished through particular means to be actionable To prevail on a claim under the Lanham Act, 15 U.S.C.S. 1125(a), the plaintiff is required to show that the representation created a likelihood of confusion Factors relevant to a likelihood of confusion include: (1) strength of the plaintiff's mark; (2) relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) likely degree of purchaser care; (7) defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines. In cases involving confusion over endorsement by a celebrity plaintiff, "mark" means the celebrity's persona. The "strength" of the mark refers to the level of recognition the celebrity enjoys among members of society. In a trademark infringement action alleging likelihood of confusion, in determining defendant's intent, the relevant question is whether the defendant intended to profit by confusing consumers.

c.

d. e.

f. g. h. i.

j.

k. l. m.

C.

Ch. 2: Subsequent Possession: Acquisition of Property by Find, Adverse Possession, and Gift 97
1. Acquisition by Adverse Possession 116
a. The Theory and Elements of Adverse Possession
i. ii. iii. iv. v. vi. Powell on Real Property 91.01 Henry W. Ballantine, Title by Ad verse Possession Oliver Wendell Holmes, The Path of the Law Van Valkenburgh v. Lutz, 106 N.E.2d 28 (1952). 122 Note: Color of Title and Constructive Adverse Possession Ala. Code 6-5-200. When title to land conferred or defeated; when claim may be defended or prosecuted; construction of section.: a. Adverse possession cannot confer or defeat title to land unless: i. The party setting it up shall show that a deed or other color of title purporting to convey title to him has been duly recorded in the office of the judge of probate of the county in which the land lies for 10 years before the commencement of the action;

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Document1 5/2/2012 He and those through whom he claims shall have annually listed the land for taxation in the proper county for 10 years prior to the commencement of the action if the land is subject to taxation; or He derives title by descent cast or devise from a predecessor in the title who was in possession of the land.

iii. b.

If the period during which the party's deed or color of title has been on record, added to the time during which the deeds or color of title of those through whom he claims have been on record, amounts to 10 years, he may defend or prosecute on his adverse possession, and an inadvertent failure to list the land for taxation, any unintentional mistake in the description of the assessment or unintentional omission of any part of it from the assessment during the period of 10 years shall not bar the party of his action or defense on his adverse possession. This section shall not be construed to affect in any way a title perfect by adverse possession before the adoption of this Code, nor to deprive any person of his rights under Sections 6-6-286 through 6-6-289, nor to affect cases involving a question as to boundaries between coterminous owners.

c.

vii. viii. ix. x. xi. xii. xiii.

ADVERSE POSSESSION PROBLEMS p. 135 Mannillo v. Gorski, 255 A.2d 258 (N.J. 1969). p. 136 More problems, p. 140 Howard v. Kunto, 477 P.2d 210 (Wash. Ct. App. 1970). p. 142 Kunto question p. 147 Problems: Tacking p. 148 Problems: Disabilities p. 149 a. Disability provision, e.g.: An action to recover the title to or possession of real property shall be brought within 21 years after the cause thereof accrued, but if a person entitled to bring such action, at the time the cause thereof accrues, is within the age of minority, of unsound mind, or imprisoned, such person (or anyone claiming from, by, or under such person) after the expiration of 21 years from the time the cause of action accrues, may bring such action within 10 years after such disability is removed.

xiv.

Note: Adverse Possession Against the Government p. 150

II.

The System of Estates (Leaseholds Aside) 183

1. 2. 3.

Estates in Land and Future Interests

Present Possessory Estate Fee Simple Absolute Estate for Years Life Estate Fee Simple Determinable Fee Simple on Executory Limitation Fee Simple on Condition Subsequent Fee Simple on Executory Limitation Future Interest (none) Reversion (landlord) Remainder (3d party) Reversion (grantor) Remainder (3d party) Possibility of Reverter (grantor) Executory Interest (3d party) Right of Entry/ Power of Termination (grantor) Executory Interest (3d party)

Automatic Termination

expiring lang. divesting lang.

4. 5. 6. 7.

A.

Benjamin N. Cardozo, The Nature of the Judicial Process 184 Ch. 3: Possessory Estates 185
1. Up from Feudalism 185
a. Tenure
i. King Tenant in chief Mesne lord (intermediate) Tenant in demesne (had possessory use of the land seisin)

b. c. d. e.

Feudal Tenures and Services Feudal Incidents Avoidance of feudal incidents The Decline of Feudalism

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Document1 5/2/2012 NOTE on currently existing feudal services reserved by a grantor prior to Revolution.

2.

The Fee Simple 191

a. How the Fee Simple Developed
i. ii. iii. Rise of Heritability Rise of Alienability Rise of the Fee Simple Estate

b. c. d.

Creation of a Fee Simple Fee Simple PROBLEMS p. 194 Inheritance of a Fee Simple
i. ii. iii. iv. v. Heirs Issue Ancestors Collaterals Escheat

e.

NOTES AND PROBLEMS p. 196

3.

The Fee Tail 198

a. Abolition of the Fee Tail p. 200
i. ii. Rest. 3d Property 24.4 Today, Fee Tail possible in: Del., Me., Mass., R.I.

4.

The Life Estate 202

a. b. c. d. e. f. White v. Brown, 559 S.W.2d 938 (Tenn. 1977). p. 202 (Jessie Lide) NOTE: Valuation of Life Estate and Remainder Baker v. Weedon, 262 So. 2d 641 (Miss. 1972). (trophy wife gets everything) The law of waste p. 217 Woodrick v. Wood, LEXIS 2258, 1994 WL 236287 (Ohio Ct. App. 1994). p. 218 NOTE: Seisin

5. 6.

Leasehold Estates 222 Defeasible Estates 222

a. b. c. d. e. Mahrenholz v. Cnty. Bd. Of Sch. Trs., 417 N.E.2d 138 (Ill. App. Ct. 1981). p. 226 PROBLEMS p. 232 Tad Walch,, Maeser School Crisis Over Mountain Brow Lodge No. 82, Indep. Order of Odd Fellows v. Toscano, 64 Cal. Rptr. 816 (Cal. Ct. App. 1967). p. 236 NOTE: Defeasible Life Estates and Personal Conduct Restraints

B.

Ch. 4: Future Interests 253

1. Introduction 253
a. Interests retained by the transferor:
i. ii. iii. Reversion Possibility of reverter Right of entry (power of termination)

b.

Interests created in a transferee:

i. ii. iii. Vested remainder Contingent remainder Executory interest

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a. b. c.

Reversion Possibility of Reverter Right of Entry

3.

Future Interests in Transferees 258

a. b. c. d. Introduction Remainders PROBLEMS Executory interests:
i. ii. iii. iv. v. future interest in a transferee that must, in order to become possessory: Divest or cut short some interest in another transferee (this is known as a shifting executory interest) or Divest the transferor in the future (springing executory interest) 2 Prohibitory Rules: No Shifting Interests; No Springing Interests The Rise of Use Abolition of the Use: The Statute of Uses Modern Executory Interests

4. 5.

The Trust 273 Rules Furthering Marketability by Destroying Contingent Future Remainders p. 280
a. The Rule Against Perpetuities
i. The Common Law Rule Against Perpetuities a. b. c. Mechanics of the Rule Class Gifts Future interests in Trasnferors; Executory Interests Following Defeasible Fees; and Options i. ii. The Symphony Space, Inc. v. Pergola Props., Inc., 669 N.E.2d 799 (N.Y. 1996). p. 292

The Perpetuity Reform Movement a. b. Early Reforms The Uniform Statutory Rule Against Perpetuities

C.

Ch. 5: Co-Ownership and Marital Interests: Common Law Concurrent Interests 319
1. Types, Characteristics, Creation 319
a. The Four Unities
i. Time: a. ii. Title: a. iii. req. that all joint tenants must acquire their interests under the same instrument. req. that all joint tenants' interests must vest at the same time.

Interest: a. req. that all joint tenants' interests must be identical in nature, extent, and duration.

iv.

Possession: a. req. that each joint tenant must be entitled to possession of the whole property.

b.

Types of Concurrent Interest

i. ii. iii. iv. v. TENANTS IN COMMON JOINT TENANTS TENANCY BY THE ENTIRETY (COPARCENY) (TENANCY IN PARTNERSHIP)

c.

Presumptions

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d.

Avoidance of Probate

2.

Severance of Joint Tenancies p. 324

a. Riddle v. Harmon, 162 Cal. Rptr. 530 (Cal. Ct. App. 1980). p. 324
i. Super. Ct. entered SJ quieting title to husband, and exx of wife's will appealed. Ct. App. held that one joint tenant may unilaterally sever joint tenancy w/o use of intermediary device, and thus wife unilaterally terminated joint tenancy by conveying her interest from herself as joint tenant to herself as tenant in common. Severance of joint tenancy extinguishes principal feature of that estate, right of survivorship, and this right is a mere expectancy that arises only upon success in ultimate gamble, survival, and then only if unity of estate has not been destroyed by voluntary conveyance, by partition proceedings, by involuntary alienation under execution, or by any other action which operates to sever joint tenancy. An indisputable right of each joint tenant is power to convey his or her separate estate by way of gift or otherwise w/o knowledge or consent of other joint tenant and to thereby terminate joint tenancy. If a joint tenant conveys to a stranger and that person reconveys to same tenant, then no revival of joint tenancy occurs because unities are destroyed, and former joint tenants become tenants in common.

ii.

iii.

iv.

b.

Harms v. Sprague, 473 N.E.2d 930 (Ill. 1984). p. 330

i. Surviving joint tenant brought action to determine title and ownership to property. Cir. Ct., entered judgment in favor of deceased joint tenant's mortgagees and deceased joint tenant's beneficiary, and surviving joint tenant appealed. App. Ct. revd, beneficiary filed a pet. for leave to appeal, and mortgagees petitioned to supp. the pet. for leave to appeal. Sup. Ct. held that: (1) mortg. given by one joint tenant of his interest in the property did not sever joint tenancy; (2) the mortg. did not survive as a lien on surviving joint tenant's property; and (3) surviving tenant's right of survivorship became operative upon death of joint tenant who had given mortg. and, as such, surviving tenant became sole owner of estate in its entirety.

3. 4.

Multiple-party bank accounts 335 Relations among concurrent owners 337

a. Partition
i. ii. iii. The act of dividing; esp., the division of real property held jointly or in common by two or more persons into individually owned interests. The privilege of each co-owner to transform a concurrent estate into estates held in severalty. Delfino v. Vealencis, 436 A.2d 27 (Conn. 1980). p. 338 a. Appeal was taken from a judgment of the Super. Ct. ordering partition by sale of land owned by parties as tenants in common. Sup. Ct. held that trial ct. erred in ordering the partition by sale to accommodate residential dev. of the land, where the land consisted of one parcel, basically rectangular in shape, and, thus, partition in kind was practicable, and where partition by sale would have forced tenant to surrender her home and perhaps jeopardize her livelihood, even though her operation of rubbish and garbage removal service on a portion of the land might reduce fair market value of the proposed residential lots. Partition by sale of property owned by tenants in common may be ordered only when the physical attributes of the land are such that a partition in kind is impractical or inequitable and the interest of the owners would be better promoted by a partition by sale. Physical partition of parcel of land was practicable, where parcel was basically rectangular in shape and there were only two competing ownership interests. In action seeking partition by sale of parcel of land owned by tenants in common, there was no substantial evidence to support trial court's conclusion that it was reasonably probable that planning commission would not approve subdivision permit for undeveloped portion of parties' property if partition in kind were granted.

b.

c.

d.

b.

Sharing the Benefits and Burdens of Co-ownership

i. Spiller v. Mackereth, 334 So. 2d 859 (Ala. 1976). p. 348 a. Cotenant filed complaint seeking sale for division among tenants in common. Cotenants counterclaimed for an accounting for s alleged ouster. By agreement of the parties, Cir. Ct., Tuscaloosa Cnty., entered decree ordering the sale of the property and after trial, awarded $2,100 in rental on the countercl. and $3,000 in atty's fees to the cotenants' atty. Appeal was taken, and the Sup. Ct. held that a

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Document1 5/2/2012 letter which demanded that either vacate half of the bldg. or pay rent was not sufficient to establish s liability to his cotenant for rent; that absent evidence that intended to excl. his cotenants, that placed locks on the building was insufficient to establish his liability to pay rent; and that where s atty performed services which inured to the benefit of the common fund resulting from the partition sale, an award of $3,000 in atty's fees was not an abuse of discretion. b. Absent an agreement to pay rent or an ouster of a cotenant, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. Ouster is a conclusory word used to describe the beginning of the running of the statute of limitations for adverse possession and the liability of an occupying cotenant to other cotenants for rent. Essence of the finding of an ouster in adverse possession cases is a claim of absolute ownership and a denial of the cotenancy relationship by the occupying cotenant. For purpose of determining whether an ouster occurred which would render cotenant liable to pay rent to his cotenant, where cotenant who allegedly committed ouster acknowledged cotenancy relationship, rule pertaining to ouster in adverse possession cases was not applicable.

c.

d.

e.

ii.

NOTES: ACCOUNTING FOR BENEFITS, RECOVERING COSTS p. 356 a. Rents and profits i. In all states, a cotenant who collects from 3d parties rents and other pmts. arising from the co-owned land must acct. to cotenants for the amts. recd, net of expenses. Absent ouster, however, the acctg. is usually based only on actual receipts, not fair mkt. value.

b.

Taxes, mortg. pmts, and other carrying charges i. A cotenant paying more than his share of taxes, mortg. pmts., and other necessary carrying charges generally has a right to contribution from the other cotenants, at least up to the amt. of the value of their share in the property. However, if theyve been in sole possession, taking all value and enjoyment, no contribution is due, but the qualification isnt uniformly applied.

ii.

III. Leaseholds: The Law of Landlord and Tenant 419

A. Ch. 6: Tradition, Tension, and Change in Landlord-Tenant Law 421
1. The Leasehold Estates 421
a. The Term of Years
i. Estate that lasts for some fixed period of time or for a period computable by a formula that results in fixing calendar dates for beginning and ending, once the term is created or becomes possessory. At common law there was no limit on the number of years permitted, but in some Amer. state statutes limit the duration. Term must be for a fixed period, but can be terminable earlier upon the happening of some event or condition. Because term of years states from the outset when it will terminate, no notice of termination is necessary to bring the estate to an end.

ii. iii. iv.

b.

The Periodic Tenancy

i. ii. iii. iv. Lease for a period of some fixed duration that cont. for succeeding periods until either the landlord or tenant gives notice of termination. Tenancy that automatically continues for successive periods usu. month to month or year to year unless terminated at the end of a period by notice. Typical example is a month-to-month apartment lease. This type of tenancy originated through court rulings that, when the lessor received a periodic rent, the lease could not be terminated without reasonable notice.

c. d.

The Tenancy at Will

i. Garner v. Gerrish, 473 N.E. 2d 223 (N.Y. 1984). p. 423

The Tenancy at Sufferance: Holdovers

2.

The Lease 428

a. b. Conveyance v. Contract Statute of Frauds

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c.

Form leases and the question of bargaining power

3.

Selection of Tenants (Herein of Unlawful Discrimination) 431

a. Fair Housing Act of 1968 and later amendments
i. 42 U.S.C.A. 3603: Effective dates of certain prohibitions a. (b) Exemptions i. ii. Nothing in section 3604 of this title (other than subsection (c)) shall apply to-(1) any single-family house sold or rented by an owner: Provided, That such private individual owner does not own more than three such single-family houses at any one time: Provided further, That in the case of the sale of any such single-family house by a private individual owner not residing in such house at the time of such sale or who was not the most recent resident of such house prior to such sale, the exemption granted by this subsection shall apply only with respect to one such sale within any twenty-four month period: Provided further, That such bona fide private individual owner does not own any interest in, nor is there owned or reserved on his behalf, under any express or voluntary agreement, title to or any right to all or a portion of the proceeds from the sale or rental of, more than three such single-family houses at any one time: Provided further, That after December 31, 1969, the sale or rental of any such single-family house shall be excepted from the application of this subchapter only if such house is sold or rented a. (A) without the use in any manner of the sales or rental facilities or the sales or rental services of any real estate broker, agent, or salesman, or of such facilities or services of any person in the business of selling or renting dwellings, or of any employee or agent of any such broker, agent, salesman, or person and (B) without the publication, posting or mailing, after notice, of any advertisement or written notice in violation of section 3604(c) of this title; but nothing in this proviso shall prohibit the use of attorneys, escrow agents, abstractors, title companies, and other such professional assistance as necessary to perfect or transfer the title, or

b.

iii.

(2) rooms or units in dwellings containing living quarters occupied or intended to be occupied by no more than four families living independently of each other, if the owner actually maintains and occupies one of such living quarters as his residence.

ii.

42 U.S.C.A. 3604: Discrimination in the sale or rental of housing and other prohibited practices a. As made applicable by section 3603 of this title and except as exempted by sections 3603(b) and 3607 of this title, it shall be unlawful-(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin. (b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin. (c) To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination. (d) To represent to any person because of race, color, religion, sex, handicap, familial status, or national origin that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available. (e) For profit, to induce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, handicap, familial status, or national origin.

b.

c.

d.

e.

f.

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Document1 5/2/2012 (f)(1) To discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap of-i. ii. iii. iv. (A) that buyer or renter,1 (B) a person residing in or intending to reside in that dwelling after it is so sold, rented, or made available; or (C) any person associated with that buyer or renter. (2) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap of-a. b. (A) that person; or (B) a person residing in or intending to reside in that dwelling after it is so sold, rented, or made available; or (C) any person associated with that person.

c. v.

(3) For purposes of this subsection, discrimination includes-a. (A) a refusal to permit, at the expense of the handicapped person, reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises except that, in the case of a rental, the landlord may where it is reasonable to do so condition permission for a modification on the renter agreeing to restore the interior of the premises to the condition that existed before the modification, reasonable wear and tear excepted.2 (B) a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling; or (C) in connection with the design and construction of covered multifamily dwellings for first occupancy after the date that is 30 months after September 13, 1988, a failure to design and construct those dwellings in such a manner that-i. (i) the public use and common use portions of such dwellings are readily accessible to and usable by handicapped persons; (ii) all the doors designed to allow passage into and within all premises within such dwellings are sufficiently wide to allow passage by handicapped persons in wheelchairs; and (iii) all premises within such dwellings contain the following features of adaptive design: an accessible route into and through the dwelling; light switches, electrical outlets, thermostats, and other environmental controls in accessible locations; reinforcements in bathroom walls to allow later installation of grab bars; and

b.

c.

ii.

iii.

han individual in a wheelchair can

maneuver about the space. h. (4) Compliance with the appropriate requirements of the American National Standard for buildings and facilities providing accessibility and usability for physically handicapped people (commonly cited as ANSI A117.1) suffices to satisfy the requirements of paragraph (3)(C)(iii). (5)(A) If a State or unit of general local government has incorporated into its laws the requirements set forth in paragraph (3)(C), compliance with such laws shall be deemed to satisfy the requirements of that paragraph. i. (B) A State or unit of general local government may review and approve newly constructed covered multifamily dwellings for the purpose of making determinations as to whether the design and construction requirements of paragraph (3)(C) are met. (C) The Secretary shall encourage, but may not require, States and units of local government to include in their existing procedures for the review and approval of newly constructed

i.

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Document1 5/2/2012 covered multifamily dwellings, determinations as to whether the design and construction of such dwellings are consistent with paragraph (3)(C), and shall provide technical assistance to States and units of local government and other persons to implement the requirements of paragraph (3)(C). iii. (D) Nothing in this subchapter shall be construed to require the Secretary to review or approve the plans, designs or construction of all covered multifamily dwellings, to determine whether the design and construction of such dwellings are consistent with the requirements of paragraph 3(C).

j.

(6)(A) Nothing in paragraph (5) shall be construed to affect the authority and responsibility of the Secretary or a State or local public agency certified pursuant to section 3610(f)(3) of this title to receive and process complaints or otherwise engage in enforcement activities under this subchapter. i. (B) Determinations by a State or a unit of general local government under paragraphs (5)(A) and (B) shall not be conclusive in enforcement proceedings under this subchapter.

k.

(7) As used in this subsection, the term covered multifamily dwellings means-i. ii. (A) buildings consisting of 4 or more units if such buildings have one or more elevators; and (B) ground floor units in other buildings consisting of 4 or more units.

l.

(8) Nothing in this subchapter shall be construed to invalidate or limit any law of a State or political subdivision of a State, or other jurisdiction in which this subchapter shall be effective, that requires dwellings to be designed and constructed in a manner that affords handicapped persons greater access than is required by this subchapter. (9) Nothing in this subsection requires that a dwelling be made available to an individual whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others.

m.

4.

Delivery of Possession 438

a. Hannan v. Dusch, 153 S.E. 824 (Va. 1930). p. 438

5.

Subleases and Assignments 442

a. b. Ernst v. Conditt, 390 S.W.2d 703 (Tenn. Ct. App. 1964). p. 442 Kendall v. Ernest Pestana, Inc., 709 P.2d 837 (Cal. 1985). p. 450
i. OVERVIEW: City of San Jose leased space to 2 people who assigned their interest to respondent. Prior to the assignment they subleased the space. The person subleasing sold his business to appellants, who agreed to be bound by the lease. The lease provided that written consent of the lessor was required before the lessee could assign his interest. Thus, the person subleasing requested consent from respondent, who refused. The proposed assignees, appellants, brought suit for injunctive relief and sought a declaration that the refusal to consent was unreasonable and an unlawful restraint on alienation. The trial court sustained a demurrer to the complaint and appeal followed. On appeal, the court reversed, finding that where the commercial lease provided for assignment only with the prior consent of the lessor, the consent could be withheld only where the lessor had a commercially reasonable objection to the assignee or the proposed use. Difference between assignment and sublease is that assignment transfers lessee's entire interest in property whereas sublease transfers only portion of that interest, with original lessee retaining right of reentry at some point during unexpired term of lease period. Free alienability of property is generally favored and leasehold interest is freely alienable. Contractual restrictions on alienability of leasehold interests are permitted, but restraints on alienation of leasehold interests are strictly construed against lessor. Rule of strict construction of restraints on alienation of leasehold interests is particularly true where restraint in question is forfeiture restraint, under which lessor has option to terminate lease if assignment is made without his or her consent. West's Ann.Cal.Civ.Code 1442. Where commercial lease provides for assignment or sublease only with prior consent of lessor, such consent may be withheld only when lessor has good faith reasonable objection to it, even in absence of provision in lease stating that consent will not be unreasonably withheld.

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vi.

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a.

The Tenant in Possession

i. ii. iii. Berg v. Wiley, 264 N.W.2d 145 (Minn. 1978). p. 460 NOTES: Summary ProceedingsPurpose and Problems NOTE: Landlords Remedies in Addition to Eviction

b.

The Tenant Who Has Abandoned Possession

i. Sommer v. Kridel, 378 A.2d 767 (N.J. 1977). p. 469 a. Actions brought by landlords seeking to recover unpaid rent. In one action, the Super. Ct. affirmed trial court's grant of SJ against the tenant. In the other case, App. Div. revd trial court ruling in favor of the tenant. Certification was granted, and the Sup. Ct., held that landlord seeking damages from defaulting tenant is under duty to mitigate damages by making reasonable efforts to relet the apt. wrongfully vacated by the tenant. Distinction between a lease for ordinary residential purposes and an ordinary contract is no longer a viable distinction Antiquated real property concepts which served as basis for traditional rule that landlord is under no duty to mitigate damages caused by defaulting tenant are no longer controlling where there is a claim for damages under a residential lease; such claims must be governed by more modern notions of fairness and equity and landlord's duty to mitigate requires that he treat the apartment abandoned by the defaulting tenant as if it were one of his vacant stock. In assessing whether a landlord who seeks to recover damages from a defaulting tenant has satisfactorily carried his burden of proving that he used reasonable diligence to relet the premises, trial court must consider factors including whether the landlord personally or through an agency offered or showed the apartment to any prospective tenants or advertised it in local newspapers; additionally, tenant may attempt to rebut such evidence by showing that he proffered suitable tenants who were rejected; however, there is no standard formula for measuring whether the landlord utilized satisfactory efforts in attempting to mitigate damages and each case must be judged on its own facts.

b. c.

d.

ii.

NOTES: Landlords Remedies and Security Devices p. 479 a. Rent & damages i. Doctrine of anticipatory breach: A breach of contract caused by party's anticipatory repudiation, i.e., unequivocally indicating that the party will not perform when performance is due. Under these circumstances, the nonbreaching party may elect to treat the repudiation as an immediate breach and sue for damages.

b.

Security devices i. ii. iii. Security deposits Other techniques Rent accelerations (accepted by majority of courts)

7.

Duties, Rights, and Remedies (Especially Regarding the Condition of the Leased Premises) 482
a. Landlords Duties; Tenants Rights and Remedies
i. Quiet Enjoyment and Constructive Eviction a. Reste Realty Corp. v. Cooper, 251 A.2d 268 (N.J. 1969). p. 483 i. Suit by lessor against lessee to recover rent allegedly due under written lease. Trial court sustained lessee's defense of constr. eviction and entered judgment for the lessee, and the lessor appealed. App. Div. revd, and the lessee's pet. for certification was granted. Sup. Ct., held that evidence supported that lessee of commercial office space, who complained about flooding from rainwater, hoped for relief from landlord, and tried to take care of water problem that accompanied recurring rainstorms, and who, when relief did not come and final blow put five inches of water in leased offices on day set for important meeting, gave notice of vacation to landlord, was not guilty of delay sufficient to estb. waiver of constr. eviction. If condition of driveway adjacent to ofc. bldg.. permitting rainwater to flood ground floor of bldg. leased for ofcs. was known to lessor, lessor had duty to disclose such condition to prospective lessees. Latent defects, that is, those the existence and significance of which are not reasonably apparent to ordinary prospective

ii.

iii.

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Document1 5/2/2012 tenant, were not assumed by lessee of portion of ground floor of ofc. Bldg.. who vacated premises as result of repeated flooding of leased area caused by rainwater which entered leased area after running off adj. driveway. iv. Demands of fair treatment for tenants with respect to latent defects remediable by landlord, either w/in demised premises or outside demised premises, require imposition on landlord of implied warranty against such defects. Ordinarily, tenant's knowing acceptance of defective leasehold precludes reliance upon any implied warranties. Where there is covenant of quiet enjoyment in lease, either express or implied, and it is breached subst. by landlord, doctrine of constr. eviction is applied as remedy for tenant, and under such rule, any act or omission of landlord or of anyone who acts under authority or legal right from landlord, or of someone having sup. title to that of landlord, which renders premises subst. unsuitable for purpose for which they are leased, or which seriously interferes with beneficial enjoyment of premises, is breach of covenant of quiet enjoyment and constitutes constr. eviction of tenant. Tenant's right to vacate leased premises is the same from doctrinal standpoint, whether treated as stemming from breach of covenant of quiet enjoyment or from breach of any other dep. covenant, and both breaches constitute failure of consideration Generally, tenant's right to claim constr. eviction will be lost if he doesnt vacate premises w/in reasonable time after right comes into existence.

v. vi.

vii.

viii.

b.

NOTE: The Illegal Lease p. 492 i. Brown v. Southall Realty Co., 237 A.2d 834 (D.C. App. 1968) a. Action by landlord for possession for nonpayment of rent. D.C. Ct. Gen. Sess. entered judgment in favor of landlord and tenant appealed. Ct. App. held that where landlord, at time he entered into lease, knew of violations of D.C. Housing Code and that violations were of such nature to make the habitation unsafe and unsanitary in violation of regs. forbidding renting of any habitation unless it is clean, safe and in sanitary condition and regulation requiring that every habitation shall be maintained and kept in repair, lease was void, and, contrary to determination of trial court, no rent was owed by tenant. Landlord and Tenant: Although tenant had moved from premises and did not wish to be returned to possession, appeal from adverse judgment in landlord's action for possession for nonpayment of rent would be considered in view of fact that judgment of court below would render determinations as to validity of lease and rent due res judicata in any subsequent suit for rent. In series of subsequent decisions, ct. said illegal lease doctrine doesnt apply if code violations develop after making lease. Minor technical violations nor violations which landlord had no actual or constructive notice also dont apply. Benefit of illegal lease to tenant is leverage.

b.

c.

d. e.

IV.

Transfers of Land 517

A. Ch. 7 The Land Transaction 519
1. Brokers 529
a. Notes and a Problem on Real Estate Brokers
i. ii. Brokers duties in the trad. brokerage arrangement Alternatives and supplements to traditional brokerage arrangements a. b. c. iii. iv. v. Buyers brokers Dual agents Disclosure requirements

MLS, price fixing, and antitrust issues The economics of real estate brokerage Types of listings

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Document1 Open listing Exclusive agency listing Exclusive-right-to-sell listing

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Unauthorized practice of law When a commission is due

2.

The Contract of Sale 533

a. Marketable Title
i. ii. Lohmeyer v. Bower, 227 P.2d 102 (Kan. 1951). p. 548 NOTE: Equitable Conversion

b.

The Duty to Disclose Defects

i. ii. iii. iv. Stambovsky v. Ackley, 372 N.Y.S.2d 672 (N.Y. App. Div. 1991). p. 553 Johnson v. Davis, 480 So. 2d 625 (Fla. 1985). Brokers duty to disclose NOTE: Merger

3.

The Deed 581

a. Warranties of Title
i. General Warranty Deed p. 586 a. Express warranties contained therein: i. ii. iii. iv. v. vi. ii. Covenant of seisin: grantor warrants that he owns the estate that he purports to convey Covenant of right to convey Covenant against encumbrances Covenant of general warranty Covenant of quiet enjoyment Covenant of further assurances

NOTES AND QUESTIONS: The Deed p. 587 a. b. c. d. e. Consideration Description of Tract Seal Forgery and fraud Indenture and deed poll p. 591

iii. iv.

Brown v. Lober, 389 N.E.2d 1188 (Ill. 1979).

Frimberger v. Anzellotti, 594 A.2d 1029 (Conn. App. Ct. 1991). 594 a. Property grantee filed action to recover damages for breach of the warranty against encumbrances in connection with the sale of real property. The Middlesex Superior Court, Schaller, J., rendered judgment for grantee, and grantor appealed. The Appellate Court, Lavery, J., held that: (1) an alleged latent violation of land use statutes or regulations existing on the land at the time the title was conveyed was not an encumbrance such that the conveyance breached the grantor's covenant against encumbrances, and (2) evidence did not support finding of innocent misrepresentation. Reversed and remanded in part. Covenant Against Incumbrances i. For purposes of a grantor's covenant against encumbrances, an encumbrance is a right to or interest in the land which may subsist in third person, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance. A property grantor's covenant against encumbrances operates in praesenti, and cannot be breached unless the encumbrance existed at the time of the conveyance. For deed to be free of all encumbrances, there must be marketable title that can be sold at the fair price to a reasonable purchaser or mortgaged to a person of reasonable prudence as security for the loan of money. Possibility that Department of Environmental Protection could impose fines or restrict use of property until it was brought into compliance with wetlands regulations was not an encumbrance for purposes of the property grantor's deed warranty against encumbrances.

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Document1 5/2/2012 The concept of encumbrances for purposes of grantor's deed warranty against encumbrances cannot be expanded to include latent conditions on property that are in violation of statutes or government regulations. There was no innocent misrepresentation by warranty deed grantor; grantor who did not make any representation relating to wetlands area of property, and latent conditions on the property in violation of wetlands regulations did not violate the warranty of a covenant against encumbrances and thus were not untrue assertions for purposes of innocent misrepresentation claim.

vi.

c.

Defects in Prior Conveyance i. To render title unmarketable, a defect must present a real and substantial probability of litigation or loss at the time of the conveyance.

d.

Restrictions as to Use of Property i. Latent violations of state or municipal land use regulations that do not appear on the land record, that are unknown to the seller of the property, as to which the agency charged with enforcement has taken no official action to compel compliance at the time the deed was executed, and that have not ripened into an interest that can be recorded on the land record, do not constitute an encumbrance such that the conveyance breaches the grantor's deed warranty against encumbrances.

e.

Statements Recklessly Made; Negligent Misrepresentation i. There was no innocent misrepresentation by warranty deed grantor; grantor who did not make any representation relating to wetlands area of property, and latent conditions on the property in violation of wetlands regulations did not violate the warranty of a covenant against encumbrances and thus were not untrue assertions for purposes of innocent misrepresentation claim.

v.

Rockafellor v. Gray, 191 N.W. 107 (Iowa 1922). p. 600 a. Action in equity to set aside a certain sheriff's deed to 80 acres of land. The present owners filed a cross-petition against the remote grantor, asking damages for breach of the covenant in seizin, and damages were awarded in the amount of the consideration in the deed executed by said remote grantor, with interest thereon. Said remote grantor appeals. Affirmed. Erroneous Decisions i. The rule that covenant of seizin runs with the land, having become thoroughly imbedded in the jurisdiction of the state and being a rule of property, will be adhered to by the Supreme Court, regardless of any views it may entertain as to the soundness of the rule as originally announced.

b.

c.

Covenant of Seisin i. ii. Covenant of seizin runs with the land, and an action thereon may be maintained by a remote grantee. A remote grantee can bring an action on covenant of seizin against original grantor, though grantor at time of execution of deed had neither title nor possession. Covenant of seizin ran with the land entitling remote grantee to maintain an action thereon, though original covenantee never had possession of the land.

iii.

d.

Recovery of Purchase Money with Interest i. Measure of damages recoverable by remote grantee against original grantor, for breach of covenant of seizin, is the amount of consideration recited in original grantor's deed to his grantee, with interest thereon from the date of the execution of the deed to remote grantee.

e.

Relief to Defendant i. In an action in equity to set aside a sheriff's deed, in which the present owners filed a cross-petition against remote grantor for breach of covenant of seizin, the court having acquired jurisdiction had power to grant full relief on cross-petition, though an action for breach of covenant of seizin is an action at law.

vi.

NOTE: Estoppel by Deed p. 605

4.

Financing Real Estate Transactions 616

a. Introduction to Mortgages and the Mortgage Market 616

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b.

Mortgage Foreclosure 621

i. Murphy v. Fin. Dev. Corp., 495 A.2d 1245 (N.H. 1985). 621 a. Mortgagors sought to set aside foreclosure sale of their home or, in alternative, money damages. The Superior Court, Hillsborough County, Bean, J., adopted recommendation of a Master, R. Peter Shapiro, Esq., and entered judgment for mortgagors, and mortgage lenders appealed. The Supreme Court, Douglas, J., held that: (1) mortgage lenders, who complied with statutory requirements of notice and otherwise conducted foreclosure sale in compliance with statutory provisions, even postponing sale at least once, could not be said to have acted in bad faith in failing to obtain a fair price for mortgagors, but since any reasonable person in place of mortgage lenders would have realized that mortgagors' equity in property was at least $19,000, which was the difference between the appraised value of $46,000 and the amount of the $27,000 mortgage, mortgage lenders, by accepting a bid of only $27,000, failed to exercise due diligence in obtaining a fair price for mortgagors, and (2) damages could be assessed at difference between fair price for property at price obtained at foreclosure sale, but attorney fees were improper absent evidence of bad faith or obstinate, unjust, vexatious, wanton, or oppressive conduct. Reversed in part, affirmed in part, and remanded. Brock, J., dissented and filed opinion. Restraining foreclosure in general i. Statute giving mortgagors right to petition superior court to enjoin a proposed foreclosure sale [RSA 479:25, subd. 2] operates to bar any action based on facts which mortgagors knew or should have known soon enough to reasonably permit filing of a petition prior to sale, but does not operate to prevent mortgagors from challenging validity of a sale in a case where only claimed unfairness or illegality occurred during sale itself.

b.

c.

Opening or Vacating and Actions to Set Aside i. Statute giving mortgagors right to petition superior court to enjoin a proposed foreclosure sale [RSA 479:25, subd. 2] operates to bar any action based on facts which mortgagors knew or should have known soon enough to reasonably permit filing of a petition prior to sale, but does not operate to prevent mortgagors from challenging validity of a sale in a case where only claimed unfairness or illegality occurred during sale itself.

d.

Execution of power and conduct of sale in general i. A mortgagee executing a power of sale is bound both by statutory procedural requirements and by a duty to protect interests of mortgagor through exercise of good faith and due diligence. RSA 479:25. The mortgagee's duty and good faith and due diligence when acting as a seller at a foreclosure sale is essentially that of a fiduciary and is such that mortgagee is required to exert every reasonable effort to obtain a fair and reasonable price under the circumstances even to the extent, if necessary, of adjourning the sale or establishing an upset price below which it will not accept any offer. RSA 479:25. What constitutes a fair price at a foreclosure sale, or whether the mortgagee must establish an upset price, adjourn the sale, or make other reasonable efforts to assure a fair price, depends on the circumstances of each case. RSA 479:25. Inadequacy of price alone is not sufficient to demonstrate bad faith on part of mortgagee with respect to a foreclosure sale unless the price is so low as to shock the judicial conscience. RSA 479:25. The duties of good faith and due diligence on part of a mortgagee with respect to a foreclosure sale are distinct; one may be observed and not the other, and any inquiry as to their breach calls for a separate consideration of each. RSA 479:25. There must be an intentional disregard of duty or a purpose to injure in order to constitute bad faith on part of a mortgagee with respect to a foreclosure sale. RSA 479:25. Mortgage lenders, who complied with statutory requirements of notice and otherwise conducted foreclosure sale in compliance with statutory provisions, even postponing sale at least once, could not be said to have acted in bad faith in failing to obtain a fair price for mortgagors, but since any reasonable person in place of mortgage lenders would have realized that mortgagors' equity in property was at least $19,000, which was the difference between the appraised

ii.

iii.

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Document1 5/2/2012 value of $46,000 and the amount of the $27,000 mortgage, mortgage lenders, by accepting a bid of only $27,000, failed to exercise due diligence in obtaining a fair price for mortgagors. RSA 479:25. viii. A finding that a mortgagee had, or should have had, knowledge of his ability to get a higher price at an adjourned foreclosure sale is the most conclusive evidence of fact that a mortgagee, who has complied with the strict letter of the statutory law, has nevertheless violated his additional duties of good faith and due diligence. RSA 479:25.

e.

Conclusiveness in general i. A master's findings and rulings will not be overturned by the Supreme Court on appeal unless they are unsupported by the evidence or are erroneous as a matter of law.

f.

Sufficiency of evidence in support i. A master's findings and rulings will not be overturned by the Supreme Court on appeal unless they are unsupported by the evidence or are erroneous as a matter of law.

g.

Wrongful Foreclosure i. Proper assessment of damages when mortgagee fails to exercise due diligence is difference between fair price for property and price obtained at foreclosure sale. RSA 479:25. Mortgagors were not entitled to an award of attorney fees as prevailing parties in absence of a finding of bad faith or obstinate, unjust, vexatious, wanton, or oppressive conduct on part of mortgage lendors with respect to foreclosure sale.

ii.

h.

Prevailing party i. Prevailing litigant is not entitled to collect attorney fees from loser in absence of evidence of bad faith or obstinate, unjust, vexatious, wanton, or oppressive conduct.

ii. iii.

Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law 7.21 at 640641. 627 Deeds in lieu of foreclosure 629 a. deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

b. c. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Another benefit to the borrower is that it hurts his/her credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy. In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Sometimes, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair value of the property. Other times, lenders will agree since they will end up with the property anyway and the foreclosure process is costly to the lender. Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations. Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached. Transfer by the mortgagor 629

d.

e.

f. iv.

c.

The Subprime Mortgage Crisis

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d.

Mortgage Substitutes: The Installment Land Contract 639

i. ii. Bean v. Walker, 464 N.Y.S.2d 895 (N.Y. App. Div. 1983). 640 Restatement 3d Property, Mortgages section3.4(b) 644

B.

Ch. 8 Title Assurance 645

1. The Recording System 645
a. b. Introduction 645 The Indexes 647
i. ii. iii. iv. v. vi. Tract index 647 Grantor-grantee index 647 How to search title 648 Luthi v. Evans, 376 P.2d 1064 (Kan. 1978). 651 NOTE: Description by Govt Survey658 Orr v Byers, 244 Cal. Rptr. 13 (Cal. Ct. App. 1988). 661

c.

Types of Recording Acts 667

i. ii. iii. iv. Race Statute Notice Statute Race-Notice Statute Messersmith v. Smith, 60 N.W.2d 276 (N.D. 1953). 670

d.

Chain of Title Problems 677

i. ii. Bd. of Educ. of Minneapolis v. Hughes, 136 N.W. 1095 (Minn. 1912). 677 Guillette v. Daly Dry Wall, Inc., 325 N.E.2d 572 (Mass. 1975). 680

e.

Persons Protected by the Recording System 686

i. ii. iii. iv. v. Daniels v. Anderson, 642 N.E.2d 128 (Ill. 1994). 686 Lewis v. Super. Ct., 37 Cal. Rptr. 2d 63 (Cal. Ct. App. 1994). 689 Alexander v. Andrews, 64 S.E.2d 487 (W. Va. 1951). 692 Creditors Quitclaim deeds

f.

Inquiry Notice 693

i. Three kinds of notice: actual, record, & inquiry. a. b. Actual: arises where one is personally aware of conflicting interest in real property, often due to anothers poss. of the property. Record (constructive notice law deems you to have knowledge regardless of your actual knowledge): notice one has based on properly recorded instruments. Inquiry (constructive notice): based on facts that would cause a reasonable person to make inquiry into the possible existence of an interest in real property.

c.

ii. iii. iv.

Harper v. Paradise, 210 S.E.2d 710 (Ga. 1974). 693 Waldorff Ins. & Bonding, Inc. v. Eglin Natl Bank, 453 So. 2d 1383 (Fla. Dist. Ct. App. 1984). 697 Miller v. Green, 58 N.W.2de 704 (Wis. 1953). 701

g.

Marketable Title Acts 702

i. Walter E. Barnett, Marketable Title ActsPanacea or Pandemonium? 53 Cornell L. Rev. 45, 52-54 (1967). 702

V.

Land Use Controls 729

A. Ch. 9 Judicial Land Use Controls: Law of Nuisance 731
1. Introduction to Substantive Law 731
a. b. c. d. Morgan v. High Penn Oil Co., 77 S.E. 2d 682 (N.C. 1953). 731 Unreasonableness Trespass v. unreasonableness Note: Lateral and Subjacent Support

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2.

Remedies (and More on Substantive Law)

a. b. Estancias Dallas Corp. v. Schultz, 500 S.W.2d 217 (Tex. Civ. App. 1973). 739 Boomer v. Atlantic Cement Co., 237 N.E.2d 870 (N.Y. Ct. App. 1970). 743

B.

Ch. 10 Private Land Use Controls: Law of Servitudes 763

1. Easements 765
a. b. Historical Background, and Some Terminology 765 Creation of Easements
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. Willard v. First Church of Christ, Scientist, 498 P.2d 987 (Cal. 1972). 768 Restatement 3d Property, Servitudes 2.6(2) 772 Reservations and Exceptions 772 Note: Licenses 773 Holbrook v. Taylor, 532 S.W.2d 763 (Ky. 1976). 774 Shepard v. Purvine, 248 P.2d 352, 361-2 (Or. 1952). 777 Henry v. Dalton, 151 A.2d 362, 366 (R.I. 1959). 777 Restatement 3d Property, Servitudes 2.10 778 Van Sandt v. Royster, 83 P.2d 698 (Kan 1938). 779 Implied Easements 785 Othen v. Rosier, 226 S.W.2d 622 (Tex 1950). 786 Easements by Necessity 792 Easements by Prescription 794 Raleigh Ave. Beach Assn v. Atlantis Beach Club, 879 A.2d 112 (N.J. 2005). 800

c. d.

Assignability of Easements
i. Miller v. Lutheran Conference & Camp Assn, 200 A. 646 (Pa. 1938). 812

Scope of Easements 820

i. Brown v. Voss, 715 P.2d 514 (Wash. 1986). 820

e. f. g.

Termination of Easements
i. Preseault v. U.S., 100 F.3d 1525 (Fed. Cir. 1996). 831

Negative Easements Conservation and Other Novel Easements

2.

Covenants Running with the Land

a. Historical Background
i. ii. Covenants Enforceable at Law: Real Covenants Covenants Enforceable in Equity: Equitable Servitudes a. Tulk v. Moxhay, 41 Eng. Rep. 1143 (Ch. 1848). 854

b.

Creation of Covenants
i. Sanborn v. McLean, 206 N.W. 496 (Mich. 1925). 859

c.

Validity & Enforcement of Covenants

i. ii. Neponsit Prop. Owners Assn, Inc. v. Emigrant Indus. Savings Bank, 15 N.E.2d 793 (N.Y. Ct. App. 1938). 864 Note: Defeasible Fees as Land Use Control Devices

d.

Termination of Covenants 882

i. ii. iii. iv. v. W. Land Co. v. Tuskolaski, 495 P.2d 624 (Nev. 1972). 882 Rick v. West, 228 N.Y.S.2d 195 (N.Y. Sup. Ct. 1962). 887 Restatement 3d Property, Servitudes 7.10: Modification and Termination of Servitudes Because of Changed Conditions 888 Pocono Springs Civic Assn, Inc. v. MacKenzie, 667 A.2d 233 (Pa. Super. Ct. 1995). 892 Restatement 3d Property, Servitudes 7.12; Modification and Termination of Certain Affirmative Covenants 895

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e.

Common Interest Communities

i. ii. iii. Condos Co-ops Nahrstedt v. Lakeside Village Condo. Assn, Inc., 878 P.2d 1275 (Cal. 1994). 900

C.

Ch. 11 Legislative Land Use Controls: Law of Zoning 925

1. Introduction 925
a. b. Historical Background 925
i. Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). 930

The Structure of Authority Underlying Zoning 941

i. ii. iii. Enabling Legislation 941 The Comprehensive Plan 942 The Economics of Zoning 944

2.

The Nonconforming Use

a. PA NW. Distr., Inc. v. Zoning Hrg Bd., 584 A.2d 1372 (Pa. 1971). 945

3.

Achieving Flexibility in Zoning 954

a. Variances and Special Exceptions 954
i. Variances 955 a. ii. Commons v. Westwood Zoning Bd. of Adjustment, 410 A.2d 1138 (N.J. 1980). 955

Special Exceptions a. Cope v. Brunswick, 464 A.2d 223 (Me. 1983). 959

b.

Zoning Ams. and the Spot Zoning Problem 962

i. ii. State v. Rochester, 268 N.W.2d 885 (Minn. 1978). 962 Note: Other means for achieving flexibility in zoning

D.

Ch. 12 Eminent Domain and the Problem of Regulatory Takings 1061

1. 2. The Power of Eminent Domain: Sources and Rationales 1061 The Public-Use Puzzle (and a Note on Just Compensation) 1065
a. b. Kelo v. New London, 545 U.S. 469 (2005). 1065 Note: Just Compensation 1077

3.

Physical Occupations and Regulatory Takings

a. Two Categorical Rules
i. ii. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) 1082 Hadacheck v. Sebastian, 239 U.S. 394 (1915). 1096

b.

A 3d Categorical Rule 1131

i. Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992). 1131

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