PROPERTY – Second Semester

ConveyancingI. LAND SALE CONTRACTS

a. General terms:i. Escrow – delivery of deed to a third person to hold until purchase price paid

ii. Closing – exchange of purchase price and deed1. The parties may or may not need to be present2. Marks the moment of change in possession

iii. Specific performance – as prop is all different, an aggrieved party must request this, not damages; Court uses equity powers to compel a party to go through with the deal

iv. Time of Performance – Unless the K specifies that ‘time is of the essence,’ a K not performed on the date called for in agreement allows for a ‘reasonable time’ for parties to complete performance

b. Statute of Fraudsi. A land K MUST be in writing and signed by the party to be charged

1. Need not be a formal K; a memorandum or compilation of several docs that when taken together evidence an agreement affecting prop suffices

2. Writing must contain all “essential terms” of the Ka. Description of the propertyb. Identification of the partiesc. The price and manner payment (if agreed upon)

i. K for sale at “fair market value” is enforceabled. Other terms and conditions pertinent to the trans (e.g., manner of payment)

3. Incidental matters (prop. taxes, title ins.) can be determined by custom – need not in the writing nor been agreed upon

4. Many states allow oral modification or revocation of K (Statute applies only to forming of K)

ii. EXCEPTIONS to Statute of Frauds1. Part Performance

a. An oral agreement in which one party begins to carry out the terms of the agreementi. The performance must be something contemplated and expressly provided

for in the oral Kb. Some courts apply an Evidentiary Theory:

i. If the acts done by a party can be explained only by reference to an agreement, these acts unequivocally establish the existence of an oral K

c. Mere preparation to perform does not amount to part performance (NOTE: but could be reliance for estoppel)

d. Jx split on what acts could constitute part performancei. Acts could include the following (many jx require at least two):

1. Possession of the land by the purchaser2. Making of substantial improvements3. Payment of all or part of the purchase price by the purchaser

e. Does not matter who performs – a seller can claim part performance based on a buyer’s acts

2. Estoppela. Acts done in reliance on the oral K which would result in hardship to such an

extent that it would be fraud if the K not enforcedi. i.e., the other party is estopped from using Statute of Frauds as a defense

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b. May also apply where unjust enrichment would result through reliance on the Statute

c. The plaintiff must be the one whose actions would result in the hardshipd. Hickey v Green : Oral agreement for sale of home, with no expectation by either

party for a writing, where π sold her home in reliance on Ki. Δ admits to the existence of the K, and knew πs were selling their home

ii. π must actually sell her current home to enact specific performanceiii. The estoppel rule is set out in R.2d Contracts § 129iv. NOTE: There was a deposit check – had it been deposited, it would have

been a signed writing, although perhaps unenforceable unless included the “essential terms” of the K

e. Walker v Ireton : NOT estoppel because the seller could not foresee the sale of the other property; Does not warrant specific performance

c. Doctrine of Equitable Conversion i. Once the K is signed and both parties are entitled to specific performance, equity regards

the purchaser as the owner of the prop1. The legal title remaining in the seller is said to be held in trust for the buyer until

payment is madeii. NOTE: Possession follows legal title seller entitled to possession of land until the

closingiii. Risk of Loss if prop destroyed

1. Majority rule: before closing, risk of loss is on the buyer (as legal owner of the prop)a. Must pay K price despite the loss, unless K provides otherwise

2. Minority Rule: Enactment of Uniform Vendor and Purchaser Risk Act, which places the risk on the seller unless the buyer has legal title or possession at the time of loss

d. Marketable Titlei. An implied warranty in every land sale K at closing, the seller will provide buyer with a

title that is “marketable”ii. NOTE: “Marketable” and “merchantable” title are synonymous

iii. Marketable – title reasonably free from doubt1. Need not be “perfect title,” but must be free from questions that might present

unreasonable risk of litigation2. Generally unencumbered fee simple with good record title

a. NOTE: “good record title” is different, and less frequently asked for in Ks – must furnish good title based on the docs in chain of title (precluding title by AP)

3. A request for quitclaim deed does not affect the warranty to provide marketable title (unless so provided in K)

iv. Could be UNMARKETABLE if:1. Defects in Chain of Title

a. Ex: Significant variation in description of land, defectively executed deed (does not meet recordation requirement), prior grantor lacked capacity to convey prop

b. Adverse Possessioni. Historically, title acquired by AP is unmarketable

ii. Most recent cases say AP title ARE marketable if:1. possession has been for very lengthy period2. the risk that record owner will sue appears remote3. probability of record owner’s success in suit appears minimal

iii. Conklin v Davi : Title based on AP is not per se unmarketable1. A seller who holds AP title may:

a. Perfect title (obtain record title from former owner, action to quiet title, etc.)

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b. Enter into K and convince buyer that marketability is justified by proving:

i. the true owners, were they to assert claim, would not succeed; AND

ii. there is no real likelihood such a claim will ever be asserted

2. NOTE: Even if the court issues a doc saying the title is marketable, the true owners may still bring suit as the decision is not res judicata as to their claim (were not parties to proceeding)

c. Future interest held by unborn or unascertainable partiesi. Generally impossible for the present and future interests to transfer a

marketable title together – as the other parties are yet unborn, etc.2. Encumbrances

a. Mortgages and liensi. Seller has right to satisfy these at closing using the purchase price

b. Easementsi. One reducing the value of the prop makes title unmarketable

1. Some courts say buyer accepts them if notorious or known to buyer when entered into K

2. Ex: Rights of way benefiting neighborsii. Beneficial easements that were latent or known to buyer does not constitute

an encumbrance1. Ex: utility easement to service property

c. Restrictive Covenantsi. Lohmeyer v Bower : There were private restrictions on the land, and the

home on the lot was in violation of these restrictions, as well as zoning restrictions

1. The mere existence of a private restriction is an encumbrance, and renders the title unmarketable (whether or not there is a violation)

2. The restriction must be substantial, otherwise it does not diminish the value of the land, and buyer has no grounds to rescind

3. In this case, the violations could have subjected buyer to litigation – therefore could not be marketable.

d. Encroachmentsi. Will not be unmarketable if:

1. very slight, not inconvenience2. owner encroached upon says will not sue3. has existed for so long (many decades) has become legal by AP

3. Zoning restrictionsa. An existing violation of ordinance for which the gov’t can demand correction

renders title unmarketableb. Generally, the restrictions alone do not affect marketability of title

4. NOTE: Any of these may be waived in the K for salev. REMEDY

1. Buyer must notify the seller and give a reasonable time to cure defects2. If not cured, buyer may rescind K, sue for damages, get specific performance3. If the buyer finds out unmarketable before closing, the buyer does not have to pay;

after closing, the buyer still must pay K price (the K is said to merge w/ the deed)

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e. Seller’s Liabilityi. Implied Warranty of Workmanlike Quality – New Construction

1. On the ground buyer has no reasonable opp. to inspect, the warranty applies new home construction

2. A few courts have extended and allowed subsequent owners to recover from original ownera. Lempke v Dagenais : Privity of K not necessary when a latent defect manifests

itself after a reasonable time after purchase AND causes econ. lossi. Plaintiff has the burden to show the defect results from builder’s

workmanship; Builder has defenses – wear and tear, not attributable to builder, previous owners made substantial changes

ii. Sale of Existing Land and Buildings1. Active concealment

a. Seller could be liable even w/out saying anything if seller took steps to conceal a defect

2. Misrepresentation (Misfeasance)a. Requires:

i. the seller make a false statement concerning a material factii. the seller know the rep. is false

iii. the seller intend the buyer to rely on the rep., ANDiv. the buyer be injured by its reliance on rep.

1. Johnson v Davis – where seller affirmatively represented a leaky roof was fine

b. NOTE: If there is no misrepresentation, caveat emptor applies – the buyer has the responsibility of discovering defects through inspection (except those that are undiscoverable – latent)

3. Duty to Disclose (Nonfeasance)a. Seller held liable if defects not disclosed if:

i. Seller knows or has reason to know of defect;ii. Defect is latent, and seller knows the buyer is unlikely to discover it; AND

iii. Defect is serious, and would probably cause buyer to reconsider purchase (“material defect”)

b. Stambovsky v Ackley : Haunted house sold w/ “as-is” clause in Ki. If the seller knows what the defect is, but it is not easily ascertainable by the

buyer, and buyer does not know of defect, not enforceable1. Conversely, a patent defect (dilapidated roof) would be enforceable

ii. The reputation of the house goes to the very essence of the bargain between the parties, greatly effecting value of prop and ability for resale

iii. The as-is (or “merger”) clause is not sufficient to overcome the seller’s liability for fraud, concealment, or failure to disclose

1. NOTE: Conversely, a specific disclaimer is likely to be upheldc. AIDS statute (California) – Does not create duty to disclose; only says there is no

C/A for failure to discloseII. DEEDS

a. Formal Requirements:i. Statute of Frauds – a deed must be in writing, signed by grantor

ii. Description of Land and Parties1. Must be unambiguous

a. Typically, extrinsic evidence is allowed to clear up any ambiguityb. Can be described by metes and bounds, recorded plat, name of prop, street

address

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2. People may be identified by name, or description (e.g., “to my eldest son”)3. If delivered w/out grantee name, the person taking the delivery is presumed to have

the authority to fill in a name – and if done, the deed is valid4. If land description is left blank, the deed is void unless the grantee is expressly given

authority to fill in the description, and did so.5. Grantee must be living – i.e., delivery to someone already dead is not valid

iii. Words of intent – intent to transfer realty, w/out having to use such words.1. In most jx, the word “grant” is sufficient

iv. Consideration not required – property may be given awayv. Seal is unnecessary

vi. Must be signed by grantor1. In case of corp., usually valid w/ sigs. of two officers and affixation of corp. seal

vii. Should be notarized to comply w/ recording actsb. Types of Deeds Warranting Title

i. General Warranty Deed – expressly contains the “usual covenants,” described belowii. Special Warranty Deed (or Grant Deed) – contains “usual covenants,” only warrants defects

in title arising during the time the grantor held the land (i.e., only Covenant of Seisin and Covenant Against Encumbrances)

iii. Quitclaim Deed – Does not warrant anything; only transfers interest grantor granteec. The Usual Covenants

i. Present Covenantsa. Breached, if at all, at time of conveyance. Statute of limitations begins to run as

of the date of the conveyance.2. Covenant of Seisin – seller covenants he owns the property conveyed3. Covenant of Right to Convey – e.g., would be breached if prop. held in an irrevocable

trust that gave only a trustee, not the seller, the right to convey4. Covenant Against Encumbrances – seller covenants there are no easements,

covenants, mortgages, or liens on the prop – “except as enumerated herein”a. If apparent, permanent or irremediable, then excluded from covenant against

encumbrances BUT if diminishes value of prop, is a breach regardless of whether it is patent.i. Frimberger v Anzellotti : A latent violation of zoning ordinance that could

not be found by title search (b/c there had been no official action to compel compliance) or physical examination, AND that are unknown to the seller, is not a breach of this present covenant.

ii. Future Covenantsa. May be breached at time of conveyance, or anytime thereafter; Statute of

limitations does not run until there is an actual breachi. There must be interference of possession by a third party

1. Most courts hold any disturbance of possession suffices to constitute a breach (only a portion of possession interfered with, having to pay a third party to retain possession, etc)

b. They run with the land to successive granteesc. There must be notice to the grantor before holing him liable

2. Covenant of Quiet Enjoyment – buyer will not be disturbed in possession of prop by a lawful claim by a third partya. Only guarantees that the peaceable possession of the land will not be taken from

the seller, not that there is no one with paramount title.i. Brown v Lober : Land sold did not convey entire mineral interests – ¾

remained in a third party; statute of limitations ran on present covenants – so, π attempted to sue for breach of the future Covenant of Quiet Enjoyment;

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no one undertook removal of the minerals, so the mineral estate remained vacant

1. Should not be interpreted to take place of another covenant – seisin 2. NOTE: If π won, would only get damages, not mineral interests

3. Covenant of Warranty – title to the prop is good and that, as grantor, seller will defend at his own cost ant suit from a party claiming paramount title

4. Covenant of Further Assurances – The ‘unusual covenant.’ Rare in America. Seller promises to perform whatever acts are necessary to perfect buyer’s title

d. BREACH OF COVENANTSi. Look at: 1)whether a sophisticated buyer; 2) whether the defect is realized before or after

closing; and 3)whether there was the ability for the buyer to find out the defect (latency)e. Damages and Remote Grantees

i. Breach of the covenant of seisin does not run with the land if there was no good title to begin with (no title upon which to attach the covenant), but the DEED created a warranty under K law, and such chose in action was assigned to third parties as the deed was transferred.

1. Rule not true in all of US. NOTE: Majority (“American Rule”) – no transferability of chose in action; Minority (“English Rule”) – transfer allowed

2. Rockafeller v Gray : A B C; A never had good title. C is able to sue A or B for breach of the covenant of seisin. B has no C/A b/c not currently in possession of land.a. Damages are limited to the amount paid by the original grantee to the original

grantor, not the mount paid by C to B.i. NOTE: If C sued B and recovered, B regains his chose in action, and may

sue A for recovery of the amount paid to C.ii. NOTE: If C did not win in a suit against B, C retains the chose in action

f. DELIVERYi. A deed MUST be delivered by the grantor (e.g., cannot sign and leave on desk)

1. Some jx relax the manual delivery requirement where it is clear the grantor meant for the grantee to receive the prop

ii. The effective date of a deed is the date when it is delivered – which can be evidenced by the date it is signed, but one cannot depend on that necessarily

iii. Two requirements:1. Must manifest intent to make the deed effective, by words or conduct; AND2. Grantor must immediately give the prop to grantee.

iv. Extrinsic evidence is admissible to prove delivery or nondelivery1. Parol Evidence

a. Admissible to prove grantor’s intent (majority rule admits stmts made by grantor before or after alleged delivery)

b. NOT admissible to show delivery to grantee was conditional, when the deed is unconditional on its face

c. Admissible to show that no delivery was intendedv. Delivery may not be cancelled – interest in prop already transferred to grantee

vi. Where there is a subsequent good faith purchaser, the grantor may be estopped from denying delivery

1. But absent estoppel, a subsequent bona fide purchaser (BFP) is not protected if there was ineffective delivery and the BFP’s grantor did not have the power to convey

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vii. Types of delivery:1. Grantor-grantee delivery

a. Presumptions: i. If grantor has deed no delivery

ii. If a deed is recorded deliveryiii. If grantee has deed delivery

1. Physical possession alone is not sufficient proof – must also be intent to pass title

b. Presumed to have taken place on the date of grantor’s signature2. Delivery subject to a condition

a. e.g., “This deed to take effect only upon my death”b. Valid

i. generally, future interest expressed in the deedii. condition that the grantee survive the grantor

iii. conditions that reserve in grantor the power to revoke the deed prior to legal passage to grantee, so long as there is no actual revocation (modern trend)

1. Opposite view: Rosengrant v Rosengrant – Delivery to a third-party, while remaining in physical possession of the prop and without having the intent to relinquish right to retake is a symbolic delivery, and void. Does not carry “all the force and consequence of absolute, outright ownership at the time of delivery.”a. The grantor must intent to divest himself of the interest conveyed

c. Not valid i. oral conditions attached to a deed valid on its face

d. Conditional Delivery: Delivery to the grantee cannot be conditional – it vests absolute title in the grantee. (Sweeney, Administratrix v Sweeney)i. Conditional delivery must be made through the agency of a third party, who

then delivers deed to grantee upon occurrence of the conditionii. There must be a present intent of delivery – delivering to grantee, without

passing title, is not present intent of deliveryIII. THE RECORDING SYSTEM

a. Purpose: To give notice to the public as to who has what interest in the prop (Constructive notice to everyone)

i. As opposed to actual notice, which would be seeing or hearing of the relationship to landb. Filed with the County Recorder in one of two ways:

i. Grantor-grantee Index 1. Chronologically and alphabetically, in two books – one for grantors and one for

granteesa. The process is laborious, and traces grantors and grantees until the prop was

initially conveyedii. Tract Index

1. Docs filed chronologically by tract, block, and lot numberc. Requirements:

i. The document recorded must be an instrument affecting title to prop1.

ii. Grantor’s signature must be notarizedd. Recording Acts

i. Three major types:1. Notice

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a. A subsequent BFP would prevail over a prior grantee if the grantee failed to record and the BFP has no actual or constructive (including record and inquiry) noticei. i.e., if the BFP knows of a previous unrecorded deed, cannot prevail

ii. The subsequent BFP is protected regardless of whether she herself records1. NOTE: If BFP does not record, she runs the risk of a subsequent BFP

prevailing over her2. Race-Notice

a. A subsequent BFP is protected only if she records before the prior grantee and did not have actual or constructive (record and inquiry) notice

b. CALIFORNIA HAS A RACE-NOTICE STATUTE – it reads says “…whose conveyance is first duly recorded…unless the conveyance shall have been duly recorded prior to the record of notice of the action.”

3. Racea. Whoever records first wins; Actual notice is irrelevantb. Very few states have this

ii. To be a BFP (and hence receive protection under Notice and Race-Notice statutes):1. Is a purchaser

a. donees, heirs, and devisees are NOT protected, although, depending on the provisions of the statute, mortgagees and judgment creditors MAY be protected

b. Under the “shelter rule”, a person who takes from a BFP protected by the recording act has the same rights as the grantor

2. Takes the prop without noticea. Two types of notice:

i. Actual: knowledge obtained from any source of the existence of a previous deed (e.g., newspaper, word of mouth)

ii. Constructive: a previous deed is recorded and in the chain of title1. Includes Inquiry notice: something is referenced in a deed or by

looking at property that would require an inquiry by granteea. A subsequent purchaser is charged with knowledge of whatever

an inspection of the prop would have disclosed AND anything that would have been disclosed by inquiring of the possessor

i. e.g., physical inspection of prop may give notice of an adverse interest

ii. e.g., Tire tracks over land to an adjacent parcel may give notice of an easement

iii. e.g., When a person is in actual possession of a condo (in open, visible and exclusive possession), should give notice of occupant’s interest in prop Waldorff Ins. v Eglin National Bank

b. When a deed references an unrecorded transaction, the grantee is bound to make inquiry to discover the nature and charac of doc

i. Harper v Paradise – deed referenced a previous deed, so grantees should have inquired about the provisions of the previous deed.

c. When a grantee’s deed indicates the plan for which his lot is a part of, without mentioning land restrictions, jx are split on inquiry notice issue

i. Some say he is required to inquire into restrictions in the other deeds in that plan from a common grantor and is held by those restrictions. Guilette v Daly Dry Wall

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ii. Some think it is a better view not to require this inquiry b/c it would be labor intensive, and the other deeds are not in the chain of title

iii. NOTE: Some jx find that restrictions on subsequent lots do not apply to previous unrestricted lots in the same plan

b. A “Mother Hubbard clause” (where the conveyance describes prop as “all of the grantor’s prop in a certain county”) does not sufficiently describe the land in the doc, and is not sufficient to give constructive notice to purchaser – Luthi v Evansi. Doesn’t matter whether the parties knew about the clause or not

ii. BUT, if regarding a claim involving original grantor, the grantor cannot claim vagueness of the clause (created it himself)

c. Improperly indexed deeds:i. Majority rule: Will not prevent constructive notice

ii. California: DOES prevent constructive notice (rejects majority view)3. Pays valuable consideration

a. If requirements are not, the common law standard of “first in time” appliesiii. The deed must be in the Chain of Title

1. “chain of title” is the title est. by the grantor’s predecessors up to the time of the conveyance to grantee.

2. The term “duly recorded” means the deed is within the chain of title3. Prior unrecorded deeds in chain

a. The recording statutes do not give priority to a prior recorded deed that shows no conveyance from a record owneri. i.e., if a prior deed is unrecorded, and the subsequent recorded deed appear

to be a record of a deed from an apparent stranger to the title (no record of transfer from original grantor to grantor of the recorded deed), then a BFP is not put on notice.

4. Grantor does not have title at time of conveyancea. JX split as to whether this conveyance, if recorded, is in the chain of titleb. The doctrine of estoppel by deed could apply

i. Requires that when O conveys land to A before obtaining title, and later receives and records, O may not retain the land himself or convey it to someone else O is estopped from denying the validity of A’s deed b/c he created it (even though he had no deed to trf at the time)

c. Issue of Constructive noticei. Majority view: Subsequent purchaser O B would first see the most recent

deed to O, and would not be required to search further back in time to find the grant O A b/c it is deemed not in the chain of title. B would prevail.

ii. Minority view: The deed would transfer automatically to A upon O’s receiving a valid deed, and A would prevail over B.

iv. Marketable Title Acts have been passed to prevent assertion of stale claims (assertions that title MANY years back was defective)

e. Title Insurancei. Does not run with the land and must be purchased by each subsequent purchaser

ii. The policy usually covers:1. Ineffective title (seller did not own)2. Defect / lien / encumbrance on title3. Lack of right of access4. Unmarketability of title

iii. The duty of the title searcher depends upon the agreement between the parties (contractual relationship), and liability is limited to the policy provisions.

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1. e.g., where a deed does not recite the amount of acreage conveyed, the policy does not warrant the correct acreage was conveyed.a. By doing a search of relevant public records, the ins. comp. could not ascertain

that which an accurate survey would disclose. Walker Rogge v Chelsea Title.iv. When evaluating marketability, the ins. comp. need not assess a land’s value

1. Someone can hold perfect title to valueless land; One can have marketable title to land that is not marketable.

2. e.g., where land has hazardous substances that effect its value, but there is no lien recorded (holding grantor responsible for cleanup costs), it does not affect title. Lick Mill Creek Apts. v Chicago Title Ins Co.

NUISANCEIV. General Information

a. Interference with a person’s right to quiet enjoyment of land.i. Different from trespass b/c that requires interference with right to possess land

b. Must be interference with land – e.g., particles, gas, noise, vibrationsc. There is no recovery when the damage results from the abnormally sensitive nature of π’s landd. “Coming to the Nuisance” – generally the person moving in vicinity of nuisance held to know of

it and accept it.i. Exception: Where the area surrounding a lawful business changes, becoming increasingly

residential, can be enjoined for nuisance when conduct affects health, comfort, and convenience of a neighborhood.

1. If a person moves to or creates a neighborhood to the foreseeable detriment of a Δ, π may have to pay the reasonable expense of moving or shutting down the business. Spur Industries v Del E Webb Development (cattle feedlot that is breeding ground for flies)

V. Public Nuisancesa. Adversely affects public as a wholeb. Must be against the lawc. To recover, a π must show the harm she suffered is different from the harm to the public generally

i. There need not be an interest in adversely affected landVI. Private Nuisances

a. Two types of private nuisances:i. Nuisances at Law (per se) – not permitted in the neighborhood in question

1. A business lawfully conducted in a particular location can never be negligence per seii. Nuisances in Fact – due to location or circumstances, is a nuisance

b. Three requirements:i. substantial interference w/ π’s use and enjoyment of land by Δ

ii. intentional and unreasonable, or unintentional and negligent, actions by Δ1. Unintentional conduct must be negligent, reckless or ultrahazardous (e.g., blasting w/

dynamite)2. Intentional conduct if Δ acts w/ the purpose of causing it, or acts knowing or having

reason to know it results from his conducta. Would be liable despite the degree of care exercised to avoid harmb. Requires the conduct be unreasonable (see below)

iii. π must be entitled to use and enjoyment of land (in possession – need not be owner)

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c. Establishing level of harmi. Look at:

1. extent and charac of harm2. burden to Δ to correct harm3. social value of land invaded4. suitability of invaded land to locality

VII. Remediesa. Injunction

i. In the case of an intentional private nuisance, must first determine whether the conduct is unreasonable by using a utility v harm test

1. Considers injury to Δ and public by granting injunctiona. If gravity of harm outweighs utility of conduct, is unreasonableb. Example

i. Harm – health concerns, effect on market value of land, use and enjoyment breach (particle, vibrations, etc); VS.

ii. Utility – jobs created, type of product, cost of alternative production methods

2. Consider balance of hardships (or balance of the equities) to determine if an injunction should be granteda. The general rule is that where substantial damage is, and nuisance is found, an

injunction shall be granted – but courts sometimes do not follow this rule literally when the effect will be great on Δ or public.i. Compares the general loss to the public against the specific (often monetary)

loss to the private plaintiffb. e.g., where a cement plant would have to be shut down by an injunction b/c there

is no other way in which it may operate, damages more appropriate. Boomer v Atlantic Cement.

c. Rule of Necessityi. Is narrowly construed

ii. Financial benefit is not sufficient to apply rule. Estancias v Schultz (where Δ argued he could not rent apts w/out air conditioning)

ii. In the case of an intentional public nuisance, the weight of the law is difference, but there is still a balancing of the hardships

b. Damages

SERVITUDESVIII. General Information

a. Non-possessory interests in land – Right to use the land of someone elseb. Include: easements, profits, covenants and servitudes

i. They are categorized by the way they operate1. To determine what you are dealing with, look at:

a. Function of right createdb. Method of creationc. Method of termination

IX. Profita. Right to enter onto land and take something from it (wildlife, timber, etc)

X. Easementsa. General Information

i. Typically created to grant right of way to access across a tract of landii. In determining whether an easement is formed:

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1. ambiguities are resolved in favor of grantee2. subsequent conduct of parties is relevant3. parties are assumed to intend a scope that would reasonably serve the purposes of the

grantiii. Function:

1. Affirmative Easementa. Right to enter upon servient tenement and make an affirmative use of itb. e.g., right of way easement

2. Negative Easementa. Entitles the privilege holder to compel possessor of servient tenement to refrain

from engaging activity that he would otherwise be able to do.b. Restricted to the categories recognized at common law:

i. (L)ight, (A)ir, (W)ater (flowing through artifical stream), (S)upport1. In Ca – also includes view

c. If representing someone, want to fit into negative easement b/c easier to create and more difficult to destroy than a real covenant (discussed later)

iv. Relation to Land:1. Easement Appurtenant

a. There must be two tracts of land involved (one dominant, one servient)b. Negative easements are always appurtenant to a dominant estatec. The dominant tenement must be benefited in use and enjoyment of property –

merely making use of the land more profitable is not sufficientd. All who posses or subsequently possess the land are entitled to the benefit of the

easemente. The right is connected to the land, and the easement may not be sold separately

i. Exception: the easement holder may convey the easement to the owner of the servient tenement in order to terminate the tenement

f. If the servient estate is sold, the easement remains unless the subsequent purchaser is a BFP with no notice of easement by:i. actual knowledge

ii. notice from visible appearance, ORiii. notice b/c the doc creating the easement is recorded

1. The BFP is required to inspect the land and the recordg. Can create easement appurtenant determinable, or subject to condition

subsequent (if granting document contains such wording)2. Easement in Gross

a. One which does not benefit a tract of land, but an individual or businessi. Passes entirely apart from the trf of land

ii. Can be personal (right to swim) or commercial (RR track easements)b. Generally must be express (rare to be by prescription)c. In case of ambiguity – courts favor easements appurtenant

i. e.g., where a grant says “for the benefit of the church” (which would be in gross) AND “so long as the property for whose benefit the easement is given…” (which is appurtenant) court would likely find appurtenant. (Willard v First Church of Christ)

d. Only transferable if for commercial purposee. Is assignable, but the parties must have so intended

i. “To heirs and assigns” are the magic words of intentf. Is divisible, but only if the separate holders act jointly (“one stock” rule)

i. One party may not give a third party rights to land without the consent of all owners. (Miller v Lutheran Conference & Camp)

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b. Creation of Easementsi. Express

1. Must be in writing that satisfies SOF, and must last in perpetuity2. To interpret, look at:

a. language of grantb. intention of partiesc. presume a broad construction of the grant

ii. Implied Easements1. Terminology:

a. Implied Reservation – retains easement in favor of grantori. Some courts may not find an implied easement in this instance b/c is

derogating from the fee grant being given to the purchaserii. Reservation of easement in a third party -- not allowed at common law

1. Majority follows common law rulea. Can still be done indirectly – deed the land first to the holder of

the easement, who can then grant a deed to the intended grantor with a reservation

2. Some courts, like in Willard, allow the reservation of an easement to benefit a stranger to the title in order to reflect the intent of the grantor (in that case, the sale of land was actually discounted)

b. Implied Grant – easement implied in favor of grantee2. Implied from Prior Existing Use

a. If, prior to the time the tract of land is divided, a use exists that is reasonably necessary for the enjoyment of a part of land, and the parties intended the use to continue after divisioni. Before the tract is divided, this is called a “quasi easement”

b. Must be a common grantorc. MUST exist prior to severance of parcel, and must be apparent and continuousd. Reasonable necessity required – something upon which enjoyment of the parcel

depends i. Depends on many things, including the cost and difficulty of an alternative,

and whether the price paid reflects expected continuation of usee. Minority: Implied Reservation: Must be strict necessity when retained in the

grantori. Modern trend: not to mechanistically require strict necessity just b/c it is for

the benefit of the grantor3. Implied by Necessity

a. When division of a tract deprives one lot of access to a road or utility line, a right-of-way by absolute necessity is created by implied grant or reservationi. **NOTE: If a landlocked parcel is sold, may be an issue of marketability –

there would not be marketable title if there is no right of accessb. Must be a common grantorc. The necessity MUST arise at the time of severance

i. e.g., if there is an accessible road at time of severance that is later unusable – no easement by necessity created

d. Strict necessity is requiredi. Generally, would look to the reasonableness of any alternative access

1. HYPO: Access through park. If not a guaranteed right (could be revocable at any time) and only during the day – likely not reasonable. If only during day, but is a guaranteed right – could be reasonable.

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ii. Some courts are VERY strict, and a navigable body of water on one side of a parcel terminates necessity

1. Reasoning: Should not rely on the court to satisfy the bargain you didn’t make in purchasing the land

e. Public Policy argument: Should be strict necessity b/c otherwise would form a landlocked parcel whose access is dependant on the goodwill of the neighbors

f. Placement of Easementi. Owner of the servient tenement has right to place the easement, provided

location is reasonably convenientii. If there is an option between two lots, would choose:

1. Any lot where there already exists an easement by prior existing use2. If none, then easement would go on lot most convenient

g. Easement terminates when necessity endsi. Cannot give rise to a prescriptive easement

1. BUT when necessity ends, any continued use is adverse and may eventually form a prescriptive easement

h. Example: The public has the right to use the wet sand on the beach, and if the dry sand is publicly owned, there must be an easement by necessity for public to reach wet sand. Matthews v Bay Head Improvement Assoc.

iii. Prescriptive1. Analogous to acquiring property by adverse possession:

a. open and notoriousi. underground or non-visible uses (pipes, utility lines) are considered open

and notorious if they could be discoveredb. adverse and under claim of right

i. Cannot have owner’s permission1. There usually must be an act by owner to interrupt prescriptive use2. If the owner also uses easement, is permissive

ii. Note: If No Trespassing signs are up, but use despite this, better claim for adversity

c. continuous and uninterrupted for statutory periodi. Not constant use, but a continuous claim of right with periodic acts that put

owner on noticed. exclusive

i. If owner also using easement, not exclusive (minority approach – this defeats the requisite adversity)

ii. Common Driveway Exception: Some jx say exclusivity not required when a common driveway is at issue, and the true owner also uses it.

2. Tacking is permitted, as with APc. Use outside scope of easement

i. When used in a way that exceeds the legal scope of easement, is said to be surchargedii. Remedy is injunction of excessive use

1. Does not terminate the original easementiii. Brown v Voss : Where dominant estate purchases another plot of land and extends an

easement to that property, Court allows it b/c it did not increase traffic on easement and acted reasonably in developing property (servient estate did not act until a large amount of money had been expended)

1. Dissent in this case said this was continuing trespass2. NOT estoppel, but balance of the hardships – new dominant estate would be left

landlocked, with no additional harm to the servient estate

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d. Terminating Easementsi. Can be accomplished in one of several ways:

1. If one owner acquires both the dominant and servient estates, easement is extinguisheda. Cannot be revived with subsequent division of parcel

2. Released by written instrument (to satisfy SOF) or oral agreement (accompanied by act done in reliance on oral agreement)

3. Abandoned if easement owner indicates clear intent to abandon, and acts in a way that indicates such intenta. Not terminated by mere long period of nonuse by owner of easement

4. Easement in a structure will terminate when the structure is involuntarily destroyed5. Easements by necessity terminate when necessity ends

XI. Irrevocable Licensea. Given permission to enter land, and owner never objects. A license is revocable by nature.b. Not subject to SOFc. Becomes irrevocable when there is estoppel (creates easement by estoppel)

i. Where one builds a house in reliance on a license to use a roadway, and improved the roadway, without a word from the owner estopped (Holbrook v Taylor)

ii. Must determine whether you are in a jx that accepts estoppel – most doiii. Must look at the intention of the parties

1. i.e., if the reliance was building a house on a lot, and the house burns down, the license terminates. If the reliance was purchasing the lot in the first place, the license remains.

d. Personal to the license holder, and may not be assignede. HYPO: If the home burns down, and start to use land to bring across supplies, but the owner stops

you – no more licensef. A dominant tenement owner would rather have an easement

XII. REAL COVENANTSa. Promises to use or not use land in a specified wayb. NOTE: Real covenants v Equitable servitudes – the same, only RC is for damages and ES is

for injunctionc. General Information:

i. Run with the land, although are not interests in landii. Involves “benefited land” and “burdened land” (not dominant/servient tenements)

iii. Must be in writing1. Can be in a deed, and grantee would be bound even if did not sign doc

iv. Both pieces of property must have restrictions to be a real covenant (reciprocal)d. In interpreting a covenant, there are four rules of construction:

i. if the language is unclear or ambiguous, the covenant is resolved in favor of free enjoymentii. restrictions on use or enjoyment will not be read into the covenant by implication

iii. the covenant must be interpreted reasonably, ANDiv. words must be given their ordinary and intended meaning

e. Whether a Burden runs with the landi. Must be the intent of the parties that it bind subsequent purchasers

ii. Must be vertical privity1. This would only NOT be met in the case of adverse possession

iii. Must be horizontal privitya. NOTE: As separate neighbors, can NEVER satisfy horizontal privity

i. Therefore, once one party sells his lot of land, that land is no longer burdened

1. Note: the other lot, as yet unsold, would still be burdened

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b. R.3d does not require horizontal privityiv. Must touch and concern the land

1. Effect of the covenant itself is to make the land more useful or valuable to benefited party

2. Must affect legal relationship as landownersv. Must be notice (actual or constructive by BFP of covenant)

f. Whether a Benefit can be enforcedi. Must be intent to bind subsequent purchasers

ii. Must be vertical privity1. Loose requirement – a renter could likely enforce

iii. Must touch and concerniv. Must be notice (not really an issue, b/c satisfied if seeking enforcement)

g. Available remedy – Damagesh. May be negative or affirmative covenants

i. The test for whether a covenant runs with the land is whether it imposes a burden on the land that also increases the value of a different interest in the same land

1. Example: Where there is an affirmative covenant to pay a maintenance fee, this runs with the land b/c it is essential to enjoyment of the property. Neponsit Property Owner’s Assoc. v. Emigrant Industrial Savings Bank.

i. TERMINATION of Covenantsi. May be terminated by:

1. release in writing2. merger (one person owning both properties)3. condemnation of burdened property4. The covenant no longer fulfills its original purpose

a. The fact that land can be of greater value if used for other purposes is not sufficient. Western Land v Trukolaski (where want to build commercial unit, but the residential restriction substantially benefits the residents of the subdivision)i. Requires a community change “so general as to frustrate the original

purpose.”5. Abandonment of property (for one landowner only, not whole restriction)

a. Can only occur if the landowner no longer holds perfect title to the land, otherwise must still abide by covenant. Pocono Springs v MacKenzie.

6. Abandonment of covenanta. Must be intent to abandon

i. Without intent, could consider waiver1. If want to show waiver (that land being used for purposes other than

the covenants restrictions), must prove the land is currently being used for that deviated purpose.

ii. There must be unanimity (one person can serve as a “hold out”)1. Where a developer created the restrictive covenant, and now wants to build a hospital,

but a landowner resists (the change would change the nature of the comm. in which she purchased) cannot terminate covenant. Rick v West.

j. Limiting Covenantsi. Could be found in violation of statute

1. Example: Restrictive covenant for single-family residential purposes, with no more than 5 unrelated persons.” Defendants want to use as AIDS home. To enjoin them under the covenant would be in violation of the Fair Housing Act (FHA). FHA creates three distinct claims:a. Discriminatory Intent – must show handicap was somehow basis for covenant

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b. Disparate Impact – enforcing covenant would actually result in disc., or have a discriminating effecti. Does – this group would be unable to live in a residential community if held

under the covenantc. Reasonable Accommodation – involves changing some rule that is generally

applicable so as to make its burden less onerous on the handicapped individual, if it does not require: 1) fundamental alteration of the nature of the restriction or 2) imposes undue financial hardship or administrative burdensi. Here, would not have negative effects on community, and should

accommodate (by not seeking enforcement of the covenant) Hill v Comm. of Damien of Molokai.

d. SO – Δs can stay b/c amounts to discrimination.i. Could also have stayed if complied with covenant, or if the covenant was

found as against public policy – policy of encouraging accommodationii. Could be found in violation of Constitution

1. Example: Restrictive covenants based on race or color are in violation of the Fourteenth Amendment, and denies a defendant equal protection. Shelley v Kraemer.a. NOTE: Is a private restriction, and would not normally be an issue for federal

courts – but when a state court enforces the restriction, it constitutes state disc. and can be reviewed by fed. cts.

XIII. Equitable Servitudesa. The only difference between this and a real covenant is the remedy sought

i. Remedy: Injunction – Equitable Remedy1. A plaintiff would generally want a servitude over a covenant – often seeking

injunctionb. Created by a covenant in a writing that satisfies the SOF

i. Exception: Negative equitable servitudes can be implied from a common scheme in development of a residential subdivision (implied reciprocal negative servitudes are discussed below)

c. Must have:i. Writing (except in implied reciprocal servitudes – discussed below)

ii. Touch and Concerniii. Notice

1. In equity, if you know about a restriction, you are held to itiv. Intent to bind subsequent purchasers

d. Touch and Concern requirementi. On issues of touch and concern, courts are not predictable

ii. Servitudes in Gross – Where benefit is personal and burden attached to land1. English Rule: Not binding on assigns of burdened land (no longer controlling)2. American Rule: Permits burden to run with the land

iii. The R.3d Property (Servitudes) thought touch and concern is arbitrary – replaced it with different tests for enforceability:

1. Arbitrary, spiteful, and capricious2. Unreasonably burdens fundamental Const. right3. Unreasonable restraint on alienation4. Unreasonable restraint on competition or trade5. Unconscionable under another section of R.3d

a. NOTE: Not good law until a jx adopts ite. Privity

i. Horizontal privity not requiredii. Vertical privity not required for burden to run (b/c attaches to the land itself)

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1. The benefit runs to all assignees2. Could apply also to adverse possessors, although this has not been litigated

XIV. Implied Reciprocal Servitudesa. Must determine whether jx applies IRS

i. NOTE: Those jx that accept IRS are called Sanborn jurisdictions – Majority approachii. California does not (must be in deeds to all lots)

b. When a developer subdivides land and some deeds contain negative covenants but some do not, negative covenants binding on all parcels may be implied as IRS

c. Requirements:i. A common grantor

ii. A common scheme for development1. The common scheme must be made known to the buyer (see notice below)

a. In CA – the scheme must be recorded to be binding2. Any lot sold before the creation of the common scheme is not held to the restrictions

thereina. Also cannot sue for violations of restrictions by those landowners within the

scheme – unless was an intended third party beneficiary of the restrictionsi. Can be an express or implied beneficiary – an implied would have a weaker

argument for enforcement of restrictions on other lotsii. Any beneficiary argument would have this counterargument – as a matter of

policy, IRS is intended to be reciprocal. If the beneficiary is not equally bound by restrictions, should not allowed to sue for enforcement of restrictions (likely would not prevail)

3. Any land retained by grantor – must determine whether it was part of common schemea. If it is intended to be a part of the common scheme, is subject to IRS restrictions

iii. Must be reciprocal between all lotsiv. NOTICE

1. Two types:a. Record Notice: In some jx, through recording act, purchaser must check deeds of

all lots from common grantor and receive constructive noticei. In a jx that accepts record notice, a developer can put in one deed “all

remaining lots restricted to the same use,” and bind all other lots by putting them on constructive notice

b. Inquiry Notice – walk through neighborhood and notice restrictionsi. Example: Where a landowner wants to build a gas station, but all other lots

are used for residential purposes, he is put on notice of uniform use, even though there are no restrictions in his title. Sanborn v McLean

c. NOTE: Actual Notice if know of covenants2. Check at two times:

a. At time land sold (and remainder retained in grantor)b. At time grantor’s retained land is sold

d. If a jx is not a Sanborn jx, then look at the express restrictionsi. Must be in every deed.

ii. The restrictions would benefit the parties in privity only – land sold before the restricted land would not be benefited land, and could not sue to enforce restrictions.

1. Only those lots retained in the grantor following sale of restricted land could sue, even after subsequently sold by grantor

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XV.Homeowner’s Associationsa. General Information

i. Members subject themselves to certain restrictions in return for protection that other homeowners also assume the same obligations

ii. Condominiums and Cooperativesiii. CCRs – Covenants, Conditions, Restrictions

b. To challenge restrictions, one must prove they are unreasonablei. Restrictions that are arbitrary, against public policy, or that impose a burden on use that

greatly outweighs any benefit will not be enforcedii. Courts do not look at individual pets, but the restriction as applied across the board

iii. Requires a balancing of the equities: benefit to comm. v. burden to landowneriv. Example: A restriction for cats and dogs, but allowing other types of pets, is reasonable b/c

rationally related to health, sanitation, and noise concerns. Nahrstedt v Lakeside Village.

ZONINGXVI. General Information

a. Public restrictions to regulate landb. Enacted where private restrictions are inefficient – b/c they go on for a long time w/out changingc. Only the State has the power to zone

i. The right has been extended to cities and counties by “enabling statutes”1. Requires the local zoning authority to adopt a comprehensive plan, which can be

revised occasionally. Zoning must conform to the plan.d. Goal: Orderly development of comm. by promoting economic growth, health, welfare, and safety

i. Can regulate density of human population by limiting building heights, yard setbacks, etc.ii. TODAY – zoning ordinances are presumptively valid.

e. Segregates land use into geographic regionsf. It is a proper exercise of police power to phase out uses that are inconsistent w/ zoning changes

i. A use no longer permitted after zoning change is a “nonconforming use”g. Euclidian Zoning

i. Districts are graded from highest to lowest, in categories of use, height and areaii. Example: U-6 can include the commercial uses therein, and any of the uses in the tiers

below it1. NOTE: Unless the uses cause a nuisance, then neighbors can bring such an action

XVII. Constitutional Considerations a. Restrictions must be for a legitimate governmental objectiveb. Two lines of Constitutional analysis:

i. Source of state power1. Often police power -- right to regulate society on issues of public health, safety and

welfareii. Constitutional Limitations

c. Complete restrictions of all commercial and apartment buildings from a purely residential district is proper for many reasons:

i. fire and health protectionii. traffic congestion and street accidents reduced

iii. safer, cleaner, and more enjoyable place to live (Village of Euclid v Amber Realty – the case challenged zoning ordinances generally, but found proper)

1. If the provisions of an ordinance are applied to a specific property, it may be arbitrary and unreasonable (Village of Euclid)

d. A nonconforming use (was once acceptable before changes in zoning) creates a vested property right that cannot be abrogated or destroyed (unless nuisance, abandonment, or extinguished by eminent domain)

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i. RULE: If the effect of a zoning law is to deprive an owner of lawful use of property, it amounts to a taking for which must be justly compensated. (PA Northwestern v Zoning Hearing Board)

e. Amortization provisions – given period of time in which to bring prop into compliancei. Jx split – some say unconst. on its face, others do not

f. Household Composition Ordinancesi. Have long been made to prevent boarding houses, frat houses, or overcrowded conditions

(preserve the nature of the neighborhood), but can also create Const. issuesii. If restrict unrelated individuals – Constitutional

1. The majority opinion in Village of Belle Terre v Boraas extended the police power, and found a legitimate state interest in maintaining the character of a neighborhood (quiet seclusion, clean air, etc)a. “Police power is not confined to the elimination of filth, stench, and unhealthy

places” – can protect an area of sanctuary for peopleb. In that case, the definition of “family” excluded a group of unrelated studentsc. The DISSENT says it is imposition on 1st Amend freedom of association and

right of privacy (only regulated unrelated people, not comm. as a wholeiii. If restrict related individuals – Unconstitutional intrusion into the family

1. California has found a similar ordinance to be unconstitutional (Moore v City of E. Cleveland – where a grandparent could not live with more than one set of grandchildren)a. Distinguished from Belle Terre b/c involves family, not unrelated individuals

iv. Courts find the idea of family should be protected – but there is no concrete idea about what “family” is

g. **STRICT SCRUTINY – applied if determined there is an invasion of right to privacyi. RULE: If strict scrutiny, then must be:

1. Compelling state interest2. Well-tailored or narrowly-tailored relationship to state interest

a. Would include a discussion of whether there are less restrictive options avail.ii. RULE: If not strict scrutiny:

1. Legitimate state interest2. Rational relationship to state interest

h. The Fair Housing Act (FHA) prohibits discrimination against certain groups (handicap, race, religion, etc)

i. Distinguishes between maximum occupancy restrictions (which would restrict to maintain health & safety by preventing overcrowding) and family composition restrictions (which help to create a single-family use)

1. Max. occ. is exempted by the FHA, family comp. is not2. Where an unlimited number of related individuals and a restricted number of

unrelated individuals may live together under the ordinance, it is family composition and not exempted by FHA (City of Edmonds v Oxford House)a. It is both underinclusive and overinclusiveb. NOTE: Is a state interest (controlling density), but NOT relational to interest (not

actually controlling density, but attempting to define the character of the family)

EMINENT DOMAIN (TAKINGS)XVIII. General Information

a. Power of government to take privately owned land for public use.b. Just compensation must be made for the taking under the Fifth Amendment

i. “Just compensation” is fair market value of property

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XIX. PUBLIC USEa. Only extends to public use or public purpose

i. Found in Public Use Clause of the Fifth Amendmentb. Two competing definitions of public use:

i. Broad (for public purpose)ii. Narrow (for public use)

c. “Public use” depends on what the legislature declares to be the public interesti. The fact that it is taken to be transferred to private parties can be allowable if done for a

public purpose.1. Example: Large amounts of land taken from a small number of landowners and sold

to individual lessees b/c there was interference w/ the normal functioning of residential land market. Hawaii Housing Authority v Midkiff(1984, USSC)

2. Conversely: An unused naval base is taken and divided among private parties to create jobs and encourage investment is for a private purpose and NOT allowable. Kelo v City of New London. – currently before USSC

ii. Taking private land to develop commercial business is NOT allowable. County of Wayne v Hathcock.

1. NOTE: This rule is a state analysis. Whether it would be allowable under the US Const. is an issue for the USSC, and now being considered in Kelo

d. There must be one of three characteristics to be public use (set forth in County of Wayne):i. Public necessity of the extreme sort otherwise impracticable

1. i.e., the very existence depends on the use of the land that can be attained only by coordination of the central government

ii. Remains in public controliii. Land selected for condemnation chosen based on public concern (e.g., slums)

1. This is the rule only if accepted by the courts of the jxXX.CATEGORICAL RULES

a. If there is a physical occupation, is always a taking (no balancing of governmental interest)b. If the ordinance is designed to control nuisance-like activity, it is never a taking

i. Does not need to be nuisance per se – if it affects health, safety and welfare, it is within the police power (Hadacheck v Sebastian – where stopping brick kiln on land caused a significant diminution of land value b/c it was fit only for that purpose, but the use negatively affected the other landholders)

1. Private interests must yield to progress2. Limitation: must not be arbitrary or w/ unjust discrimination

c. Total regulatory taking must always be compensated. Lucas v Carolina Coastal Council i. Where 100% of the value of the land is taken, is always a taking

ii. Unsure what portion of land would prompt this rule -- whether 100% taking of a small portion of land would be a compensable act of eminent domain, or if it is merely a diminution in value that would require a balancing test

iii. This only applies to new statutes in certain circumstances – new regulations that do not effect the old law do not constitute a taking

XXI. TYPES OF TAKINGSa. Physical Invasion

i. If substantial enough, it must pay just compensation1. e.g., vibrations, odors, noise, etc

b. Permanent Physical Occupationi. Degree of interference and impact considerations are significant considerations

1. BUT constitutional protection in this instance does not depend on the size of the area permanently occupied

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a. Example: Regulation that requires a LL to allow the cable company to install a cable box and wires on its building, where the cable company determines placement, is a permanent physical occupation. Loretto v Teleprompter Manhattan.i. The LL cannot legally deny, so arguably violates the right to exclude

ii. NOTE: If the ordinance said LL must provide cable if requested by a tenant, and LL could arrange for installation himself, would be a regulatory taking(discussed below) and would not be violative per se.

b. Conversely: Owner of mobile home park, who is forced by ordinance to allow renters to sell their mobile homes while also fixing the land rent payment, does not have an involuntary taking can change the nature of the land, stop running a mobile home park, and not be subjected to the provisions of the ordinance. Yee v City of Escondido.

c. Regulatory Takingsi. Questions arise when some, but not all, of the value of land is lost as a result of regulations

ii. Some courts look at the purpose of the regulation1. If the goal and effect of the regulation is protection of the public from harm, it is a

valid exercise of police poweriii. Other courts look at whether the land’s value is negatively affected

1. The land must have practically no economic value left to it; Sometimes even severe loss is not enough to constitute a taking

d. Historical Landmarksi. The case of Penn Central v City of New York

1. Balancing Test – Extent of Interference v. Importance of Government Action:a. The nature and extent of impact on prop owner

i. Court found that all interest in the land was not taken because they still retained the right to rebuild (Transfer Development Rights (TDRs) – can trf to other land owned) – mitigates impact

1. Look at Penn Central as a whole (not just Penn Station property) – can still build on other of its properties

ii. Still can get an adequate return on their investment (no change to existing structure

iii. “Reciprocity of Advantage” – benefited as well as burdened by the ordinance (increased tourism dollars)

b. The character of the governmental actioni. Legitimate government interest (preserving landmarks, promoting tourism,

etc)e. Total Restriction of Use of Land

i. The police power is limited by due process1. Gov’t should not have to pay for every diminution of property value caused by its

laws, b/c then it could not act2. Look at the extent of the diminution to determine the limits

a. At a certain magnitude, there must be exercise of eminent domain & compensationi. i.e., whether compensation is required is a question of degree

b. When damage is not common or public, and there is no public nuisance, a law does not disclose a public interest sufficient to warrant an extensive destruction of a landowner’s property rights (which are constitutionally protected)i. A strong public desire to improve the pubic condition is not enough to

warrant achieving the goal through a shorter route – bypassing the Const. requirement of compensation.

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ii. Example: Where a statute gives someone a right to mine coal, but only so much as doesn’t cause subsidence of human dwellings – Δ mines coal, causes such subsidence to π’s home, but the deed transfers right of subsidence to Δ. Court finds the gov’t cannot regulate use of private property to prevent an owner from using the property. There was not enough of a public interest – and Δ has a constitutionally-protected right to mine coal. Penn Coal Co v Mahon.

1. πs bargained for only surface rights, and the fact the risk they assumed has become a danger does not warrant giving them greater rights than they bought

2. Balancing Test:a. State v Coal Company (constitutionality of statute)b. Importance of public interest v Extent of burden on mining coal

i. NOTE: The right of subsidence is an estate in land (property right), which is severable and transferable

3. Dissent disagrees – says was controlling a nuisance, and that is never a taking

f. Total Extinguishing of Property Valuei. Regulations that deny the property owner all economically viable use of the land requires

compensation without inquiry into the public interest advanced in support of the restraint1. Is one of the discrete categories of regulatory deprivations that requires this

a. There has been no justification set forth for this by the courts2. ALWAYS a taking – no balancing test ( becomes a categorical rule – see below)

ii. Example: Where π purchases land on coast, and afterward a regulation is passed that he must obtain licenses before building. The limitation is so great that the value of the land, according to the court, becomes $0. Therefore, is a taking, and should be compensated. Lucas v Carolina Coastal Council

g. Imposing Conditions on Land Permitsi. A use restriction may constitute a taking if not reasonably necessary to the effectuation of a

substantial government purpose.ii. TWO-PART TEST that must be employed:

1. Essential Nexus Test – an “essential nexus” must exist between the public purpose and the condition imposed on land use.a. The gov’t may not require a person to give up a constitutional right (namely,

right to compensation) in exchange for a discretionary benefit that has little or no relationship to the property.i. Example: A coastal regulation limits the height of houses built at the coast

so as not to block the view of the ocean. Coastal Commission will let landowner build higher than regulation if they allow an easement. There is not sufficient connection between the purpose of the regulation (sight of ocean) and the taking of an easement. Any such easement would require compensation under eminent domain. Nolan v California Coastal Commission.

2. Rough Proportionality Test – required by the Fifth Amendment, some sort of individualized determination that the required land use regulation is related both in nature and extent to the impact of the proposed land use reg.a. No precise mathematical calculation is necessaryb. Example: The city did not present enough evidence that the regulation placed on

a business expansion would actually serve the purported purpose – regulation of flooding. For instance, a public easement for a bike trail serves to diminish the

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landowners right to exclude others, but was not shown to help in controlling flooding. Dolan v City of Tigard. i. There is an essential nexus (they are connected), but not rough

proportionality iii. Landlords – use the two-part test when the government tells landlords they cannot do

something unless gives the gov’t something it cannot otherwise get.1. Example: In NY, a statute passed that says LLs cannot go out of business, unless on

condition they contribute to a public housing fund.a. As to the statute – unconstitutional b/c is a permanent occupation of land –

always a takingb. As to the condition – would be allowable if was uniform as to all such LLs, and

was calculated to reach a goal of a legitimate state purpose.i. Apply the two part test

iv. Exactions – money taken from landowner and given to a public fund1. Is unconstitutional if taken from one landowner as a condition for a building permit.

a. It may be allowable if imposed as a general tax to all such businesses.2. Example: The city did an analysis and determined there were too few public

recreational facilities. When π attempted to tear down a private facility and build an office building, the city made it a condition of the permit that π either contribute money to a public fund for recreational facilities, or include such facilities in its new building. There is a nexus – office building would bring more people to the area and worsen the existing problem – but it is not proportional b/c the condition suggests replacing a private club with a public one. Erlich v Culver City.

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