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The  Leasehold  

I. The  Leasehold  [nonfreehold  estate]  a. Term  of  Years  

i. An  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  

ii. Common  law:  no  limit  on  number  of  years  permitted  iii. Modern  law:  state  statutes  typically  limit  duration  iv. Termination:    

1. notice  unnecessary  bc  fixed  duration  2. Death  of  L  or  T:  no  effect  on  term  of  years  3. Term  of  years  determinable:    

a. condition  subsequent:  L  to  T  for  10  years  “so  long  as  used  for  a  school”  OR  b. terminable  by  one  party:  L  to  T  for  one  year,  with  a  proviso  that  L  can  

terminate  at  any  time  b. Periodic  Tenancy  

i. A  lease  for  a  period  of  some  fixed  duration  that  continues  for  succeeding  periods  until  either  L  or  T  gives  notice  of  termination  

1. EX)  “To  A  from  month  to  month”  or  “To  B  from  year  to  year.”  ii. Creation:  

1. Agreement  of  parties  2. Operation  of  Law  

a. Holdover  after  expiration  of  the  term:  L  may  consent  to  T’s  staying  over  and  hold  T  liable  for  the  rent  of  another  term  

b. T  takes  possession  under  invalid  lease:  Entry  by  T  creates  a  tenancy  at  will,  and  payment  of  periodic  rent  converts  the  TW  to  a  Periodic  Tenancy  by  operation  of  law  i. Notice  will  be  required  even  though  parties  may  think  the  invalid  lease  

will  end  without  notice  iii. Termination  has  to  be  on  the  final  day  of  the  period  (see  problems  for  examples)  

1. Notice:  required;  period  automatically  extended  until  proper  notice  is  given;  notice  must  state  the  last  day  of  the  period,  and  the  notice  must  be  equal  to  the  length  of  the  period  itself  (exception:  yr  to  yr  reqs  only  6  mos)  a. EX)  notice  given  on  Jan.  20  to  terminate  a  month  to  month  tenancy  on  Feb  20  

is  insufficient;  nor  will  it  terminate  on  the  last  day  of  Feb  bc  it  does  not  specify  that  date  

2. Restatement:  abandons  common  law  rule  and  says  that  if  the  date  stated  in  the  notice  for  termination  is  not  the  end  of  a  period  or  is  too  short  a  time  before  the  end  of  a  period,  the  notice  will  be  effective  to  terminate  at  the  earliest  possible  date  after  the  date  stated.    (better  honors  intentions  of  party)  

3. Death  of  Landlord  or  Tenant  has  no  effect  on  the  duration  of  the  term  of  years  or  the  periodic  tenancy  

iv. Types:  1. Year  to  year  

a. Notice:  i. Common  law:  6mo  notice  required  to  terminate  yr-­‐to-­‐yr  tenancy  ii. Modern  law:  statutes  will  govern  notice  requirements  

b. EX)  annual  rent  payable  monthly  –  generally  interpreted  to  be  year-­‐to-­‐year  2. Less  than  a  year  

a. Notice  must  be  given  equal  in  length  of  the  period,  but  not  to  exceed  6  mos.  i. EX)  for  a  month-­‐to-­‐month,  must  give  a  full  month’s  notice  ii. Court  will  make  the  notice  effective  on  the  earliest  date  it  could  be  

effective  under  common  law  principles  c. Tenancy  At  Will  

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i. A  tenancy  of  no  fixed  period  that  endures  so  long  as  both  L  and  T  desire  ii. Unilateral  power  to  terminate  a  lease  can  be  negotiated  on  a  term  of  years  or  a  periodic  

tenancy  1. SPLIT:  if  a  leasehold  has  no  certain  duration  but  is  terminable  at  will  by  one  party  

a. Tenancy  at  Will  i. some  courts  imply  a  power  of  termination  in  the  other  party  since  there  is  

no  certain  duration,  thereby  creating  a  TW,  where  both  can  terminate  b. Determinable  LE  

i. other  courts  say  that  if  the  agreement  does  not  create  a  term  of  years/periodic  tenancy,  but  the  tenancy  is  to  continue  so  long  as  T  wills,  T  has  a  LE  determinable  

2. Restatement:  you  should  be  able  to  negotiate  that  for  either  party,  but  it  might  be  an  unconscionable  term  in  the  contract  and  therefore  unenforceable  a. EX)  L  to  T  “for  10  years  OR  until  L  sooner  terminates”  

i. Creates  a  term  of  years  determinable    b. EX)  L  to  T  “for  as  long  as  T  desires  to  stay  on  the  land.”  

i. Creates  a  life  estate  determinable,  terminable  at  his  will  or  on  his  death  iii. Termination    

1. Common  law  required  no  notice;  modern  statutes  generally  require  some  notice  2. When  one  party  ends  it  OR  at  the  death  of  one  of  the  parties    3. TW  can’t  be  assigned,  so  it  terminates  if  L  attempts  to  convey,  or  T  attempts  to  assign,  

the  property  iv. Modern  Law  requires  a  period  of  notice  in  order  for  one  party  to  terminate  a  TAW    

1. 30  days  or  a  time  equal  to  the  interval  bw  rent  payments  d. Tenancy  at  Sufferance:  Holdovers  

i. When  a  tenant  remains  in  possession  (holds  over)  after  termination  of  the  tenancy  1. Leaving  items  does  not  constitute  a  holdover  unless  they  interfere  with  L’s  use  of  the  

premises  2. An  ill  tenant  is  not  liable  as  a  HO  tenant  bc  not  staying  on  voluntarily  

a. But  L  may  still  have  a  remedy  –  T  will  have  to  pay  for  the  period  he  was  on  the  premises  preventing  L  from  leasing  to  someone  else  

ii. Common  law    1. Tenant  friendly  2. L’s  2  Remedies:  

a. Eviction  (plus  damages)  i. Treat  HO  tenant  as  trespasser  ii. Get  special  damages  (those  caused  directly  by  the  HO)  

b. Consent  (express  or  implied)  to  create  a  new  tenancy  i. Usually  any  new  agreement  will  be  limited  to  one  year  (even  if  original  

lease  was  for  like  5  years,  etc)  ii. Even  if  L  decides  to  treat  HOtenant  as  trespasser,  if  he  subsequently  

accepts  and  deposits  rent  checks,  he  implicitly  agrees  to  a  month-­‐to-­‐month  tenancy  (or  other  period,  depending  on  the  facts)  

iii. In  Most  Jxns,  holding  over  gives  rise  to  a  periodic  tenancy  subject  to  the  terms  of  the  original  lease;  generally  limited  to  one  year  tenancy    

iv. Ways  to  Deal  with  Holdovers  1. Statutes  specify  length  of  the  holdover  tenancy  2. Some  convert  hold  over  tenant  into  a  tenancy  at  will  and  provide  that  the  tenant  

shall  be  liable  for  the  reasonable  value  of  use/occupation  –  even  though  this  may  be  less  than  the  rent  agreed  upon  in  the  original  lease  

3. Ls  may  demand  double  rend  from  HO  tenants  (fairly  common)  v. Damages  

1. Common  law:  FRV  of  leased  premises,  plus  any  special  damages  (rent  in  original  lease  is  good  evidence  of  FRV)  

2. Rights  of  Incoming  Tenant:    

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a. Conventional  Common  Law:  incoming  T  with  the  right  to  possession  can  evict  a  holdover  tenant  and  recover  damages  as  measured  by  FRV  (evidenced  in  original  lease)  

b. Restatement:  incoming  T  should  also  be  able  to  consent  and  treat  HO  tenant  as  subletter  as  L  can  

II. The  Lease  a. Defined:  an  instrument  that  proclaims  itself  as  a  lease  may  not  be  one  (could  instead  be  a  loan,  LE,  

or  license);  and  one  that  does  not  identify  itself  as  a  lease  may  nevertheless  be  one  b. Both  conveyance  and  contract:  

i. Conveyance:  transfers  a  possessory  interest  in  land  ii. Contract:  contains  a  number  of  promises  

c. SOF:  requires  leases  for  more  than  1  year  be  in  writing  i. Where  a  jxn  does  not  permit  oral  leases  for  a  term  less  than  a  year,  it  usually  will  hold  that  

entry  under  an  oral  lease  plus  payment  of  rent  creates  a  periodic  tenancy  not  subject  to  the  SOF  

ii. Oral  lease  to  commence  in  the  future:  valid  under  the  SF  if  the  term  does  not  exceed  one  year  iii. If  the  oral  lease  has  an  option  to  renew  for  another  one-­‐year  term,  it  is  treated  as  a  2yr  lease  

and  is  void  under  SF  bc  no  longer  falls  into  short-­‐term  lease  exception  of  SF  d. Form  Leases  Most  Common  

i. Lack  of  bargaining  power?  Maybe  not.  Competition  should  be  an  equilizer  ii. Real  issue:  monopoly  power  iii. Statutory  leases  –  but  conflict  if  L  has  political  power  +  market  power  

III. Selection  of  Tenants  [unlawful  discrimination]  a. Fair  Housing  Act  42  U.S.C.  §  3604  (1968)  –  product  of  civil  rights  movement  of  60s  

i. Protects:  race,  color,  religion,  sex,  familial  status  (specifying  ratio  of  adults  to  kids),  and  national  origin,  handicap,  maybe  sexual  harassment  under  §  3604(b)  “conditions  of  premises”  

ii. Does  not  protect:  marital  status,  sexual  preference,  profession  iii. §  3604(c)  deals  with  advertising  

1. What  if  advertising  says  “only  people  of  certain  languages?”  a. Probably  a  violation  bc  can  the  statute  protects  people  of  “national  origin”  and  

languages  can  be  read  to  prefer  people  of  certain  national  origin  iv. §  3603(b)  is  an  exemption  provision,  applies  to  everything  except  3604(c),  the  advertising  

provision  [SO,  if  someone  violates  by  discriminatory  advertising,  but  lives  in  a  situation  exempted  by  the  statute,  the  exemption  does  not  extend  to  the  advertising  violation]  

1. 3603(1):  single  family  homes  a. EX)  “Wanted:  Female  to  share  2bdrm  apt.”  

i. Violation  of  FHA?  No.    ii. Exemption  provision:  people  renting  a  room  in  the  apartment  in  which  

they  are  living  are  no  prohibited  from  preferring  a  specific  gender    2. 3603(2):  small  space  with  no  more  than  4  families  living  independently  there  and  

owner  occupying  one  of  those  units  v. §  3604(f)(3):  discrimination  based  on  handicap  

1. L  must  make  reasonable  accommodations  to  allow  handicapped  persons  to  use  the  premises  (waiving  no  pet  policy,  construction,  etc.)  

2. AIDS  considered  a  handicap    vi. Approaches  discrimination  by  making  a  disparate  treatment  claim  (you  were  treated  

differently  than  another  gender/class  of  persons)  1. Prima  Facie  Case:  

a. You  were  part  of  an  FHA  protected  class  (racial,  gender,  familial  group)    b. You  tried  to  get  housing  (rent/buy)  that  you  were  legitimately/objectively  

qualified  to  obtain  BUT  the  landlord/seller  did  not  rent/sell  the  housing  to  you  and  instead  it  remained  available  OR  went  to  someone  not  in  my  protected  class  

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2. Then,  burden  shifts  to  L  to  prove  that  he  did  not  discriminate;  if  he  can,  then  3. Burden  shifts  back  to  P  so  show  he  did  

vii. Disparate  Impact  Claim  1. Demonstrate  that  the  action/practice  is  one  that  would  make  a  discriminatory  impact  

rather  than  actual  discrimination  2. Burden  shifts  if  it  is  a  governmental  D  –  they  must  show  they  have  a  governmental  

purpose  w/o  discrimination  3. If  private  owner,  they  must  show  some  underlying  business  purpose  to  explain  their  

practice  b. 42  U.S.C.  §  1982  (1866)  –  product  of  post  civil  war  statute  

i. No  prohibition  on  discriminatory  advertising  ii. It  doesn’t  specifically  protect  “national  origin”  as  a  classification  BUT  “race”  at  that  time  was  

interpreted  as  synonymous  with  national  origin  –  so  probably  a  violation  iii. Does  not  apply  to  advertisements  

IV. Delivery  of  Possession  a. L  has  the  duty  to  transfer  to  T  at  the  beginning  of  the  tenancy  the  legal  right  to  possession  b. English  Rule  (majority):  

i. Must  give  T  actual  possessory  rights  to  property  at  time  of  lease  ii. Delivery  of  possession:  there  needs  to  be  an  express  condition  iii. L  must  make  sure  previous  T  has  left  the  premises  so  it’s  actually  available  iv. Implied  term  of  the  lease  that  L  will  make  sure  premises  are  actually  available  for  use  by  

incoming  T  v. Incoming  T’s  remedies  against  L:  

1. Not  necessarily  obligated  to  pay  rent  while  kept  out  of  premises  2. Damages:  loss  of  business,  cost  of  renting  other  place,  cost  of  ousting  3. Terminate  lease  –  and  still  sue  for  damages  

vi. Rationale:  1. L  in  better  position  to  know  status  of  current  T/likelihood  of  holdover  

c. American  Rule  (minority):  i. If  the  lease  doesn’t  speak  to  the  issue  of  holdover  T,  then  L  does  not  owe  T  actual  possession  

of  the  premises  at  the  beginning  of  the  lease;  and  L  hasn’t  violated  any  duty  to  the  new  T  ii. L  has  a  duty  to  the  incoming  T  

1. If  L  leased  it  for  longer  to  the  initial  T  and  then  granted  a  new  lease  covering  the  same  time  period,  THEN  there’s  a  cause  of  action  against  L  

2. L  has  obligation  to  give  T  legal  right  to  the  property  but  NO  DUTY  to  give  actual  possessory  rights  at  the  time  of  the  property  

iii. Incoming  T’s  remedies:  1. evict  Holdover  T  and  recover  damages  2. Treat  HT  as  tenant  for  another  term,  with  rent  payable  to  incoming  T  

iv. Still,  parties  can  negotiate  to  put  a  contrary  term  in  the  lease  1. Caveat:  URLTA,  adopting  English  rule,  does  not  allow  parties  to  agree  otherwise  

v. Rationale:  1. Unfair  to  hold  L  responsible  for  wrongful  acts  by  3rd  party  not  actually  in  L’s  control  2. Statutes  provide  remedies  for  incoming  T  in  these  situations  3. Ls  may  be  discouraged  from  entering  into  new  leases  

V. Subleases  and  Assignments  a. Assignment:  T  or  L  may  freely  transfer  his  interest  in  the  premises  

i. L  assigns  the  reversion,  the  assignee  and  the  T  are  in  privity  of  estate  OR  ii. T  transfers  his  entire  remaining  term  of  his  leasehold,  the  assignee  comes  into  privity  of  

estate  with  L  iii. IF  a  T’s  assignee  breaches  a  covenant  in  the  lease  (fails  to  pay  rent),  L  can  sue  the  assignee  bc  

of  privity  of  estate  and  can  also  sue  the  original  T  bc  of  privity  of  K  1. Privity  of  estate  makes  L  and  assignee  liable  to  each  other  on  the  covenants  of  the  

original  lease  that  run  with  the  land  2. Privity  of  Contract:  Obligations  bind  regardless  of  whether  in  privity  of  estate  

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a. T  remains  a  surety;  so  if  T2  fails  to  pay  rent,  L  may  still  sue  T1;  The  only  way  T1  can  escape  rent  liability  is  by  a  release;  just  because  L  consents  to  the  assignment  and  accepts  rent  from  T2  does  not  waive  L’s  rights  against  T1  

3. Many  people  can  be  in  privity  of  K  with  L;  only  1  party  can  be  in  privity  of  estate  with  L  

4. Exceptions  –  when  assignee  would  be  in  privity  of  K  with  original  owner:  a. Novation:  L  consents  to  assignment  to  T2  and  releases  T;  a  new  K  bw  L  and  T2  

is  formed;  now  privity  of  K  and  privity  of  estate  bw  L  and  T2  b. 3rd  party  beneficiary  doctrine:  enter  into  a  K  for  the  benefit  of  someone  else  

i. (pledgers:  my  own  life  insurance  plan    I  won’t  collect  on  my  policy,  but  my  beneficiaries  would);  someone  who  is  not  party  to  the  K  nevertheless  has  rights  to  enforce  it  bc  it  was  for  their  benefit  

ii. EX)  K  bw  T  and  T1  to  transfer  the  leasehold;  this  K  could  arguable  be  a  3rd  party  benefic  K  for  the  benefit  of  the  L:  for  example,  T  and  T1  may  agree  that  T1  will  assume  covenants  of  original  Lease,  so  L  could  be  seen  to  benefit  from  the  K  in  a  jxn  that  recognizes  3rd  party  benefic  Ks  

5. Theory  of  Subrogation:  if  T  is  forced  to  pay  L  based  upon  defaults  by  other  people;  In  exchange  for  paying  off  L,  T  implicitly  acquires  L’s  rights:  he  can  turn  around  and  assert  the  same  rights  L  could  have  asserted  against  other  liable  parties;  he  has  subrogated  L’s  rights  bc  he  had  to  pay  off  the  L  

iv. Partial  Assignment:  when  lessee  transfers  all  of  his  interest  in  some  physical  part  of  the  premises  

b. Sublease:  i. If  a  T  transfers  less  than  the  entire  remaining  term  of  his  leasehold,  there’s  a  sublease,  and  T  

becomes  landlord  of  the  sublessee  ii. Sublessee  is  not  in  privity  of  estate  with  L  and  cannot  sue  or  be  sued  by  L  

1. Since  the  Sub  has  made  no  K  with  L,  he  cannot  sue  or  be  sued  on  K  either  c. Covenants  against  Assignments/Subleases  

i. Majority  rule:  is  a  lease  covenant  says  lessor  must  obtain  L’s  written  consent  to  an  assignment,  L  can  arbitrarily  reject  assignments    

ii. Minority  rule:  requires  a  commercially  reasonable  objection  for  rejecting  the  assignment  1. financial  responsibility  for  new  T,  but  cannot  consider  new  L’s  general  economic  

advantage    2. Rationale:    

a. Want  the  property  to  be  used  b. the  lease  is  both  a  conveyance  and  a  contract  

i. alienation:  L  would  restrain  alienation  by  refusing  consent  (property  law  favors  transferability)  

ii. implied  covenant  of  good  faith/fair  dealing  (K  law  favors  also)  iii. Waiver  of  covenant:  

1. may  expressly  or  impliedly  waive  the  covenant  against  assignment  or  sublease;  generally  happens  when  L  accepts  rent  from  the  assignees  with  the  knowledge  of  the  assignment  

2. Rule  in  Dumpor’s  Case:  where  L  expressly  consents  to  one  assignment,  the  Rule  states  that  the  covenant  thereafter  becomes  unenforceable  (once  waived,  is  destroyed)  a. Restatement:  rejects  RDC  b. Exceptions  to  Rule:  

i. If  the  covenant  not  to  assign  w/o  consent  of  L  is  expressed  as  binding  on  lessee  and  his  assigns,  then  an  assignment  with  consent  of  L  does  not  free  assignee  from  the  binding  force  of  the  covenant.    

ii. If  L,  in  consenting  to  an  assignment,  expressly  says  the  consent  is  to  that  assignment  only,  and  not  to  future  assignments,  then  RDC  doesn’t  apply  

iv. Residential  Leases:  Generally,  the  reasonable  objection  standard  does  not  apply  to  residential  leases  

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d. Covenants  running’s  to  Assignees  VI. L’s  Remedies:  The  Tenant  Who  Defaults  

a. Means  of  Assuring  Performance  i. Options  for  L  under  minority  view:  

1. Distress  2. Statutory  Liens  3. Security  Deposits  

a. Common  law:  put  in  an  escrow  acct  and  return  to  T  at  termination  of  lease,  minus  any  damages  to  premises  

b. To  withhold  security  deposit,  L  must  provide  an  itemized  list  of  why  4. Rent  Acceleration  

a. To  avoid  the  rule  that  L  must  wait  to  sue  for  rent,  the  clause  provides  that  the  rent  for  the  balance  of  the  term  shall  become  payable  in  full  on  T’s  default  of  payment  of  rent  

5. Waiver  of  service  and  Confession  of  Judgment  b. The  Tenant  in  Possession  

i. Common  law/Majority:  forcible  reentry/self  help;  L  could,  w/o  notice  to  T,  enter  upon  premises  and  seize  whatever  chattels  he  found  and  hold  them  as  security  until  rent  was  paid  SO  LONG  AS  

1. L  was  legally  entitled  to  possession  and  2. His  means  of  reentry  was  peaceable  

ii. Modern  trend/minority:  move  away  from  self-­‐help;  require  L  to  seek  judicial  remedy  1.  Should  T  be  able  to  bargain  away  this  anti  self-­‐help  protection  in  exchange  for  lower  

rent?  iii. L’s  remedies:  

1. Eviction:  2. Summary  Proceedings  (3-­‐10  days)  3. Temporary  Restraining  Order  (as  soon  as  judge  will  sign;  sort  of  like  injunction)  

iv.  c. The  Tenant  Who  Has  Abandoned  Possession  

i. When  T  abandons,  L  has  three  options:  1. Terminate  the  lease,    2. Let  the  premise  lie  idle  and  sue  T  for  rent,  or    3. Retake  possession  and  attempt  to  re-­‐let  

ii. L’s  remedies  1. Termination  of  Lease:  

a. Surrender  i. L  terminates  the  lease  on  T’s  abandonment;  T  liable  only  for  rent  accrued  

and  damages  caused  by  abandonment  ii. L  no  longer  has  remedy  of  lien  or  distress  upon  termination  of  lease  

b. Anticipatory  Breach  i. Common  law  did  not  allow:  if  L  wanted  damages,  L  had  to  keep  the  

lease  alive  (rather  than  terminate),  wait  until  rent  was  due,  and  then  sue  ii. Majority  law  allows:  if  T  makes  it  clear  he  will  pay  no  further  rent;  L’s  

damages  are  determined  by  the  [rent  agreed  upon  in  lease]  –  [FRV  over  the  value  of  the  term]  

2. Sit  Idle  a. Duty  to  Mitigate  Damages  

i. Common  Law:  L  has  no  duty  to  mitigate  damages  if  T  abandons,  so  no  duty  to  find  replacement  

1. Rationale:    a. T  can’t  by  his  wrongdoing  impose  a  duty  on  L  (property  

view  of  lease)  b. Abandonment  of  property  encourages  vandalism,  and  law  

shouldn’t  encourage  that  conduct  

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2. Restatement:  follows  common  law;  no  duty  to  mitigate  damages  if  T  abandons  

ii. Modern  Trend/majority:  1. L  has  duty  to  mitigate  damages  and  L  has  burden  of  proof  to  

show  he  has  tried  b. Rent  Acceleration  Clause  

3. Repossess  and  Re-­Let  a. If  duty  to  mitigate:  L  must  repossess  b. If  no  duty  to  mitigate:  SPLIT  if  L  enters  

i. JXN  1:  L’s  Repo  deprives  T  of  possession  and  effect  a  surrender,  excusing  T  from  further  liability  

ii. JXN  2:  reentry  by  L  effects  a  surrender  only  if  L  intends  to  terminate  the  lease;  otherwise,  L  is  acting  as  an  agent  for  T  in  re-­‐letting  

VII. Landlords  Duties,  Tenant’s  Rights,  and  Remedies  [regarding  condition  of  leased  premises]  a. Common  Law  

i. Leases  subject  to  the  doctrine  of  caveat  lessee:  1. Lessee  beware;  generally,  L  has  no  obligation  to  provide  suitable  premises  2. Exceptions:  in  which  L  has  a  duty  to  provide  suitable  premises  

a. short  term  leases  for  furnished  dwellings  –  The  lessee  isn’t  going  to  be  there  for  an  extended  amount  of  time;  immediate  occupancy  

b. disclose  latent  defects  in  the  premises  (one  that  is  not  readily  observable)  –  even  after  inspecting  the  property,  T  may  not  be  aware  of  the  demise;  object  of  caveat  lessee  is  to  make  T  do  their  homework;  

c. Maintaining  common  areas  used  by  all  tenants:  L  in  better  position  to  maintain  common  areas  and  weird  economic  incentives  for  Ts  if  they  were  responsible  for  hallways  (free  riders,  etc.)  

d. L  must  undertake  carefully  any  repairs  that  he  promised  or  volunteered  to  make:  T  may  have  made  their  decision  to  rent  in  reliance  on  said  promises  (would  not  have  rented  had  L  not  promised  to  repair)  

e. abstain  from  fraudulent  misrep  as  to  the  condition  of  the  premises:  similar  to  rationale  above  

f. Immoral  conduct  and  nuisances:  L  in  better  position  to  deal  with  this  issue  (if  another  T  is  using  their  apartment  for  immoral  activities…L  can  better  address  problem)  

b. Covenant  of  Quiet  Enjoyment  i. T’s  right  of  quiet  enjoyment  of  premises  without  interference  by  L  ii. If  not  expressed,  it  is  implied  in  every  lease  iii. American  Law  of  Property:  iv. Dependent  covenant:    

1. At  Common  Law,  covenants  in  leases  were  independent,  so  if  L  didn’t  do  what  he  was  supposed  to  do,  that  didn’t  excuse  T  from  paying  his  rent  (his  part  of  the  covenant)  BUT  

2. T’s  covenant  to  pay  rent  was  always  dependent  on  L’s  performance  of  the  Cov.  of  QE;  so  if  L  breaches  CQE  by  evicting  T,  T  released  from  obligation  to  pay  rent  

v. Breach:  CQE  can  be  breached  by  actual  or  constructive  eviction  c. Actual  Eviction  

i. Complete  Actual  Eviction  1. Physical  eviction  of  T  from  the  entire  leased  premises  terminates  T’s  rental  obligation  

ii. Partial  Eviction  by  L  1. If  T  is  evicted  from  any  portion  of  the  leased  premises  his  rent  obligation  abates  

entirely  until  possession  of  that  part  is  restored  to  him;    2. T  may  stay  in  possession  and  refuse  to  pay  rent  3. Rationale:  obligation  to  pay  rent  rests  on  T’s  possession  of  the  entire  leasehold  4. Restatement:    

a. rejects  rule  of  total  rent  abatement  for  partial  actual  eviction  bc  unjust  to  L  

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b. adopts  a  partial  rent  abatement  rule  iii. Partial  Eviction  by  paramount  title  

1. T  evicted  by  3rd  party  with  paramount  title,    2. T’s  remedies:    

a. Terminate  the  lease,    b. Recover  damages,  or    c. Receive  a  proportionate  rent  abatement  

3. If  T  remains  in  possession,  he  is  liable  for  the  reasonable  rental  value  of  the  portion  he  possesses  (distinct  from  partial  eviction  by  L,  where  T  can  remain  in  possession  w/o  paying  rent)  a. Rationale:  recording  statutes  –  T  should  have  constructive  knowledge  of  

paramount  title  d. Constructive  Eviction  

i. Through  the  fault  of  L,  there  is  a  substantial  interference  with  T’s  use  and  enjoyment  of  the  leased  premises;  does  not  require  physical  expulsion  from  possession  

ii. T’s  remedies  1. Terminate  lease,  2. Vacate  premises,  and  3. Be  excused  from  further  rent  liability  

iii. Expansion  of  dependent  promises  1. Make  T’s  obligation  to  pay  rent  dependent  on  L’s  performance  of  her  CQE  2. Gives  T  the  remedy  of  terminating  the  tenancy  

iv. Covenant  Not  to  Compete  1. A  covenant  by  L  that  he  will  not  compete  with  or  rent  to  a  competitor  of  T  will  

generally  be  deemed  so  important  to  T’s  enjoyment  that  breach  of  the  covenant  by  L  is  treated  as  constructive  eviction  

i. Elements  of  Constructive  Eviction  2. Substantial  Interference  

a. Consider  purposes  for  which  leased,  foreseeability,  potential  duration,  nature/degree  of  harm  caused;  available  means  to  abate  the  interference  

b. Disclosure  prior  to  Lease:  If  L  knows  of  defects,  may  have  duty  to  disclose  c. Tenant’s  Knowledge:  If  T  knows  of  the  interference  before  taking  possession,  

he  has  waived  the  interference  d. Notice  to  L:    

i. T  must  give  notice  to  L  before  claiming  constructive  eviction  and    ii. L  must  fail  to  remedy  situation  within  a  reasonable  time  

3. T  must  vacate  the  premises  a. T  cannot  remain  in  possession  and  refuse  to  pay  rent  or  receive  damages  

under  Constructive  Eviction;  rent  obligation  continues  if  he  stays  on  i. T  takes  a  risk  in  abandoning  possession,  though,  bc  court  could  find  no  

constructive  eviction  1. Declaratory  Judgment:  way  for  T  to  stay  on  and  know,  before  

vacating  premises,  whether  constructive  eviction  is  constituted  b. Damages  After  Vacating    

i. When  T  vacates,  the  lease  is  terminated  BUT  T  can  recover  from  L  damages  suffered  because  of  the  constructive  eviction    

ii. EX)  Diff  bw  rent  paid  and  reasonable  rent  value;  cost  of  finding  new  premises;  loss  of  profits  

c. Restatement:    i. rejects  requirement  that  T  must  abandon  property  before  claiming  CE  ii. T  has  right  to  1)  terminate  OR  2)  stay  on  and  receive  damages  or  a  rent  

abatement  iii. Rationale:  T  should  receive  what  he  has  bargained  for  

4. Fault  of  Landlord  

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a. The  interference  with  T’s  QE  must  result  from  some  act  or  failure  to  act  on  part  of  L  i. Where  T  claim  constructive  eviction  for  breach  of  CQE,  L  must  have  some  

legal  duty  to  act  b. Can’t  claim  CE  from  acts  of  3rd  party  unless  that  party’s  acts  were  induced  by  or  

committed  with  the  consent  (express  or  implied)  of  L  i. Generally,  L  not  responsible  for  acts  of  other  Ts  ii. Exceptions:    

1. nuisance:  L  has  duty  not  to  permit  a  nuisance  on  the  premises  2. common  areas:  L  has  duty  to  control  common  areas  

e. The  Illegal  Lease:  transitional  document;  on  the  way  to  implied  warranty  of  habitability  f. The  Implied  Warranty  of  Habitability  

i. Common  law:  L  had  no  duty  to  provide  habitable  premises  (caveat  lessee)  ii. Modern  Law:  IWH,  L  has  duty  to  maintain  a  safe,  healthy,  functioning  premises  iii. Allows  T  to  maintain  possession  while  withholding  rent  (at  com  law,  T  couldn’t  do  that  

unless  what  L  did  was  so  severe  as  to  constitute  a  constructive  eviction)  iv. Can  often  glean  the  standard  of  habitability  by  housing  codes  v. Cannot  be  waived  vi. Latent  defects:  T  must  notify  L  and  give  him  reasonable  opportunity  to  remedy  vii. Remedies  for  T  

1. Breach:  reformation,  rescission  (get  out  of  lease),  or  reformation  of  K  2. Damages:  

a. Diff  bw  value  of  the  dwelling  as  T  was  told  it  would  be  and  the  value  of  the  dwelling  as  it  is  (loss  of  the  bargain)  

b. Discomfort  and  annoyance  c. Punitives  sometimes  

3. Repairs  made  –  T  can  deduct  from  rent  viii. Approaches  to  calculating  Damages  

1. Hilder:  [FRV  as  warranted]  –  [actual  value]  a. The  lease  rent  doesn’t  necessarily  equal  the  FRV  b. More  T  friendly  

2. Kline:  [lease  rent]  –  [actual  value]    a. L  can  say  “I  don’t  owe  you  anything  bc  while  your  place  is  crappy,  we  reflected  

that  in  the  rent”  3. Percentage  Diminution  :  but  how  to  calculate?  by  footage  available  or  time  you  

spend  in  a  particular  part  of  building?  ix. T  can  enforce  his  rights  

1. Withhold  rent  (dependent  covenant)  2. Get  money  back  for  repairs  or  reduce  rent  accordingly  

x. Constructive  Eviction  Still  Necessary  1. IWH  only  applies  to  residential  leases,  so  CE  needed  for  commercial  leases  2. Some  residential  leases  not  covered  by  IWH  

a. single-­‐family  residences  b. agricultural  leases  

3. IWH  more  advantageous  that  CE  a. can  remain  in  possession  and  withhold  rent  b. L  has  duty  to  provide  habitable  premises;  before,  L  just  had  duty  to  comply  

with  common  law  exceptions  c. Damages  tend  to  be  better  

g. Retaliatory  Eviction  i. Common  Law:  L  could  evict  T  when  they  complain  ab  status  of  premises  ii. Modern  Law:  prohibits  retaliatory  eviction  

1. If  L  freely  evicts  someone,  that  undercuts  any  advantage  that  T  would  have  from  IWH  VIII. Tenant’s  Duties;  Landlord’s  Rights  and  Remedies  

a. Waste  

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i. T  replaces  defective  portions  of  the  apartment  1. T  might  be  liable  to  L  for  taking  anything  they  may  have  repaired  during  the  tenancy  2. If  T  has  lease  obligation  to  repair,  then  he  can  not  take  away  those  repairs  when  he  

leaves  3. Law  of  Fixtures:  when  something  that  used  to  be  moveable/personal  property  gets  

attached  to  real  property;  thereafter  treated  as  fixed,  real  property  ii. Affirmative  Waste:  T  tears  down  a  building  iii. Permissive  Waste:  failure  of  T  to  act,  allowing  things  to  fall  into  disrepair  

1. Common  law:  T  had  duty  to  repair  to  extent  necessary  to  prevent  permissive  waste  2. Modern  Law:    

a. maj  says  T  has  no  obligation  to  make  repairs;    b. instead,  L  has  duty  to  maintain  the  property  (rise  of  IWH)  

b. Frustration  of  Purpose  (Impossibility  of  Performance):  excuses  both  parties  from  further  performance  of  their  obligations  under  the  lease  (ex:  building  burns  down)  

IX. The  Problem  of  Affordable  Housing  a. Economic  effects  of  ordinances:  

i. Cost/Status:  if  cost  to  L  goes  up,  rent  rises  or  L  won’t  maintain  the  property  to  offset  ii. Supply:  owners  would  sell  rather  than  rent  bc  selling  the  house  would  have  to  meet  the  

standards  of  the  ordinance  b. Rent  control  hurts  poorer  Ts  and  newer  Ts  

i. Poorer  Ts:  if  L  are  trying  to  provide  low  cost  housing,  but  have  to  pay  more  to  do  so,  then  that  cost  will  be  passed  along  to  Ts  looking  to  get  lower  value  housing  

 

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Transfers  of  Land  

I. Intro  to  Buying/Selling  Real  Estate  a. lenders  generally  req  borrowers  to  contribute  10-­‐20%  of  purchase  price  as  down  payment  b. Title  not  transferred  immediately  upon  signing  the  agreement,  bc  both  buyer  and  seller  must  do  

certain  things  bw  the  signing  of  the  K  and  the  closing:  i. Seller:  

1. Pay  off  existing  loans  on  the  property  2. pay  the  broker’s  commission  3. pay  legal/other  fees  4. pocket  the  rest  

ii. Buyer:  1. Title  search  (by  attorney  or  title  company)  2. Mortgage  contingency:  must  obtain  a  mortgage  loan  within  a  given  time  or  she  can  

rescind  the  K  and  get  her  deposit  back  3. Second  contingency:  inspect;  if  too  expensive  to  remedy  the  inspection,  can  rescind  

(this  is  contentious)  4. get  the  deed,  sign  a  promissory  note  for  the  loan,  execute  a  mortgage  or  deed  of  

trust  in  favor  of  the  lender,  and  pay  attorney’s  fees  c. Policy  of  title  insurance:    

i. issued  by  title  insurance  company  ii. assures  lender  and  buyer  that  they  have  good  title  to  property  (defend  against  adverse  

claims)  d. Transfer  of  title:  

i. Some  jxns:  transfer  deed  with  all  parties  physically  present  ii. Other  jxns:  transfer  deed  by  3rd  party  escrow  agent  

e.  II. Brokers  

a. Hired  by  sellers  to  attract  prospective  buyers  i. Fiduciary  duty  of  loyalty/good  faith;  must  act  in  best  interest  of  client  (seller)  

1. Have  duty  to  find  a  buyer  at  the  best  price  to  seller  based  what  they  know  ab  property  

2. Traditionally  employed  by  sellers  so  fiduciary  duty  owed  to  seller,  but  buyers  recently  known  to  hire  buyer’s  broker  who  owe  fiduciary  duties  to  prospective  buyers  and  share  commission  earned  by  the  listing  agent  when  the  property  is  purchase  

b. Types  of  Brokers  i. Listing  Broker:  empowered  to  serve  as  the  seller’s  agent  in  selling  the  property  ii. Selling  Broker:  more  indirect  relationship  with  seller;  receive  their  compensation  by  

splitting  the  listing  broker’s  commission  (interested  buyer  initiates  the  relationship  w/  a  selling  broker  who  then  introduces  the  buyer  to  sellers  and  listing  brokers)  

1. but  the  selling  broker’s  duties  are  to  the  seller  not  the  buyer  c. Dual  Agents  

i. When  both  buyer  and  seller  hire  the  same  person  ii. Complicated  bc  the  broker  owes  the  buyer  and  seller  the  same  duty  of  good  faith  and  loyalty  iii. Many  states  permit  it  if  the  dual  agent  reveals  her  dual  agency  to  both  parties  early  on  iv. Positive:  can  negotiate  a  lower  commission  

d. Disclosure  Requirements  i. Some  states  require  written  disclosure  that  the  broker  is  the  seller’s  agent  not  the  buyer’s  ii. Brokers  must  tell  buyer  of  any  material  defect  known  to  the  broker  and  unknown  to  the  

buyer  iii. Some  jxns  say  that  the  broker  has  a  duty  to  diligently  visually  inspect  the  property  for  hidden  

defects  

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iv. GA  Rule:  must  disclose  who  broker  is  working  for  and  any  latent  defects  of  which  broker  is  aware  

e. MLS:  multiple  listing  service  i. Brokers  and  appraisers  can  share  residential  listing  info,  for  a  fee,  on  one  main  database    

1. Have  to  be  a  licensed  broker  (illegal  restriction  on  trade/competition?)  2. Anti-­‐trust  laws:  designed  to  preserve  competition  in  the  market  

ii. Problems  with  price  fixing  f. Listing  agreements:    

i. An  employment  K  bw  a  real  estate  broker  and  a  seller  (most  states  req  writing)  ii. Types  of  Listings:  

1. open  listing:  least  protective;  S  retains  right  to  sell  property  herself  or  use  a  diff  broker  w/o  paying  the  open  listing  broker  commission;  broker  gets  commission  only  if  she  finds  a  buyer  before  the  owner  

2. exclusive  agency  listing:    a. only  one  broker,  the  exclusive  agent,  to  sell  the  property  b. specified  period  of  time  (period  of  commission  could  run  out)    c. owner  can  still  find  buyer  w/o  broker’s  help,  in  which  case,  broker  not  entitled  

to  comission  3. exclusive  right  to  sell  listing:  most  protective  for  brokers;  O  must  pay  that  broker  if  

any  buyer  purchases  the  property  during  the  specified  duration  of  the  listing,  no  matter  who  found  the  purchaser  (these  are  most  common)  

a. highest  probability  of  closing  bc  broker  has  most  incentive  to  move  g. Commission  

i. Traditional/Majority  rule:  broker  gets  commission  once  he  finds  a  buyer  who  is  “ready,  willing,  and  able”  to  buy  –  even  if  the  sale  doesn’t  close  

1. would  also  get  commission  if  the  seller  and  also  buyer  defaulted  2. O  can  avoid  these  dangers  through  contract,  making  the  commission  conditional  on  

actual  sale    ii. Minority:  broker  is  not  entitled  to  commission  until  the  property  closes  

1. but  broker  still  gets  commission  if  the  seller,  through  her  own  frustrating  conduct,  does  not  act  in  good  faith  and  backs  out  of  the  agreement  before  closing  

iii. Custom:  most  brokers  decline  to  pursue  commission  when  transaction  fails  to  close  to  maintain  friendly  relations/referrals  

h. Attorneys  v.  Brokers  i. Generally,  brokers  not  allowed  to  draft  legal  docs,  offer  advice,  or  carry  out  property  closings  

1. legal  education,  more  knowledgeable  ii. Many  jxns  allow  brokers  to  de  simple/standardized  legal  forms  if  they  are  incidental  to  his  

usual  tasks  III. The  Contract  of  Sale  

a. Statute  of  Frauds  i. To  satisfy  the  SOF,  there  must  be  a  memo  of  sale  that  at  minimum:  

1. Is  signed  by  the  party  to  be  bound  2. Describes  the  real  estate  3. States  the  price  

a. essential  term  b. if  no  price  agreed  upon,  a  ct  can  imply  an  agreement  to  pay  a  reasonable  price  c. some  jxns  demand  that  they  refer  to  a  price  and  indicate  a  method  they  intend  

to  use  in  fixing  it  4. Some  states:  require  in  addition  to  the  previous  3  requirements,  all  the  material  or  

essential  terms  of  their  agreement  ii. Exceptions  to  SOF:  

1. Part  performance:    a. allows  specific  enforcement  of  oral  agreements  when  particular  acts  have  

been  performed  by  one  of  the  parties  to  the  agreement  

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b. traditional  ways  of  invoking  doctrine  of  part  performance:  payment  (all  or  part  of  purchase  price),  possession,  or  making  valuable  improvements    

2. Estoppel:  a. Protects  detrimental  reliance  (which  may  take  the  form  of  part  performance;  

overlapping)  i. Maj  view:  can  just  pay  part    ii. Has  to  be  unequivocally  related  to  the  K  of  sale;  be  able  to  look  at  the  

acts  and  say  they  had  to  have  done  this  bc  there  was  a  K  of  land  b. Applies  when  unconscionable  injury  would  result  from  denying  enforcement  

of  the  oral  K  after  one  party  has  been  induced  by  the  other  seriously  to  change  his  position  in  reliance  on  the  contract  

c. May  apply  when  unjust  enrichment  would  result  if  a  party  who  has  received  the  benefits  of  the  other’s  performance  were  allowed  to  rely  on  the  SOF  

d. of  purchase  price  iii. Electronic  Transactions:  new  legislation  says  electronic  signatures  are  sufficient  

1. caselaw  goes  both  ways  2. Is  hitting  send  sufficient?  sometimes.  

b. Marketable  Title  i. A  title  reasonably  free  from  doubt,  which  a  prudent  purchaser  would  accept;  perfect  title  not  

required  ii. Always  implied  in  the  K;  but  parties  can  negotiate  the  it  be  waived  iii. Rationale:  

1. low  risk  transfer;  helps  determine  how  much  risk  new  O  is  taking  on  2. not  easy  to  produce  a  chain  of  title  w/o  any  Q  that  current  owner  has  good  title  (lack  

of  records,  etc.)  iv. General  rules:  

1. MT  means  an  “unencumbered  FS”  2. Mortgages,  liens,  covenants,  and  easements  make  title  unmarketable  unless  buyer  

waives  them  a. Waiver  does  not  waive  the  violation  of  the  encumbrance  when  B  doesn’t  know  

of  the  violation  3. Mortgages:  not  an  encumbrance  if  S  pays  it  off  before  closing  4. Zoning  Restrictions  don’t  make  property  unmarketable  5. Restrictive  covenants  generally  do  (can’t  build  house  less  than  2  ft  high)  

a. But,  if  the  deed  says  “subject  to  all  restrictions  and  easements  of  record  applying  to  this  property,”  then  the  restriction  doesn’t  make  it  unmarketable  

b. BUT  where  those  restrictions  attached  to  the  land  have  been  violated,  the  violations  of  the  restrictions  (not  the  restrictions  themselves)  make  the  title  unmarketable  

6. Easements:  as  long  as  it’s  obvious,  courts  say  that  easements  don’t  make  a  property  unmarketable;  but  if  it  lessens  the  value  of  the  property,  it  might  

7. Adverse  Possession:    a. majority:  must  be  clearly  proven;  seller  must  offer  buyer  written  evidence  

that  the  buyer  can  use  to  defend  suits  challenging  title  b. minority:  marketable  title  cannot  be  shown  by  AP  unless  a  quiet  title  action  

has  eliminated  the  record  owner’s  rights  8. Record  search:  many  jxns  limit  the  time  to  which  you  must  look  back  in  the  records;  

risk  can  be  covered  by  warranties  of  title  or  title  insurance  c. Equitable  conversion:  if  there’s  a  specifically  enforceable  contract  for  the  sale  of  land,  equity  

regards  as  done  that  which  ought  to  be  done;  the  buyer  is  viewed  in  equity  from  the  date  of  the  K  –  thus  having  equitable  title  i. Title  doesn’t  pass  until  closing  where  title  passes  through  use  of  a  deed  ii. Until  then,  legal  title  remains  with  the  Seller  iii. EC  treats  buyer  as  equitable  owner  until  deed  passes  to  them  

1. buyer’s  interest  as  equitable  owner  treated  as  his  real  property    

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2. seller’s  legal  interest  is  treated  as  personal  property  iv. Views/Applications:  

1. Majority:  burden/risk  of  loss  on  the  purchaser  (applying  equitable  conversion)  a. criticism:  seller  in  possession  in  better  position  to  protect  against  loss  

2. Minority:  loss  is  on  seller  until  legal  title  is  conveyed  (declining  to  apply  EC)  3. Massachusetts:    

a. If  loss  is  substantial:  the  risk  of  loss  is  on  seller  if  loss  is  substantial  and  the  terms  of  K  show  that  the  building  constituted  an  important  part  of  the  subject  of  the  K  

b. If  loss  is  not  substantial:  either  party  can  enforce  the  K,  though  an  abatement  in  purchase  price  may  be  given  

4. 4th:  the  risk  of  loss  is  placed  on  the  party  in  possession  (also  view  of  uniform  Vendor  and  Purchaser  Act)  

v. Inheritance:  if  EQ  has  occurred,  the  seller’s  interest  is  personal  property  (right  to  the  purchase  price),  and  the  buyer  is  treated  as  owner  of  the  land  

d. Duty  to  Disclose  Defects  i. Traditionally,  Caveat  Emptor:    

1. no  duty  to  disclose  any  info  concerning  the  premises  unless  there  is  a  confidential  or  fiduciary  relationship  bw  the  parties  or  some  conduct  on  the  part  of  the  seller  constitutes  active  concealment;  no  rescission  permitted  by  mere  non-­disclosure  at  common  law  but  

a. affirmative  misrepresentation:  rescission  would  be  grated  b. silence:  could  be  grounds  for  rescission  if:  

i. active  concealment:  seller  intentionally  hides  info  ii. nature  of  relationship  bw  parties:  fiduciary  relationships;  one  is  

responsible  for  protecting  the  other’s  interest  c. seller  contributes  to  the  allegation  (i.e.  reporting  haunting)  and  then  later  

decides  to  deny  it  in  order  to  sell,  he  can’t  do  that  d. Latent/material  defects:  those  that  would  be  a  deciding  factor  for  buyer  in  

making  the  deal  but  would  be  something  buyer  would  be  unlikely  to  uncover  ii. Modern  Trend:  

1. Increasing  majority  moving  away  from  caveat  emptor  and  imposing  a  duty  to  disclose  unknown  defects    nondisclosure  equated  with  fraud  or  misrepresentation  

iii. JXN  Splits  1. NY:  follows  common  law  2. CA:  must  disclose  neighborhood  noise/other  nuisances  

iv. JXNS  requiring  disclosure:    1. Is  it  a  latent  defect?  2. Is  it  really  material  to  the  deal  or  not?  

a. Objective  test:  reasonable  person  would  attach  importance  to  it  in  deciding  to  by  OR  

b. Subjective  test:  whether  the  defect  affects  the  value  or  desirability  of  the  property  to  the  buyer  

v. Megan’s  Law  1. Sex  offenders  living  nearby?  not  really  a  latent  defect  bc  info  available  to  public,  but  

materiality  test  points  to  yes,  it  should  be  disclosed  vi. Hazardous  Waste  Disposal  

1. CERCLA:  imposes  SL  for  cleanup  costs  of  a  hazardous  waste  site  upon  any    a. current  owner  or  operator  of  a  site  containing  hazardous  waste,  b. prior  owner  or  operator  at  the  time  it  was  contaminated,  c. generator  of  hazardous  waste,  d. transporters  of  hazardous  substances  

2. BFP  Defense:  available  where    a. the  release  of  hazardous  materials  took  place  before  the  purchaser  bought  the  

property  

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b. The  purchaser  made  all  the  appropriate  inquiries  into  the  previous  ownership  and  uses  of  the  property,  and  

c. the  purchaser  “exercises  appropriate  care  with  respect  to  hazardous  substances  found  at  the  facility”  

3. Purchaser  of  contaminated  property  held  liable  under  CERCLA  may  sue  their  sellers  for  contribution  

e. Merger  Doctrine  i. Once  the  deal  is  accepted,  the  previous  K  merges  into  the  deed,  so  you  can  only  bring  an  

action  on  the  contents  of  the  deed  ii. After  closing,  when  the  deed  has  been  delivered,  you  cannot  go  back  and  sue  on  things  in  the  

1st  K  you  signed  bc  contract  theory  that  the  K  merges  into  the  deed  which  becomes  the  final  expression  of  the  parties’  transaction,  and  you  must  look  to  it  for  the  obligations  that  may  givce  rise  to  suit  

iii. Where  it  arises:  warranty  of  quality  construction  wouldn’t  apply  to  the  deed  bc  that’s  an  independent/collateral  obligation,  separate  from  the  basic  transfer  of  real  property    

iv. Exception  to  Merger  Doctrine  is  fraud  1. ex)  selling  something  you  know  you  don’t  own;  delivering  quitclaim  

f. The  Implied  Warranty  of  Quality  i. Common  law:  implied  warranty  of  quality  where  there  is  privity  of  K  

1. Builder  had  no  liability  to  buyer  absent  an  express  warranty  [caveat  emptor]  ii. Modern  trend:  most  courts  are  moving  away  from  privity  req’t  and  impose  an  implied  

warranty  of  habitability  on  the  sale  of  new  homes  1. Rationale:  Initial  owner  has  a  better  chance  to  see  defect,  but  not  necessarily  better  

equipped  to  evaluate  the  quality  of  the  building  iii. Limitations  on  Builder’s  Duty  to  Subsequent  Purchasers  

1. Must  have  a  latent  defect  (can’t  be  obvious)  2. Must  be  brought  w/i  a  reasonable  time  –  you’re  only  liable  for  a  certain  period  of  

time  3. Builder  must  do  his  work  with  workmanlike  standards    

iv. Tort  or  Contract  Theory  1. Tort:  

a. Runs  to  all  persons  who  buy  the  product  b. Liability  can’t  be  waived/disclaimed  by  provision  in  the  K  c. the  SOL  runs  from  the  time  of  discovery  

2. K:  a. Runs  only  to  those  in  privity  of  K  w/  builder  b. Can  be  disclaimed  by  K  provision  (must  be  by  B  in  clear/unambig  lang)  c. the  SOL  runs  from  the  date  of  the  conveyance  

v. Commercial  buildings:  implied  warranty  of  habitability  only  applies  to  sale  of  housing    g. Remedies  for  Breach  of  Sales  Contract  

i. NOT  governed  by  uniform  rules  like  the  UCC  bc  property  not  sold  intrastate  ii. Damages  [legal  remedy]  

1. [downward  market:  buyer  breaches;  seller  gets  damages  a. [purchase  price]  –  [FMV  at  time  sold]  –  [any  payment  received]  =  damages  

2. upward  market:  seller  breaches;  buyer  gets  damages  a. seller’s  subsequent  profit  from  re-­‐sale  of  profit  b. [k  price]  –  [FMV  at  time  of  breach]  

3. special  damages:  the  result  of  the  natural  and  probable  cause  of  the  breach  iii. Retention  or  Return  of  deposit  (seller  or  buyer)  

1. Common  law:  S  keeps  deposit  so  long  as  it  isn’t  more  than  10%  of  the  K  price  a. Rationale:    

i. deterrence:  keep  people  from  having  excessive  down  payment  ii. fairness:  letting  seller  keep  everything,  where  there  is  no  liquidated  

damages  clause,  isn’t  fair,  and  10%  is  a  fair  approximation  of  damages  

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iii. anything  above  10%  is  punitive  2. Minority/Restatement:    

a. Seller  doesn’t  keep  the  whole  deposit  but  only  that  portion  that  covers  their  actual  damages  

b. Calculate  actual  damages  to  seller;  anything  above  that  is  given  back  to  B  as  restitution  

3. Efficient  Breach:    a. Maximize  potential  value  of  land    flow  to  most  socially  beneficial  uses  b. Some  people  should  be  allowed  to  breach  where  performing  the  K  would  lock  

someone  into  an  inefficient  allocation  c. Should  be  able  to  breach  as  long  as  you  compensate  the  other  party  for  any  

damages  4. Liquidated  damages  provision:  still  have  to  negotiate  a  penalty  and  call  it  

liquidated  damages  a. must  be  reasonable  

iv. Specific  Performance  [equitable  remedy]  1. only  available  where  legal  remedy  is  inadequate  2. Sometimes  B  wants  that  property  so  paying  money  doesn’t  remedy  the  harm  3. When  it’s  S  who  wants  to  enforce,  court  less  reluctant  

a. The  remedies  at  law  are  adequate  bc  give  S  what  he’s  really  seeking  in  the  transaction  ($$)  

v. Rescission:    h. Damages  and  Breach  of  Marketable  Title  

i. English  Rule:  Flureau    if  you  really  thought  you  had  marketable  title,  then  there’s  a  limitation  on  the  damages  owed  to  B  (good  faith  standard)  

ii. American  Rule:  B  gets  benefit  of  the  bargain  damages  (expectations  standard)  1. More  generous  to  the  buyer  –  better  records  to  trace  ownership  over  time,  so  S  in  

better  position  to  know  whether  he  has  marketable  title  i. Time  of  the  essence  clause:  unless  the  parties  expressly  provide  that  time  is  of  the  essence,  a  

court  will  give  the  parties  a  reasonable  time  for  performance  IV. The  Deed  

a. Warranties  of  Title  i. Types  of  Warranties  

1. General  Warranty  Deed:  warrants  title  against  all  defects  in  title,  whether  they  arose  before  or  after  the  grantor  took  title  

2. Special  Warranty  Deed:  contains  warranties  only  against  the  grantor’s  own  acts  but  not  the  acts  of  others  

a. EX)  if  the  defect  is  a  mortgage  on  the  land  executed  by  the  grantor’s  predecessors  in  ownership,  the  grantor  is  not  liable  

3. Quitclaim  Deed:  contains  no  warranties  of  any  kind  ii. Consideration  

1. Can  give  a  deed  that  is  legally  binding  without  consideration  (gift)  2. BUT  giving  consideration  is  customary  to  let  you  know  it  was  a  sale  rather  than  a  gift  3. For  purposes  of  the  recording  statutes,  gift  v.  sale  matters  

iii. Content  1. Deed  must  contain  a  description  of  the  parcel  of  land  conveyed,  locating  the  parcel  by  

description  of  its  boundaries  2. Customary  references:    

a. natural/artificial  monuments  b. directions  and  distances  from  the  starting  point  (metes  and  bounds)  c. reference  to  a  gov’t  survey,  recorded  plat,  or  some  other  record,  and  d. reference  to  the  street  and  number/name  of  the  property  

3. Reference  points  and  water  boundaries  

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a. accretion:  natural  forces  gradually  shift  a  river  and  cause  the  adjacent  land  to  recede  or  advance  by  the  build  of  new  soil;  owner  of  adjacent  land  gains  or  loses  land  as  the  water  boundary  shifts  

b. avulsion:  sudden  change  in  the  course  of  a  river  (as  after  a  flood),  and  the  boundaries  do  not  change  

iv. Seal:  deed  must  be  signed,  sealed,  and  delivered  1. Common  law:  seal  req’d  2. Modern  law:  almost  anything  can  be  a  seal  (the  word  seal,  the  initials  L.S.,  the  place  of  

the  seal,  a  ribbon,  a  scrawl,  a  scratch)  v. Forgery  and  Fraud  

1. A  forged  deed  is  void  2. Tax  Stamps  

a. indicate  value  of  property  b. people  might  pay  more  taxes  to  get  more  stamps  and  make  property  look  

more  valuable  3. Two  Kinds  of  Fraud  

a. Fraud  in  Execution:  i. O  is  misled  in  the  document  he  thinks  he’s  signing  ii. Courts  treat  as  a  forged  deed  and  O  wins  over  BFP  iii. EX)  O  signs  papers  on  secretary’s  desk;  one  is  a  deed  from  O  to  

secretary;  he  signs  it;  Secretary  conveys  to  BFP;  O  wins  b. Fraud  in  Inducement:    

i. A  deed  procured  by  fraud,  unlike  a  forged  deed,  is  effectual  to  pass  title  to  BFP  

ii. O  was  induced  to  sign  a  bad  deed  iii. BFP  wins  over  O  (preventable  fraud)  iv. EX)  O  gives  bad  check  to  X  who  later  gives  to  BFP;  BFP  wins  

vi. Indenture  and  Deed  Poll  1. Ways  of  providing  copies  of  deeds  when  both  grantor  and  grantee  wanted  a  copy  2. Indenture:  

a. deed  written  out  twice  on  a  single  sheet  of  parchment  and  signed  at  the  end  of  each  copy  by  both  grantor  and  grantee  

b. parchment  cut  into  two  pieces  in  an  irregular  line    3. Deed  poll:  

a. signed  by  only  the  grantor  b. called  deed  poll  bc  top  wasn’t  indented  but  polled  (even  shaved)  

vii. Six  Covenants  in  a  General  Warranty  Deed  1. Present  Covenants:    

a. Covenant  of  seisin:  grantor  warrants  that  he  owns  the  estate  he’s  conveying  i. Run  with  the  land?  SPLIT  

1. American  Rule:  NO,  present  covenants  do  not  run  w/  the  land  2. English  Rule/minority:  YES,  the  successor  in  interest  can  be  

assigned  the  right  to  sue  on  this  ii. Damages:  return  of  all  or  a  portion  of  purchase  price  iii. EX)  A  buys  100  acres  and  title  fails  as  to  20  acres;  A  gets  one-­‐fifth  of  

the  purchase  price  (not  mkt  value)  back  iv. EX)  If  A  struck  a  good  bargain  and  the  mkt  value  is  significantly  

higher  than  A  paid,  A  does  not  get  the  benefit  of  her  bargain  b. Covenant  of  right  to  convey:  G  has  right  to  convey    

i. same  basic  function  as  covenant  of  seisin,  but  possible  to  have  seisin  but  no  right  to  convey  

ii. ex)  a  trustee  may  have  legal  title  but  be  forbidden  by  the  trust  instrument  to  convey  it  

c. Covenant  against  encumbrances:  there  are  no  encumbrances  on  the  property  (mortgages,  liens,  easements,  and  covenants)  

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i. Visible/known  easement  1. If  it  affects  title:  included  in  the  covenant  regardless  of  

knowledge  2. If  it  affects  physical  condition  of  land:  usually  excluded  from  

the  covenant  bc  w/i  the  contemplation  of  bargaining  parties  3. Easements  involving  private  right  of  ways  that  burden  the  

land,  regardless  of  grantee’s  knowledge,  constitute  a  breach  of  encumbrances  

ii. Damages:  1. If  easily  removable  (mortgage)  =  cost  of  removal  2. If  not  easily  removable  (restrictive  covenant  or  easement)  =  

[value  of  land  encumbered]  –  [value  of  land  unencumbered]  3. In  any  case  –  damages  capped  by  purchase  price  

2. Future  Covenants:    a. Covenant  of  general  warranty:  the  grantor  warrants  that  he  will  defend  

against  lawful  claims  and  will  compensate  the  grantee  for  any  loss  that  the  grantee  may  sustain  by  assertion  of  superior  title  

i. Grantor  is  not  liable  for  legal  fees  incurred  by  the  grantee  in  successfully  defending  title,  bc  the  3rd  party’s  claim  is  not  lawful  

ii. Grantor  is  liable  for  grantee’s  legal  fees  only  if  grantee  loses  to  a  superior  lawful  claim  

b. Covenant  of  quiet  enjoyment:  grantor  warrants  that  the  grantee  will  not  be  disturbed  in  the  possession  and  enjoyment  of  the  property  by  assertion  of  a  superior  title  

i. basically  identical  to  covenant  of  general  warranty  c. Covenant  of  further  assurances:  grantor  promises  that  he’ll  execute  any  

other  document  required  to  perfect  the  title  conveyed  viii. Present  and  Future  Covenants  

1. Present  Covenants:  a. broken  at  time  deed  is  delivered  b. SOL  begins  to  run  on  the  date  of  delivery  

2. Future  Covenants:  a. Broken  when  the  grantee  or  his  successor  is  evicted  from  the  property,  buts  

up  the  paramount  claim,  or  is  otherwise  damaged  b. SOL  begins  to  run  at  the  time  of  eviction  or  when  the  covenant  is  broken  in  

the  future  c. Run  with  the  land  –  creating  continuing  obligations  

ix. Encumbrances  1. Types  

a. Pecuniary  charge:  mortgage  or  tax  lien  b. Estates  or  interests:  in  the  property  less  than  a  fee  (leases/LE/dower  rights)  c. Easements  or  servitudes:  on  the  land  (rights  of  way,  restrictive  covenants,  

profits)  2. Violations  of  Marketable  Title  

a. Building  code  violation  not  an  encumbrance  w/  regard  to  covenant  against  encumbrances  

b. Zoning  code  violation  does  subject  person  to  a  greater  risk  of  authorities  coming  so  it  could  be  encumbrance  

c. Court  more  likely  to  find  encumbrance  if  remedy  sought  is  rescission  rather  than  damages  

d. Knowledge  of  seller  i. Latent  violations  that  do  not  appear  on  land  records  that  are  

unknown  to  S  do  not  constitute  an  encumbrance  for  purposes  of  warranty  deed  

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ii. Violations  of  which  S  has  knowledge,  however,  do  constitute  an  encumbrance  

x. Covenants  Running  with  the  land  1. For  a  covenant  to  run  with  the  land  to  a  successor  claimant,  the  convenantee  must  

convey  to  the  successor  either  title  or  possession,  something  to  which  the  covenant  can  attach  

xi. Estoppel  by  Deed:  1. If  a  grantor  conveys  land  to  a  grantee  that  the  grantor  does  not  own,  and  the  grantor  

warrants  the  land,  if  grantor  subsequently  acquires  title  to  the  land,  the  grantor  is  estopped  to  deny  that  he  had  title  at  the  time  of  the  deed  and  that  title  passed  to  the  grantee  

2. When  grantor  does  get  title  to  the  lot  he  fraudulently  conveyed,  that  title  will  automatically  be  transferred  to  his  grantee  and  he  is  estopped  from  claiming  that  he  owns  it  bc  he  previously  gave  it  to  someone  else  

3. Chain  of  title  issues:  deed  executed  on  one  date  but  nothing  to  show  that  he  actually  owned  the  property  on  that  date;  so  finding  chain  of  title  will  depend  on  the  rules  of  that  jxn  (does  he  have  to  search  conveyances  after  acquisition)  

b. Delivery  i. Valid  Conveyance:  

1. Actual  or  constructive  delivery  of  the  deed  to  grantee  or  3rd  party,  and  2. A  present  intention  by  grantor  to  divest  himself  of  the  conveyed  interest  

ii. To  be  effective,  a  deed  must  be  delivered  with  the  present  intent  to  pass  title  iii. Doesn’t  have  to  be  handed  over  –  just  an  act  that  evinces  an  intent  to  be  immediately  bound  by  

the  transfer  (if  no  intention,  considered  revocable)  1. ex)  placing  deed  in  safe-­‐deposit  box  

iv. Manual  delivery  1. Rebuttable  presumption  of  present  transfer  2. Physical  possession  of  deed  is  not  conclusive  that  it  was  legally  delivered  3. Must  be  a  present  intent  to  pass  title  4. Assent:  assumed  with  the  deed  is  beneficial  to  receiving  party  

v. Upon  receipt  of  purchase  price,  grantor  hands  deed  to  grantee  (intending  to  make  immediate  transfer  of  title),  OR  

vi. In  anticipation  of  Closing,  grantor  gives  deed  to  3rd  party  (escrow  agent)  who  hands  over  deed  upon  closing  

1. Grantor  intends  to  transfer  title  when  all  conditions  are  fulfilled  2. Agent  is  agent  of  both  grantor  and  grantee    grantor  cannot  recall  the  deed  from  the  

agent  3. Relate  back:  when  agent  delivers  the  deed  to  grantee,  the  title  of  the  grantee  will  

relate  back  to  the  date  grantor  handed  deed  to  the  agent  (avoids  need  for  a  will  to  pass  title  if  grantor  dies  before  agent  delivers)  

vii. Conditional  Delivery:    1. can  only  be  made  by  placing  the  deeds  in  the  hands  of  a  third  party  to  be  kept  until  

the  happening  of  the  event  upon  which  the  deed  is  to  be  delivered  to  the  grantee  2. the  mere  transfer  of  a  deed  from  the  grantor  to  the  grantee  may  override  the  

grantor’s  explicit  declaration  of  intention  3. relate  back:  after  the  condition  is  satisfied,  there  is  a  conveyance  which  is  

considered  to  have  been  delivered  at  the  time  of  the  conditional  delivery  (so  the  delivery  itself  relates  back,  but  ownership  passes  at  the  time  of  the  condition)  

4. SOF:  can’t  attach  an  oral  condition  to  the  delivery  of  the  deed  to  a  grantee  a. illusory  transfer:  to  get  around  elective  share;  some  jxns  say  no  

viii. Delivery  w/o  Handing  over:  1. If  grantor  intends  to  pass  title  to  the  grantee  now,  there  has  been  a  delivery  even  

though  possession  may  be  postponed  until  G’s  death  

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2. If  grantor  intends  that  no  interest  should  arise  until  death,  no  delivery  during  life  has  taken  place  and  the  deed  will  not  take  legal  effect  at  death  bc  G  intended  it  to  be  a  Will  

3. NOTE:  see  relate  back  of  title    when  G  gives  to  a  3rd  party,  it  will  take  legal  effect  on  his  death  

ix. Revocation  clause  1. When  grantor  retains  power  to  revoke  the  deed  it  is  not  upheld  as  a  delivery  2. Revocation  clause  in  the  deed?  3. SPLIT:    

a. some  permit  b. traditional  view:  deed  must  be  delivered  or  not.    

x. Revocable  Trust  1. Grantors  sign  instrument  retaining  right  to  revoke  the  trust  and  reclaim  legal  title,  

but  on  death  title  passes  to  ____.  Legal  title  held  in  grantors  as  trustees.    a. LE  in  grantors  (for  the  life  of  the  survivor  if  HW  or  joint  owners)  b. Remainder  in  grantee  upon  their  death  (or  other  condition)  

2. Valid  in  all  states  3. No  delivery  requirement  4. No  recording  requirement  (though  advisable)  5. Can  revoke  at  any  time  during  life  (or  the  survivor  can  revoke  after  the  death  of  the  

other  6. NON-­‐PROBATE  –    

a. probate  only  necessary  when  beneficiary  is  not  entitled  to  property  under  some  valid  inter  vivos  instrument  and  must  get  legal  title  changed  to  him  at  O’s  death  

xi. SOoooo  1. Deed:  

a. delivery  b. dominion/control    

2. Revocable  Trust:  a. intent  to  create  a  trust  b. satisfy  SOF  if  interest  in  land  

V. The  Mortgage  a. Terms/procedure  

i. Mortgage:    1. Borrower  issues  a  promissory  note  and  2. A  mortgage,  a  second  document  that  agrees  that  the  land  will  be  sold  if  the  debt  is  not  

paid  off,  gives  lender  security  3. Recorded:  subsequent  purchasers  take  subject  to  the  mortgage  but  is  not  

responsible  for  the  debt  4. SO:  creditor  can  foreclose  a  property  even  though  new  owner  not  responsible  for  

debt;  OR  if  the  subsequent  purchaser  assumes  the  warranty,  they  could  lose  the  property  and  be  liable  for  a  deficiency  judgment  for  any  excess  not  met  at  foreclosure  

ii. Mortgagor:  the  Buyers  (the  ones  taking  out  a  loan)  iii. Mortgagee:  the  lender  (the  ones  giving  the  loan)  iv. Equity  [of  redemption]:  mortgagor’s  interest  in  the  property  (how  much  they’ve  paid  on  it)  

1. Equity  =  [FMV]  –  [Debt]  v. Title  theory  of  mortgage:  mortgagee  takes  legal  title  to  land  and  mortgagor  has  only  equity  

of  redemption  [minority]  vi. Lien  Theory  of  mortgage:  mortgagor  keeps  legal  title  and  the  mortgagee  has  only  a  lien  on  

the  property  [majority]  vii. Deficiency  Judgment:  if  house  doesn’t  bring  in  enough  at  sale  to  cover  the  mortgage,  allows  

mortgagees  to  bring  suit  against  the  personal  assets  of  homeowners  viii. Anti-­deficiency  Statutes:  regulates  what  can  be  obtained;  limits  the  ability  of  mortgagee  to  

file  an  action  for  deficiency  judgment  

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ix. Refinance:    1. to  get  a  better  interest  rate  or    2. borrow  new  money  against  the  house  if  it  has  risen  in  value  since  original  purchase  

b. Mortgage  Backed  Loans  i. Bundle  lots  of  mortgages  and  sell  to  investors  ii. more  risk  in  buying  a  single  mortgage  but  bundle  them  bc  even  if  some  are  bad,  overall  will  be  

a  good  investment  iii. Attract  investments  from  overseas,  etc.  who  want  to  get  into  lower  risk  real  estate  investment  

c. Types  of  Mortgages  i. First  and  Second  Mortgages:  same  property  can  be  used  to  secure  more  than  one  loan  

1. First  is  one  given  first  in  time  2. Second  mortgage  is  take  subject  to  the  rights  of  the  first  mortgage  3. Upon  foreclosure,  the  holder  of  a  second  mortgage  is  entitled  to  share  in  the  sale  

proceeds  only  after  the  first  mortgage  has  been  fully  satisfied  4. EX1)  foreclosure  sale    profits  go  to  payment  of  1st  mortgage  1st    

a. any  remaining  funds  after  paying  off  1st  mortgage  go  to  2nd  mortgage  5. EX2)  1st  mortgagee  getting  paid;  can  2nd  mortgagee  enforce  their  mortgage?  

a. Equity  of  Redemption:  can  try  to  enforce  their  mortgage  by  foreclosing  on  their  mortgage  (the  amount  to  which  they  have  right  –  whether  in  lien  or  title)  and  selling  the  property,  but  only  in  a  way  that  protects  the  rights  of  1st  mortgagee  

b. Can  have  a  foreclosure  sale  and  whatever  comes  in  goes  to  2nd  mortgage;  any  excess  goes  to  homeowners;  but  the  1st  mortgage  stays  and  whoever  buys  the  property  takes  subject  to  the  first  mortgage  

ii. Fully  Amortizing:    1. fixed  monthly  payment  2. pay  more  interest  at  the  beginning  and  more  principle  at  the  end  3. at  the  end  of  the  period,  you’ve  paid  off  the  debt  

iii. Adjustable  Rate:  1. no  fixed  interest  rate  –  can  change  during  the  year  every  year  2. a  limited  amount  on  change  and  a  cap  on  how  high  

iv. Postpone  Principal  Payments:  for  a  period  you  only  pay  interest  v. Negative  Amortization:  

1. requires  balloon  payment  at  the  end  OR  2. refinancing  of  the  debt  

d. Foreclosure  sale  i. If  a  buyer  defaults  on  his  loan/doesn’t  perform,  the  lender  may  have  the  property  sold  

(“foreclose  the  mortgage”)  and  apply  the  proceeds  of  sale  to  the  amount  due  on  the  note  ii. Any  amount  exceeding  the  debt  goes  to  the  borrower  OR  to  the  amt  due  on  any  second  

mortgages  iii. Can  be  valuable  in  extinguishing  junior  liens  on  the  property  (see  ex  above)  iv. Requirements:  

1. Notice  to  borrowers  (we’re  going  to  foreclose)  so  they  have  a  reasonable  opportunity  to  satisfy  the  debt  

2. Advertise  the  sale  –  publish  info  in  paper/public  places  v. Lender’s  Duty  to  Buyer  

1.  Exercise  reasonable  effort  to  obtain  a  fair/reasonable  price  under  the  circumstances  [buyer  wants  his  equity  back]  

2. But  no  incentive  bc  he  only  gets  back  debt  owed  3. Remedy:  

a. Can  set  a  minimum  upset  price  to  ensure  a  fair  price  (minimum  bid  below  which  none  will  be  accepted)  

b. Pay  commission  to  lender  for  any  amount  over  the  outstanding  debt  c. List  the  property  w/  an  agent  

vi. JXNS  Approach  to  Foreclosure  

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1. Judicial  Foreclosure  a. Any  clause  in  the  mortgage  giving  mortgagee  the  power  to  sell  land  on  

default,  w/o  judicial  proceedings,  is  void  b. Requirements:  

i. Notice  to  borrower  ii. Public  sale  

2. Private  Power  of  Sale  a. gives  lender  some  right  to  the  property  in  the  even  they  don’t  pay  their  loan  

back  b. differs  from  standard  mortgage  –  lender  can  sell  the  property  to  collect  

money  w/o  judicial  foreclosure  c. Common  law:  mortgagee  couldn’t  bid  on  the  property  at  the  sale    

i. Deed  of  Trust  created  to  avoid  judicial  foreclosure  and  the  rule  ab  mortgagee  bidding  at  sale    

d. Not  allowed  to  bring  deficiency  action  against  homeowner  vii. Deed  of  Trust  

1. Borrow  conveys  title  to  3rd  party  (usually  lender)  to  hold  in  trust  to  secure  payment  of  the  debt  to  the  lender  

2. Trustee  is  given  the  power  to  sell  the  land  w/o  going  to  court  if  the  borrower  defaults  3. Quicker/less  costly    no  judicial  supervision,  no  notice  req’t  4. Trustee  can  sell  the  land  upon  default  at  a  public  sale  out  of  court  and  the  lender  can  

bid  at  trustee’s  sale  viii. Mortgagee’s  Rights  in  Foreclosure  

1. Ask  for  stop  on  foreclosure  (before  sale)  2. Ask  for  sale  to  be  set  aside  (after)  3. Seek  damages  from  lender  for  improperly  conducting  process  

ix. Payment  Theories  for  Mortgagees  1. Expectations  Theory:  pay  only  that  which  he  reasonably  expects  to  receive  2. Subordination-­Agreement  Theory:    

a. When  parties  have  entered  into  a  K  subordinating  one  claim  to  the  other’s  x. Land-­Purchase  Contract  

1. Defined:  a. An  agreement  by  buyer  to  buy  land  and  pay  for  it  over  a  period  of  years  b. S  agrees  to  deliver  title  at  the  end  of  the  period  c. B  takes  possession  and  seller  keeps  title  until  final  payment  (that  is  the  

security)  2. Remedies  available  to  S:  

a. Call  in  balance  immediately  OR  b. Declare  K  terminated  and  repossess  (disfavored  bc  disregards  buyer  equity)  c. Foreclosure  (favored  by  courts  bc  protects  buyer  equity)  

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Title  Assurance  

[gilberts,  ch.  11]  I. The  Recording  System  

1. Intro  i. Common  law:  Prior  in  Time  

1. Prior  in  time,  prior  in  effect  –  Legal  effect  given  to  conveyances  in  accordance  with  the  time  of  execution  

a. EX)  O  to  A;  then  O  to  B,  where  B  doesn’t  know  of  A’s  deed.  A  prevails  over  B  on  the  theory  that  O  conveyed  title  to  A  and  had  nothing  left  to  convey  to  B  

2. Continues  to  control  unless  a  person  can  qualify  for  protection  under  an  applicable  recording  act  

ii. Under  the  recording  acts,  a  subsequent  BFP  is  protected  against  prior  unrecorded  interest  iii. Equitable  Doctrine  of  BFP  Exception:  

1. If  the  prior  interest  was  equitable,  equity  would  not  enforce  it  3against  a  subsequent  purchaser  of  a  legal  interest  who  didn’t  know  of  the  prior  equitable  interest  and  paid  valuable  consideration  

2. EX)  O  contracts  to  sell  to  A.  A  has  equitable  title.  O  later  conveys  to  B,  and  B  is  a  purchser  for  value  without  notice  of  A’s  equitable  interest.  The  subsequent  conveyance  to  B  cuts  off  prior  equity  in  A.    

iv. Judgments:  1. should  be  recorded  2. if  there  is  an  outstanding  judgment  against  the  Seller,  creditors  can  get  to  debtor’s  

property,  so  if  the  property  as  been  attached  as  a  lien  to  secure  a  judgment,  a  buyer  would  want  to  know  bc  he  would  buy  subject  to  the  judgment    

3.  2. Title  Search  

i. Constructive  notice:  “had  you  done  a  proper  title  search,  you  would  have  seen  _____”;  imputed  to  have  the  knowledge  that  a  proper  search  would  have  provided  

3. The  Indexes  i. Types:  

1. Tract  Index  a. Index  by  block  and  lot,  can  see  prior  recorded  instruments  conveying,  

mortgaging,  or  otherwise  dealing  with  the  lot  2. Grantor-­‐Grantee  Index  

a. more  complicated  b. First  to  grantee  index  to  discover  from  whom  each  previous  owner  took  title  c. Then,  to  grantor  index  to  ascertain  what  transfers  each  owner  made  

ii. Government  Survey  1. Prime  meridian  (34)  Range  Lines,  baselines,  townships,  etc  2. Jefferson’s  Gridiron  System  –  promotion  of  an  agrarian  egalitarian  society;  and  easy  to  

describe  in  deeds/auctions  4. Types  of  Recording  Acts  [before  you  can  take  advantage  of  the  recording  system,  you  must  claim  

status  as  BFP  =  good  faith  purchaser  w/o  notice]  i. Race  Statute  [minority,  NC  and  LA]  

1. The  1st  to  record  wins  2. Knowledge  of  prior  claim  is  irrelevant  

a. BUT  if  the  other  has  recorded,  it  gives  constructive  notice,  and  subsequent  purchaser  loses  

b. EX)  if  he  actually  knows,  but  the  1st  hasn’t  record  –  subsequent  purchaser  prevails  

ii. Notice  Statute  [50%  of  states]  

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1. Subsequent  purchaser  cannot  have  notice  (actual  or  constructive)  of  prior  purchaser  2. Protects  a  subsequent  BFP  without  notice  even  if  he  has  failed  to  record  3. Shelter  Rule:  a  person  who  takes  from  a  BFP  protected  by  the  recording  act  has  the  

same  rights  as  his  grantor  a. BUT  does  not  extend  to  grantor:  if  O  repurchases  from  B  (the  2nd  person  he  

conveyed  to),  O  cannot  prevail  over  A  (the  1st  person  he  conveyed  to)  b. doctrine  of  estoppel  would  also  probably  apply  

4. Gift:  if  received  as  a  gift,  can’t  claim  status  as  good  faith  purchaser  for  value  bc  they  didn’t  purchase  it  (haven’t  suffered  loss)  

iii. Race-­Notice  Statute  1. A  subsequent  purchaser  is  protected  against  prior  unrecorded  instruments  only  if  the  

subsequent  purchaser  a. Has  no  notice  of  prior  instrument  and  b. Records  before  prior  instrument  is  recorded  

2. Everything  in  notice  statute  plus  record  1st  5. Inquiry  Notice  

i. Actual  Notice:  actually  knows  of  prior  instrument    not  BFP  ii. Record  Notice:  if  an  instrument  is  recorded,  any  subsequent  purchaser  has  record  notice  and  is  

not  BFP  iii. Inquiry  Notice:  [some  cts  don’t  recognize  inquiry  notice  and  only  protect  subsequent  

purchasers  who  have    no  actual  or  record  notice;  if  they  have  “inquiry  notice”  could  still  be  protected]    something  happened  that  should  have  raised  suspicion  and  led  to  inquiry  

1. From  Quitclaim  Deed  –  bc  looks  suspect  to  convey  w/o  warranty  of  title  2. From  Possession  –  if  a  third  party  in  possession  of  the  property,  even  if  the  purchaser  

did  not  inspect  3. From  Neighborhood  –  restrictions  in  deeds  from  a  common  grantor  if  a  uniform  

scheme  for  development  of  the  subdivision  is  obvious  from  the  neighborhood  4. Into  Unrecorded  instruments  –  if  a  recorded  instrument  expressly  refers  to  an  

unrecorded  instrument  [harper  v.  paradise]  6. Chain  of  Title  Problems  

i. Name  spellings  –  where  to  check  1. Doctrine  Idem  Sonans:  Absolute  accuracy  in  spelling  not  required  if  the  

pronunciations  are  practically  alike  a. Doesn’t  apply  where  the  written  name  is  material  b. Most  likely  to  apply  in  smaller  towns  where  there  won’t  be  a  lot  of  the  same  

name  2. Hyphenated  names:  insufficient  to  provide  constructive  notice  (not  req’d  to  look  for  

hyphens)  3. Diminutives:  most  say  must  search  under  diminutives    4. Married  women:  If  you  know  of  her  maiden  name  or  previous  married  name,  look  

under  those  ii. Reciprocity  of  Restriction:  

1. Where  grantor  binds  his  remaining  land  by  writing,  reciprocity  of  restriction  bw  the  grantor  and  grantee  can  be  enforced  

2. Subsequent  purchaser  from  the  common  grantor  acquires  title  subject  to  the  restrictions  in  the  deed  to  the  earlier  purchaser  

3. SPLIT  [50/50]  a. Some  jxns  require  you  to  look  at  all  deed  from  a  common  grantor;  b. Some  jxns  allow  you  to  focus  only  on  the  chain  of  title  for  your  particular  

parcel  i. EX)  an  easement  or  restrictive  covenant  on  Wacre  that  appears  in  a  

prior  deed  of  Bacre  from  the  common  owner  of  the  two  is  not  in  the  purchaser’s  chain  of  title  to  Wacre  

iii. Prior  deed  recorded  after  a  later  purchaser  with  notice  has  recorded  subsequent  deed  

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1. Morse:  a  purchaser  is  not  bound  to  examine  the  record  after  the  date  of  a  recorded  conveyance  to  discover  whether  the  grantor  made  a  prior  conveyance  recorded  later  

2. Woods:  a  deed  recorded  late  –  after  another  deed  from  the  same  owner  –  gave  constructive  notice  to  subsequent  purchaser  (title  searching  substantially  increased)  

3. see  estoppel  by  deed  7. Persons  Protected  by  the  Recording  System  

i. Designed  to  circumvent  the  common  law  “prior  in  time”  rule  so  that  a  2nd  in  time  purchaser  can  prevail  if  they  can  prove  they  were  a  good  faith  purchaser  for  value  

ii. BFP:  good  faith  buyer  for  value  1. Shelter  Rule:  protects  those  to  whom  protected  BFPs  convey  

iii. Donees:    1. Generally  not  protected  under  the  recording  system  bc  they  do  not  give  value  2. But  where  the  donee  is  the  1st  person  with  an  interest,  it  may  be  protected  

iv. Creditors:  protected  only  if  they  have  a  lien  [which  would  be  recorded]  1. merely  lending  money  to  the  record  owner  does  not  give  priority  over  unrecorded  

instruments  2. At  a  foreclosure  sale,  the  buyer  (generally  creditor)  is  protected  as  a  subsequent  BFP  

for  value  if  the  buyer  has  no  notice  of  the  unrecorded  claim  at  time  of  sale  v. Quitclaim  deeds:  JXNS  are  split  

1. Majority:  QC  deed  treated  same  as  GWD  for  notice  purposes  2. Minority:    

a. purchaser  buy  QC  can’t  be  BFP  w/o  notice  bc  the  deed  warrants  suspicion  b. all  subsequent  purchasers  are  also  on  notice  by  operation  of  QC  

vi. Outstanding  Interests  and  Partial  Payment:  1. Generally:  where  a  buyer  has  notice  of  an  outstanding  interest  and  pays  consideration,  

he  does  so  at  his  own  risk  2. BUT:  where  a  buyer  receives  notice  of  an  outstanding  interest  (ex:  1st  right  of  refusal)  

subsequent  to  paying  some  but  not  all  of  the  purchase  price,  authorities  SPLIT:  a. Majority:  protanto  rule    protect  only  to  the  extent  of  payments  made  prior  

to  notice  i. award  land  to  holder  of  the  outstanding  interest  and  award  buyer  the  

payments  he  has  made  ii. award  buyer  a  fractional  interest  in  the  land  proportional  to  the  amt  

paid  prior  to  notice  iii. allow  buyer  to  complete  the  purchase  but  to  pay  the  remaining  

installments  to  the  holder  of  the  outstanding  interest  b. Minority:  partial  payment  of  the  consideration  is  insufficient  to  render  buyer  

BFP  3. Waldorff:  careful    if  the  2nd  in  time  purchaser  pays  subsequent  to  someone  else  (1st  

in  time)  having  an  outstanding  interest,  then  the  pro-­‐tanto  rule  applies;  but  in  Waldorff,  the  issue  was  that  a  1st  in  time  purchaser  got  an  interest,  didn’t  record  it,  and  a  2nd  in  time  purchaser  (bank)  secured  a  mortgage…  so  there,  the  outstanding  interest  came  subsequently  

8. Marketable  Title  Acts  i. Generally:  

1. people  protected  by  adverse  claims  2. statute  works  in  conjunction  with  the  recording  statute  3. Limits  the  amount  of  time  for  which  you  have  to  do  a  title  search  by  creating  

conditions  under  which  competing  claims  to  the  land  on  record  can  be  extinguished/no  longer  treated  as  effective  

4. EX)  p  613  a. OX  in  lease  for  99  years  in  1889  b. in  1890,  O  sells  to  A,  mentioning  the  lease  to  X  in  the  deed  to  A  c. in  1920,  AB,  but  deed  does  not  mention  the  lease  d. in  1941,  BC,  no  mention  of  99  year  lease  

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e. 1960:  C’s  title  to  Bacre  would  be  free  and  clear  of  the  99  year  lease  when  the  1920  deed  from  AB  had  been  on  record  for  40  years  

5. Constructive  notice:  immaterial  ii. “Root  of  Title”  

1. Two  chains  that  make  competing  claims  to  the  same  property  2. Root  of  title  for  C  is  the  1920  deed  from  A  to  B  (the  recorded  interest  at  least  40  years  

in  the  past)  3. Once  you  find  the  root  of  title,  the  MTA  extinguishes  competing  chains  of  title  that  

haven’t  been  subj  of  record  activity  since  the  root  of  title  (so  here,  99  yr  lease  extinguished)  

4. Prevent  Extinguishment:  periodically  re-­‐record  the  interest  5. Certain  Interests  don’t  have  to  be  recorded  

a. mineral  rights,  easements,  interests  of  persons  in  possession,  claims  of  federal  gov’t  

II. Title  Insurance  1. Insures  the  accuracy  of  records  by  agreeing  to  defend  the  record  title  if  litigated  2. get  it.    

 

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The  Law  of  Nuisance  

[gilberts  ch.  8]  I. An  Intro  to  the  Substantive  Law  

1. Nuisance:  an  unprivileged  interference  with  a  person’s  use  and  enjoyment  of  land  i. Prima  Facie  Case:  

1. P  has  possessory  interest  in  the  land  2. D  has  done  an  affirmative  act  that  interferes  with  P’s  use  and  enjoyment  of  her  

property  3. The  interference  is  substantial  and  unreasonable  and  4. The  burden  of  the  interference  outweighs  its  benefit  (unless  SL  applies)  

2. Private  Nuisance:  i. Conduct  that  causes  a  substantial  interference  with  the  private  use  of  land  and  is  either:  

1. Intentional  and  unreasonable  or  2. Unintentional  but  negligent,  reckless,  or  abnormally  dangerous  (SL)  

ii. P  suing  on  nuisance  must    1. Have  a  property  interest  that  is  affected  OR  2. Allege  bodily  harm  as  the  result  of  the  nuisance  

iii. Intentional  Nuisance  1. Prima  Facie  Case  

a. Unreasonable  conduct  that    b. Interferes  with  private  use  and  enjoyment  of  the  land  and  c. The  gravity  of  the  harm  outweighs  the  utility  of  the  actor’s  conduct  

2. Reasonableness  a. Evaluate  based  on  reasonable  person  w/  normal  sensibilities  b. NOT  a  nuisance  if  most  people  wouldn’t  be  affected  c. EX)  odorless  gasses  that  special  P  is  affected  by  is  not  a  nuisance  

3. Tests  for  Intent  a. Jost  Test:  threshold  test  

i. If  D’s  conduct  creates  a  certain  level  of  interference  with  a  person’s  use/enjoyment  of  someone’s  land,  that  is  automatically  unreasonable  

b. Restatement  1st:  Risk-­Utility  Test  i. If  gravity  of  harm  outweighs  the  benefit  of  the  harm,  it’s  unreasonable  

1. Extent  and  character  of  the  harm  2. Social  value  of  P’s  use  3. Suitability  to  the  locality  in  question  4. Burden  on  P  of  avoiding  the  harm  5. Cost  to  D  in  preventing  the  harm  

c. Restatement  2d:  potential  compensation  test  i. If  conduct  is  socially  useful,  D  can  compensate  harmed  Ps  where    

1. The  harm  is  serious  and    2. Compensating  P  would  make  the  continuation  of  the  conduct  

feasible    3. Could  be  unreasonable  if  they  haven’t  compensated  people  when  

they  could  have  iv. Unintentional  Nuisance  

1. Effect  of  the  conduct  is  substantial  2. Conduct’s  effect  invades  an  interest  in  the  use  and  enjoyment  of  land  3. The  conduct  is  negligent,  reckless,  or  ultra-­‐hazardous  

a. not  a  question  of  unreasonableness  where  conduct  is  unintentional  3. Public  Nuisance:  the  interference  is  with  a  right  common  to  the  general  public  4. Hybrid  –  public/private  Nuisance:    

i. Can  a  private  party  claim  a  public  nuisance?  Isn’t  that  gov’t  job?  ii. Private  citizens  are  members  of  the  public  –  can  any  one  bring  public  claim?    

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iii. Generally  need  more  than  one  citizen  iv. TEST:  

1. statutory  declarations  of  conditions  deemed  to  be  public  nuisances  (yes)  2. special  injury  beyond  what  other  general  members  of  the  public  experience  (no)  

5. Distinguish  Nuisance  from  Trespass  i. Nuisance  –  protects  person’s  interest  in  their  use/enjoyment  of  land  

1. Intangible  invasion  –  smell,  light,  sound  ii. Trespass  –  protects  interest  in  exclusive  possession  of  land  

1. Have  to  prove  a  physical  invasion  by  a  tangible  thing  iii. Sometimes,  it  can  be  both    sewer  system  that  overflows  on  neighbor’s  property  

6. Intentional  Nuisance  v.  Intentional  Trespass  i. Intentional  torts  1)  result  in  liability  regardless  of  the  gravity  of  the  harm  and  2)  don’t  assess  

reasonableness  of  conduct  ii. Intentional  nuisance  requires  

1. substantial  invasion  and  2. unreasonable  conduct  

II. Remedies  (and  more  substantive  law)  1. Damages  [court  awards]  

i. Generally,  D  who  creates  nuisance  bears  financial  cost  of  moving  it  ii. Compensate  P  for  damages  iii. Buy  D’s  land  iv. Payment  of  Permanent  Damages    would  effect  a  servitude  on  P’s  land  and  preclude  future  

recovery  by  future  grantees  2. Injunction  [P  &  D  make  decision  ab  injunction]  

i. Balancing  the  equities  –  comparative  hardship    1. Think:  relative  social  costs  (increased  rent?  proximity  of  affected  land)  2. Efficiency    want  to  allocate  property  rights  to  places  that  will  result  in  the  greatest  

total  social  value  3. Basically  the  restatement  test  of  reasonableness  but  do  it  again  when  you  get  to  

injunction  ii. If  awarded  injunction  for  past  harm,  P  has  to  bring  suit  as  long  as  D  is  creating  the  nuisance  

3. Injunction  conditioned  on  payment  of  permanent  damages:  i. Only  goes  into  effect  if  D  doesn’t  pay  past/present/future  damages  

4. Coming  to  the  Nuisance  Doctrine  i. Can  bar  nuisance  claim  if  P  came  to  D’s  land  after  D  was  already  using  it  in  the  interfering  way  ii. If  deemed  a  nuisance,  court  might  make  P  (one  claiming  nuisance)  bear  financial  burden  of  

making  D  remove  the  nuisance  since  it  existed  before  P  came  iii. If  public  nuisance  –  more  like  to  grant  bc  might  affect  public  health/  

III. Nuisance  and  Environmental  Controls  1. Use  authorized  by  Zoning  Ordinance:    

i. that  D’s  use  of  her  land  is  consistent  w/  local  zoning  is  not  controlling  in  an  action  for  private  nuisance  

ii. Though  the  ordinance  may  permit  the  use,  it  might  still  be  an  unreasonable  inference  with  the  particular  adjoining  parties  

 

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Private  Land  Use:  The  Law  of  Servitudes  

[gilberts,  ch.  7]  I. Easements  

1. Ways  to  Create  Easements  i. Express  written  grant  ii. Prescription  iii. Estoppel  iv. Implication  

1. Prior  Use  2. Necessity  

2. Ways  to  Terminate  Easements  i. Release  –  expressly  release  in  writing  ii. Expiration  –  not  all  deeds  have  expiration  date  iii. Removal  of  Necessity  iv. Merger  –  if  owner  of  easement  becomes  owner  of  servient  tenement  v. Estoppel  –  servient  owner  reasonably  relies  upon  a  statement  or  representation  by  the  

easement  owner  (like  said  they  would  stop  using/said  they’d  release?)  vi. Abandonment  –  nonuse  +  unequivocal  manifestation  of  intent  to  release  vii. Condemnation  –  gov’t  taking  viii. Prescription  –  if  servient  O  wrongfully  prevents  the  easement  from  being  used  for  the  

prescriptive  period    3. Historical  Background/Terminology  

i. Profits  a  prendre:  rights  to  take  off  the  land  things  that  were  thought  of  as  “part”  of  the  land  (ex:  timber,  minerals,  wild  game,  and  fish)  

ii. Incorporeal  hereditaments:  certain  intangible  rights  that  descended  as  real  property  to  the  primogenitary  heir  (eldest  son)  

iii. Classifications  of  easements  1. Affirmative  easement:  owners  grants  someone  the  right  to  enter  or  perform  an  act  on  

the  servient  land  2. Negative  easement:  owner  is  forbidden  from  doing  something  on  his  land  that  might  

harm  a  neighbor  3. Easement  appurtenant:  benefits  the  easement  owner  in  the  use  of  land  belonging  to  

that  owner;  granting  an  easement  over  one  piece  for  the  benefit  of  the  other  piece  a. usually  transferable  b. if  unclear,  courts  construe  as  easement  appurtenant  c. Where  the  easement  “last  so  long  as”  –  easement  is  determinable  

4. Easement  in  gross:  benefits  the  easement  owner  personally  rather  than  in  connection  with  use  of  land  which  that  person  owns    

a. only  a  servient  estate,  no  dominant  tenement    b. may  be  alienable  or  inalienable  

iv. Dominant  tenement:  the  easement  attaches  to  and  benefits  the  dominant  tenement  v. Servient  tenement:  the  land  subjected  to  the  easement  

4. Creation  of  Easements    i. Easements  (and  profits)  are  interests  in  land  and  therefore  subject  to  SOF  

1. Generally  requires  written  instrument  signed  by  party  to  be  bound,  but  notwithstanding  the  SOF,  easements  may  sometimes  be  created  by  fraud,  part  performance,  estoppel,  implication  or  prescription  

ii. OVERIEW:  Ways  to  Create  Easement  1. express  written  grant  2. implication  

a. necessity  (othen)  b. prior  existing  use  (van  sandt)  

3. prescription:  uses  property  long  enough  under  right  conditions  

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4. estoppel:  dominant  tenement  owner  relies  on  statements  by  servient  tenement  owner  iii. In  a  third  party  

1. At  common  law  –  couldn’t  reserve  an  easement  in  a  3rd  party  a. Rationale:  

i. BFP  w/o  notice  is  adequately  protected  by  recording  statutes  ii. Parties  rely  on  the  common  law  rule  

2. Some  courts  (minority)  reject  this:  a. Defeats  parties’  intent  b. Fairness  to  parties  in  the  transaction  (one  pays  less  and  then  can  turn  around  and  

pay  more)  3. Restatement:  permits  easement  to  be  created  in  a  3rd  party  4. Arises  when:  generally  arises  in  context  of  easement  in  gross  

iv. Reservations/Exceptions:  1. Reservation:  a  provision  in  a  deed  creating  some  new  servitude  which  did  not  exist  before  

as  an  independent  interest  2. Exception:  a  provision  in  a  deed  that  excludes  from  the  grant  some  preexisting  servitude  

on  the  land  v. Licenses  

1. Permission  to  do  something  that  would  otherwise  be  trespass  2. Revocable    3. Sometimes  becomes  irrevocable:  

a. Where  you  remove  some  chattel  from  the  property  i. Coupled  with  an  interest  called  a  profit,  can  become  irrevocable  

b. Estoppel:  under  certain  conditions,  you  will  be  estopped  from  revoking  the  license,  making  it  effectively  an  easement    

4. Easement  by  Estoppel  a. if  you  have  changed  your  position  substantially  in  form  or  reliance  

(improved/invested),  that  can  make  your  license  irrev  and  essentially  make  an  easement  by  estoppel  

vi. Easements  by  Prescription  1. No  express  permission  to  the  easement,  2. Similar  to  AP  –  asserting  a  right  to  use  the  property  which  acknowledging  that  the  

property  belongs  to  someone  else  3. If  permission  –  not  adverse,  so  not  by  prescription  

a. Holbrook  –  use  of  road  wasn’t  Adverse  bc  it  had  been  used  many  times  before  in  various  circumstances  with  permission  of  O  

4. Exclusive  use:  not  necessary  for  easement  by  prescription  –  just  establishing  right  to  use  rather  than  title  there’s  no  reason  you  shouldn’t  be  able  to  use  it  along  with  the  owner  

a. It’s  exclusive  in  the  sense  that  it  belongs  to  me  and  not  other  people  5. Lost  Grant  theory:  owner  must  acquiesce  to  the  use  

a. If  O  gives  permission,  that  permission  makes  the  use  not  adverse  so  no  easement  by  prescription  

b. If  O  can  show  through  evidence  like  a  letter  that  they  did  not  acquiesce  in  the  use  of  the  property,  that’s  enough  to  prevent  the  creation  of  an  easement  by  prescription  

6. Jxn  that  doesn’t  follow  lost  grant  theory  –  sending  letter  saying  “stop  using  my  property”  is  enough  to  stop  creation  of  an  easement  by  prescription  

7. Restatement:  you  have  to  actually  interrupt  their  use  of  the  property  somehow  before  you  can  prevent  the  creation  of  the  easement  

8. EX)  Golf  Balls  a. will  country  club  get  easement  by  prescription  for  golfers  to  go  retrieve  their  golf  

balls?  b. McDonald  found  that  easement  had  been  created  by  continued  retrieval  of  balls  

over  long  time;  so  to  avoid  this,  you  need  to  interrupt  it    tell  them  to  stop,  put  up  

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a  fence  to  keep  people  from  coming  in;  negotiate  agreement  with  country  club  to  keep  them  from  getting  an  easement:  grant  them  permission  (that  you  can  revoke  at  any  time)  which  prevents  the  satisfaction  of  requirements  to  get  an  easement  by  prescription  

vii. Easement  by  Estoppel  1. License  becomes  irrevocable  by  estoppel  2. User  has  changed  use  substantially  in  form  of  reliance,  making  license  irrevocable  and  

creating  easement  by  estoppel  3. Arises  when:    

a. Oral  discussions  –  no  title  search  to  find  i. SOF:  interest  in  land  ought  to  be  in  writing  

b. Improvements  made  c. Removal  of  chattels    profits  

4. Restatement:    a. expectations  that  create  the  servitude  will  also  define  its  scope  and  terms  b. If  they  were  initially  permitted  to  do  so  (even  as  licensee),  creates  expectations  

that  they  will  always  at  minimum  permit  that  use  viii. Quasi-­Easement:  

1. When  O  makes  use  of  one  part  of  his  land  for  the  benefit  of  another  part  (ex:  waste  traveling  through  the  easement)  

2. If  it’s  just  an  interest  in  using  your  own  property,  you  don’t  have  the  someone  else  req’d  to  have  an  easement  –  so  it’s  a  quasi-­‐easement  

ix. Easements  by  Implication  1. O  had  a  quasi-­‐easement,  she  burdened  one  party  of  her  property  to  benefit  another  part  2. Generally  implied  in  two  situations:  

a. prior  existing  use;  apparent  and  continuous  use  of  a  portion  of  the  tract  existing  when  the  tract  is  divided  (quasi-­‐easement);    

b. easement  by  necessity:  the  claimed  easement  is  necessary  to  the  enjoyment  of  the  claimant’s  land  and  that  necessity  arose  when  the  claimed  dominant  parcel  was  severed  from  the  claimed  servient  parcel  

3. Easement  Implied  by  Prior  Use  a. Conveyance  of  property  (unity  of  ownership    common  owner  cuts  it  into  

smaller  pieces)  i. ex)  sever  2  estates  and  there  is  a  prior  existing  use  of  the  property  

b. Reasonable  necessity  for  use/enjoyment  of  the  quasi-­‐dominant  estate  c. Continuous  use  

i. Intended  continuation  –  at  time  of  division  –  to  continue  the  prior  use  ii. Existing  use  –  prior  use  must  be  existing  at  the  time  of  division  (implied  by  

the  element  of  intended  continuation)  d. Apparent  prior  use  (not  necessarily  visible)  e. Restatement  Factors  

i. whether  claimant  is  the  conveyor  or  the  conveyee  ii. the  terms  of  the  conveyance  iii. the  consideration  given  for  it  iv. whether  the  claim  is  made  against  a  simultaneous  conveyee  v. the  extent  of  necessity  of  the  easement  or  profit  to  the  claimant  vi. whether  reciprocal  benefits  result  to  the  conveyor  and  the  conveyee  vii. the  manner  in  which  the  land  was  used  prior  to  its  conveyance,  and  viii. the  extent  to  which  the  manner  of  prior  use  was  or  might’ve  been  known  to  

the  parties  (speaks  to  foreseeability/intention)  4. Easements  Implied  by  Necessity  

a. Requirements:  i. unity  of  ownership  

1. sever  2  estates  and  the  easement  is  necessary  as  a  result  ii. necessity  not  convenience  

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iii. necessity  existed  at  the  time  of  severance  1. if  it  gets  created,  will  be  at  the  time  of  severance  

b. Majority  only  requires  “reasonable  necessity”  c. Can’t  be  a  matter  of  mere  convenience  d. Terminates  when  the  necessity  is  removed  

x. Public  Trust  Doctrine  1. Ownership  over  land  flowed  by  tidal  waters,  which  extend  to  the  mean  high  water  mark,  

is  vested  in  the  State  in  trust  for  the  people;  covers  wet  sand  area  of  beach  2. State  owns  for  the  benefit  of  the  public  and  the  public  can  use  it  if  they  want  3. Public  must  be  given  reasonable  access  –  whatever  is  reasonably  necessary  for  the  

enjoyment  of  the  ocean  4. Recognizes  a  limitation  on  landowner’s  right  to  exclude  people  from  their  property  (like  

state  v.  shack  –  migrant  farm  workers)  5. Could  this  be  considered  a  “Taking”?  Esp  if  Leg  enacted?  Should  it  be  compensated?  

a. Argue  yes:  taking  some  interest  b. Argue  no:  not  taking  any  interest  bc  was  never  given  to  private  owners;  was  

always  held  in  trust  by  State  xi. With  RRs  

1. When  a  RR  for  its  purposes  acquires  an  estate  in  land  for  laying  track  and  operating  RR  equipment  thereon,  the  gov  takes  the  least  amt  of  the  estate  necessary,  and  that  typically  means  an  easement  not  a  FS  estate  

2. Condemnation  a. Where  it  was  a  condemnation  proceeding,  courts  treat  as  easement  b. Even  if  deed  says  “FS”,  if  the  conveyance  was  done  w/  the  threat  of  condemnation,  

courts  convey  as  easement  [presault]  c. SO  you  can  convey  FS  to  RR  for  strip  of  land  if  there  is  no  condemnation  threat  

5. Assignability  of  Easements    i. Doctrine  of  Mountjoy’s  Case:  For  an  easement  to  be  assigned,  it  must  be  used  by  the  

controllers  of  the  easement  “as  one  stock”    1. Rationale:  if  you  grant  an  assignment  and  then  allow  them  to  assign  without  working  

together/getting  consent  of  others,  there’s  a  concern  that  the  lake  might  get  overused  (the  easement  being  used  more  than  originally  envisioned  by  ice  company  when  it  made  the  grant  to  frank)  

2. Majority:  do  not  follow  this  non-­‐divisibility  rule  ii. Restatement:  EIG  may  be  divided  unless    

1. contrary  to  intent  of  parties  in  creating  easement  or  2. the  division  unreasonably  increases  the  burden  on  the  servient  estate    

iii. Easements  in  gross:  assignable  for  commercial  exploits,  but  not  for  personal  enjoyment  iv. Easements  appurtenant:  run  with  the  land,  attached  to  the  land  

6. Scope  of  Easements    i. General  Rule:  

1. An  easement  appurtenant  to  one  parcel  of  land  may  not  be  extended  by  O  of  dominant  estate  to  other  parcels  owned  by  him  (brown  v.  voss)  

2. Extension  of  the  use  of  an  easement  to  benefit  a  non-­‐dominant  estate  constitutes  a  misuse  of  the  easement  

3. Misuse  of  an  easement  is  a  trespass  ii. Restatement:    

1. expectations  that  create  the  servitude  will  also  define  its  scope  and  terms;  fact  that  they  initially  permitted  them  to  do  so,  creates  expectations  that  they  will  always  at  minimum  permit  them  to  do  that  

2. owner  of  dominant  tenement  can  subdivide  its  tracts  and  still  use  easement  so  long  as    a. it  is  to  accommodate  normal  development  of  the  dominant  estate;  and    b. it  does  not  cause  unreasonable  damage  to/interfere  unreasonably  with  the  

enjoyment  of  servient  estate  (otherwise    nuisance)  3. O  of  servient  tenement  should  be  able  to  move  the  easement  in  certain  conditions  if  

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a. they  are  the  ones  paying  for  it  and  b. if  it  doesn’t  significantly  lessen  the  utility  of  the  easement/increase  burdens  on  

the  owner  of  the  easement  in  its  use  and  enjoyment/frustrate  the  purpose  for  which  the  easement  was  created  

c. **  better  rule:  can  make  dominant  tenement  more  valuable;  servient  tenement  should  be  able  to  change  to  make  their  property  more  valuable  

iii. Changing  the  Scope:  1. Traditionally:  can’t  alter  w/o  permission  of  dominant  tenement  owner  2. Restatement:    

a. O  of  servient  tenement  should  be  able  to  unilaterally  move  the  easement  if  i. they  are  the  ones  paying  for  it  and  ii. it  doesn’t  significantly  lessen  the  utility  of  the  easement  or    iii. increase  the  burdens  on  O  of  easement  in  its  use  and  enjoyment  or    iv. frustrate  the  purpose  for  which  the  easement  was  created  

3. Minority:  servient  tenement  should  be  able  to  change  to  make  their  property  more  valuable  (efficiency)  

iv. Determining  Scope:  Was  it  a  foreseeable  use  of  the  easement?  1. Foreseeability:  Expectations  the  parties  would  have  originally  had  for  its  use/purpose  2. New  use  shouldn’t  be  more  burdensome  to  O  3. Scope  may  be  adjusted  in  face  of  changing  times  to  serve  the  original  purpose,  so  long  as  

the  change  is  consistent  with  the  terms  of  the  original  granty  4. Easement  by  prescription:  the  kinds  of  activities  that  create  the  E  also  serve  as  limitations  

that  will  sustain  it  v. Remedies  for  exceeding  scope  

1. Injunction  a. increased  burden  on  servient  estate  (vol  of  use)  b. actual  and  substantial  injury  sustained  by  person  seeking  injunction  

vi. If  there’s  a  “taking”  1. When  there’s  already  an  easement  there  and  you  exceed  the  scope,  the  taking  is  only  to  

the  extent  to  which  it  is  exceeding  the  easement  7. Negative  Easements  

i. Right  of  dominant  O  to  stop  the  servient  O  from  doing  something  on  the  servient  land  ii. differ  from  affirmative  easement  bc  saying  what  the  servient  owner  can’t  do;  whereas  

affirmative  easements  say  what  activities  the  servient  owner  is  permitted  to  do  8. Conservation  and  Other  Novel  Easements  

i. Allows  landowner  to  grant  something  like  a  negative  easement  (a  restriction  on  their  use  of  the  property)  to  a  gov’t  organization  or  charity  1. Historic  areas:  people  want  areas  to  stay  as  they  are  

ii. With  respect  to  land  in  the  future:  can’t  be  used  for  something  else  in  the  future;  could  be  problematic  bc  restricts  future  use  

iii. Can  you  make  the  land  useable  in  the  mktplace  notwithstanding  the  conservation  easement?  1. gov’t  could  use  its  power  of  eminent  domain  and  condemn  the  property  subject  to  the  

conservation  easement  iv. IF  benefit  is  in  gross,  burden  will  not  run  unless  preempted  by  statute  saying  otherwise  

II. Covenants  Running  with  the  Land  1. Historical  Background  

i. Real  Covenants:  Covenants  Enforceable  at  Law    1. An  agreement/promise  respecting  the  use  of  land  that  runs  to  the  owner  of  the  property  

and  w/o  materially  increasing  the  burden  of  performance  2. Affirmative  covenants:  promise  to  do  something  3. Negative  covenants:  promise  not  to  do  something  

a. EX)  A  &  B  promise  to  only  use  lots  for  residential  purposes  4. Requirements  for  Covenants  that  run  with  the  land  

a. Intention  of  Parties  i. language  of  the  covenant  itself  

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ii. circumstances  surrounding  the  covenant  b. Touch  and  Concern  the  Land  

i. has  to  do  with  the  use  of  the  land  itself  –  restriction  on  what  you  can  do  w/  the  land  

ii. easement  in  gross  does  not  satisfy  c. Privity  of  Estate  

i. Asking:  An  estate  in  land  is  an  interest  in  the  land  being  transferred  from  one  person  to  another,  and  depending  on  the  particular  reqs  for  privity,  you  are  asking  whether  the  kind  of  estate  transferred  is  one  that  would  allow  the  running  of  the  burden  or  the  benefit  

1. burden:  asking  whether  successor’s  of  B  (the  promisor)  are  bound  by  that  promise  

2. benefit:  whether  successors  of  A  (promisee)  can  enforce  the  promise,  or  can  only  A  enforce  it?  

ii. Horizontal  Privity  1. Relationship  of  original  parties  to  the  covenant  2. Burden:    

a. Generally  requires  successive  grantor-­‐grantee  rel  bw  A&B  (472)  

b. Massachusetts:  both  parties  have  an  interest  in  the  same  piece  of  land  

c. Restatement:  horizontal  privity  is  not  req’d  for  burden  to  run  with  land  at  law  

3. Benefit:  horizontal  privity  is  not  required  iii. Vertical  Privity:  horizontal  privity  not  required  

1. Relationship  bw  an  original  covenanting  party  and  some  successor  of  that  original  party  

2. Burden:  successor  has  to  obtain  the  entire  estate  of  the  original  covenanting  party  

3. Benefit:  successor  can  obtain  the  same  or  some  lesser  estate  of  the  original  covenanting  party  

5. For  Burden  to  Run  a. Intention  b. TC  the  Land  c. Privity  

i. Horizontal  privity  1. Generally:  Requires  successive  grantor-­‐grantee  relationship  bw  A&B  

(472)  2. Massachusetts:  both  parties  have  to  have  an  interest  in  the  same  

piece  of  land  3. Restatement:  horizontal  privity  is  not  required  for  burden  to  run  w/  

the  land  at  law  ii. Vertical  privity  

1. Traditionally:  same  estate  rule  (so  doesn’t  run  to  APor)  6. For  Benefit  to  Run  

a. Intention  b. TC  the  Land  c. Privity  

i. Horizontal  privity  1. The  running  of  the  benefit  does  not  require  horizontal  privity  

ii. Vertical  privity  1. Successor  can  succeed  to  the  same  estate  OR  a  lesser  estate  than  the  

original  covenanting  party  7. Restatement  3d:  Distinguishes  bw  affirmative  and  negative  promises;  eliminates  

distinction  bw  RC  and  ES  

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a. Negative  promises:    i. Don’t  worry  about  privity  ii. All  owners/possessors  of  burdened  land  are  bound  by  negative  covenants  iii. All  possessors  of  benefitted  land  are  entitled  to  enforce  the  covenant    iv. (like  easement)  

b. Affirmative  promises:    i. Separate  rules  for  lessees,  life  tenants,  and  APors;  also  distinguishes  bw  

benefits  and  burdens  ii. Lessees:    

1. the  benefit  of  covenants  to  repair,  maintain,  or  render  services  runs  to  lessees  

2. the  burden:  only  the  affirmative  covenants  that  bind  lessees  are  those  that  can  more  reasonably  be  performed  by  a  person  in  possession  than  by  the  holder  of  the  reversion  

iii. LTs:  both  the  benefits  and  burdens  of  affirmative  covenants  run  to  legal  LT  iv. APors:    

1. Burden:  APors  who  haven’t  yet  gained  title  are  liable  on  the  affirmative  covenants  burdening  the  property,  but    

2. Benefit:  the  benefits  of  affirmative  covenants  run  to  APors  who  have  not  yet  gained  title  to  property  only  under  limited  circumstances  

a. Where  the  covenant  was  to  repair,  maintain,  or  render  services  to  the  property,  or  

b. The  benefit  is  one  that  can  be  enjoyed  by  the  person  in  possession  w/o  diminishing  the  benefit’s  value  to  the  owner  of  the  property  and  w/o  materially  increasing  the  burden  of  performance  on  the  party  obligated  to  perform  the  covenant  

c. Touch  and  Concern:  i. Negative  Covenants:  

1. you  may  not  do  something  on  the  land  2. typically  held  to  TC  the  land  if  they  really  are  ab  land  use  3. EX)  caulett:  right  to  build  1st  building  

ii. Affirmative  Covenants:  1. English  law:  ACs  do  not  TC  land  2. American  Law:  move  away;  pretty  well  accepted  that  AC  to  provide  

fees  for  HOA  in  common-­‐interest  community  TC  land  ii. Equitable  Servitudes:  Covenants  Enforceable  in  Equity  

1. Equitable  servitude:  a  covenant  respecting  the  use  of  land  enforceable  against  successor  owners  or  possessors  in  equity  regardless  of  its  enforceability  at  law  

a. English  Standard  regarding  horizontal  privity:    i. Burden  of  a  covenant  will  not  run  at  law;  not  enforceable  at  law  against  the  

successor  owner  [no  damage  award]  b. American  Standard:  burden  should  run  at  law    

i. Fairness:  presumably  negotiated  a  lower  sale  price  due  to  the  covenant;  wouldn’t  be  fair  if  purchaser  could  then  turn  around  and  sell  it  for  a  much  higher  price    

2. Main  difference  is  the  remedy  available:  a. Real  Covenant  seeks  Damages;  b. Equitable  Servitude  seeks  Injunction  c. P  has  option  to  decide  but  general  preference  is  an  equitable  injunction  to  prevent  

the  person  from  breaking  the  promise  PLUS  can  sell  the  injunction  if  they  prefer  to  terminate  the  promise;  allows  for  negotiation  

3. Benefit  In  Gross  and  ES  a. Common  Law:  If  the  benefit  is  in  gross,  the  burden  will  not  run  in  equity  

i. Transaction  costs  ii. Diminishes  value/marketability  of  land  

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b. Restatement:    i. Burden  may  run  in  equity  if  benefit  in  gross  BUT  ii. the  benefit  may  be  in  favor  of  someone  you  can’t  find,  so  you  can  seek  

termination/modification  of  covenant  if  you  can’t  find  the  beneficiaries  (need  consent  of  any  known  beneficiaries)  

c. EX):  reserve  the  right  to  build  first  dwelling  on  premises  i. Too  vague  ii. Doesn’t  TC  –  personal  to  grantee  iii. Benefit  in  gross  rather  than  associated  w/  a  dominant  tenement  

4. Burden  in  gross  a.  OK  bc  benefit  attached  to  land  bc  doesn’t  affect  value/marketability  

i. EX)  someone  agrees  to  trim  hedges  monthly  5. Enforcing  Equitable  Servitude:  

a. Intention  of  parties  that  burden/benefit  run  to  successors  of  original  parties  b. Notice  of  subsequent  purchaser  of  the  covenant  (party  to  be  bound)  

i. Exception:  covenants  run  in  equity  against  those  successors  who  give  no  consideration  (donees,  heirs,  will  beneficiaries)  whether  or  not  they  have  notice  

1. Fundamental  principle  of  recording  system  –  it  is  designed  to  protect  only  subsequent  purchasers  against  prior  interest  of  which  they  have  no  notice  

ii. Not  required  as  part  of  elements  of  what  makes  real  covenants  enforceable  (but  probably  required  anyway  by  virtue  of  recording  statutes,  if  you  can  show  BFP  w/o  notice)  

c. Touch  and  Concern  the  land  i. English  Rule:  

1. An  affirmative  covenant  to  do  something  like  pay  money  cannot  be  deemed  to  TC  the  land  for  purposes  of  the  running  of  the  covenant  

2. Only  Negative  Covenants  could  run  w/  the  land  ii. American  Rule:  generally  depart  from  English  Rule  and  expand  TC  

1. HOA:  where  the  affirmative  easement  (to  pay  money)  gives  right  of  common  enjoyment  to  other  property  owners,  it  is  deemed  to  TC  

2. Bigelow’s  Test:    a. If  covenanter’s  legal  interest  in  land  is  rendered  less  valuable  

by  the  covenant’s  performance,  then  the  burden  TCs    b. If  the  covenanter’s  legal  interest  in  land  is  made  more  

valuable  by  the  covenant’s  performance,  then  the  benefit  TCs  c. Circular:  can’t  know  how  it  affects  the  value  unless  it’s  

complied  with  3. Still  –  most  are  hestitant  to  find  TC  of  aff  covenants  

a. Issue  order  that  will  require  continuing  judicial  supervision  b. Enforcement  may  impose  large  personal  liability  on  successor    c. Aff  obligations  are  unlimited  in  time  d. Clogs  on  titles  

4. Covenants  to  pay  money  –  most  courts  say  no  TC  5. Restatement:    

a. All  covenants  (unless  illegal,  fraudulent,  or  against  pub  policy)  are  at  least  initially  valid  for  TC  

b. Instead,  focus  is  on  subsequent  validity  d. Privity  

i. Horizontal  1. Burden:  doesn’t  need  2. Benefit:  doesn’t  need  

ii. Vertical  

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1. Burden:  doesn’t  need;  all  subsequent  owners/possessors  are  bound  by  the  servitude  just  as  with  an  easement  

2. Benefit:    a. Generally:  don’t  need;  runs  to  all  assignees;  although  some  

jxns  do  require  it  (except  w/  regard  to  HOAs)  b. APor:  the  benefit  may  run  (not  litigated)  c. 3rd  party  beneficiary:  prob  needs  to  show  vertical  privity  

i. HOA:  regarded  as  acting  as  agents  of  landowners  who  are  in  vertical  privity  so  can  enforce  the  covenant  even  though  technically  no  privity  on  benefit  side      

2. Creation  of  Covenants  i. Express  Covenants:    

1. Deeds  2. Written  Agreements  

ii. Implied  Restrictions  and  the  SOF  1. Will  only  be  Implied  ES;  RC  has  to  be  in  writing,  signed  by  covenantor  2. Cannot  have  ES  by  prescription  (no  notice  of  party  to  be  bound?)  3. Notice  

a. For  purposes  of  implied  covenants,  notice  may  be  constructive  or  inquiry  i. Constructive  notice:  imply  that  you  have  notice,  had  you  done  what  you  

should’ve  done  ii. Inquiry  notice:  circumstances  were  sufficient  to  indicate  that  some  restriction  

might  exist  and  that  they  have  a  duty  to  inquire    1. (generally  applied  where  there  is  a  general  plan/subdivision)  2. uniform  character  of  neighborhood  generally  sufficient  

4. General  plan/Common  Plan  of  Development:    a. If  there  is  a  subdivision  being  developed  pursuant  to  a  common  plan  of  

development,  even  if  some  restrictions  don’t  get  written  down  w/  respect  to  every  lot,  some  courts  will  imply  that  those  restrictions  apply  to  all  lots  

b. Majority:  will  imply  negative  restrictions  from  a  general  plan  (inquiry  notice)  c. California:    

i. Won’t  imply  equitable  servitude  bc  needs  to  be  in  writing  to  prevent  fraud  ii. Reqs  interest  in  land  to  be  conveyed  in  writing;  the  interest  of  the  neighbors  

to  prevent  building  of  commercial  uses  must  be  in  writing  1. A  recorded  map  might  work  as  a  writing  2. An  advertisement  might  work    

d. Massachusetts:  same-­‐ish  5. Equitable  Servitude  by  Prescription?  

a. No.    iii. Restatement  3rd:  eliminates  distinction  bw  real  covenants  and  equitable  servitudes  iv. Remedies:  

1. Real  Covenant:  can  seek  damages  (bc  covenant  at  law)  2. Equitable  Servitude:  can  seek  injunction  3. A  person  seeking  to  enforce  the  covenant  has  the  option  to  decide  if  it’s  real  or  equitable,  

depending  on  which  remedy  they  prefer  a. Generally,  the  preference  is  an  equitable  injunction  to  prevent  the  person  from  

breaking  the  promise  PLUS  they  can  sell  the  injunction  if  they  prefer  to  terminate  the  promise  and  get  money  later;  allows  for  negotiation  

3. Scope  of  Covenants  and  FHA  Violation  i. Restrictive  Covenant  –  Single  Family  Residence  

1. Definition  of  family  may  come  from  other  local  ordinances    2. Usually  arise  w/  discrimination  claims  3. 3  causes  of  action  for  discrimination  under  FHA  

a. Discriminatory  Intent:  is  it  intentional  discrimination  against  ____?  

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b. Disparate  Impact:  P  only  needs  to  prove  that  D’s  conduct  actually  or  predictably  results  in  discrimination  or  has  a  discriminatory  effect  

c. Reasonable  Accommodation:  a  refusal  to  make  reasonable  accommodations  in  rules,  policies,  practices,  or  services  (variances?),  when  such  accommodations  may  be  necessary  to  afford  a  handicapped  person  equal  opportunity  to  use/enjoy  dwelling  

4. What  activity  is  non-­residential?  a. Bread  and  breakfast?  –  some  say  residential  b. Piano  lessons?  –  probably  residential  c. Training  dogs?  yes  

ii. Covenant  not  to  allow  Caucasians    1. FHA  exemption:  applies  to  people  who  don’t  own  more  than  3  single-­‐family  houses  at  one  

time  a. Developer  can’t  defend  using  this  exemption  

2. Mayers:  violation  of  FHA  §3604(c)  for  recording  deeds  containing  racial  covenants  a. can’t  make  print  or  publish  any  notice  statement  or  advertisement  w/  respect  to  

the  sale  b. So  –  recording  the  deed  got  you  around  the  exemption  bc  it  wasn’t  an  

advertisement  for  sale  4. Termination  of  Covenants  

i. Merger:  if  same  person  acquires  title  to  the  burdened  land,  and  all  the  benefitted  land,  the  covenant  is  extinguished  by  merger  

ii. Changed  Conditions[rick  v.  west]  1. Zoning  Change  –  will  not  override  restrictive  covenants    

a. Zoning  changes  do  not  modify  or  change  a  covenant  unless  they  make  compliance  with  the  covenant  illegal  

2. Changed  conditions  within  the  affected  area:  conditions  have  so  thoroughly  changed  that  the  covenant  can  no  longer  achieve  its  purpose  

3. Changed  conditions  in  the  surrounding  area:  nature  and  character  of  the  surrounding  area  has  so  changed  that  it  would  be  inequitable  to  enforce  the  servitude;  must  prove  that  all  the  benefitted  lots  have  lost  the  benefit  of  the  covenant  

4. Restatement  §  7.10:  Modification  and  Termination  of  Servitudes  bc  of  Changed  Conditions  

a. When  a  change  has  taken  place  making  it  impossible  as  a  practical  matter  to  accomplish  the  purpose  for  which  the  servitude  was  created,  a  court  may  modify  the  servitude  to  permit  the  purpose  to  be  accomplished.  If  modification  is  not  practicable,  or  would  not  be  effective,  a  court  may  terminate  the  servitude.  Compensation  may  be  awarded  to  beneficiaries.  

b. If  the  purpose  of  the  servitude  can  be  accomplished,  but  bc  of  changed  conditions,  the  servient  estate  is  no  longer  suitable  for  uses  permitted  by  the  servitude,  a  court  may  modify  to  permit  other  uses  under  conditions  designed  to  preserve  the  benefits  of  the  original  servitude  

c. These  rules  govern  conservation  servitudes  as  well  5. Massachusetts:  statute  makes  damages  rather  than  an  injunction  the  only  remedy  in  

many  cases  of  changed  circumstances  6. Reverse  Damages:  when  restrictive  covenants  should  not  be  enforced  unless  the  parties  

who  seek  enforcement  pay  compensation  to  the  parties  who  maintain  that  changed  conditions  have  rendered  the  restrictions  unenforceable  

iii. Abandonment  1. Can’t  abandon  FS  title  to  property    wants  someone  identifiable  bc  obligations  related  to  

property  ownership  2. Pennsylvania:  cannot  abandon  real  property  held  in  fee  simple  with  perfect  title;  intent  

to  abandon  is  irrelevant  3. Widespread  violation  of  the  covenant  w/o  enforcement  

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a. Reasonable  Person  Test:  avg  person  would  conclude  that  the  use  restriction  ahs  been  abandoned  

b. Frustration  of  Purpose  Test:  the  covenant’s  purpose  has  been  so  frustrated  that  enforcement  would  seriously  impair  the  value  the  value  of  burdened  lots  w/o  producing  any  substantial  benefit  

4. Restatement  §7.12  –  Modification  and  Termination  of  Certain  Affirmative  Covenants:  a. Covenant  to  pay  money  terminates  after  a  reasonable  time  if  the  instrument  that  

created  the  covenant  does  not  specify  the  total  sum  due  or  a  definite  termination  point  

b. Terminated  if  the  obligation  becomes  excessive  in  relation  to  the  cost  of  providing  the  services  or  facilities  or  to  the  value  received  by  the  burdened  estate  

iv. Condemnation  (Eminent  Domain):  1. When  gov’t  takes  the  burdened  land  for  a  purpose  inconsistent  w/  the  restrictive  

covenant  2. Easement:  Gov’t  must  pay  compensation  to  the  easement  owner  3. Restrictive  Covenant:  majority  says  gov’t  must  pay  damages  to  the  Os  having  the  benefit  4. Affirmative  Covenant  to  pay  money:  must  pay  beneficiary  for  the  loss  of  the  benefit  5. In  Florida  

a. Negative  covenant:  benefit  of  the  restrictive  covenant  not  compensable  if  the  gov’t  violates  the  covenant    

b. Affirmative  covenant:  gov’t  must  pay  compensation  to  the  benefitted  party  for  the  loss  of  the  stream  of  income  (the  benefit)  

c. Rationale:  right  of  compensation  for  violation  of  a  restrictive  covenant  in  a  subdivision  would  place  on  the  public  an  “intolerable  burden”  bc  of  the  difficulty  of  measuring  damages  to  all  the  individual  lot  owners;  but  damages  for  condemning  an  affirmative  covenant  to  pay  a  set  sum  of  money  is  easily  ascertainable  and  therefore  compensable    

v. Express  Waiver  or  Release  1. Release:  all  holders  of  the  benefit  expressly  release  the  covenant,  it  is  extinguished  

a. Even  if  one  holder  on  a  small  lot    can  enforce  b. Fairness  and  expectations  c. If  terminate,  have  to  share  w/  the  promisees  of  the  covenant  any  profits  made  

from  its  termination  2. Waiver:  all  benefit  holders  expressly  waive  the  covenant  to  permit  a  specific  

nonconforming  use,  the  covenant  remains  alive  to  bar  other  nonconforming  uses  5. Common  Interest  Communities  

i. Types  1. HOAs  2. condominiums  3. cooperatives  

ii. Privity:  not  a  problem  bc  original  owners  are  all  in  privity  w/  the  developer  and  subsequent  purchasers  are  in  privity  w/  the  original  purchasers  

iii. TC  land:  usually  satisfied;    1. negative  covenants  almost  always  held  to  TC  bc  adversely  affecting  all  homeowners  so  

affecting  all  the  property    2. affirmative  covenants  to  pay  HOA  dues  are  almost  always  held  to  TC  

iv. Restatement  3d:    1. the  distinctive  feature  of  common-­‐interest  communities  is  the  obligation  that  binds  the  owners  

of  individual  lots  to  contribute  to  the  support  of  common  property,  or  other  facilities,  or  to  support  the  activities  of  an  association  whether  or  not  the  owner  uses  the  common  property  or  facilities  or  agrees  to  join  the  association  

2. Direct  and  Indirect  Restraint  on  Alienability  a. Direct:  a  direct  restraint  is  valid  “if  reasonable”;  those  that  clearly  interfere  with  the  

operation  of  the  free  market  economy  

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i. ex)  no  transfer  w/o  consent  of  community,  rights  of  1st  refusal,  eligibility  reqs  of  purchasers  

b. Indirect:  invalid  only  if  it  “lacks  rational  justification  (more  lenient);  those  that  limit  the  potential  market  for  the  property  i. ex)  pet,  paint  color,  or  planting  restrictions    

3. Regulation  in  Original  Document  and  Subsequent  Regulations  a. Original  Document:  deferential  standard  

i. rationale:  original  restrictions  have  been  recorded  so  people  know  what  they  are  buying  into;  presume  unanimous  consent  

b. Subsequent:  reasonableness  standard  applied  here  i. Rationale:  owners  not  necessarily  buying  into  those  regulations  bc  put  into  

place  after  they’ve  already  moved  in;  majority  rule  of  owners  v. Condominiums  

1. Each  unit  is  owned  (in  FS)  and  financed  separately    a. Failure  of  one  owner  to  pay  mortgage  interest  or  taxes  does  not  jeopardize  the  other  

unit  owners  2. Common  areas  are  owned  by  the  unit  owners  as  TICs  3. Each  owner  becomes  an  association  member  and  must  abide  by  its  laws  4. Each  unit  owner  is  liable  for  a  monthly  charge  to  maintain  common  facilities  and  insure  against  

liabilities  vi. Cooperatives  

1. Mostly  in  NY  2. Title  to  the  land  and  building  is  held  by  a  corporation  3. Residents  are  both  owners  of  the  cooperative  corporation  and  tenants  of  the  corporation  

a. Residents  own  all  the  shares  of  stock  in  the  corp.  and  control  it  through  an  elected  board  of  directors  

b. Each  resident  has  a  long-­‐term  renewable  lease  of  an  apt  unit  4. Business  Judgment  Rule:  

a. Corporate  governance  b. Corp  owned  by  shareholders  but  run  by  board  of  directors  making  policy  decision  c. BD  makes  decisions,  shareholders  can  challenge  d. Court  very  deferential  to  BD    people  living  there  are  in  better  position  to  make  

those  decisions  5. Collective  Mortgage  

a. The  investment  of  one  person  (unlike  in  condominium)  depends  upon  the  financial  stability  of  others  i. Courts  will  defer  to  the  “business  judgment”  approach  to  enforceability  

b. Strong  incentive  to  screen  applicants  to  ensure  they  can  carry  their  share  c. Allows  for  social  screening  as  well  

i. Discrimination:  if  the  applicant  can  prove  racial  or  ethnic  discrimination,  the  cooperative  will  have  to  admit  the  applicant  or  pay  damages  

vii. Enforcement  of  Restrictions  in  Common-­Interest  Communities    1. Generally  

a. Declaration:  the  operative  document  for  a  common  interest  development,  setting  forth,  among  other  things,  the  restrictions  on  the  use/enjoyment  of  any  portion  of  the  development;  aka  master  deed  

b. The  restriction  must  be    i. uniformly  enforced  against  all  residents    ii. Must  be  reasonable  

1. not  arbitrary,    2. against  public  policy,  or  3. burdens  substantially  outweigh  its  benefits  

c. Rationale:  i. stability  ii. protects  expectations/predictability  

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iii. problems  could  arise  in  HOAs  as  to  people  who  chose  to  live  there  in  reliance  on  the  covenants  

2. Approaches  to  Enforceability    a. “Reasonableness”:  enforceable  unless  unreasonable  

i. Rationale:  governing  boards  will  enact  rules  and  make  decisions  that  are  reasonably  related  to  the  promotion  of  the  health,  happiness,  and  peace  of  mind  of  the  project  owners,  considered  collectively  

b. “Presumption  of  validity”  unless  arbitrary  or  in  violation  of  public  policy  or  a  constitutional  right  i. Rationale:  courts  disinclined  to  question  the  wisdom  of  agreed-­‐to  restrictions  

c. “Originating  document”:    i. Covenants  in  the  master  deed:  restrictions  that  predate  the  purchase  of  individual  

units  is  given  greater  deference  (strong  presumption  of  validity)    ii. Covenants  imposed  by  HOA:  restrictions  imposed  by  HOAs  after  the  owners  have  

acquired  title  are  not  given  the  same  “presumption  of  validity”  and  are  valid  only  if  reasonable  

iii. Rationale:  1. Serves  the  best  interest  of  the  majority  of  owners  who  may  be  presumed  to  

have  chosen  not  to  alter  or  rescind  such  restrictions  2. Avoids  the  burden  and  expense  of  highly  particularized  and  lengthy  

litigation  3. Protects  the  general  expectations  of  condo  owners  that  restrictions  in  place  

at  the  time  they  purchase  their  units  will  be  enforceable    a. purchaser  has  constructive  notice  of  the  restrictions  in  a  master  

deed  d. “Business  Judgment”:  financial  decision  making  requires  a  board  to  exercise  its  

discretion  in  good  faith  and  with  regard  for  the  best  interests  of  the  community  association/its  members  (greatest  degree  of  deference  given  to  condominium  boards)  i. Rationale:  protects  the  board’s  business  decisions  and  managerial  authority  from  

indiscriminate  attack    

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Legislative  Land  Use  Controls:  Zoning  

[gilberts  ch.  8]  I. An  Intro  to  the  Substantive  Law  

1. Historical  Background  i. Euclidean  Zoning:    

1. Districts  are  graded  from  highest  (sing-­‐family  residences)  to  lowest  (worst  kind  of  industry)  

2. Cumulative  zoning:  higher  uses  are  permitted  in  areas  zoned  for  lower  uses,  but  not  vice  versa  

a. Non-­‐cumulative  zoning:  prohibiting  houses  and  commercial  in  industrial  zones  (industrial  parks);  an  attempt  to  preserve    large  tracts  for  future  industrial  use  

3. Overt  licensing  of  segregation  by  class:  bc  protects  the  value  of  land  owned  by  the  propertied  class  and  the  values  of  the  class  itself  

4. Assumptions  of  EZ  a. Separation  of  uses  is  good  b. You  ought  to  be  able  to  live  around  people  who  are  more  like  you  c. Glorification  of  single  family    promotes  American  dream/good  life  d. Class  bias    benefits  those  w/  resources  to  live  in  single-­‐family  area  

ii. Constitutionality  of  Zoning  1. Due  Process  TEST:  can’t  deprive  someone  of  life,  liberty,  or  property  w/o  due  process  of  

law  a. Whether  the  provisions  are  arbitrary/unreasonable  b. Having  no  substantial  relation  to  the  public  health,  safety,  morals,  or  general  

welfare  (police  power)  2. Zoning  in  general  is  held  to  be  constitutional  3. Specific  claims  of  unfairness  will  be  dealt  with  individual  in  order  to  avoid  barring  zoning  

altogether  4. General  presumption  of  validity  attaches  to  a  zoning  ordinance  5. Can  evaluate  as  procedural  due  process  or  substantive  due  process  (more  controversial)  

iii. Takings  1. Can  a  severe  reduction  in  value  of  P’s  land  by  the  zoning  ordinance  constitute  a  “Taking”  

for  which  gov’t  will  have  to  compensate?  a. PA:  yes,  there  is  a  compensable  taking  if  the  gov’t  “goes  to  far”    b. Majority:  zoning  ordinances  are  generally  upheld  in  the  face  of  taking  allegations  

2. Structure  of  Authority  Underlying  Zoning  i. State  Police  Power:  

1. State  gov’ts  have  a  certain  residual  power  to  regulate  for  the  public    2. Specifically,  to  regulate/protect  the  public  health,  safety,  morals,  or  general  welfare  3. Constitutionality  Test:  provision  cannot  be  arbitrary  and  unreasonable,  having  no  

substantial  relation  to  the  public  health,  safety,  morals,  or  general  welfare  [police  power]  4. Fed’l  Gov’t  has  no  police  power  5. Restrictions  within  the  Police  Power  

a. Methods  of  construction,  height  of  buildings,  space  bw  buildings  (fire),  overcrowding  (health)  

b. Industries  creating  a  nuisance  ii. Enabling  Legislation  

1. The  Standard  State  Zoning  Enabling  Act  a. Most  states  have  some  version  b. Permits  division  of  municipalities  into  districts  (zones)  in  accordance  with  a  

comprehensive  plan  c. Regulations  made  with  reasonable  consideration  to  

i. Suitability  of  a  district  for  particular  uses,  ii. View  to  conserving  the  value  of  buildings,  and  

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iii. Encouraging  the  most  appropriate  use  of  land    2. To  enact  a  Zoning  ordinance  under  the  SSZEA  

a. Planning  commission  i. Big  picture  planning/  general  rules  

b. Board  of  adjustment  i. Application  of  the  rules/whether  exceptions  should  be  granted  ii. Grant  variances  (people  who  seek  exceptions)  iii. Ripeness  Doctrine:  suit  not  ripe  for  resolution  by  the  court;  P  must  petition  

to  the  board  for  relief  first  3. Zoning  Ordinances  applied  to  New  Uses  

a. O  must  apply  for  building  permit    denying  permits  who  want  to  build  something  incompatible  w/  that  area  

b. Before  you  can  use  a  built  building    inspection  and  certificate  of  occupancy  (gov’t  can  deny  the  cert  of  occupancy  to  enforce  zoning)  

4. The  delegation  of  legislative  authority  cannot  a. go  beyond  the  authority  given  the  locality  under  the  zoning  act  (ultra  vires)  or  b. conflict  with  the  state  constitution  c. constitutionality  test:    

iii. The  Comprehensive  Plan  1. Statement  of  the  local  governments  objectives  and  standards  for  development  2. Generally,  the  plan  itself  is  not  binding  but  must  be  implemented  by  actual  zoning  

ordinances  3. 50%  states:  don’t  require  4. 50%  DO  require,  but  judicial  attitudes  vary:  

a. plan  needn’t  be  written  in  a  separate  document  from  the  ordinance  itself  b. the  statement  of  purpose  in  the  zoning  ordinance’s  preamble  is  evidence  of  an  

underlying  plan    c. scheme  of  regulations  in  the  ordinance  constitute  “the  plan”  

5. Even  when  written  plan  exists,  zoning  regulations  inconsistent  w/  it  are  not  necessary  invalid  so  long  as  considered  a)  reasonable  and  b)  in  the  public  interest  

i. Rationale:    1. future  is  too  unpredictable  2. Technological  changes  affect  land  use  

6. Changing  Uses  and  Land  Use  Planning  a. How  changes  in  the  past  have  changed  needs  for  land  use  and  then  project  

forward  –  what  kind  of  things  might  happen  in  the  future?  b. Rise  of  the  Internet  changes  patterns  of  land  use:    

i. smaller  office  spaces  ii. online  shopping  =  decrease  in  shopping  malls/parking  lots  

c. Rise  in  gas  prices:    i. people  want  to  live  car-­‐free  ii. public  transportation  

d. Social  changes:  much  more  common  for  singles  with  their  own  living  space;  more  smaller  living  spaces;  or  if  trying  to  save  money  –  more  demand  for  multi-­‐family  homes;  longer  life  spans  

II. The  Nonconforming  Use  1. When  zoning  is  introduced  some  existing  land  uses  aren’t  in  conformity  with  the  uses  permitted  2. Generally  permitted  to  continue  to  exist  because  their  immediate  abatement  would  amount  to  

i. a  taking  w/o  just  compensation  OR  ii. an  unreasonable  exercise  of  the  zoning  power  

3. Forced  Phase-­Out:  i. Amortization  period:    

1. The  zoning  law  may  specify  a  period  after  which  the  nonconforming  use  must  cease  a. Must  be  long  enough  to  avoid  charge  of  Taking  or  

i. (if  immediate  –  unconstitutional)  

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b. Denial  of  substantive  due  process  2. Forbid  improvements  to  a  nonconforming  use  

ii. Majority:  Valid  if  reasonable  amortization  period  1. Balancing  of  Factors:  

a. public  gain  to  be  derived  from  speedy  removal  of  nonconforming  use  b. private  loss  which  removal  would  entail  

iii. Minority:  Invalid  per  se  4. Changes  

i. Change  of  Ownership:    1. Per  Se  JXN:    

a. Right  to  maintain  a  nonconforming  use  runs  with  the  land;    b. it  survives  a  change  of  ownership  

2. Amortization  JXN:  a. The  right  ends  at  the  termination  of  the  period,  whether  or  not  property  has  

changed  owners  3. Generally:  can  sell  it  when  nonconforming  use  and  the  new  owner  can  continuing  using  

the  nonconforming  use  [change  of  title  doesn’t  affect  permission  to  use]    not  all  agree  ii. Expansion:  

1. Some  say  yes  nonconforming  use  may  expand  to  meet  natural  changes  (ex:  increased  demand)  

2. Some  say  no  iii. To  a  different  non-­conforming  use:    

1. Some  jxns:  no  2. Some  jxns:  yes  but  only  if  the  change  reduces  the  impact  of  the  use  on  the  zone  in  

question  a. ex)  changes  to  apt  building:  same  structure,  but  more  apts  inside  

i. courts  are  split  as  to  whether  this  change  is  permitted  iv. Stop  Using  Property  for  the  non-­conforming  purpose  

1. Some  jxns  will  deny  it  based  on  discontinuance  a. Diff  from  abandonment  bc  there  may  still  exist  the  intention  to  resume  the  non-­‐

conforming  use  2. Other  jxns  will  only  deny  if  there  is  an  abandonment  

5. To  Avoid  Interference  with  Land  Use  by  Zoning  i. Hope  for  per  se  jxn  ii. Argue  Unreasonableness  iii. Vested  Rights  Doctrine  

1. a  pre-­‐existing  operation  is  protected  2. a  proposed  use  might  be  protected  if  sufficient  commitments  have  been  made  in  reliance  

on  existing  zoning  requirements  that  are  subsequently  changed  in  a  way  that  invalidates  the  proposed  use  

3. Variables:  how  far  the  developer  has  gone  in  obtaining  gov’tal  approval,  money  invested  in  good  faith,  and  on  what  money  has  been  spent  

4. Kicks  in  before  you  start  running  a  business  that  violates  the  new  ordinance?  (got  permit,  bought  building,  but  ordinance  passed  before  opened  door  for  business)  

a. will  protect  IF  you  show  good  faith,  improvements,  investments  (depends  on  jxn)  iv. Estoppel  

1. When  developers  rely  reasonably  and  to  their  detriment  on  the  issuance  of  a  permit  and  proceed  to  make  substantial  expenditures  

2. Must  be  in  good  faith  3. Can’t  erroneously  interpret  a  zoning  map  and  then  claim  estoppel  4. Person  who  induced  reliance  can’t  stop    5. EX)  If  gov’t  has  acted  in  a  way  that  you’re  relying  upon  (grant  permit),  you  might  be  able  

to  claim  that  they’re  estopped  a. some  courts  say  that  O  should  have  realized  the  mistake  b. Estoppel  only  protects  reasonable  reliance  

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6. Termination  of  Permission  to  Continue  Non-­conforming  use  i. Destruction:    

1. the  nonconforming  use  is  destroyed  (by  act  of  God  or  otherwise);    2. new  replacement  structure  or  new  use  must  conform  to  the  current  zoning  law  (?)  

ii. Abandonment  1. Intent:  most  jxns  req’t  intent  to  abandon  nonconforming  use  2. Discontinuance:  some  ordinances  say  discontinuance  of  the  nonconforming  use  for  a  

specified  period  terminates  permission  for  the  use  a. considered  discontinued  use  even  if  owner  intends  to  resume  the  nonconforming  

use  later  iii. Condemnation  by  Eminent  Domain  

III. Zoning  Flexibility  Devices  1. Why  allow  exceptions?  

i. something  unanticipated  that  would  be  to  the  public’s  benefit  ii. bribes  iii. subject  to  discretion/abuse  

2. Variances    i. Uses  that  are  expressly  prohibited  by  the  ordinance  but  granted  bc  strict  compliance  w/  the  

ordinance  would  impose  an  unnecessary  hardship  on  O  ii. P  must  show  

1. Unnecessary  hardship  on  P  if  imposed  2. Negative  Criteria  

a. Can’t  be  in  violation  of  public  interest  b. Can’t  be  adverse  to  the  intent/purpose  of  the  ordinance    

3. EX)  O’s  reliance  on  an  erroneously  issued  building  permit  does  not  constitute  a  hardship  entitling  him  to  a  variance  

iii. Unnecessary  Hardship  1. Cannot  be  self-­‐imposed/inflicted  2. Evidence  of  hardship  

a. have  they  tried  to  sell/obtain  land  to  meet  reqs?  iv. Options  for  deciding  to  grant  or  not  

1. Grant  variance  2. Deny  variance  (risking  taking  claim)  3. Try  to  purchase  land  from  neighbors  to  meet  the  req’s  4. Sell  land  to  neighbors  OR  purchase  from  them  

a. Grant  variance  conditionally:  unless  neighbors  will  purchase  the  land,  the  variance  will  be  granted    

b. Rationale:  Transfers  financial  cost  onto  the  people  who  would  benefit  from  ordinance  

v. Types  of  Variances  1. Use  variance  

a. Permission  to  violate  the  ordinance  as  to  the  uses  permitted/prohibited    b. More  prospective  of  conflicting  land  uses  if  use  variance  

2. Area  Variance  a. Permission  to  violate  the  ordinance  to  alleviate  siting  problems  (setback  req’s  or  

minimum  yard  area)  3. Special  Exceptions  (special-­use/conditional-­use  permit)  

i. These  are  permitted  by  the  ordinance,  subject  to  certain  conditions  1. Variance  –  asking  for  permission  to  violate    2. Special  Exception  –  asking  to  take  advantage  of  some  conditional  exception  the  ordinance  

allows  in  certain  specified  conditions  ii. Must  be  in  harmony  w/  general  intention/purpose  of  the  ordinance  [cope]  iii. 4  Factors  in  Granting  

1. Certain  Requirements  Mt  2. Use  not  Adverse  

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3. Purpose  Upheld  4. Value  Maintained    

iv. Non-­‐Delegation  Doctrine  1. Idea  that  legislatures  have  limits  on  how  much  of  their  authority  they  can  delegate  to  

someone  else  2. Needs  to  be  a  bit  more  specific  guidance  to  legitimize  their  discretion  3. “Health,  safety,  general  welfare”    formulation  of  the  State’s  Police  Power  

4. Zoning  Amendments  and  the  Spot  Zoning  Problem  i. Spot  Zoning:    

1. a  zoning  amendment  that  delivers  special  private  benefits  (and  no  public  benefits)  to  a  small  parcel  which  is  not  in  conformity  with  the  comprehensive  plan  

2. Island  of  non-­‐conforming  use    can’t  show  rational  basis  relating  to  public  health,  safety,  and  morals  [police  power]  

3. Illegal  if:  a. Not  in  public  interest  but  only  for  the  benefit  of  O  b. Not  in  accord  w/  the  comprehensive  plan  

ii. Zoning  Amendments:  1. How  to  characterize  [affects  the  standard  of  review]    legislative  or  adjudicative  action?  2. If  judicial:  would  be  presumptively  invalid  

a. dealing  with  particular  lots  [legislative  dealing  with  large  areas]  3. If  legislative:  would  be  presumptively  valid  unless  

a. arbitrary  or  capricious  or  b. inconsistent  w/  comprehensive  plan  

4. Rational  Basis  [due  process]  Test  for  legislative  actions:  a. Unsupported  by  any  rational  basis  for  supporting  the  furtherance  of  public  heath,  

safety,  morals,  or  general  welfare;    b. Otherwise,    violation  of  due  process  

5. Plebiscites  i. A  direct  vote  of  citizens  on  some  public  question;    ii. Two  forms:  

1. Referendum:  to  electorate  for  final  decision  2. Initiative:  from  petition  of  citizens  to  the  ballot  3. *both  viewed  as  legislative  actions  

iii. Generally  not  allowed  for  small-­‐scale  zoning  [small  voter  turnout]  iv. Flip  of  non-­‐delegation  doctrine?  

1. THAT:  didn’t  want  legislative  power  delegated  to  adjudicative  body  2. NOW:  don’t  want  an  adjudicative  power  [what  happens  to  a  particular  lot]  delegated  to  

people  themselves  6. Contract  Zoning  

i. Bilateral  agreement  bw  O  and  zoning  authority  ii. Some  jxns  suspicious  iii. Issue:  exactions    gov’t  agrees  to  let  you  do  something  if  you  do  XYZ,  but  sometimes  these  

are  challenged  as  takings  7. Conditional  Zoning:  unilaterally  agrees  to  use  land  in  a  specified  manner  8. Floating  Zones:    

i. We  know  we  want  to  have  a  hospital  somewhere,  not  sure  the  best  place,  so  we  set  out  rules  about  where  it  might  go  

ii. Later,  when  someone  proposes  where,  then  we’ll  nail  it  down  9. Cluster  Zoning  

i. Flexibility  device  ii. Allow  developers  to  do  something  in  a  pattern  that’s  not  exactly  in  line  w/  the  Plan  iii. Same  total  #  acreage  but  bring  house  closer  together  iv. Area  variance  

10. PUD:  planned  unit  developments  i. Similar  to  cluster  zoning  

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ii. Not  just  confined  to  housing  (includes  services  too)  iii. area  and  use  variances  

IV. Expanding  the  Aims  (and  Exercising  the  Muscle)  of  Zoning  1. Aesthetic  Regulation  

i. Traditionally  –  was  beyond  scope  of  police  power  (beauty  is  subjective)    ii. Modern  Majority  uphold  aesthetic  land  use  regulations  banning  uses  that  result  in  lower  

property  values  iii. Architectural  Review  

1. Even  if  builder  complies  with  all  city  ordinances/codes,  could  still  be  denied  by  AR  2. Cont  3. Two  Factors    

a. Conformity  of  proposed  structure  to  the  existing  character  of  neighborhood  b. Likelihood  that  it  will  not  cause  substantial  depreciation  of  neighboring  property  

values  4. Constitutional  delegation  of  police  power  

a. Majority    i. Berman    yes:  it  is  within  the  power  of  the  legislature  to  determine  that  the  

community  should  be  beautiful  as  well  as  healthy,  spacious  as  well  as  clean,  well  balanced  as  well  as  carefully  patrolled  

ii. Will  generally  base  their  reasoning  on  “property  values”  but  it’s  really  ab  aesthetics  

iii. Rule:  aesthetics  alone  will  justify  a  regulation,  provided  there  are  adequate  standards  that  are  appropriately  applied  

b. Minority:  some  still  waffle  on  the  issue  and  some  are  opposed  to  aesthetic  regulation  

c. Generally  less  hesitancy  in  context  of  historic  zoning/historic  preservation  legislation  

5. Void  for  Vagueness:    a. [Anderson  v.  city  of  Issaquah]  b. Whether  there  is  enough  specificity  in  guidance  given  to  police  power    violation  

of  due  process  i. deprived  of  life/liberty/property?  ii. Euclid  

1. substantive  due  process  challenge:  rational  use  of  police  power  iii. Anderson  

1. procedural  due  process  challenge:  notice  of  what  law  requires  is  a  fundamental  principle  of  due  process  

2. could  be  void  for  vagueness  bc  no  notice  c. Unconstitutional  deprivation  of  property  w/o  due  process  

i. Doesn’t  have  to  be  super  specific  bc  aesthetics  are  subjective  BUT  it  must    ii. Give  effective  or  meaningful  guidance  to  applicants,  professionals,  or  public  

enforcers  iii. Technical  words  

d. Arbitrary  and  capricious  standard  (Equal  protections  clause  test)  e. Rational  relationship  test    

i. Permissible  governmental  end  ii. Rational  means  for  ordinance  in  achieving  that  end  iii. Deferential  test:  doesn’t  have  to  perfectly  accomplish  the  gov’ts  goal  as  long  as  

it  will  rationally  help  you  get  there  f. clearly  erroneous  standard  

6. Criticism  of  Architectural  Review:  a. limits  creativity  and  stifles  free  expression  by  killing  art  

7. Private  Restrictive  Covenants:    a. private  architectural  restrictions  are  governed  by  a  different  standard  than  public  

restrictions  

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b. specific  standards  not  necessary  c. architectural  community  only  has  to  act  reasonably  and  in  good  faith  

8. Nuisance:  can’t  claim  nuisance  based  on  aesthetics  (too  ugly)  iv. Free  Speech  

1. When  a  zoning  law  infringes  upon  a  protected  liberty,  it  must  be  narrowly  drawn  and  must  further  a  sufficiently  substantial  gov’t  interest  

2. Content-­based  regulation  of  speech  a. Subject  to  Strict  scrutiny  and  presumptively  void  b. Gov’t  must  prove  that  the  restriction  is  necessary  to  accomplish  a  compelling  

government  objective  i. EX)  no  political  speech  

c. Secondary  effects  exception:    i. secondary  effects  –  consequences  that  are  not  produced  by  the  

communicative  impact  of  speech  ii. when  the  law  discriminates  on  the  basis  of  speech  content  but  does  so  to  

regulate  the  secondary  effects  of  speech,  the  law  is  presumptively  valid  iii. “time,  place,  and  manner”  shift  not  ban  

d. Adult  Entertainment:    3. Content-­neutral  regulation  of  speech  

a. Subject  to  more  relaxed  scrutiny  i. EX)  no  amplified  speech  in  the  park  bw  midnight  and  6AM  

b. Invalid  if:  i. Broader  than  reasonably  necessary  to  achieve  a  gov’t  purpose  other  than  

speech  regulation  or  1. gov’t  attempt  to  give  one  side  of  a  debatable  public  question  an  

advantage  in  expressing  its  views  to  the  people  ii. So  Restrictive  that  they  fail  to  leave  open  alternative  channels  of  

communication  1. laws  that  foreclose  an  entire  medium  of  expression  are  generally  

invalid,  even  if  they  are  completely  free  of  content  or  viewpoint  discrimination  (like  signs)    bc  effect  is  to  suppress  too  much  speech  

iii. Time  place  and  manner  restrictions:  1. Not  based  on  content/viewpoint  in  speech  but  making  people  take  

their  speech  to  more  convenient  places  or  times  2. You  can  regulate  this,  but  you  have  to  leave  open  ample  alternatives  

c. Signs  i. commonly  held  that  governments  can  regulate  the  physical  characteristics  of  

signs  to  avoid  clutter/maintain  property  values  ii. advertising  home  businesses:  some  courts  say  they  may  not  be  banned  

v. Free  Exercise  of  Religion  1. Religious  Land  Use  and  Institutionalized  Persons  Act  of  2000:    

a. prohibits  land  use  regulations  that  impose  substantial  burdens  on  religious  exercise  unless  

b. Strict  Scrutiny  Test  the  gov  demonstrates  that    i. the  regulation  is  in  furtherance  of  a  compelling  gov’t  interest  ii. it  is  the  least  restrictive  means  of  furthering  that  interest  

2. Controls  on  Household  Composition  i. Rational  Basis  Test:  

1. Two  Part:  a. End  that  is  permissible  for  gov’t  to  pursue  b. Rational  means  for  ordinance  in  achieving  that  end  

2. Deferential  standard:  doesn’t  have  to  perfectly  accomplish  the  gov’ts  goal  as  long  as  it  will  rationally  help  you  get  there  

ii. Strict  Scrutiny  Test  [majority]  1. Two  Part:  

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a. Compelling  and  substantial  gov’t  interest  b. There  is  no  less  restrictive  means  of  accomplishing  that  interest  

2. Applies  when:  intruding  on  some  fundamental  constitutional  right  a. Residential:  people’s  choice  of  who  they  live  with  is  very  person  and  should  have  

freedom  to  do  it  iii. Moore:  Hybrid  test  bw  SS  and  RBT  justified  by  the  fact  that  there  were  important  

constitutional  interests  involved  iv. Laws  that  substantially  interfere  with  the  constitutionally  fundamental  liberty  of  people  to  

marry/associate  together  in  a  traditional  family  relationships  are  presumptively  void  even  if  the  purpose  is  to  promote  a  compelling  gov’t  purpose  [the  purpose  is  valid  but  the  means  is  not]  1. EX)  ordinance  that  cuts  into  the  family  itself  –  invalid  2. EX)  ordinance  limiting  occupancy  to  2  unrelated  persons  -­‐  valid  

v. Subject  to  strict  scrutiny  vi. Constitutionally  guaranteed  right  of  privacy  –  entwined  w/  the  freedom  of  association  vii. Family:  

1. Laws  interfering  w/  the  ability  of  unrelated  persons  (not  by  blood,  marriage,  or  adoption)  to  live  together  are  presumed  valid  and  subject  only  to  minimal  scrutiny  and  will  be  constiutional  notwithstanding  the  availability  of  less  restrictive  alternatives  

2. majority:  liberty  of  unrelated  persons  to  live  together  in  a  group  is  not  constitutionally  fundamental  

3. minority:  the  choice  of  household  companions  involves  deeply  personal  considerations  as  to  the  kind/quality  of  intimate  relationships  w/i  the  home;  unrelated  persons  can  live  together  as  a  functional  family    

4. see  also    note  2,  782  (family  in  context  of  restrictive  covenants  limiting  to  single-­‐family)  

viii. FHA:  1. mandates  of  this  law  can  collide  w/  local  zoning  laws  limiting  occupancy  by  unrelated  

persons  when  handicapped  people  seek  to  live  together  in  group  homes  for  various  therapeutic  purposes  

2. Prohibits  discrimination  against  handicapped  but  it  exempts  from  that  “reasonable  local  restrictions  regarding  the  number  of  occupants  permitted  to  occupy  a  dwelling”  

a. codes  within  exemption:  those  that  cap  the  total  number  of  occupants  in  order  to  prevent  overcrowding  of  a  dwelling  (i.e.  if  limits  occupancy  of  unrelated  persons  v.  occupancy  of  a  house  in  general)  

b. codes  outside  the  exemption:  those  designed  to  preserve  the  family  character  of  a  neighborhood,  fastening  on  the  composition  of  households  rather  than  on  the  total  number  of  occupants  living  quarters  

3. The  FHA  exempts  only  total  occupancy  limits,  not  occupancy  limits  based  on  the  familial  composition  of  the  household  

4. EX)  Ordinance  limiting  to  family  and  2  unrelated  persons.  Bars  occupancy  by  a  group  of  10  to  12  recovering  alcoholics/addicts  living  together  in  a  substance  abuse  treatment  program    an  invalid  discrimination  of  handicapped  persons  under  the  FHA  bc  pertains  to  the  type  of  occupants  rather  than  the  number  of  occupants.    

a. Will  have  to  figure  out  if  by  not  allowing  them  to  be  there,  whether  they  are  failing  to  accommodate    

3. Exclusionary  Zoning  i. Unlike  typical  Euclidian  Zoning  [can  put  stuff  anywhere],  here  if  you  have  it  zoned  industrial,  

you  can’t  have  residents  ii. Often  used  by  suburban  communities  to    

1. restrict/bar  particular  uses  (apartments,  small  houses  on  small  lots,  mobile  homes)  2. foreclose  entry  by  particular  people,  especially  poor  and  racial  minorities  3. fiscal  concerns  –  low  property  taxes  4. Like  industrial  properties  (corps  pay  taxes)  and  don’t  like  children  (expensive)  

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a. industrial  users  pay  higher  taxes  but  consume  fewer  munincipal  resources  than  other  kinds  of  residents  

b. Target  elderly  people  or  those  w/o  kids  iii. Exclusionary  Zoning  Techniques  

1. minimum  housing  cost  [disfavored  by  courts]  2. minimum  housing  size  [mixed  reviews]  3. minimum  lot  size  [upheld]  4. minimum  setback  [upheld]  5. prohibitions  on  mobile  homes  [almost  always  upheld]  6. prohibitions  on  multifamily  housing  

iv. Plaintiffs  must  show  discriminatory  intent  v. Mount  Laurel  II  

1. Every  municipality  –  not  just  developing  ones  –  must  provide  a  realistic  opportunity  for  decent  low-­‐income  housing,  except  where  (like  in  urban  areas)  the  poor  represent  a  disproportionately  large  %  of  the  population  as  compared  to  the  rest  of  the  region  

2. Affirmative  measures:  inclusionary  zoning  3. “Builder’s  Remedy”:  trial  court  can  allow  a  developer  to  go  forth  w/  a  low  income  project  

even  though  the  municipality  hadn’t  granted  a  permit  if  the  court  finds  that  the  municipality  hadn’t  fulfilled  its  Mount  Laurel  obligations  

4. Regional  Contribution  agreements:  suburbs  can,  with  council  approval,  compensate  cities  for  agreeing  to  absorb  up  to  half  of  the  suburbs’  fair-­‐share  obligation  

vi. Exclusionary  Zoning  in  Other  States  1. NJ:  Mount  Laurel  –  attacks  exclusionary  zoning  2. Other  States:  follow  tradition  that  zoning  ordinances  are  presumptively  constitutional  

a. apply  rational  basis  test  3. PA:  reqd  to  provide  zoning  for  all  types  of  housing  4. NY:  ordinances  annulled  if  they  don’t  include  districts  for  multiple  housing  when  area  

needs  req’d  them  5. MA:  non-­‐profits  and  NGOs  have  a  way  around  6. CT:  expedited  judicial  appeals  by  any  developer  of  an  “affordable  housing  project”  

vii. Tiebout  Hypothesis  1. The  specialization  of  municipalities  and  the  competition  among  them  will  enhance  the  

efficiency  of  metropolitan  organization  bc  people  will  congregate  w/  others  of  similar  tastes  and  therefore  be  more  likely  to  get  the  public  goods  they  most  prefer  

2. Everybody  living  in  the  locality  pays  the  same  amount  of  taxes  [head  taxes]  viii. Waring  Blender  Model  

1. Calls  for  all  land  uses  and  all  types  of  households  to  be  represented  in  each  neighborhood  in  proportion  to  their  representation  in  the  entire  metro  area  

2. Produces  great  diversity  within  neighborhoods  but  no  diversity  between  neighborhoods,  limiting  the  variety  of  residential  choices  available    

4. Inclusionary  Zoning  i. Devices  designed  to  require/encourage  developers  to  supply  low  and  moderate-­‐income  

housing  ii. Requirement:  

1. Conditioning  a  building  permit  on  the  builder’s  agreement  to  provide  a  certain  number  of  units  for  lease  at  below-­‐market  rents  

2. Courts  are  divided  on  the  legality  of  this  iii. Incentive  

1. Lifting  density  requirements  in  exchange  for  the  builder’s  agreement  to  build  more  low-­‐income  units  

 

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Eminent  Domain  and  the  Problem  of  Regulatory  Takings  

I. The  Power  of  Eminent  Domain:  Sources  and  Rationales  1. [start]:  to  do:  

i. finish  outline  ii. print  it  iii. read  it  iv. barbri  lectures  v. take  an  exam  [check  sample  answer]  vi. book  problems  vii. conceptualize  outline  viii. TAKE  EXAMS  

2. Defined:    i. Gov’t  acquisition  of  property  [gets  title]  to  satisfy  whatever  governmental  purposes  it  wants  to  

pursue  power  to  tell  landowners  you  will  transfer  property  to  us  whether  you  want  to  or  not  ii. Power  of  gov’t  to  take  property  from  owners  and  reallocate  it  to  governmentally  preferred  

uses  [forced  transfer]  with  just  compensation  (distinguishes  police  power  from  eminent  domain)  1. Grand  scheme:  urban  renewal  program  2. Self-­‐serving  transfer:  post  office  

iii. Duty  to  Compensate:  1. Fairness:  compensation  for  property  2. Deterrence:  discourages  efficient  landuse  if  not  3. Posner:  gov’t  would  take  more  land  instead  of  taxation  4. Protects  Politically  Powerless:  more  likely  to  compensate  powerful  people  as  a  matter  of  

course  3. Constitution  

i. Bill  of  Rights:  to  restrain  Fed’l  gov’t  1. “Shall  not  take  private  property  for  public  use  w/o  compensation”  

a. No  technical  restriction  on  taking  property  for  non-­‐public  uses  b. Assumes  that  if  exercising  ED  power,  it  will  be  for  public  use  

ii. 14th  Amendment:  restraint  on  State  gov’t,  so  though  14th  amendment,  the  bill  of  right  restrictions  on  fed’l  govt  are  incorporated  as  state  restriction  

4. Private  Party  Transfers  i. CANNOT  take  the  property  of  A  for  the  sole  purpose  of  transferring  it  to  another  private  party,  

even  if  A  is  paid  just  compensation…  EXCEPT  ii. Three  instances  recognized  by  Court:  

1. Instrumentalities  of  commerce  a. RR,  gas  lines,  canals  

2. Privately  Owner  Public  Service  providers  a. Utility  commission  

3. Facts  of  Independent  Public  Significance  a. ex)  condemnation  of  blighted  property  b. the  public  goal  was  accomplished  by  the  taking  itself  though  the  land  was  later  

transferred  to  private  people  c. Dealing  with  the  blight  was  the  independent  significance  that  brought  the  need  for  

the  Taking  Power  d. Diff  from  situation  where  you  don’t  get  a  public  benefit  unless  transfer  to  private  

parties  5. Theories  of  Eminent  Domain  

i. High  transaction  Costs  –  in  settings  w/  high  transaction  costs  people  must  be  allowed  to  use  the  courts  to  shift  resources  to  a  more  valuable  use  

ii. Land  assembly  through  private  transactions  1. Should  gov’t  just  have  to  cope  with  assembly  problems  just  as  private  developers  must?  

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2. Bilateral  Monopolies  a. Holdouts  –  when  the  cost  of  the  land  becomes  very  high,  people  owning  the  land  

will  be  tempted  to  hold  out  for  a  very  high  price  –  a  price  in  excess  of  the  opportunity  cost  of  the  land  

iii. Opportunity  for  corruption  6. Persuasion  

i. Aristotle:  3  elements  of  persuasion  1. Ethos  (Character  of  speaker)  2. Pathos  (appeal  to  hearers)  3. Logos  (logical  argument  making)  

 II. The  Public  Use  Puzzle  (and  Just  Compensation)  

1. Scope  of  Eminent  Domain  Power  i. Property  may  only  be  taken,  under  the  5th  Amendment,  for  “public  use”;  gov’t  can’t  condemn  

for  private  use;  Scope  hinges  on  meaning  of  “public  use”  ii. Definition  of  Public  Use  

1. Broad  View:  Advantage  or  benefit  to  the  public  [dominates]  –  gives  gov  more  latitude  2. Narrow  View:  actual  use  or  right  to  use  of  the  condemned  property  by  the  public  

2. Tests  for  “public  use”  i. If  you  take  for  public  purposes,  some  private  person  will  benefit,  but  that’s  ok  as  long  as  it’s  

being  taken  for  public  use  ii. “Use  by  Public”  and  “Public  Purpose”  Tests  

1. Traditionally  very  narrow,  but  has  since  broadened  into  the  Public  Purpose  Test  2. Does  it  serve  a  public  purpose  3. Will  not  survive  test  if  there  is  a  clear  showing  that  its  purpose  is  “to  favor  a  particular  

private  party  with  only  incidental  public  benefits”  iii. Public  Ends  Test  

1. Takes  on  a  broad  view  of  “public  use”  2. If  the  ends  are  sufficiently  “public”  the  test  is  passed  3. EX1)  where  the  condemned  property  remains  subject  to  public  oversight  after  transfer:    

a. the  property  is  transferred  to  a  regulated  public  utility    4. EX2)  where  the  property  is  taken  not  in  the  interests  of  private  parties  to  whom  it  is  

transferred,  but  “because  of  facts  of  independent  public  significance”  a. to  clear  blighted  land  

iv. Public  Means  Test  1. Whether  the  power  of  ED  is  really  necessary  to  accomplish  whatever  aim  the  gov’t  has  in  

mind  2. Requires  eminent  domain  to  assemble  land  on  behalf  of  enterprises  generating  public  

benefits  (this  is  really  a  hybrid  means-­‐ends  test)  a. rights  of  way,  RR,  highways  

v. Level  of  Scrutiny  in  determining  public  use  1. SPLIT  

a. strict  scrutiny:  requires  a  showing  that  the  project’s  aims  cannot  be  achieved  by  some  means  less  intrusive  than  eminent  domain  

b. deferential  standard:  afford  legislatures  broad  latitude  in  determining  what  public  needs  justify  the  takings  power  

vi. JC  and  Public  Use  1. If  the  taking  passes  public  use  test,  it  may  go  forward  upon  payment  of  just  compensation  

as  fixed  by  court  2. If  the  taking  fails  the  public  use  test,  the  gov’t  may  only  go  forward  by  purchasing  the  

property  though  voluntary  transactions  with  owners  3. Takings  for  economic  development  

i. JXN  splits  1. Majority:  presumptively  valid  so  long  as  

a. reasonably  necessary  to  achieving  city’s  intended  public  use?  and  

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b. for  reasonably  foreseeable  needs?  2. Minority:  imposed  heightened  standard  of  review  

ii. SCOTUS  authority:  1. Kelo:  public  economic  development  

a. made  it  difficult  to  prove  taking  for  private  use  b. just  have  to  say  that  some  public  person  will  be  furthered  by  the  ED  power  c. Here,  tax  based    any  time  the  gov’t  can  take  and  give  somethign  that  would  

increase  taxes  or  be  a  better  use,  it  would  be  ok  under  Kelo  d. HOW  TO  WIN:  more  of  an  argument  if  there  are  more  single-­‐lot  takings  

2. O’Connor  Dissent:    a. Economic  Development  as  public  purpose  is  troubling  bc  nearly  any  lawful  use  of  

real  property  can  be  said  to  generate  some  incidental  public  benefit  b. Emphasizes  3  exceptions  and  says  maj  goes  too  far  c. Test  of  whether  the  gov’t  has  a  stupid  staff    smart  people  can  always  come  up  

for  some  reason  by  the  public  will  benefit  3. Once  Q  of  public  purpose  has  been  decided,  the  amount  and  character  of  land  to  be  taken  

for  the  project  is  w/i  the  discretion  of  the  State  –  Deference  generally  given  to  city  plans  4. Just  Compensation  and  Public  Use  

i. General  Rule:  measure  by  FMV  1. Doesn’t  fully  compensate  condemnees  2. Not  all  property  is  for  sale  [subjective,  sentimental  value  giving  property  higher  value  to  

O  than  they  could  get  on  the  mkt]  3. Is  it  really  just  if  there  is  a  loss  being  compensated?  Maybe  not  but  hard  to  accurately  

measure  subjective  values  of  property  4. Nature  of  forced  sale  compromises  autonomy  of  owners  5. Some  proposed  solutions  

a. Canada:  special  advantages  generated  by  the  land  may  be  recovered  if  condemnee  proves  

b. England:  FMV  plus  10%  to  soften  blow  of  compulsory  taking  c. Ellickson:  system  of  bonuses,  defined  in  legislative  schedules  to  compensate  for  

losses  of  personal  value  ii. Condemnation  of  Part    

1. Diminution  of  Value:  a. Gov’t  use  makes  it  less  desirable  than  its  ordinary  use  [ex:  landfill]  b. If  condemnation  devalues  the  tract,  does  that  get  reflected  in  our  award  of  just  

compensation?    c. Yes:  when  JC  awarded,  you  get  the  FMV  of  the  part  taken  but  ALSO  an  award  of  

damage  to  any  part  remaining  in  ownership  of  L  2. Increase  in  Value  

a. SPLIT:  i. Give  gov’t  credit:  natural  flip-­‐side  of  having  to  pay  damages  where  reduces  

value  ii. Don’t  give  credit:  FAIRNESS    not  fair  if  the  person  whose  land  is  partially  

taken  has  to  pay  when  a  neighbor  whose  land  is  also  increased  in  value  doesn’t  

iii. Downzoning  In  Anticipation  of  Condemnation  1. Most  courts  say  it’s  not  just  to  compensate  for  just  the  value  of  residential  property  

where  gov’t  has  down-­‐zoned  knowing  it  would  condemn  later  2. You  cannot  downzone  someone’s  property  simply  for  purpose  of  later  acquiring  it  for  

eminent  domain  proceedings  3. Problematic:  it  would  be  very  difficult  to  prove  that  the  reason  they  changed  zoning  was  

for  future  eminent  domain  proceedings  iv. Intergovernmental  Takings  

1. The  substitute  Facilities  Doctrine:  The  state/city  is  entitled  not  merely  to  mkt  val  but  to  the  cost  of  obtaining  or  constructing  the  equivalent  of  what  had  been  taken  

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2. Abandoned  in  1984    SCOTUS  said  to  treat  public  condemnees  like  private  ones  III. Physical  Occupations  and  Regulatory  Takings  

1. Regulations  that  interfere  substantially  with  O’s  right  to  use,  dispose  or  possess  property  may  be  takings  

2. Some  states  req’t  gov’t  to  attempt  a  negotiated  purchase  before  initiating  a  condemnation  actoin  3. Two  Per  Se  Categorical  Rules  

i. Permanent  Dispossession  1. Rule:  when  by  government  authority  there  is  permanent  physical  occupation  on  

someone’s  property,  there  will  be  a  per  se  taking  a. Rationale:  Virtually  complete  interference  of  property  rights  such  that  O  can’t  use,  

dispose  of,  or  exclusively  possess  that  portion  of  the  property  in  ways  inconsistent  w/  the  gov’ts  use  of  it  

b. EX)  a  regulation  requiring  apt  buildings  to  install  smoke  detectors/fire  extinguishers  in  all  common  areas    not  a  taking  within  Loretto  bc  there  the  owner  is  L  and  he  has  choice  of  what  to  buy  and  where  to  put  it;  in  Loretto  it  was  a  3rd  party  what  to  put  there  and  where  to  put  it  

2. Permanent  physical  occupation:  there  is  a  taking  to  the  extent  of  the  occupation  without  regard  to  whether  the  action  achieves  an  important  public  benefit  or  has  only  minimal  economic  impact  on  the  owner    

a. Servitudes:  even  if  the  gov’t  physically  invades  only  an  easement  physically  still  must  pay  compensation  

b. Flight  Nuisance:    i. Planes  invading  airspace  over  O’s  land  considered  a  taking  by  most  jxns  

(noise  and  vibration  damage)  ii. O  has  all  area  above  and  below  the  land,  theoretically  iii. If  not  in  flight  path,  but  similar  damage  caused    no  taking  

c. Irrelevant  whether  O  had  previously  occupied  the  space  on  which  the  gov’t  physically  occupies  [loretto]  

d. Temporary  occupations  are  not  a  per  se  taking  3. Temporary  Physical  invasion:    

a. No  taking  per  se  [avoid  difficult  line-­‐drawing  problems]  b. Only  if  balancing  test  indicates  c. If  the  action  strips  all  utility  from  an  O’s  possession,  the  action  may  be  treated  as  a  

gov’t  invasion  of  property  that  constructively  dispossesses  the  owner  4. Rationale  for  permanent  invasion  rule  

a. O  has  no  right  to  possess  the  occupied  space  b. No  power  to  control  the  use  of  the  property  c. Empties  property  of  value  bc  the  purchaser  will  also  be  unable  to  make  any  use  of  

the  property  d. O  disturbed  in  exclusive  owernship  *share  w/  stranger)  e. Avoids  difficult  line-­‐drawing  problems  f. Few  problems  of  proof  

ii. Nuisance  Abatement  1. Rule:  under  state  police  power,  gov’t  can  control  uses  of  property  that  are  deemed  

nuisances  w/o  being  deemed  a  taking  of  property  a. no  taking  per  se  even  if  the  regulations  bar  all  economically  viable  uses  of  the  

property    b. Rationale:  property  rights  don’t  give  permission  to  create  a  nuisance;  nothing  

taken  by  forbidding  what  was  never  lawful  2. Where  city  “comes  to  the  nuisance,”  should  they  have  to  pay?  3. EX)  Competing  Uses:  Diseased  trees  killing  healthy  trees  

a. Taking:  i. Efficient    preserves  more  valuable  trees    

b. No  Taking:  i. Efficiency  doesn’t  mean  no  compensation  

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ii. Owner  of  cedars  shouldn’t  have  to  subsidize  apple  industry  4. Historically,  courts  distinguished  bw    

a. Regulations  that  seize  public  benefits  (compensation  required)  b. Regulations  that  control  private  harms  inflicted  on  the  public  (no  compensation  

req’d)  [public  bad  test]  iii. Economically  Viable  Use  

1. If  the  gov’t  regulation  denies  all  economically  viable  use  of  the  land,  there  is  a  taking  2. State  can’t  evade  duty  to  compensate  under  Lucas  by  leaving  O  with  a  token  interest  3. Exception:  if  abating  a  nuisance,  not  a  taking  even  if  depletes  all  economically  viable  uses  4. NOTE:  it  doesn’t  have  to  make  the  land  itself  valueless,  it  merely  has  to  deny  economically  

viable  use  of  the  land    a. ex)  the  brick  land  case    land  still  had  value  when  gov’t  prohibited  the  most  

valuable  use  of  it  5. Do  we  have  a  conceptual  severance  issue?  

a. Scalia:  state  courts  in  Penn  Central  looked  not  just  at  that  piece  of  property  but  at  all  the  property  the  person  owns  in  the  area  and  find  effect  on  value  of  all  of  property  in  a  region;  Scalia  rejects  this  and  instead  suggests  

iv. NO  compensation  required  when:  1. Nuisance  abatement  2. Civil  necessity  [burn  a  house  to  stop  a  fire]  3. Public  use  (subj  to  balancing  tests)  4. Average  reciprocity    

4. Rules  Based  on  Measuring  and  Balancing  i. Mahon:  Regulations  affecting  use  

1. “goes  too  far”    regulations  that  amount  to  a  taking  are  those  that  go  too  far.  [helpful]  2. Could  be  a  taking  but  won’t  be  every  time  bc  incompatible  w/  Euclid  and  forms  of  

regulations  that  court  has  approved  3. Holmes:  gov’t  would  be  stalled  if  it  had  to  pay  for  every  move  it  makes  4. Rationale:  

a. Long-­‐recognized  existence  of  the  police  power  b. Owners  still  get  value  from  property  w/  limitations  c. Ownership  is  a  right  to  do  what  you  want  within  legal  limits  d. If  you  own  property,  you  do  so  with  the  reservation  of  some  legal  interest  in  the  

gov’t  [they  may  come  in  and  regulate]  ii. Average  Reciprocity  of  Advantage  

1. The  people  who  bear  burden  of  the  regulation  are  also  advantaged  by  the  regulation  as  applied  to  others  [you  have  to  leave  coal  but  so  does  neighbor]  

2. Situations  where  you  are  being  burdened  but  doesn’t  advantage  you  at  all  and  advantages  others  at  your  expense    could  be  a  taking  

3. Plymouth  Coal:    a. If  you  own  mineral  rights  under  property,  you  can  take  a  lot,  but  you  have  to  leave  

a  pillar  of  coal  b. Purpose:  avoid  injury  caused  by  floods  

iii. Conceptual  Severance:  1. What  interests  in  land  are  considered?  The  land  as  a  whole?  or  certain  property  rights  

viewed  in  isolation?  [the  denominator  problem]  a. Approach  1:  

i. Denominator  =  the  entire  bundle  (all  rights  in  land)  ii. Numerator  =  what  is  taken  away  by  the  statute  

b. Approach  2:  i. Denominator:  value  of  the  whole  ii. Numerator  =  diminution  in  value  

c. Approach  3:  [majority  in  penn  coal]  i. Denominator  =  what  statute  takes  away  ii. Numerator  =  what  statute  takes  away  [one  stick]  

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2. Can  you  carve  out  interests  for  separate  examination?  Depends  a. Reasonable  expectations  of  owner  in  light  of  background  State  law    whether  

and  to  what  degree  the  state’s  law  has  accorded  legal  recognition  and  protection  to  the  particular  interest  in  land  

3. Is  gov’t  taking  all  of  a  small  thing  or  part  of  a  larger  thing?  4. [Penn  Coal]  

a. majority:  gov’t  took  all  of  a  particular  set  of  rights  b. j.  brandeis:  the  gov’t  didn’t  take  all  of  a  small  thing  but  a  part  of  a  larger  thing    

look  at  the  property  as  an  entire  estate  iv. BALANCING  TESTS  

1. average  reciprocity  of  advantage?  2. public  use?  3. diminution  in  value  [prob  wont  count  if  sentimental]  

a. take  into  account  stuff  on  the  land  and  under  it  4. economically  viable  use  of  land  

v. Penn  Central  Balancing  1. All  economically  viable  use  not  taken    could  still  be  a  taking  depending  on  balancing  

factors  a. Regulation’s  economic  effect  on  the  landowner  b. The  extent  to  which  the  regulation  interferes  with  reasonable  investment-­‐backed  

expectations  c. The  character  of  the  gov’t  action  [legitimate  gov’t  purpose]  

2. Economic  Impact  a. Deprivation  of  ability  to  get  revenue  b. Diminish  current  revenue  or  prevents  excess  revenue?  c. TRDS:  factor  in  bc  can  get  revenue  off  diff  property  

i. not  just  compensation  but  they  reduce  economic  impact  of  the  regulation  3. Investment-­Backed  Expectations  

a. Whether  someone  has  invested  money  w/  a  certain  set  of  expectations  b. inherited  property:  

i. may  be  more  difficult  to  prove  regulatory  taking?  ii. take  into  account  investments  by  earlier  family    

c. Can’t  be  an  interference  with  the  primary  expectations  they  ahd  when  acquired  property  

4. Legitimate  Gov’t  Purpose  a. physical  invasion    more  likely  to  be  a  taking  b. public  program  adjusting  benefits  and  burdens  of  economic  life    less  likely  c. Airspace:  taking  req’ing  just  compensation  

vi. Regulation  Prior  to  Ownership  1. [palazzolo]  Owner  not  precluded  from  bringing  takings  claim  simply  bc  the  contested  

regulation  was  in  place  prior  to  his  ownership  a. a  regulation  cannot  be  a  background  principle  for  some  owners  and  not  for  others  

2. Here,  no  taking  under  Lucas  bc  not  denied  economic  value  bc  retains  $200K    in  development  under  State’s  wetlands  regulations  

a. PENN  BALANCING  will  determine  bc  won’t  survive  under  Lucas  5. Temporary  Regulations  

i. Originally:  If  some  regulation  were  a  taking,  then  state  could:  1. rescind  the  regulation  and  not  pay  compensation  or  2. keep  regulation  and  pay  compensation  

ii. First  English  Rule:  said  they  still  had  to  pay  just  compensation  from  time  regulation  in  effect  until  it  got  rescinded  

iii. Can  you  take  the  First  English  Rule  and  mix  it  with  the  Lucas  rule?  1. Regulation  denies  you  of  all  economic  use  of  land  for  a  temporary  time  2. SCOTUS  says  NO  

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a. Lucas  does  not  apply  for  a  temporary  regulation  for  a  fixed  period  of  time;  only  applies  when  it’s  a  permanent  regulation  

b. First  English:  it’s  a  remedial  question  dealing  with  whether  there  has  been  a  taking  or  not  

iv. Temporary  Moratorium  could  constitute  a  taking  even  if  you  don’t  rely  on  Lucas  rule:  Penn  Central  Balancing  Test  1. Can’t  focus  on  a  period  of  time  to  the  exclusion  of  the  full  length  of  time  that  the  property  

exists  2. What  if  it  is  scheduled  to  expire  in  150  years?  

a. applying  Penn  Central  the  economic  impact  of  that  regulation  may  be  sufficient  to  make  it  a  taking  

3. 2  years  moratorium  to  make  plans  but  keep  having  successive  renewals  on  ban  on  development?  

a. Conceivably  a  taking  6. Exactions  

i. Test:  1. Would  it  be  a  taking  if  viewed  independent  of  the  condition?  2. Essential  Nexus  3. Rough  Proportionality  

ii. Nollan  1. Public  trust  doctrine  2. court  analogizes  to  Loretto    people  walking  could  be  like  a  permanent  physical  

occupation  3. Court  does  find  a  legitimate  public  interest  ab  the  consequences  of  building  the  bigger  

house    psychological  barrier;  people  don’t  know  about  the  public  beach  4. Commission:  but  if  we  can  deny  the  permit,  we  can  grant  the  permit  and  ask  the  Nollans  

to  solve  the  problem  5. Although  general  rule:  can  attach  a  condition  to  the  granting  of  a  permit  so  long  as    

a. The  condition  serves  the  same  gov’tal  purpose  as  to  the  development  [nollan],  and  b. Exaction  is  roughly  proportional  in  nature  and  impact  to  the  problem  created  by  

the  land  use  6. here,  the  imposed  exaction  helps  people  get  to  the  park  but  it  doesn’t  help  people  see  the  

beach,  which  was  the  interest  involved  7. TESTS:  

a. legitimate  public  interest  b. economically  viable  use  of  the  land  c. Per  se  tests  

i. Loretto  ii. Nuisance  iii. Lucas  

d. Exactions:  iii. Dolan:  rough  proportionality  test  

1. Degree  to  which  it  creates  a  problem  and  the  degree  to  which  the  exaction  will  help  solve  the  problem  

2. some  individualized  determination  that  the  req’d  thing  is  related  in  nature  and  impact          

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Problems  and  Hypos    problems  pg.  364  

• 1.  a)  L  has  no  rights  against  T  bc  he  doesn’t  have  to  give  any  notice  beyond  the  lease  itself;  L  does  have  a  reversionary  interest,  and  can  find  a  new  tenant,  but  no  rights  against  T  

•  b)  year-­‐to-­‐year  periodic  tenancy  so  has  to  give  6  month  notice;  since  he  did  not,  then  T  continues  to  be  own  the  hook  for  another  period  (1year)  

i. neither  T  nor  L  gave  proper  notice  in  this  HYPO,  so  both  would  be  bound  for  another  year  • c)  month-­‐to-­‐month  periodic  tenancy  (some  would  say  it’s  year-­‐to-­‐year  bc  it  specifies  an  annual  

rate)  ii. at  common  law,  year  to  year  req’d  6  mos,  though  modern  law  statutes  will  govern  iii. for  month-­‐to-­‐month,  need  a  full  month’s  notice  

•  why  should  L  get  4mos  rent  from  T?  iv. the  notice  given  by  T  was  improper  bc  tried  to  give  notice  in  the  middle  of  the  month  

(period)  –  they  should  have  given  a  full  month’s  notice,  so  L  says  there  was  no  legal  or  adequate  notice  of  termination  of  the  tenancy  

v. court  will  make  the  notice  effective  on  the  earliest  date  it  could  be  effective  under  common  law  principles,  so  he’ll  have  to  pay  for  one  month,  but  not  for  subsequent  months.    

vi. if  you  have  to  give  30  days  notice  to  terminate  a  tenancy  at  will,  does  that  make  it  a  month-­‐to-­‐month  periodic  tenancy?  yeah.    

 at  common  law,  if  L  or  T  dies,  that  automatically  ends  a  tenancy  at  will.  OR  if  L  conveyed  the  property  or  if  T  attempted  to  assign  the  property,  at  common  law,  that  could  end  the  tenancy  at  will.    problems  pg.  368  2.  T  has  a  tenancy  at  will    

• if  you  give  one  party  the  right  to  terminate  at  will,  then  the  right  goes  to  both  parties  and  either  can  terminate  at  will  

• Garner  shows  that  parties  can  negotiate  an  agreement  giving  the  tenant  only  the  right  to  terminate  

• what  ab  an  agreement  giving  L  the  right  to  terminate?  vii. Why  treat  L  differently?  viii. Restatement:  you  should  be  able  to  negotiate  that  for  either  party,  but  it  might  be  an  

unconscionable  term  in  the  contract  and  therefore  unenforceable  i. This  would  create  a  FSD  in  T  ii. Restatement:  in  this  case,  it  should  end  at  L’s  death  

3.    • supposed  to  be  able  to  (at  least  in  theory)  determine  the  maximum  length  of  the  tenancy  –  so  not  

Term  of  Years  • Not  Periodic  tenancy  bc  contemplates  that  it  is  going  to  keep  going  month  to  month  until  the  war  

ends  • Tenancy  at  will?  no.  • So  what  do  you  do?  you  can’t  create  a  new  estate  (numerus  clausus),  so  you’ll  have  to  squeeze  it  

into  one  of  the  three:  • some  courts  said  it  can  be  a  term  of  years  bc  there  is  a  day  when  the  war  will  end  • other  ct  said  tenancy  at  will  (but  only  bc  of  TERRIBLE  logic  based  on  deductive  reasoning)    

note  2,  p.  372:  Mississippi  Statute  for  remedies  for  a  holdover  tenant:  • double  rent  –  pay  2x  if  you  holdover.  

note  3:    • tenant  who  stays  past  bc  sick  child  =  not  holdover,  bc  not  voluntary  but  there  still  may  be  a  

remedy  against  T  (will  have  to  pay  for  the  period  of  time  they  are  actually  in  the  premises  and  preventing  L  to  rent  to  someone  else)  

P.  380,  Q  3:  • “For  rent:  Furnished  basement  apartment  in  private  white  home.”  

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• violation  of  FHA?  o 3604(c):  deals  w/  how  you  advertise,  so  this  is  a  violation  of  the  FHA  o 3604(a):  no  violation  bc  of  the  exemption  provision  of  3603(b)  

1. acts  that  would  ordinarily  violate  the  FHA  are  not  violations  bc  exempted  2. 3603(1):  sale  of  single  family  homes  by  the  owner  will  be  exempted  in  some  

situations  (but  that  doesn’t  apply  here)  3. 3603(2):  small  place,  no  more  than  4  families  living  independently  in  the  same  

place,  and  the  owner  occupies  one  of  those  units,  then  the  FHA  does  not  apply  to  that.  

4. SO  this  woman  would  not  violate  –  but  does  that  also  exempt  her  based  upon  her  advertisement?  No.  Bc  3603(b)  says  that  “nothing  in  section  3604  shall  apply  to  these  exemptions  EXCEPT  subsection  (c)  which  is  the  advertisement  section…  so  her  exemption  does  not  apply  also  to  her  violation  by  advertisement  

5. Under  SCOTUS  reading  in  the  Jones  case,  she  would  be  liable;  the  civil  war  statute  does  not  include  a  prohibition  on  discriminatory  advertising  so  she  would  not  be  

6. Her  advertisement  probably  does  not  violate  FHA;  but  decision  not  the  rent  based  on  race  does  not;  VICE  VERSA  under  civil  war  statute.    

o What  if  the  advertisement  had  not  contained  the  word  “white”?  7. Now,  probably  no  violation  of  FHA  bc  of  exemption  and  ad  is  clean  8. BUT  still  violates  §  1982  (civil  war  statute)  

o What  if  ad  had  said  “only  to  renters  who  speak  certain  languages”?  9. FHA  protects  people  of  national  origin;  this  could  be  read  to  prefer  people  of  

certain  national  origin,  though  it  says  speaking  a  language  –  so  probably  violates  FHA  w/  respect  to  advertisement  provision  

10. §1982:  doesn’t  apply  to  ads;  no  violation  o What  if  she  discriminates  against  German  people  in  renting  the  apartment  in  her  home  

11. No  violation  of  FHA  12. Civil  Rights  at  of  1866  (§1982)?:    

a. it  doesn’t  specifically  protect  national  origin  as  a  classification  BUT  “race”  at  that  time  was  interpreted  as  synonymous  with  national  origin  –  so  probably  a  violation  

o Regular  exclusion  of  black  models  in  ads  as  a  violation?  13. potential  violation  of  FHA  depending  on  who  is  included  in  advertising  

o Purpose  of  exclusion  is  to  keep  the  complex  integrated?  14. violation  of  3604(A)  refusal  to  sell/rent  15. maj  found  that  it  violated  FHA  16. dissent  said  that  FHA  had  mult  purposes  and  one  is  to  maintain  housing  

integration  page  380-­81  

• Note  4(a)  o Landlords  have  8  single-­‐family  houses  o avoid  turnover  o limit  occupancy  to  4  persons  –  are  they  discriminating  against  a  couple  w/  3  kids?  no  

justified  based  on  maintaining  the  economic  value  of  the  property   could  be  discrimination  based  on  familial  status  (specified  meaning,  relates  to  

having  minor  children)   may  be  defensible  on  grounds  of  preservation  of  property  

• Note  4(b)  o violation:  Familial  status  discrimination  –  specifying  ratio  of  adults  to  children  

• Note  4(c)  o Marital  status  not  covered  under  FHA  so  NOT  a  violation  under  FHA  o BUT  sometimes  states/cities  have  their  own  fair  housing  code,  so  could  violate  some  

local  legislation,  but  no  violation  of  the  federal  act  

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• Note  4(d)  o FHA  does  not  prohibit  sexual  preference  discrimination  so  no  violation  

• Note  4(a)  –  sexual  harassment  of  female  tenant  o could  violate  3604(b)  –  conditions  of  rental/provision  of  services    

P.  382,    • (f):  refusing  to  rent  to  someone  with  AIDS  is  prohibited  bc  AIDS  considered  a  handicap  • (g):  if  it  is  just  an  apparent  threat,  and  it  is  possible  to  make  reasonable  accommodations  to  allow  

them  to  live  there,  there  may  be  an  obligation  on  L  to  make  it  possible  for  mentally  disabled  person  w/  threatening  behavior  to  live  there  

• (e):  if  it  is  possible  for  the  landlord  to  reasonable  accommodate  the  tenant,  who  needed  a  dog,  then  they  should;  no-­‐pet  policy  will  only  prevail  if  such  reasonable  accommodations  are  not  possible  

• State  and  local  legislation:  o No  prohibition  on  discriminating  based  on  profession  

• Note  6,  page  383:  o “Wanted:  Female  to  share  2bdrm  apt.”  o Violation  of  FHA?  No.    

Exemption  provision:  people  renting  a  room  in  the  apartment  in  which  they  are  living  are  no  prohibited  from  preferring  a  specific  gender    

FHA  exemption  3603(b)(2)  exemption  BUT  the  exemption  provision  applies  to  everything  of  than  3604(c)  [the  advertising  provision]  SO  are  those  advertisements  that  specify  a  gender  a  violation  of  §  3604(c)?  

YES.  but  this  is  problematic:   the  FHA  makes  it  legal  for  Pat  to  prefer  a  female  roommate  –  can  legally  

decide  to  rent  or  not  based  on  gender;  BUT  it  also  makes  it  illegal  to  advertise  that  fact;  so  here,  there  is  a  1st  Amendment  question.  Does  the  1st  amendment  allow  the  fed’l  gov’t  to  ban    an  advertisement  proposing  a  legal  transaction?  

problems  p.387-­88  1.  no-­‐  landlord  violates  his  duty,  which  includes  making  sure  the  new  tenant  can  use  the  land  2.  T  is  probably  still  obligated  to  pay  rent  –  even  if  someone  else  has  a  lease;  that  hasn’t  interfered  with  T’s  ability  to  use/possess;  T  might  be  able  to  terminate  lease    Problems  p  393:  2(a)    

• Sublease  bw  T  and  T1;  L  not  getting  paid;  He  can  sue  T,  arguing  privity  of  K,  making  T  liable  (breach  of  K);  ALSO  privity  of  estate  bc  T  didn’t  convey  his  entire  interest  in  the  estate  (sublease);  

• Could  L  sue  T1  for  non-­‐payment  of  rent?  NO.  no  privity  of  estate;  he’s  not  in  privity  of  K  either  (no  new  agreement  bw  K  and  T1  and  nothing  to  indicate  that  the  K  is  a  3rd  party  beneficiary  K);    

• So  if  T  just  disappeared,  does  that  mean  that  L  just  can’t  get  rent  from  T1?  o L  can  terminate  lease  with  T  and  evict  T1  

• What  if  T1  had  agreed  in  the  transfer  to  pay  the  rents  of  the  original  K?  o no  privity  of  estate,  but  maybe  privity  of  K  

2(c):  • LT    T1  (assign,  assuming  covenants  of  original  lease)    T2    T3  • L  has  cause  of  action  against  T,  given  that  rent  not  being  paid/premises  not  kept  in  good  

condition;  L  not  in  privity  of  estate  with  T  (bc  entire  estate  assigned  to  T1)  BUT  he’s  still  in  privity  of  K  with  T,  which  would  give  him  a  cause  of  action  for  nonpayment  of  rent  and  keeping  in  non-­‐repair;  

• Can  L  release  T  from  obligation  under  an  assignment?  T  might  negotiate  a  release  of  their  liability,  but  assuming  none  has  been  negotiated,  they’re  still  on  the  hook  for  the  original  lease  

• Cause  of  action  against  T1?  Once  T1  gives  it  up  to  T2,  T1  is  not  in  privity  of  estate  with  L;  but  he  could  be  in  privity  of  K  with  L?  depends  on  whether  the  “assumption  of  covenants”  is  read  as  a  3rd  party  beneficiary  (lessor  becomes  a  3rd  party  beneficiary  bw  K  relationship  bw  T  and  T1  and  

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can  enforce  the  K  between  those  two  bc  they  are  essentially  the  ones  who  would  benefit  from  that  K…  this  depends  upon  the  jxn)  

• T2  transferred  the  estate  when  the  breach  occurred,  so  not  in  privity  of  estate  bw  L  and  T2;  no  real  factual  basis  for  arguing  privity  of  K;  so  no  legal  remedy  

• L  v.  T3?  YES  covenants  ran  with  the  land  to  T3,  so  he  is  in  privity  of  estate  but  not  privity  of  K  • Suppose  L  decides  to  go  after  T  and  T  has  to  pay  the  back  rent;  does  T  have  remedies  against  

people  further  down  the  line?  YES.  T1  –  T  has  K  with  T1  that  says  T1  will  assume  all  covenants.  What  about  T3?  Yes.  Theory  of  subrogation.  ix. T  was  forced  to  pay  the  landlord  based  upon  defaults  by  other  people;  so  T  gets  implicitly  

in  exchange  for  paying  off  the  landlord  is  that  he  acquires  L’s  rights;  he  can  turn  around  and  assert  the  same  rights  L  could  have  asserted  against  other  liable  parties;  he  has  subrogated  L’s  rights  bc  he  had  to  pay  off  the  L  

 Problems,  page  402:  1(a)(1):  maybe  commercially  reasonable  1(a)(2):  commercially  reasonable  2):  jxn  follows  maj  rule,  prohibits  assignments  but  doesn’t  prohibits  subleases;  can  he  prohibit  assignment  for  all  but  one  day?  

• technically,  there  would  still  be  a  remainder  and  this  is  still  technically  a  sublease,  so  L  can  do  that  

3)  L  is  not  in  privity  of  K  with  T1;  so  why  does  L  think  that  T1  is  liable  for  rent  not  being  paid  by  T2  once  T1  has  already  moved  out?  Theory  of  privity  of  estate.  when  there  is  an  assignment,  the  leasehold  has  been  transferred  to  someone  else;  so  L  was  in  privity  of  estate  with  T1,  but  T1  assigned  it  on  to  T2,  so  why  does  L  think  he  is  in  privity  of  estate  with  T1?  

• T1’s  assignment  was  improper  bc  he  did  not  get  L’s  permission  • So  is  L  right?  does  T1  have  to  pay  for  the  rent  for  the  period  that  T2  was  supposed  to  be  paying  

it?  • Argue  for  T1:    

o not  in  privity  of  estate  with  L  because,  according  to  the  Rule  in  Dumpor’s  Case,  if  you  consent  to  an  assignment,  then  the  effect  is  to  eliminate  the  requirement  that  you  approve  assignments  unless  you  specifically  reserve  that  right  for  future  transactions;  so  if  you’re  in  a  jxn  that  supports  Dumpor,  then  T1  prevails.    

o The  Restatement  disapproves  of  Dumpor’s  rule  [jxnal  split!]  • Argue  for  L:  clause  in  K  says  you  have  to  get  L’s  approval    

 Note  2,  page  408:  

• should  tenant  be  able  to  bargain  away  that  protection  (in  a  jxn  that  bars  self-­‐help  by  L)  –  in  exchange  for  lower  rent  

 Page  417,  Note  1  

• If  L  relets  on  T’s  account  for  less  than  the  fair  rental  value  and  less  than  the  original  rent?  o Lease  Rent/FRV/Actual  rent  (less  than  FRV)  o Does  T  have  to  pay  the  diff  bw  the  lease  rent  and  the  FRV  or  the  diff  bw  the  lease  rent  

and  the  actual  rent?  (less  than  FRV)  FRV.  They  can’t  get  a  lower  amount  and  expect  T  to  pay  the  difference  

• L  relets  on  T’s  account  and  finds  a  T1  willing  to  pay  more  than  the  original  lease  specified.  Who  should  get  the  additional  money?  

o T  should  get  it:  it’s  his  apartment;  he  has  possession  to  property;  L  serves  as  agent  acting  on  behalf  of  T  (like  if  you  sublet  it,  you  get  to  keep  additional  revenue)    

o L  should  get  it:      Problems,  page  429  1)Tenancy  at  will  –  either  party  can  end  it  at  either  time  

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• L  says  not  liable  for  damages  to  T  on  theory  of  constructive  eviction  because  it  was  a    tenancy  at  will;  he  could  have  told  T  to  move  out  tomorrow  and  I  wouldn’t  have  violated  any  covenant;  I  can  actually  evict  them,  so  why  can’t  I  constructively  evict  them?  

• Does  this  argument  work?  NO.  Trial  court  said  it’s  a  tenancy  at  will  so  no  cause  of  action.  The  appellate  court  said  it  wasn’t  a  tenancy  at  will  btu  rather  a  periodic  tenancy,  and  there  could  be  liability  bc  for  at  least  a  period  of  time  L  had  an  obligation  to  the  covenant  of  quiet  enjoyment  

2)  T  vacates  before  the  end  of  a  lease  term  and  L  brings  an  action  to  recover  rent;  can  T  defend  against  rent  action  based  upon  theory  of  constructive  eviction    

• L  argues:  2a)  2b):  no  constructive  eviction;  L  had  an  obligation  to  do  something  “under  duty  to  maintain  common  areas”  but  L  did  that;  and  the  covenant  of  quiet  enjoyment  doesn’t  make  them  an  ensurer  against  acts  by  third  parties,  they  just  have  to  take  reasonable  steps  to  comply  with  their  obligations  2c)  L  does  nothing  ab  some  loud  protesters;  T  claims  constructive  eviction  

• L  has  a  duty  to  maintain  common  areas,  which  include  parking  lot/inner  lobby;  there  is  constructive  eviction;  L  had  promised  to  provide  security  guards  and  had  not  done  that    

3)  Can  T  bring  action  for  declaratory  judgment,  seeking  declaration  that  certain  breaches  of  quiet  enjoyment  –  wants  judge  to  say  that  L  has  breached  the  covenant  of  quiet  enjoyment  and  as  a  result  T  is  subject  to  constructive  eviction;  but  T  hasn’t  moved  out  yet  so  should  they  be  able  to  seek  a  declaratory  jucgment?    

• This  is  to  guard  against  risk  of  moving  out  and  having  court  declare  that  they  had  no  constructive  eviction  

• Here,  ct  said  it  was  an  option  they  could  pursue    problems  page  439  

• 4(a):  L  still  responsible  to  provide  habitable  premises    • 4(b):  this  is  not  covered  by  the  IWH;  but  T  would  want  to  fit  those  amenities  within  the  IWH  bc  

easier  for  them  to  proceed/  seek  remedy;  court  said  that  IWH  did  not  extend  to  all  of  the  expectations  of  T,  only  those  things  hat  affect  health,  safety,  and  material  function  of  premises  

• 4(c):  T  can  waive  the  IWH?  no.  It  is  not  subject  to  waiver  by  T;  so  even  if  T  knows  ab  the  problems,  moves  in  knowing  they  exist,  he  may  still  be  able  to  raise  a  breach  of  IWH  in  litigation  w/  L  

• 5:  from  T’s  p.o.v.  what  is  it  that  makes  the  IWH  advantageous  compared  to  prior  law  (constructive  eviction/quiet  enjoyment,  etc)  

o 1.  right  to  remain  in  possession  and  still  withhold  the  rent  (couldn’t  before  bc  only  could  withhold  rent  w/o  a  constructive  eviction,  and  can’t  have  constructive  eviction  unless  you  move  out)  

o 2.  now,  duty  on  L  to  provide  habitable  premises;  under  prior  law,  that  generally  was  not  required;  L  had  no  general  duty  to  provide  habitable  premises,  simply  had  to  comply  w/  common  law  exceptions  (like  maintaining  common  areas,  etc)  

o 3.  IWH  applies  not  just  at  the  outset  of  the  lease  but  throughout  the  lease  term  (L  has  to  fix  stuff  as  it  comes  up);  prior  law  usually  only  applied  to  issues  present  at  the  outset  of  the  lease;  so  from  T’s  perspective  it’s  advantageous  bc  it’s  a  continuing  duty  of  L  

o Damages  tend  to  be  better  for  T  under  IWH    problems  page  441  1):  L  is  not  liable  for  the  injury  from  the  horse  fall;  if  there’s  a  defect  that  exists  at  the  outset  of  the  lease,  and  L  knew  or  should  have  known  of  the  defect  and  knew  or  should’ve  known  that  T  couldn’t  be  respoinsible  for  the  defect  

• whether  defect  existed  at  outset  of  the  lease:  court  said,  since  it  was  a  month  to  month  tenancy,  then  if  defect  existed  at  the  beginning  of  one  of  those  months,  then  L  would  be  liable;    

• this  is  a  weird  theory    2):  exceptions  page  428  imposing  a  duty  on  L;  here  no  duty  3a):  L  has  duty,  must  maintain  reasonable  care  in  maintaining  common  areas  and  lack  of  speed  bumps  could  be  unreasonable  3b):  no  fence?  ??  split  authority  as  to  L’s  duty  here  

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4):  L  is  not  liable  for  injuries;  no  duty  to  protect  against  criminal  acts  of  3rd  parties  based  upon  common  law  theory  to  maintain  common  area,  though,  might  impose  a  duty  

• common  area  exception  deals  with  the  physical  common  areas;  but  some  argue  that  common  areas  include  providing  security  in  common  areas,  especially  where  L  knows  of  criminal  conduct  in  the  area  

5):  exculpatory  clause  protecting  L  from  liability  against  T  for  injuries  sustained  on  the  leased  premises?  • ?  

 Problems  on  P.  462  –  1)            

• a.          Why  would  seller  care  if  buyer  was  married?  Affects  a  lot  in  community  property  state.  Even  in  sep  prop  states,  seller  would  want  to  know  about  dower/elective  share,  etc.  

• b.          Does  not  specify  JT,  TIC,  etc.  Why  does  it  matter  what  form  of  title  the  tenant  intended  to  take?  If  JT,  right  of  survivorship  has  an  effect  on  what  happens  to  prop  on  death.  Under  TIC,  co-­‐tenants  interest  may  pass  to  third  party.  

• c.          Good  and  merchantable  title  –  Why  does  it  matter?  Is  it  good  enough?  Yes,  generally.  Is  good  and  merchantable  title  satisfied  by  AP?  It  can  be  if  evidence  is  good  enough.  

• d.          Suppose  recorded  covenant  restricts  land.  Is  buyer  bound?  Depends.  2)        Contract  to  buy  house  still  under  construction  –  Would  be  good  to  have  an  express  warranty  as  to  the  quality  of  construction,  but  the  reasonable  security  is  to  check  out  the  builder’s  practices.    Problem  on  467  –  B  would  have  a  duty  to  disclose  material  information  about  P’s  willingness  to  pay.    problems  page    477:  2a)  SOF  complied  with  when  O  deeded  it  to  A;  but  the  SOF  not  complied  with  when  A  gave  it  back  to  O;  SO  A  owns  the  property  2b)  Deed  does  not  have  to  be  legally  recorded;  it  is  legally  effective  when  it  was  delivered,  even  if  it  wasn’t  recorded;  

• Can  O  create  a  JT  by  a  deed  from  O    O+A?  some  jxns  allow  this;  assume  here  you  can.  • A  whites  out  her  name  and  then  the  deed  gets  recorded;  doesn’t  comply  with  SOF;  still  would  be  

O+A  upon  O’s  death  p.  526,  problem  4  purchase  price  

• encumbrances:  if  easily  removable  (just  the  cost  of  moving)  if  not  (difference  in  value  of  land  with  encumbrance  and  without  it)  

breach  of  covenant  of  seisin:    • depart  from  standard  K  principle  

p.  531,  problem  2  A    B  (in  GWD)  at  $20K  

• B  C  at  $15K  O  comes  in  to  oust  C  a)  deed  from  B  to  C  is  quitclaim  deed:  B  can’t  be  sued  by  C  bc  no  warranties  in  quitclaim  deed;  so  can  be  recover  from  A?    

• B  would  have  to  show  damages  which  he  can’t  do  • B  sold  it  for  less  to  C  bc  O  had  been  nosing  ab  and  people  were  starting  to  get  nervous  ab  

whether  O  really  owned  the  property  (“????)  b)  deed  from  B  to  C  is  a  GWD;  Can  B  recover  from  A?  

• C  kicked  off  the  property,  B  has  a  GWD  out  there  which  he  might  have  to  make  good,  so  he  wants  to  be  protected,  so  he  brings  an  action  against  A,  but  he  hasn’t  been  damaged  yet.  

• if  damage  he’s  worried  ab  is  suit  by  C,  well  C  hasn’t  sued  yet.  • could  be  some  warranties  in  A’s  deed  that  would  run  to  C  as  well  • could  the  court  order  A  to  pay  money  into  an  escrow  acct  to  cover  the  potential  of  a  future  

damage  action  by  C,  and  once  the  SOL  runs,  and  C  never  sues,  then  the  money  goes  back  to  A  c)  deed  from  B  to  C  is  GWD;  C  sues  and  actually  recovers  $15  from  B.  How  much  can  B  recover  from  A?  

• B  says:  $20K  

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• caselaw  going  either  way  d)  would  answers  be  diff  if  jxn  follows  rule  of  rockafeller  v.  gray?  what  difference  would  htat  make?  

• RULE:  cause  of  action  like  covenant  of  seisin  is  implied  assigned  from  B  to  C  when  B  transfers  the  property  to  C  

 SO  in  a)  and  b),  then  B  couldn’t  sue  A  bc  B  no  longer  has  the  benefit  of  that  covenant  once  B  has  transferred  to  C  bc  the  cause  of  action  goes  with  the  property  to  C    in  c)  where  C  has  sued  B  and  recovered,  B  could  file  an  action  against  A  after  having  to  pay  C;  the  causes  of  action  that  C  could  assert  are  transferred  to  B  once  having  paid  C.    problem  3,  531  a)  A    B  (GWD  at  $15K)    C  (QCD  at  $12K)    D  (GWD  at  $20K)  

• O  ousts  D  when  FMV  of  property  is  $24K  • D  could  sue  C  for  breach  of  covenants  in  C’s  deed  to  D  (present  covenants  bc  no  title  to  property  

so  breach  of  covenant  of  seisin;  future  covenants  also  bc  disturbed  in  possession  by  ouster  by  O)  and  could  recover  $20K  from  C  based  upon  those  breach  of  warranty  claims  

Can  D  sue  B?  • NO.  

Can  D  sue  A?  • yes  based  on  the  future  covenant  in  A’s  deed  

o is  possession  critical?     you  don’t  have  to  be  in  possession  beofer  you  take  advantage  

Can  sue  A  based  on  future  warranties  bc  those  run  with  the  land  • can  bring  action  against  A  for  $15K  (plus  interest)  

Can  D  sue  A  based  upon  the  present  covenants  in  the  AB  deed?  • ONLY  in  Rockafeller  jxn  where  they  say  the  cause  of  action  is  assigned  in  the  transfer  • in  traditional  jxns,  no;  the  present  covenants  not  typically  held  to  run  with  the  land  

Can  C  bring  cause  of  action  before  D  sues  him?  No  bc  he  has  no  damages  

• he  sees  a  suit  coming  and  would  like  to  prepare  • can’t  sue  B  bc  QCD  • can’t  sue  A  bc  D  holds  title  and  therefore  has  the  benefit  of  the  causes  of  action  (in  Rockafellar  

jxn)  if  not  in  that  jxn,  the  future  coventas  have  run  with  the  land;  only  the  present  covenants  are  still  with  C;  but  in  any  event,  he  can’t  sue  until  he’s  had  to  pay  

• In  a  non  Rocka,  wonce  D  has  recovered  from  C,  C  has  benefit  of  cause  of  action  future  in  the  Deed  • in  Rock,  C  can  bring  cause  of  action  for  the  present  covenants  in  the  deed  

Can  D  get  his  $20  from  C  and  then  sue  A  claiming  “I  was  actually  damaged  by  $4K  more?””      problem  4,  page  531  a)  A    B  for  $10K  and  20  yrs  later,  paramount  title  asserted  by  O  and  Bacre  worth  $125K  

• does  A  or  B  bear  the  risk  of  loss  for  increase  in  value?  • when  B  brings  suit  against  A,  he  can  only  recover  $20;  he  bears  more  risk  • B  could  have  protected  himself:    

o title  search  o if  he  saw  a  risk,  he  could  get  a  title  insurance  policy  

note  3,  page  536:  • seller  ready  to  deliver  deed  to  buyer,  but  buyer  doesn’t  have  money  yet;  seller  says  I’ll  give  you  

this  deed  now  on  condition  that  you  pay  me  by  the  first  of  the  next  month.  buyer  takes  the  deed/records;  but  doesn’t  pay;  under  Sweeney,  what  is  seller’s  remedy?  

o Title  passes  to  the  buyer  –  that  condition  is  ineffective  upon  delivery  • cause  of  action  for  breach  of  K:  sue  for  amount  owed  to  seller  

 problems  page  462  1)            

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• a.          Why  would  seller  care  if  buyer  was  married?  Affects  a  lot  in  community  property  state.  Even  in  sep  prop  states,  seller  would  want  to  know  about  dower/elective  share,  etc.  

• b.          Does  not  specify  JT,  TIC,  etc.  Why  does  it  matter  what  form  of  title  the  tenant  intended  to  take?  If  JT,  right  of  survivorship  has  an  effect  on  what  happens  to  prop  on  death.  Under  TIC,  co-­‐tenants  interest  may  pass  to  third  party.  

• c.          Good  and  merchantable  title  –  Why  does  it  matter?  Is  it  good  enough?  Yes,  generally.  Is  good  and  merchantable  title  satisfied  by  AP?  It  can  be  if  evidence  is  good  enough.  

• d.          Suppose  recorded  covenant  restricts  land.  Is  buyer  bound?  Depends.  2)        Contract  to  buy  house  still  under  construction  –  Would  be  good  to  have  an  express  warranty  as  to  the  quality  of  construction,  but  the  reasonable  security  is  to  check  out  the  builder’s  practices.      (same  problems  –  but  lauren’s)    [1]  

•  [seller’s  marital  status]:  could  be  a  community  property  state;  dower;  homestead  rights  –  want  to  know  if  the  spouse  has  any  rights  in  the  property  

•  does  it  matter  if  buyers  were  [purchasing  as  joint  tenants/tenants  in  common/tenants  by  entirety],  and  then  one  dies  –  right  of  survivorship  matters  

•  [paragraph  15,  the  deed  –  tells  what  the  sellers  are  going  to  provide]:  is  “good  and  merchantable  title”  satisfied  by  a  title  based  on  adverse  possession?  –  yes,  as  long  as  there’s  good  evidence  for  adverse  possession  

•  [recorded  covenant  with  restriction]:  see  paragraph  15  –  K  has  a  term  saying  that  these  things  can’t  void  

[2]  • gives  builder  a  lot  of  discretion  • could  advise  to  make  sure  there’s  an  express  warranty,  so  that  builder  can’t  substitute  cheap  

materials  • best  protection:  check  out  the  builder  

 Problem  on  467  –  B  would  have  a  duty  to  disclose  material  information  about  P’s  willingness  to  pay.    problems  page    477:  2a)  SOF  complied  with  when  O  deeded  it  to  A;  but  the  SOF  not  complied  with  when  A  gave  it  back  to  O;  SO  A  owns  the  property  2b)  Deed  does  not  have  to  be  legally  recorded;  it  is  legally  effective  when  it  was  delivered,  even  if  it  wasn’t  recorded;  

• Can  O  create  a  JT  by  a  deed  from  O    O+A?  some  jxns  allow  this;  assume  here  you  can.  • A  whites  out  her  name  and  then  the  deed  gets  recorded;  doesn’t  comply  with  SOF;  still  would  be  

O+A  upon  O’s  death    problem  1,  582  

•  • B  prevails  • How?  O  didn’t  own  the  property  when  he  died,  so  how  can  H  claim  ownership  as  heir  and  

transfer  to  B?  o If  B  does  a  title  search,  it  looks  for  all  the  world  that  O  was  the  title  owner  at  the  time  he  

died,  so  you  protect  someone  like  H  who  thinks  he’s  inherited,  so  B  can  be  a  good  faith  purchaser  for  value    

problem  2  • OA  (doesn’t  record)  

o O    B  (BFP  but  doesn’t  record)   A  records    C  (BFP)  

B  records  • C  records  

• In  notice  statute,  who  wins  bw  B  and  C?  

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o C  wins  bc  he  gave  value  when  he  purchased  land;  no  actual  or  constructive  notice  of  B’s  prior  interest  bc  A  had  recorded  and  it  look  like  OA    C  

• Who  wins  bw  A  and  B?    o B  bc  B  doesn’t  have  notice  of  A’s  purchase  (doesn’t  know  of  it  and  if  he  did  a  title  search,  

he  wouldn’t  have  found  the  deed  from  O  to  A)  • In  a  race  notice  jxn?  

o C  wins  over  B  o C  must  not  only  purchase  w/o  notice  but  also  record  first;  but  B  recorded  before  C  o Shelter  rule:  a  person  who  takes  from  a  BFP  protected  by  the  recording  act  has  the  

same  rights  as  his  grantor;  necessary  if  the  recording  act  is  to  give  C  the  benefit  of  his  bargain  by  protecting  his  market  (A’s  ability  to  sell  protected)  

The  rule  does  not  apply  to  O;  if  O  repurchased  Bacre  from  A,  O  would  not  prevail  over  B  

Problem  3  • O  owns  Bacre  (worth  $50K)  

o borrows  $10K  from  A  (mortgage);  A  does  not  record  o borrows  $14K  from  B  (mortgage);  B  has  notice  of  A’s  prior  mortgage  and  B  records  o borrows  $5K  from  C  (mortgage);  C  has  no  notice  of  A’s  interest  and  records    

• Bacre  drops  in  value  bc  of  waste;  foreclosure  sale,  it  sells  for  $20K  o How  do  we  distribute  among  A,  B,  &  C?  –  parties  should  be  given  their  expectations  o Circular  priority:  each  mortgagee  has  a  claim  inferior  to  another  and  superior  to  

another   A  has  priority  over  B;    

A  is  1st  in  time  and  B  took  with  notice  of  A’s  prior  mortgage   C  has  priority  over  C  

B  would  have  priority;  C  had  constructive  notice  of  B’s  interest  bc  recorded  

C  has  priority  over  A?   C  would  win  bc  C  didn’t  have  notice  of  A’s  mortgage  (in  notice  jxn  bc  no  

notice)  (in  race  notice    bc  he  recorded  1st  and  took  w/o  notice)  • Give  their  expectations?  (what  they  should  have  expected  if  there  is  a  foreclosure  sale,  given  

their  mortgage  interest)  o A  expects  ____  (last  in  line);  he  should’ve  expected  that  if  he  didn’t  record,  someone  

would  beat  him;  so  he  gets  the  leftover  $5K  o B  expects  $10K  bc  notice  and  records  o C  expects:  2nd  in  line  behind  a  $____mortgage;  so  $5K  to  satisfy  his  reasonable  

expectations  • Often,  the  money  is  distributed  as  if  there  was  a  contractual  subordination  of  A’s  claim  to  C’s;  so  

the  way  they  actually  come  out,  imagine  that  A  and  C  entered  into  a  K  in  which  A  agreed  to  subordinate  his  claim  to  C’s  

o if  we  allocate  $10K  to  satisfy  A’s  first  mortgage;  then  hypothesize  a  subordination  agreement  where  A  agrees  to  subordinate  his  claim  to  C’s,  then  what  happens?  

C  would  get  $5  first  and  then  whatever  doesn’t  go  to  C  can  be  given  to  A   so  C  gets  $5,  A  gets  $5  and  the  leftover  $10  goes  to  B  

• What  if  all  the  figures  in  the  problem,  except  the  original  value,  were  just  $5K  –  so  only  one  person  gets  paid  off  

o applying  expectations  theory,  who  gets  paid?   B  can’t  expect  to  get  anything  bc  he  knows  he’s  2nd  in  line  behind  $5K  mortgage  

held  by  A   C  can’t  expect  to  get  anything  bc  if  he  does  a  title  search  knows  that  B  has  a  $5K  

mortgage   SO  the  $5K  goes  to  A;  even  though  that  doesn’t  seem  fair  

o applying  subordination  agreement  theory:   A  and  C  have  entered  into  a  K  subordinating  A’s  claim  to  C’s;  $5K  comes  in  at  

foreclosure  sale  

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C  gets  it:   even  though  C  knows  ab  B’s  mortgage  BECAUSE  B’s  mortgage  is  

subordinate  to  A’s  bc  B  knows  of  A’s  mortgage,  and  A’s  mortgage  is  subordinate  to  C’s  by  the  agreement  

• must  have  signature  notarized  before  they’ll  accept  deed  for  recording  purposes  • can’t  properly  record  via  telephone  (again  notarization  req’d)  

 example  9,  page  595  

• once  O  transfers  to  A,  then  a  doctrine  of  estoppel  by  deed  kicks  in  and  A  is  estopped  from  preventing  B  from  claiming  ownership  bc  A  had  already  deeded  to  B  peviously  

o if  it  was  jut  A—B  and  then  O—A,  then  B  would  be  ok,  but  now  we  have  to  worry  ab  C  who  omes  on  the  scene  

o C  does  a  title  search  and  finds  a  deed  from  A  B  and  then  a  deed  from  O  A  and  now  A  has  transferred  to  C  and  the  question  is  whether  C  has  notice  of  B’s  claim.  

Argue  No  notice:   Argue  Yes  notice:  C  should  have  done  a  more  extensive  title  search  

example  10  • purchase  history  

o O  A  (not  rec)  o O  B  (not  BFP)  o O    A  (rec)  o B  C  

• shelter  rule  has  no  application  • C  would  argue  he  has  no  notice  of  A’s  interest;  arguing  that  he  is  not  bound  to  examine  the  

record  after  the  day  of  the  conveyance  to  find  if  the…  o Instead,    

• A  thinks  the  title  searcher  should  search  under  the  owner  of  the  present  time  problems  pg  597  2(a)  

• in  a  notice  jxn:  E  WOULD  WIN  o C  claims  estoppel  by  deed  which  would  give  C  title  over  B  and  probably  over  A  as  well  o BUT  then  could  D  or  E  claim  to  be  entitled  to  priority  under  the  notice-­‐recording  

statute?   Does  D  have  reason  to  know  of  a  competing  claim  by  C?  C  recorded  deed  from  B,  

but  this  does  not  give  D  notice  bc  D  would  probably  look  from  OA;  he  wouldn’t  know  that  A  transferred  to  B;  so  if  D  does  the  title  search,  he  won’t  find  bC  deed  (it’s  a  wild  deed,  unconnected  to  the  chain  of  title)  

o What  about  E?   E  says  he’s  a  BFP  bc  no  notice  of  prior  interest  in  the  property   E  does  not  have  notice  bc  A  didn’t  record,  so  E  wouldn’t  know  to  look  for  

transfer  from  A    D   No  deeds  from  O  on  the  record;  so  unless  he  has  actual  notice,  then  E  could  

claim  that  he’s  a  BFP  for  value  w/o  notice  of  any  prior  interest   SO  E  WOULD  WIN  in  Notice  JXN  

• In  a  race-­‐notice  jxn:    o C  would  win  o Did  C  record?  He  records  a  deed,  but  did  he  record  1st  w/i  the  meaning  of  the  recording  

statute?   argue  that  he  has  not  recorded:  C  has  actually  handed  to  the  recording  office  a  

deed  from  BC,  but  this  does  not  satisfy  his  obligation  to  record  before  E  to  defeat  E’s  claim  under  a  race  notice  statute?  No.  that  was  not  sufficient  to  defeat  E  bc  if  E’s  title  searcher  can’t  find  the  deed  from  BC,  it  shouldn’t  be  treated  as  having  been  recorded  first  under  a  race  notice  statute  

o what  does  it  mean  to  be  the  1st  to  record?  

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some  say:  put  your  own  deed  on  record  but  whatever  else  is  necessary  for  a  title  searcher  to  find  it  

o E  ought  to  win  bc  recorded  before  C  in  the  relevant  sense  but  his  complete  chain  of  title  is  on  the  record  

2(b)  • notice  jxn:  

o always  start  w/  last  person  and  see  if  they  can  establish  what  they  need  to  establish  to  win  

o last  person  to  get  an  interest  here  is  D;  at  the  time  he  gets  the  interest,  does  he  satisfy  the  requirements  to  be  protected  under  a  notice  statute?  

he  knows  ab  the  deed  from  O—B  but  not  a  conveyance  to  A  bc  A  doesn’t  record  until  after  D  gets  his  interest  

• race-­‐notice  jxn:  o A  would  win  o he’s  the  1st  to  record  and  if  he  did  a  title  search,  as  1st  to  record,  he  prevented  anyone  

else  from  establishing  priority  under  race  notice  statute  2(c):  (playing  off  2b)  A  conveys  to  E  who  prompty  records  

• notice  jxn:  o go  back  to  example  10  and  split  of  authority  to  find  out  whether  E  has  notice  of  a  prior  

interest  or  not  o A  comes  to  E  and  says  “I’ll  sell  oyu  a  piece  of  property”  E  hires  a  title  searcher.  Under  

what  rules  would  the  title  searcher  find  out  ab  a  competing  interest  and  under  what  rule  would  the  searcher  not  find  out?  

MORSE  jxn:  E  wins   Not  required  to   title  searcher  would  not  find  out  ab  a  competing  interest  in  the  

property  bc  would  stop  his  search  once  he  finds  the  recorded  conveyance;  once  he  finds  in  grantee  indexes  and  finds  that  A  has  an  interest  that  he  received  from  O;  and  then  the  title  searcher  doesn’t  have  to  look  at  O  at  later  points  in  time  to  figure  out  whether  O  transferred  property  to  someone  else  later  

Woods:  must  search  under  O’s  name  up  until  today  to  find  out  if  O  transferred  to  anybody  else.  if  he  did  that,  he  would  find  out  ab  O  to  B  transfer  

• race-­‐notice  jxn:  E  prevails  o A  had  title;  records  1st,  prevents  B  from  establishing  priority  over  A    

question  3,  page  597:  • When  C  finds  the  deed,  the  deed  is  dated  June  1st,  2005;  even  though  that  deed  was  not  recorded  

until  Aug.  15th,  he  still  has  to  look  for  anything  in  the  records  after  the  date  June  1st  which  is  on  the  deed;  so  if  he  does  aproper  title  search  should  go  back  to  June  1st,  even  thogh  it  got  recorded  late;  if  he  did  that,  he’d  find  out  ab  the  mortgages  

 note  1,  611  

• shouldn’t  have  to  • could  be  too  burdensome  • more  burdensome  than  bank  in  waldorff  having  to  check  w/  all  occupants  of  condo  to  see  if  they  

have  any  unrecorded  interest?  o there  you  can  just  give  them  notice  o here,  they  already  know  that  leasee  lives  there  

 pg.  614,  problem  1:  

• forged  deeds  typically  a  nullity  • but,  in  the  Marshall  case,  a  MTA  was  applied  in  a  circ  like  this  with  the  effect  of  eliminating  C’s  

interest;    • effectively,  it  rehabilitated  the  forged  deed  through  the  operation  of  the  MTA  bc  of  its  work  in  

conjunction  w/  the  MTA  

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• problem  1:  C’s  interest  was  extinguished  by  the  MTA    note  2,  p  676    how  to  draft  document  to  carry  out  McG’s  intent  and  not  violate  the  common  law  rule  that  an  easement  can’t  be  reserverd  in  a  3rd  party  

• accomplish  the  same  thing  in  two  docs  that  you  can’t  accomplish  in  one  doc  o EX  1.  

ONE  deed:  easement  bw  O  and  church  (K  arragement)   Another  Doc  that  conveys  the  deed  OR  

o EX  2   deed  1:  deed  property  to  church  property   doc  2:  church  deeds  to  Petersen,  reserving  an  easement  for  itself,  OR  

o EX  3   doc  1:  deed  from  O  to  Petersen  and     doc2:  Petersen  deeds  an  easement  to  the  church  

note  2,  page  681  • can  Taylor  build  a  new  house  using  the  right  of  away  across  Holbrooks  land?  

o argue  no:  the  others  were  licensees  and  that’s  revocable  o argue  yes:  restatement    expectations  that  create  the  servitude  will  also  define  its  

scope  and  terms;  fact  that  they  initially  permitted  them  to  do  so,  creates  expectations  that  they  will  always  at  minimum  permit  them  to  do  that  

• est  by  estoppel  that  you’ve  improved/invested  already    problem  2,  695  

• what  should  court  do?  can’t  leave  middle  piece  with  no  access  • grant  an  easement  over  one  of  the  4  parcels  and  make  it  fair  to  all  siblings?  someone  will  have  a  

burden  of  easement  over  their  property  • pick  place  that  causes  the  least  damage  to  anyone  –  whichever  place  is  most  efficient  to  give  

access  to  lot  5  and  cause  least  interference  w/  anyone  else’s  use  of  property,  but  still  have  one  lot  owner  bearing  the  burden  equalize  the  burden  by  requiring  payments  from  the  people  who  aren’t  burdened  to  the  people  who  do  have  to  bear  the  burden  of  the  easement    

Note  3,  when  does  an  easement  by  necessity  end?  • when  the  necessity  end,  the  easement  disappears  • Question  on  696:  once  new  sewer  line  is  available,  the  easement  does  not  disappear  necessity  

doesn’t  end  bc  in  Van  Sandt,  the  implied  sewer  easement  was  not  an  easement  by  necessity  but  an  easement  by  prior  existing  use  

 HYPO:  Equitable  Conversion  relevant  when  1.  someone  has  a  will  and  has  entered  into  a  K  for  purchase  of  a  piece  of  property  and  in  the  will  they  leave  all  of  their  personal  property  to  A  and  all  of  their  real  property  to  B;  what  do  we  do  ab  this  K  for  purchase  of  real  property?  

• if  you  just  apply  the  legal  rules  on  title,  then  the  seller  owns  it;  it  would  go  to  A  bc  the  property  is  still  personal  property  

• BTU  if  the  ct  applied  theory  of  equitable  conversion,  then  it  would  go  to  B;  court  would  there  be  saying  that  even  though  testator  doesn’t  yet  have  legal  title  to  property,  they  do  have  equitable  title  in  the  property  bc  K  that  could  be  specifically  enforced  by  ct  of  equity,  and  so  ct  treats  it  as  real  property  so  it’ll  go  to  B  under  the  will  

o K  also  provides  for  payment  of  the  property;  if  the  testator’s  interest  in  the  property  goes  to  B,  then  A  might  end  up  paying  for  the  property  that  goes  to  B  

o when  person  dies,  their  estates  pays  off  their  debts  (and  A  got  all  the  personal  property)  2.  K  for  sale  of  house,  and  before  closing,  the  house  burns  down  

• Maj  rule:  applying  doctrine  of  equitable  conversion,  the  buyer  would  be  seen  as  title  owner  and  would  assume  risk  of  loss  bc  at  signing  the  buyer  has  equitable  title  at  signing  

o Criticisms  of  Maj.  Rule:     buyer  doesn’t  have  possession;  so  seller,  being  in  possession,  is  in  better  

position  than  buyer  to  prevent  a  fire  from  occurring    

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before  closing,  the  seller  is  more  likely  to  have  insurance  on  the  property;  if  seller  has  insurance  on  the  property  and  the  ct  says  the  risk  of  loss  is  really  on  the  buyer,  does  seller  just  get  to  collect?  no.  the  insurance  would  go  to  the  benefit  of  the  buyer  

To  protect  against  this:  say  risk  stays  with  seller  until  closing   Min.  view:  loss  on  seller  until  legal  title  is  conveyed  

 problem  2,  695  

• what  should  court  do?  can’t  leave  middle  piece  with  no  access  • grant  an  easement  over  one  of  the  4  parcels  and  make  it  fair  to  all  siblings?  someone  will  have  a  

burden  of  easement  over  their  property  • pick  place  that  causes  the  least  damage  to  anyone  –  whichever  place  is  most  efficient  to  give  

access  to  lot  5  and  cause  least  interference  w/  anyone  else’s  use  of  property,  but  still  have  one  lot  owner  bearing  the  burden  equalize  the  burden  by  requiring  payments  from  the  people  who  aren’t  burdened  to  the  people  who  do  have  to  bear  the  burden  of  the  easement    

 Note  4,  736  –  does  foreclosure  terminate  easement?    problems,  744  [1]  Running  of  the  Burden  of  the  Covenant    A    B  for  residential  purposes  only  

• BC;  C  wants  to  build  apartment  complex  • a)  whether  burden  of  covenant  runs  to  C?  

o arguably  yes;  only  useful  if  it  binds  the  parties  to  the  covenant  and  their  successors;  so,  circumstances  may  suggest  intention;  the  language  of  the  covenant  suggests  an  intention  for  it  to  run/bind  their  successors  

[2]  Running  of  the  Benefit  of  the  Covenant  • distinction  bw  the  burden  and  benefit  of  the  covenant?  

o Burden:  who  has  to  comply  with  the  covenant  o Benefit:  who  can  insist  on  compliance  with  the  covenant?  

• Here,  don’t  have  to  worry  ab  running  of  the  burden  bc  A  doesn’t  have  a  successor;  A  still  owns  it  and  is  one  of  the  original  parties,  so  he  is  bound  for  sure;  Instead,  the  question  is  whether  C  can  enforce  the  covenant  against  A  

• Requirement  for  running  of  benefit:    Problem  750:  if  injunctive  relief  had  been  sought  in  problem  1,  pg  744:  

• C  sues  on  injunction  based  on  violation  of  equitable  servitude  • A  could  not  get  damages  based  on  jxn  following  horiz  privity  rule  BUT  could  get  injunction  bc  no  

req  of  horizontal  privity      Problems  page  767  [before  class]  [1]  a)  no  flag  of  any  kind  including  USA  flag  can  be  displayed  

• Touch  and  Concern:  yes  bc  negative  covenant,  affects  value  • Restatement:  no  –  unconstitutional  (1st  amendment  violation)  

b)  no  sign  except  house  location  #  displayed  nor  Christmas  lights  outside  • TC:  yes  bc  negative  covenant  • R3d:  not  unconstitutional  bc  its  not  gov’t  doing  it;  probably  fine  

c)  no  solar  energy  device  installed  • TC:  yes  bc  negative  covenant  • R3d:  probably  fine;  may  violate  public  policy  which  serves  to  promote  use  of  alternative  energy  

d)  no  house  used  to  provide  day  care  for  nonresidents  of  the  house  • TC:  yes  bc  negative  covenant  • R3d:  probably  fine;    

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o arguably  unreasonable  restraint  on  trade  OR  maybe  spiteful  depending  on  circs  e)  upon  sale,  10%  gain  paid  to  developer  

• TC:  maybe;  it’s  affirmative  covenant,  so  court  more  hesitant;  here,  unlikely  bc  the  developer  isn’t  like  the  HOA  acting  as  an  agent  of  property  owners;  developer  isn’t  like  3rd  party  beneficiary  

o Bigelow’s  test:  probably  does  substantially  affect  legal  relations  o but  distinguish  from  Nep:  bc  there,  the  money  went  to  communal  enjoyment;  here  –  

does  it  just  go  to  developer?  • R3d:  probably  initially  valid  but  subsequently  invalid  (unconscionable)  

money  not  going  towards  the  use/community  benefit;  just  going  to  a  developer    note  5,  772  

• zoning  ordinances  apply  generally  applicatable  requirements,  but  sometimes  people  can  ask  for  exception  and  that  would  be  a  variance  

• here,  someone  wants  a  variance,  and  city  says  maybe  but  wants  something  in  exchange:  o developer  to  limit  the  use  of  5  apts  to  low  income  families  

• Does  this  particular  covenant  run  with  the  land?  o it  is  a  negative  or  affirmative  covenant?  

affirmative  covenant:  would  affect  ability  to  enforce  it  later  on  against  the  city   argue  that  benefit  of  the  covenant  is  in  gross:    

• the  benefit  is  in  favor  of  the  city  in  the  use/enjoyment  of  some  land  that  the  city  owns;  but  no  particular  piece  of  land  made  more  valuable  by  the  covenant;  SO  benefit  in  gross  –  the  burden  won’t  run  w/  the  land  bc  later  they  may  split  up  the  land  

• if  you  want  it  to  be  long  term  proposition:  the  devloper  may  not  be  the  one  who  owns  the  land  later  on;  will  the  burden  run  w/  the  land?  if  the  benefit  is  in  gross,  the  burden  wouldn’t;  if  the  covenant  is  affirmative,  that  might  affect  TC  of  land  (cts  less  willing  to  find  aff  covenants  to  TC  land);  issue  of  privity  –  no  real  grantor-­‐grantee  relationship  as  to  city  and  developer,  so  not  horizontal  privity  which  would  affect  whether  the  covenant  would  run  w/  the  land  at  law  (no  horiz  privity  req  for  eq  serv  to  run  w/  land)  

note  2,  785  • it  could  be  a  restraint  on  alienation;  bc  you  can  only  sell  to  certain  people  would  be  a  restraint  • some  courts  got  around  this:    

o diff  bw  restraint  on  alienation  and  restraint  on  use  785:  can’t  sell  to  Yankees?  no  redwoods?  who  can  purchase/live  on  property  

• Concern  w/  horizontal  or  vertical  privity?:    o make  sure  he  transfers  pieces  to  people  and  whoever  purchases  from  them  will  be  in  

vertical  privity  • Do  the  restrictions  TC  the  land?  

o purchase/live  on  property?  probably  doesn’t  TC;    • would  it  be  violation  of  equal  protection  as  interpreted  in  Shelley  v.  Kreimer?  

o restrictions  o different  levels  of  scrutiny  applied  depending  on  the  violation  

racial  violation  =  stricted  level  of  scrutiny   rational  basis  test  may  be  a  diffent  standard  

• restraint  on  alienation  problem  o to  extent  its  telling  you  who  can  purchase  it,  might  be  a  restraint  on  alienation  

  question  1,  796-­‐97  

• Restatement  3d  that  allows  you  to  modify/terminate  covenants  to  pay  money  • if  that  applied  in  Pocono  would  it  have  allowed  a  modification?  

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o NO.  it’s  a  common  interest  commnity   (1)  if  it  doesn’t  tell  you  the  total  amt  you’ll  have  to  pay  or  when  the  covenant  

terminates,  then    it  terminates  after  a  reasonable  time   (2)  if  covenants  are  in  exchange  for  services,  if  obligation  becomes  to  excessive  

compared  to  the  value  received  by  the  burdened  estate   (3)  provision  doesn’t  apply  bc  it’s  a  common-­‐interest  association  

• Is  it  unconscionable?  o typically  deals  with  circumstnaces  when  the  covenant  was  1st  entered  into  o here,  it  wouldn’t  apply  bc  they  voluntarily  entered  into  the  agreement  

question  2,  796:  • how  to  get  out  of  obligation  to  keep  paying  money  to  HOA  who  is  doing  nothing  for  them:  

o create  a  corporation  and  transfer  title  of  the  property  to  the  corporation  o giving  it  to  a  next  door  neighbor  to  use  for  a  garden  o if  it  were  acquired  by  AP,  does  the  burden  of  the  covenant  run  to  an  APor?  

depends  if  real  covenant  or  equitable  servitude  and  the  particular  privity  requirements  

809:  legislation  enacted  protecting  pet  owners  against  HOAs  810:  have  people  w/  pet  allergies  been  deprives  of  ability  to  live  w/i  a  pet-­‐free  facility  

• servere  pet  allergies:  could  you  argue  handicap  and  say  the  state  law  is  violation  of  FHA?  o handicapped:  physical  or  mental  condition  that  substantially  impairs  a  major  life  

activity  note  1,  846  

• value  of  A’s  land  reduced  • 1[a]:  rezoning  probably  not  a  taking  • 1[b]:  if  you  have  an  existing  business  and  city  tells  you  to  stop  immediately,  likely  to  be  declared  

a  taking  requiring  just  compensation    What  is  the  difference?:  

• Rather  be  B  bc  at  least  making  some  money;  his  investment  has  paid  off  in  a  way  that  A’s  has  not  and  still  B  gets  to  claim  the  taking  

• Could  be  an  encourgement  for  use  –  o more  protection  to  B  bc  B  making  productive  use  of  property  o creative  incentive  for  investments  like  B  made  bc  people  like  b  would  be  less  likely  to  

invest  in  more  expensive  property  uses  if  risk  that  they  could  be  subject  to  a  zoning  restriction  limiting  their  use  

 Note  3,  916:    [1]  FHA  violation?  

• purchased  the  house  w/  the  expectation  that  they  could  use  it  as  group  home  • 3604(f)  –  unlawful  to  refuse  to  sell  or  rent  or  make  unavailable/deny  a  dwelling  to  a  person  bc  of  

a  handicap  • argue:  by  purchasing  the  house,  the  neighbors  are  making  it  available  to  someone  w/  a  handicap  

–  excluding  a  group  from  being  able  to  purchase  it  [2]  

• zoning  ordinance  might  violate  FHA,    • but  would  the  act  of  filing  a  suit  to  enforce  an  ordiance,  would  that  be  a  separate  violation  of  the  

FHA?  • suit  should  be  subject  to  liable  under  FHA  if  it  was  intentionally  targeted  to  ____  a  group  under  

the  FHA    PERMANENT  PHYSICAL  INVASION  HYPO:  city  regulation  requiring  apartment  buildings  smoke  detectors/fire  extinguishers  in  all  common  areas;  is  this  a  taking  w/i  the  rule  of  Loretta?    

• NO.  o That  is  different  because  the  L  would  be  the  owner  of  the  things  “invading”  

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o In  loretta  a  3rd  party  installing    note  3,  972:  Causby  

• Alleged  taking:  noise  caused  by  flights  • Gov’t  taking  bc  they  own  all  the  area  above  and  below  the  land  • Here,  planes  are  authorized  by  gov’t  to  take  off  and  land  over  P’s  prop  in  a  way  that’s  invading  

the  airspace  over  P’s  property  and  causing  damage  via  noise  • Is  this  a  taking?  yes.  • What  if  you’re  not  in  the  flight  path,  but  similar  damage  caused?  No  taking    has  to  be  right  

over.  Does  this  make  sense?            EXAM:    3hrs  15MC  Essay:  90  lines  CHECK  online  for  sample  essay  Rule:     bring  book,  notes,  outline  Content:  based  on  2nd  semester  but  may  assume  you  remember  some  things  Review  Session:  May  9th  afternoon        CHARTS  Summary  of  Leasehold  Estates:  Gilberts,  226  Comparison  of  Civil  Rights  Act  and  FHA:  Gilberts,  231  Assignment  v.  Sublease:  Gilberts,  280  Actual  v.  Constructive  Eviction:  Gilberts,  241  T’s  Remedies  for  Breach  of  Implied  Warranty  of  Habitability:  Gilberts,  250  Financing  and  Foreclosure:  Gilberts,  466  Covenants  in  Lease  Running  to  Assignees:  Gilberts,  287    SIDE  BY  SIDE  of  RC  and  ES  tests    CREATE.  WAYS  LANDUSE  IS  CONTROLLED  

1. covenants    imposed  by  private  parties  2. Nuisance    imposed  by  judicial  branch  [judicial  zoning]  3. Zoning  Ordinance    legislature  [local,  city  council,  zoning  commission]  4. Statute    legislature  [state  agencies]