Property Attack OutlineProf. Julia Mahoney, Spring 2015

Acquisition of Property :o First Possession

See also Discovery and Law of Finders Continuum of Possession

Intent - Effort - Marked - On the Verge - Fleeting - Absolute Ex.: Creativity may fit between Intent and Effort Ex.: Pierson v. Post is On the Verge

Themes: Level of Effort

o Effort alone is never enough Proximity Intent Racing/First finder Custom: see Ghen v. Rich But-for test: close possession; would have actual possession but for adverse

action of another party Pierson v. Post (p. 82): Fox case & Ownership of Animals

Rule: no ownership of an animal until it’s actually possessed Keeble v. Hickeringill (p. 93): competition and malicious interference

Rule: Spite acceptable only if done in honest competition; wanton malicious behavior without purpose to benefit yourself is not acceptable. P recovers for lost property. (duck decoy case)

Whaling: Iron Holds the Whale: Whoever’s harpoon is in the whale has rights to it so

long as he is in fresh pursuit Tie-it-Up/Fast-Fish Rule: finder’s keeper, you must tie it up Split Value Rule: Harpooner gets the whale, but finder gets reward

o Ghen v. Rich (p. 90): Rule: more than Iron holds the whale: finder got salvage fee

but harpooner got the whale Shipwrecks: for general principle

Policy: finding loot vs. preserving archeological find, see Abandoned Shipwrecks Act (qualifying wrecksfirst possession to government)

Eads vs. Brazelton (p. 107): Notice + Due DiligenceRule: possession requires more than notice, but also due diligence in acting to achieve full domain and control over the resource

Home Run Baseballs: Fleeting Possession vs. Absolute Possession Distinction is Continuous Control Fleeting Possession: discourages mobs, hard line to draw Absolute Possession: clears up ambiguity, but causes fighting Popov v. Hayashi (p. 109): Pre-possessory interest

o Facts: Popov catches ball briefly, mob forms, ball ends up with Hayashi who was not part of the mob.

o Rule: Split the baby (rarely done in other cases), pre-possessory interest to one and possessory interest to the other

o Adverse Possession Required Elements

Actual PossessionUse as the true owner would (improvement, use unlike trespass)

Open and Notoriouso Give notice to the whole world including the true owner that you are in

possession of the property (possession/improvement normally enough)

o True owner does not need actual knowledge of the possession, only that a reasonable person would consider adequate notice to be provided

Exclusiveo Behave like true owner by excluding use by others (owner or public)o If Sharing with true owner, see easement by prescription

Adverse or Hostileo Without permission or lapsed permission via explicit request to stopo Does not require a bad faith state of mindo Trend: courts more likely to deny title to bad faith adverse possessors

Continuouso No gaps in actual possession, though year-round not requiredo Doctrine of Tacking: Howard v. Kunto p. 208

Facts: shifted plots vs. titles Rule: tacking requires privity. Must be a relationship (e.g.

sale or gift) between each successive AP in order for continuity and exclusivity elements to be met.

o ~20 years? Discovery Rule: SOL does not begin to run until property owner is aware of his rights

Marengo Cave Co. v. Ross (p. 190)o Rule: SOL began when Ross discovered the cave was under his land,

and not when he bought the land. Therefore too short for AP. Methods

Claim of Right: traditional AP, comes up in court Color of Title: point to formal document that purports to have conveyed the

property to you upon which you acted in reasonable reliance. Disabilities Tolling SOL

Only matters at time of initial trespass Classes included: underage (not always, statutes vary), imprisoned, insane,

legally incompetent. Not Coverture. Doctrine of Agreed Boundaries (Acquiescence)

If one party relies (improvement helpful, but not required) on an agreed upon a boundary discussed between the parties in lieu of an uncertainty, the other party is estopped from asserting the official boundary if he has (1) acquiesced and (2) the statute of limitations has run (~5 years)

Time Doesn’t Run Against The King No AP against the government Trend : Not an absolute rule anymore; natural parks more likely to be protected

than vacant lots. Role of Bad Faith/Squatters:

Carpenter v. Ruperto (p. 203) - Squatterso Rule: Squatters cannot get good title.

J.A. Pye (Oxford) Ltd. v. The United Kingdom (p. 207) – UK Ruleo Facts: permission lapsed, no response to extension request, later

asserted APo Ruling: can’t adversely possess w/ k it’s another’s (rights violation)

Not Take and Pay If granted title by AP, you are not required to compensate the former owner.

AP of Personal Property Controlled by Conversion SOL, Replevin SOL, and questions “discovery rule” Thieves can never get good title; if you buy unknowingly from a thief you are a

good faith AP’er of the property.o See Nemo Dat: you can’t give what you don’t haveo Songbyrd, Inc. v. Estate of Grossman (p. 215) - Conversion

Facts: Grossman took tapes in the 70’s, Byrd waited until the 90’s to ask for them back.

Rule: SOL for conversion begins at time of conversion, not at the time the true owner attempts to assert his rights. Byrd is barred by SOL from suing for conversion.

NY Anomaly: SOL for conversion is shorter than SOL for good faith purchasers to be absolved, thus for AP, a bad faith converter’s rights vest sooner

o Good Faith Purchasers: SOL doesn’t begin until the property is requested to be returned

o Conversion: SOL begins as soon as the property is taken Discovery Rule: treats converters and good faith purchasers the same way; SOL

begins when true owner knows or should know where the property is. Policy

Encourage land use over disuse/rewards improvements to land/productivity Punishes neglect Prevents litigation of centuries-old land disputes Caps need for title searches beyond SOL Honors Expectations/Reliance Interest Corrects clerical errors:

Trend: deny rights of bad-faith possessorso Creation

General Rule: what you create is yours Modified by:

o Fair Useo Licensing/Royaltieso Copyright

Types: Copyright (long, but strong fair use doctrine) Patents (20 years, but strong protection) Trademarks (for consumer protection, thus indefinite) Trade Secret (only as strong as you make it) Right of Publicity: Protects person’s right to their own identity and ability to

profit from their personao Recognized in half of states, created judiciallyo Midler v. Ford Motor Company (p. 143) – Limited Right

Facts: Ford hired a Bette Midler sound-alike for their ads. Rule: No copyright to one’s own voice; mere imitation not a

copyright infringement; but deliberate imitation of a distinctive voice is a tort.

International News Service v. Associated Press (p. 131): Quasi Property Rights

o Facts: INS took news from AP and sold it as their own, AP sued o Ruling: there is a quasi property right - limited right to exclude against

competitors onlyo Policy: concerned for unfair competition/Free-Riders, but see concerns

Policy/Interests Involved: Unfair Competition (taking news, use of someone’s voice) Monetary Autonomy/Personal Authorship Interests of the consumer/public Balancing: societal need vs. encouragement for discovery

o Gift Three Elements

Intent Delivery

o Irons v. Smallpiece (p. 863) – mere verbal promise insufficient Facts: Father promised colts, son never possessed them

Rule: No gift, no behavior acting like owner or delivery Acceptance

o Presumed for gifts of positive value (not for negative value)o Disclaimer: rejection of property transfer (see state statutory

requirements, presumed if gift of negative value) Gift Causa Mortis (in contemplation of death)

Substitute to a will but are not enforceable if the person recovers Foster v. Reiss (p. 865)

o Facts: Reiss goes to hospital for surgery, wrote a note just before indicating where some hidden money, etc. was

o Ruling: note undelivered on deathbead not sufficient, no (3), (6) o Elements: (1) in contemplation of death; (2) death is the result of

peril/disorder that sparked gift; (3) delivery; (4) competent donor; (5) intent to make the gift; (6) acceptance by donee

See also Nemo Dat Quod Non Habet: you can’t give what you don’t have See also restrictions on alienation

o Purchase See Title information and nemo dat for double conveyances 4 Stages

Negotiation/Agreemento Statute of Frauds: Writing w/ essential terms (description), signedo If no writing, raise question of Part Performance AND Estoppel

Part Performance: One party performs a substantial component of the obligations; other party may not be able to invoke SOF as defense against performing himself.

E.g.: taking possession, improving, or paying Estoppel: if the promisor makes a promise that (1) a

reasonable person might anticipate to cause the promisee to rely; (2) the promisee relies reasonably; and (3) promisee would suffer a real loss if the promisor did not perform SOF is not available as defense

Hickey v. Green: (Supp. 2)o Facts: Writing w/o D’s signature, but w/

price, description, delivery. P: detrimental reliance on the promise by selling their home. D backed out of deal, pleads SOF/lack of signature.

o Rule: Estoppel. Negotiation was beyond preliminary, had specific terms, and P reasonably relied in a foreseeable way to his detriment.

o See remedies o Ex ante vs. ex post

See remedies below Executory Period: financing, inspection Closing: security interest granted, deed delivery/property conveyed (see details)

o Types of Deeds Quick Claim: All interests seller may have; buyer assumes

risk of seller not having any interest to convey (nemo dat) General Warranty: Includes assurance that seller has title to

property, has power to convey, property is unencumbered Post-Closing: when lawsuits happen

Remedies for Breach of Sale Contract Specific Performance: property rule protection, see equitable concerns

o Defenses: Hardship, Laches

Damages: get $, normally for sellerso Jones v. Lee (Supp. 2) – Calculate via Loss of the Bargain

Rule: loss of the bargain Calculate damages by subtracting the substitute

performance price from the FMV at the time of the breach

See also Compensatory (Special Damages) & Punitive Damages

o Discovery See also first possession and law of finders Johnson v. M’Intosh (p. 113): Discovery grants sovereign property rights to the land, but

does not grant power to expel pre-existing residents who retain a right of occupancy. By nemo dat, pre-existing residents may not sell (Indians case)

Right of Discovery: European states need not possess lands to assert rights over nativeso Law of Finders

See also first possession and discovery Relative property rights: courts don’t determine rights in rem, only superior claim Policy: prefer a first finder rule to last finder rule to prevent theft (but see carelessness) Armory v. Delmirie (p. 220): (chimneysweep + diamond) “That the finder of a jewel,

though he does not by such finding acquire an absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner, and consequently may maintain trover [conversion]”

Clark v. Maloney (p. 222): Facts: Clark “finds” logs, ties them up, somehow they come loose (suspicious?),

Maloney finds the logs and takes possession Rule: First finder, subsequent loss did not divest p’s special property interest

Anderson v. Gouldberg (p. 223): wrongful actor is still a finder Facts: Anderson trespasses on 3rd party’s land, cuts down trees, Gouldberg takes

possession of the logs as repo man for another party Rule: For A, Doesn’t matter if Gouldberg “dispossessed a wrongful actor”

o Principle of Accession: property rights are granted to the owner of the resource most prominently connected to the property in question and to which ownership has already been established

Increase: offspring of animals (animals only) go to the owner of the mother, see Carruth v. Easterling

Doctrine of Accession Ad Coelum (Adage): whoever owns the soil owns the sky and depths

Trend : Limited to what you’ve reduced to actual possession o Alternate Conception : it is a servitude that you give to the airlines

where, in return, balanced by portion of others’ servitudes you receive Hinman v. Pacific Air Transport (p. 10): Ad Coelum Adage (airplanes)

o Rule: Ad coelum becomes an adage; servitude in exchange for others’o Remedy for airplanes: sue for trespass if too low (nuisance for

interference w/ enjoyment) But see Google Print: not like airline industry taking servitude from ad coelum

rule because there is actual damage even with small snipits Accretion/Avulsion

Accretion: gradual deposit by water producing dry land that had once been covered by water changes property lines; gains through accretion are kept

Avulsion: sudden abandonment of one channel/sudden washing away and depositing of entire riverbank doesn’t change property lines; use old channel.

o Nebraska v. Iowa (p. 179) Facts: sudden shift makes oxbow on the river that separates

the states. Part of IA’s land is now on NE’s side the river. Rule: Avulsion. Iowa keeps the land.

Reliction: “land that has been covered by water, but which has been uncovered by the imperceptible recession of the water” changes property lines

Terms:o Erosion: “gradual and imperceptible wearing away of land (bordering

on water) by the natural and imperceptible recession of the water”o Riparian: “land bordering on any type of water”o Littoral: “land bordering the ocean or a major inland sea”

Fixtures: A thing that, although originally movable property, has been annexed to the land and is now regarded as part of it.

Default Rule: look to reasonable expectations of parties + physical conditionso Strain v. Green (p. 184)

Facts: Seller took water heater, lighting, etc. General Rule: if removing the item makes an ugly eyesore, or

makes the house less of a house then it is a fixtureo Seller’s silent intent carries no weight. Must speak up if he wishes

something to be considered a fixture.o Buyers/sellers contract around, if close, presumption is it’s a fixture

Sometimes this is treated differently in cases of foreclosure Concern for Tenants and Landlords: what interest do tenants have in making

“permanent” improvements? No higher price like sellers – courts favor tenants Salvage Rule: like whaling, get finders fee Theory from Hume (General Principle of Accession): psychological, we associate small

objects with large ones (e.g. North Sea Oil to nearest coastline) Tests: Proximity/Median Line/Focal Point; Proportion (population, etc.);

First Possession (salvage)o Abandonment: difficult for real property, must renounce all right and title

Pocono Springs Civic Association, Inc. v. MacKenzie (p. 486): General Rule Facts: Negative value plot w/ condo fees, back taxes + lien, gov’t wouldn't take Rule: Not abandoned because he retained title

Possible way to abandon real property: have another sell drugs on the land, have it seized Alternatively: bargain away all servitudes and then gift to conservation group

Contrast with interests in property such as easements which can be abandoned through actions alone w/o transfer

Equitable Concepts/Actions o Basic Concepts of Equity: see also Ebay v. Mercexchange

Clean Hands No Remedy at Law: “safety valve for the law” In personam, not in rem (i.e. injunctions against certain parties) Regards substance over form, bends rules to do justice in individual cases

o Quiet Title Actions: Judge identifies owner of a piece of real propertyo Building Encroachments and Injunctions

Traditional view: Pile v. Pedrick (p. 52) Property Rule Protection for Plaintiff (Rule 1) Facts: D built 2 inches onto P’s property in good faith reliance on a surveying

error. Cost of moving his wall would be prohibitively expensive. Rule: Despite sympathy for D’s hardship, Rule 1 D must knock down wall. See also: Smith v. McEnany for equivalent lease case.

Modern View: Golden Press, Inc. v. Rylands (p. 55) Liability Rule Protection for Plaintiff (Rule 2)

Facts: minor underground encroachment from the base of a wall Rule: New standard for “mandatory injunction rule:”

o Deliberate, wilful, intentional encroachment? (Good vs. Bad Faith)o Would cost of the injunction be excessive in relation to damage done?

Damages: proportional to amount of land takeno Mahoney: also place a lien on percentage of their structure for proceeds

See also Smith v. McEnany in Covenant of Quiet Enjoyment

o Mistaken Improver General Rule: Bestowing a benefit on the property of another without bargained-for

considering leaves you without recourse. Losses left where they lie, equivalent of a gift. Equity: Will grant remedy if leaving losses where they lie will result in gross injustice.

Trend: Good faith improver is more likely to recover at least reliance costs. See full outline for possible remedies (assuming clean hands): Law vs. Equity: fixture (no compensation vs. remedy to prevent gross injustice)

Waste (see also doctrine of waste below), Self Help Producers Lumber & Supply Co. v. Olney Building Co. (p. 65)

o Facts: D owned property, conveyed but then built on it, tried to bargain with actual owner and then destroyed the property

o Rule: no longer good faith improver because he used self help to destroy property

o Nuisance General Rule – Equitable Relief: when nuisance is found, the court weighs the benefits

to determine a remedy. Go to cases and discuss balancing, substantial + unreasonable, time & place, malicious intent/bad faith

Public Nuisance: Interference with the general public’s rights to use and enjoyment of property.

Private Nuisance: Substantial and unreasonable interference with the private use and enjoyment of another’s land

Must show a significant harm to recover Usually a socially beneficial activity done in an inappropriate place, or two

competing and incompatible uses of land. Interference may be substantial & intentional, but not nuisance if not malicious. Hendricks v. Stalnaker p. 23 (incompatible but beneficial use/balance equities)

o Ruling: balanced interests, no reason to call the well a nuisance because though intentional, it’s a reasonable use and w/o malicious intent

Nuisance Per Se: (rare) use that is never reasonable Nuisance Per Accidens: depends on time/place, must show damages to get injunction

Coming to the Nuisance: new neighbors who come to an area knowing about bothersome circumstances, coming there ∆ circumstances making it nuisance

Note: government can always step in with legislation to set the rules regarding nuisance Property vs. Liability Rule Protection and the Line of Nuisance

Campbell v. Seaman (Rule 1) (p. 949): Traditional Approacho Rule: unlike trespass, nuisance requires a weighing of interestso Remedy: Gives property rule for the plaintiff (injunction) because the

damage is irreparable and there’s now way to afford an adequate remedy at law (for brick yard fumes)

o Old rule: Sic utere tuo ut alienum non laedas Boomer v. Atlantic Cement (Rule 2)  (p. 996) Trend Toward This

o Rule: balance the equities (cement factory > costs to community)o Remedy: Pay damages to P (liability rule to plaintiff, forced servitude)

Note: post-Clean Air Act; statute provides framework of rights to bargain against.

Spur v. Del E Webb (Rule 4) ( p. 975) Outliero Rule: Public nuisance. Injunction will be issued if P pays D the costs

of moving, converting his property or lost profits. (Liability for D)o Reasoning: public health (housing)>coming to nuisance (cattle feed lot)

Calabresi Entitlement to Plaintiff Entitlement to Defendant

Property Rule Rule 1: Pile, Campbell Rule 3: Adams

Liability Rule Rule 2: Golden Press, Boomer Rule 4: Spur

o Trespass/Right to Exclude

Trespass is strict liability: there is no weighing of the benefits. Baker v. Howard County Hunt (p. 44) (Theory: right to exclude > social benefits)

Rule: Equities balanced and injunction awarded because landowner had clean hands and he had no remedy available at law.

Reasoning: intangible harm of trespass outweigh the benefits of foxhunting, and thus injunction must issue to deter future harms against that right

Adams v. Cleveland-Cliffs Iron Company (p. 939): Tangible & Direct Rule: trespass is physical invasion that is tangible and direct (not dust/noise)

Martin v. Reynolds Metals (p. 947): In cases close to the line, courts will award nuisance-like remedies (damages) even if they find trespass.

o 4 Part Test for Injunction: eBay vs. MercExchange (p. 59) Rule: Injunction is available only when 4 conditions satisfied:

Irreparable injury No remedy at law is adequate Balancing of equities favors patent holder (burdened owner) Public interest would not be disserved by injunction (patent trolls?)

Ex ante approach: anticipates future disputes for clarity (ex post = this case only) Limits of Sovereign Ownership

o Nemo Dat: See Johnson v. M’Intosh: did indians have the right to transfer?o Owner Self-Help

Repossession: competing views on the availability of self-help Progressive: Berg v. Wiley (p. 388) – no self-help

o Rule: Law changed. Only lawful means to dispossess a tenant who has not voluntarily surrendered the property is through judicial process.

o Incentives: Discourages possibly violent repossessions. Traditional: Williams v. Ford Motor Credit Co. (p. 394) peaceful self-help

o Ruling: late hour + verbal objection is not sufficient to make it a breach of the peace (law requires peacefully)

o Dissent: points to potential for violence See also Ploof v. Putnam Policy: self-help makes credit available at lower costs because it’s cheaper for creditors

to repossess property than go into court. Due Process in Takings

o Exceptions to the Right to Exclude Necessity: creates the right to invade.

Ploof v. Putnam (p. 400)o Rule: Must vacate right to exclude when human life is at stake.

Vincent v. Lake Erie Transportation Co. (p. 402)o Must compensate when acting out of necessity (take and pay)

Custom: McConico v. Singleton (p. 403) – Common Law Right to Hunt Ruling: there is a universal right to hunt on undeveloped, unenclosed, and

uncultivated lands which cannot be superseded by the owner’s will State v. Shack (p. 418): employer may reasonably ask visitors to employees for ID, but

cannot interfere w/ normally dealings (assisting migrant farm workers) Public Accommodations: right to exclude is limited, cannot be based on discrimination

Public Accommodationso Defined as lodging, food services, or entertainment (held out to public)

Common Carriers: may only exclude w/ justification, reasonable limitations oko Defined generally as something that carries goods/people

State v. Schmid (p. 418): right to distribute literature on college campuseso Rule: When you open your doors to the general public, you may not

exclude unreasonably. Rather, there is a duty not to act in an arbitrary or discriminatory manner toward persons who come on the premises.

Uston v. Resorts International Hotel (p. 415) Regulation + Right to Excludeo Ruling: gambling industry is so heavily regulated that the casino can’t

make rule (excluding card counters) w/o regulating commission But see Donovan v. Grand Victoria (p. 421): w/o explicit law, state regulation

cannot abrogate right to exclude o Destruction and Waste

Affirmative Waste: misfeasance, affirmative action of the present interest holder that makes the property less valuable (e.g. excessive use, destroying property)

Permissive Waste: nonfeasance, inaction or failure to take normal behavior that results in injury to property (e.g. failing to pay taxes or to make repairs)

Ameliorative Waste: unauthorized changes that increase value (can bargain though) Brokaw v. Fairchild (p. 552)

o Rule: life estate is right to use/build, not permanently/materially altero Traditional rule: only indefeasibly vested remainder/reversion holders

may sue for waste, but trend is toward allowing holders of lesser future interests (contingent remainders and executory interests) to sue.

o Complication: holdouts, bilateral monopoly Valuation Factors: for future interests consider (p. 561)

Discount Rate, Life Expectancy, Time Value of Money, Uncertainty of Futureo Criminal Law

Larceny Criminal Trespass (distinct from civil trespass) Arson Burglary Destruction of Property

o Property Torts Real Property

Trespass: Right to exclude (formally “trespass q.c.f.”) Ejectment: Done to counter Adverse Possessor Nuisance: Use and enjoyment (public v. private)

Personal Property Conversion (formerly trover): obtain the value of goods in money damages Trespass to Chattels: damage to property without conversion, used for

o When the thing itself was damagedo When owner is constructively dispossessedo When dispossession is for a substantial timeo When harm against a legally protected interest is caused by

dispossession/trespass E.g. Intel Corp. v. Hamidi (p. 374): damage requirement

o Rule: not trespass to Chattels because there was no damage to the email system itself - only damage was to employee productivity (not chattels) based on their decisions to read emails

o Not conversion, but see Epstien reduced value? Replevin: have property returned (e.g. stolen good/value of loan returned)

o Demand Rule: COA/SOL clock starts when demand is made (NY)o Discovery Rule: COA/SOL clock starts when you (could reasonably)

discover location Ouster: cotenant exercises right to use whole thus preventing other cotenants from

exercising their rights. More than exclusive use: take affirmative step to deny others.

Gillmor v. Gillmor (p. 606): o Ruling: act of grazing to the fullest extent and refusing other’s rights

goes beyond simply exercising right to use the whole, oustero Damages: amount lost by not grazing, less improvements

Note: can become adverse possession, but no need for “adverse” (lower burden) Contribution Damages: for necessary repairs/upkeep charged to co-tenant

Encroachments: Role of “Good Faith,” see also covenant of quiet enjoymento Public Property Rights: Some property cannot be reduced to private ownership

Navigable Waters - Navigation Servitude: government does not own waters but grants general public a broad right over them

Air - U.S. v. Causby (p. 295): case with the chickens, can recover if planes are so low as to constitute a direct interference with the use of land

Seashore Public Trust Doctrine: Used to protect lands of extraordinary environmental value But see Takings

Formalities on Property Rightso Licenses: temporary and revocable waiver of the right to exclude (usually grants right to use)

Profits: license to enter property coupled with a right to take something off of it Wood v. Leadbitter (p. 450): Licenses are Revocable

Rule: P’s ticket to race was only a license, D had right to revoke it at any time. o Action for breach of contract more appropriate

Exception: license + grant – generally cannot revoke (e.g. profits) Equitable Enforcement (p. 455-457): you lose the right to revoke when inequitable

Specific performance: equity normally grants this if reasonable relianceo Hurst v. Picture Theaters (p. 457): normal damages not acceptable

when performance is unique (e.g. show over), larger damages make up ProCD, Inc. v. Zeidenberg (p. 458): Shrink-Wrap License Enforceable

Ruling: shrink-wrap licenses are fully enforceable as contracts unless the terms are unconscionable (even if not known to buyer) (two tiered database)

o Lease: Policy/Utility: see main outline Views of Leases

Old view: conveyance of a property interest Modern view: closer to a contract with elements of a conveyance

Types: courts (like with wills) will try to fit all language to one of these types Term of Years: any specified period of time, no need for notice Period of Tenancy: automatically rolls over until someone gives notice Tenancy at Will: at will of parties to terminate anytime (today needs notice) Tenancy at Sufferance: holdover tenant after terminated lease (>trespasser)

Covenants Pre-Covenant Approach

o Paradine v. Jane (p. 653) No Longer Valid Rule: D had to pay rent because tenant bears risk of loss and

landlord didn’t eject him (invasion, can K around) Covenant of Quiet Enjoyment

o Smith v. McEnany (p. 656): rent is for the whole of the property, thus 1ft. encroachment changes conditions of the lease

o Constructed Broadly Today: anything that goes against the C of QE that the landlord refuses to act on is considered constructive eviction

Independent vs. Dependent?o Medico-Dental v. Horton & Converse (p. 678): Shift to Dependent

View Rule: Breach of non-compete agreement create a right of

rescission when they go to the heart of the bargain.

o Today: most covenants are now considered dependent so long as they go to the heart of the bargain

Minor breaches do not create a right to rescind Implied Warranty of Habitability: civil cause of action for violation of local

regulations (note: generally for residential, not commercial tenants) (implied dependent covenant)

o Old Rule: Caveat Lessee. No covenant or warranty that property would be transferred in any particular condition. Lessee assumes risk and bears burden to inspect property before signing.

o Javins v. First National Realty Corp. (p. 685) – not all jurisdictions Rule: all leases will be construed to have an implied warranty

of habitability as a mandatory (not default) rule Owner Re-Entry Duty to Mitigate Damages: Sommer v. Kridel (p. 702)

Rule: Landlord had duty to mitigate damages--court used the contract model, not the conveyance model. But see burden shifted to LL for proof

Assignments vs. Subleases (p. 713) Assignment

o Assignee assumes the entire leasehold interest, o Assignee is in privity of estate with landlord, not privity of contracto Primary tenant/assignor in privity of contract w/ landlord and assignee.

Subleaseo Primary tenant retains an interest and acts as a sub-landlordo Sublease is carved out of primary lease, which continues to existo Subtenant has no relationship with landlord (cannot sue)o Primary tenant retains privity of contract and estate with landlord

How to distinguish? Title not dispositive, question function (reversion, responsibilities retained? Language suggesting full transfer?)

o Bailment: Owner temporarily transfers custody to bailee (contractual, return in same condition) Some property rights (e.g. right to exclude) transferred (sometimes duty to exclude) Allen v. Hyatt Regency-Nashville Hotel (p. 464): Bailments & Presumed Negligence

Rule: because this was a bailment, TN law yields a presumption of negligence when a bailed property is damaged or stolen (because moral hazard)

Bailment: Garage had absolute control and possession of the car (but see key in P’s hands?), so this is a bailment and not a mere license

o Servitudes: General:

Policy - Equitable Servitudes/Real Covenants: dead hand, rights of transferability, shortcomings of land use regulations, contracts not transferable

Slight merging of Real Covenants and Equitable Servitudes:o Restatement wants on single clear doctrine: servitude is created if (1)

the owner of the property to be burdened enters into a contract or makes a conveyance (2) intended to create a servitude that complies with the statute of frauds or exceptions thereto

o Trend: Courts begun to blur the line by allowing varying types of damages/remedies, but have committed to the restatement, apply formalities of both

Real Covenants: generally enforced by damages Contract based - reasonability/enforceability of the writing itself

o Nahrstedt v. Lakeside Village (p. 752): Notice and Reasonability Rule: (cats) Reasonability goes to whole community, not to

individual. Absent unusual facts/explicit harms, courts will enforce, especially if prior knowledge (see new CA Law)

But see statutory language “reasonable” (dissent)

o Kiekel v. Four Colonies Homes Association (p. 771): Amendments Rule: Language in covenant referring to tenants implied a

right to rent, and this could only be modified by an amendment to covenants, not bylaws

Might also stand for right to rent if no existing restrictions in covenants, only restrictable by amending covenants

o Restatement: Are invalid if they violate public policy (see list)o Restrictions by race not enforceable by courts (see con law)

Burden Running with the lando See Questions to Ask on Main Outline for Policy/way to attacko Requirements for a Burden to Run: see 1038 and main outline

(1) Intent for the burden to run by the conveyor of interest (2) Horizontal Privity: relationship between original parties (3) Vertical Privity: successor of burdened interest must hold

the entire durational interest of original burdened party held (4) Touch and Concern: so closely related to the use of the

land that the promise should be deemed to run Eagle Enterprises, Inc. v. Gross (p. 1042)

o Ruling: burden to pay for delivered water doesn’t substantially affect ownership interest of landowners, burden on alienation

Neponsit Property (p. 1031): Pre-Eagle Enterprises, changed the law such that promises to pay money can touch and concern the land (think condo fees)

Benefit Running with the Land: see 1040o Intent for the benefit to runo Vertical Privity: must be successor to some estate, not the whole thingo Touch and Concern

Modification and Terminationo Expiration: end of a period of years specified by covenanto Release: done through bargainingo Abandonment or Waiver: harder to establish than for easements:

prove that original purpose of restrictions can no longer be vindicatedo Merger: dominant and servient tracts come under common ownershipo Estoppel: if the person asserting the servitude makes statements that

would lead a reasonable person to believe the servitude has ended and that person reasonably relies on these statements

o Prescription: adverse possession, see easementso Condemnation: If eminent domain is exercised over either the

burdened or benefitted property, servitude may become unenforceableo Changed Conditions: courts more willing to modify a covenant if

conditions which brought it about are no longer present, or if new conditions frustrate implementation (e.g. too expensive) – this is post finding real covenant

Bolotin v. Ringe (p. 1054) Ruling: effect on FMV irrelevant, changed

circumstances are local to burdened properties, must be impossible to keep or broadly disregarded

Mahoney: too rigid. Apply cy pres Also gives rise to good Abandonment claim

o Disappearance of Holder: Servitudes in gross unenforceable if person who holds interest cannot be located

o Peckham v. Milroy (synthesis) (p. 1058)

Abandonment: a few examples of violations are neither habitual nor substantial, it must rise to a level that the scheme of residential neighborhood can no longer be obtained

Laches: Requires (1) knowledge of the COA, but (2) unreasonably delayed in a way that would (3) damage the defendant - initially he didn’t know it would be used for day-care and he also objected verbally as soon as he found out

Estoppel: Requires (1) admission/act inconsistent w/ claim, (2) action in reasonable reliance, and (3) injury suffered due to reliance. (Here: P objected from beginning, delay reasonable)

Public policy: However strong the interest in home day care it’s not a right the courts will create. Up to legislature.

Equitable Servitudes (Negative Reciprocal Easements): enforced by injunction Running with the Land

o See main outline for questions to asko Requirements for a Burden to Run

(1) Intent (2) Notice

Actual notice (in grant) Record notice (at office) Inquiry notice: reasonable inquiry would have

discovered the servitudeo Sanborn v. McLean (p. 1047) - implied

equitable servitude from general plan in locality – Negative Equitable Servitude

Rule: even though the common owner didn’t include covenants in all tracts upon conveyance, it was implied on all tracts and could be found via inquiry notice looking to other tracts (gas station case)

Outlier, extension of inquiry notice (not recognized in all states)

o Normally via chain of title It’s inequitable for a burden to run without some

form of notice (3) Touch and Concern NO PRIVITY Tulk v. Moxhay (p. 1026): Basis for Equitable Servitudes

Ruling: If equity is attached to property by the owner, no one purchasing w/ notice of that equity can stand in a different situation from the party from whom he purchased even if there is no vertical privity

o Requirements for a Benefit to Run (1) Intent (2) Touch and Concern No Notice Requirement, not “unfair” to have a secret benefit

o See Real covenant for Termination Easement

Types:o Easements Appurtenant: Attached to parcel of property, transferable

Dominant Estate: tract that is benefited by the easement Servient Estate: tract that is burdened by the easement

o Easements in Gross: Attached to parties, generally utilities/RR Parties: benefitting party and burdened party

Methods of Creationo Express Easemento Implied Easements:

Lost grant theory: Courts will go back into the record to see what parties meant to do and then grant an implied easement to correct failure to file or find paperwork

Easement Implied from Prior Use (1) 2 parcels under common ownership at one time

o Inflexible, others are more lenient (2) Before division permanent use benefitting one

part of the property and burdening the other part (3) Use was apparent upon reasonable inspection (i.e.

use was in existence and noticeable at time of division)

(4) Easement is reasonably necessary Easement by Necessity

(1) Necessity must have been in existence at the time the property was divided (severed)

(2) Common grantor must have created condition of necessity

(3) Must be strictly necessary No prior use requirement (although common)

Ex: Schwab v. Timons - stable doctrine, courts won’t change it No easement implied by prior use because there

was no road at the time of division benefiting one part of the property (2)

No easement by necessity because it wasn’t strictly (absolutely) necessary (3) to build a road (could get there inconveniently over dunes) and P, not the government, created the condition of necessity by landlocking his own land (2).

o Easement by Estoppel (Irrevocable License) Holbrook v. Taylor (p. 997)

Facts: neighbors got permission to use private road, improved it and used it to build house, continued use. P tried to get $ from them for continued use

Ruling: reliance - licenseirrevocable e. by estoppel o Point of no return: when user makes a

significant improvement to the property (usually by spending big $). See equity

o Owner’s silence Not an Easement by Prescription because it wasn’t

adverse, continuous, uninterrupted M be used to expand existing easements over time If acquiescence/no permission see easement by prescription

o Easement by Prescription Requirements

Open and notorious use (not possession) Continuous use: clear route Adverse: relaxed, not explicit permission, if there is

explicit permission see easement by estoppel For the statutory period: usually 5 years Note: if use is exclusive, see Adverse Possession

Common law principle: getting an easement by prescription creates no obligation to pay

Warsaw v. Chicago Metallic Ceilings, Inc. (p. 1002) Example Ruling: E by P because elements met, no damages to

remove building erected during litigation (bad faith) See Remedies Analysis (see Calabresi)

Methods of Terminationo Expiration: easements may be explicitly limited in time either to a

term of years or defeasible like a feeo Explicit Bargain or Release: writing that releases burdened o Merger: dominant and servient estates come under common ownership

Does not automatically return if property is split againo End of Necessity: if necessity ends then so does the easement (for

easements by necessity)o Abandonment: statements or actions by benefited party inconsistent

with continued use of easement, something beyond mere nonuseo Prescription: owner of servient property acts as if easement isn’t there;

see rules for easement by prescriptiono Condemnation: if the government takes the servient estate it can pay

for the easement across it to be terminatedo Estoppel: if the benefited party makes statements about the state of the

easement (i.e. that they won’t use it) and the servient party reasonably relies then it may terminate the easement

o Sale of Servient Estate to BFP without knowledge of easement Only applies to unwritten easements, not to written ones

o Excessive Use/Misuse Simple misuse = damages, gross/malicious = termination Penn Bowling and Recreation Center v. Hot Shoppes (1021)

Rule: Easements appurtenant must be used only for the intended dominant tract, use for benefit of other properties can result in injunction or termination

Note: today court may consider damages for past use License vs. Lease vs. Easement

o Baseball Publishing v. Burton (p. 983): Lease=Possess; License=use; Easement = Exclusive Right to Use

Rule: Easement, not a license/lease, because it’s a conveyance of an exclusive right and privilege to use (not possess, but also conveys some interest in land?) even though paper says “lease”

THIS IS NOT A RULE, hard line to draw Conservation Servitudes (often “conservation easements,” don’t look like easements)

Protect values other than the pecuniary: ecological, historical, or aesthetic Perpetual: not extinguishable by release/merger

o Zoning Part of three-part system of regulating land use (nuisance/servitudes), police power Reflect the public/democratic view (Concern: tyranny of the majority) Non-pecuniary benefits: public health/safety, esthetics, nuisance/nuisance-like activity History:

Less comprehensivemore comprehensive/common (post Buchanan)o Buchanan v. Worley (p. 1062): racial-based zoning laws struck down as

due process violation: restraint on alienation (liberty to sell taken) Euclid v. Ambler Realty Co. (p. 1064): Nuisance-like behavior

o Cumulative/Euclidian Districts: types of districts are numbered and you can participate in listed restrictions of your class and those below

o Ruling: Zoning ordinance is not facially unconstitutional as they attempt to prevent nuisance-like behavior, which is within state police power. Ordinances may be unconstitutional as applied to individuals

Amortization: period of time a non-conforming land use has to conform with zoning Harbison v. City of Bufffalo (p. 1074) - pre-existing nonconforming uses

o Rule: right to a nonconforming use may be terminated after reasonable period of time to amortize investment in light of nature of the business, the property, improvements, character of the neighborhood

o Dissent: over-extension of zoning used only for future planning Counterargument: thought use would wither away

o Estates fill in language p. 504 Fee Simple Absolute: basic form of full property ownership Fee Tail: successive life estates to keep land in family Life Estate: present possessory estate that lasts the duration of a measuring life

Per autre vie: measuring life is not that of the estate holder Future Interests

o If only “to X for life”: reversion in grantor (or grantor’s estate)o If “to X for life then Y”: remainder in Y (or Y’s estate)

Indefeasibly vested remainders Contingent remainders Vested remainders subject to divestment

Defeasible Fees Important: Courts don’t like finding defeasible fees. Fee Simple Determinable: automatically ends and returns to the grantor upon

occurrence of a specific event, i.e. if a condition is violatedo Possibility of reverter in grantoro Contains language like “as long as...then”

Fee Simple Subject to Condition Subsequent: terminates upon the demand (self-help or lawsuit) of someone with a future interest upon the meeting/violation of a condition. Exercise of option.

o Future interest: right of entry/power of termination (held by grantor)

o Contains language like “then has the right to” Fee Simple Subject to Executory Limitation: conveyed to a third party upon

occurrence of a specific evento Future interest: executory interest (held by the third party)

Future Interests Reversion: future interest held in a life estate by the grantor

o Presumed if nothing is written Remainder: future interest held in a life estate by a third party

o Must be explicitly created Possibility of Reverter: interest held grantor after a condition is violated

o Presumed to go on forever unless SOL or rule against perpetuities Right of Entry/Power of Termination: interest held grantor at grantor’s

discretion after a condition is violatedo Presumed to go on forever unless SOL or rule against perpetuities

Executory Interesto No governing law on whether they are automatic like a possibility of

reverter, or must be acted upon like a right of entry.o Differs from remainder (activated at death) because it cuts short a

living interest holder’s interest. Subject to Open: if class is listed that may change

o Generally “to children/heirs”o Also Subject to Partial Divestment

Valuation Methods: Value of fee simple minus value of life estate (calculated by estate holder’s age) equals value of remainder or reversion.

Williams v. Estate of Williams (p. 519): ex. constructon

Facts: Holographic Will to guy who had many kids but 3 unmarried daughters living at home

o Wanted to create a life estate for his 3 daughters not to be sold (i.e. ensure they had a home if alive and not married)

o Living daughter wanted it to be considered a fee simple absoluteo Heirs of other daughters think it is a life estate

Ruling: Finds o A defeasible life estate, each daughter had executory interest in each of

the other two daughters that vests upon death/marriage of that daughtero Other heirs have a reversion in fee simple once all three daughters have

married or died. Applicability to Non-real Property: Gruen v. Gruen (p. 549) - painting

Rule: estate system that applies to real property can apply to personal property o Exception: no future interests in things that are perishable

o Security Interests: transferable property interest to secure obligation (debt usually), alienable Mortgages

Mortgage vs. Promissory Noteo Mortgage is the security interest w/ note, recorded at the records officeo Note is a promise to pay that includes terms, schedule, interest rateo Old Rule/Mary's Little Lamb Rule: mortgage follows the note

Lien Theory: mortgagor (borrower) transfers to the lender a lien on the property until the amount on the note is repaid

Trust Theory: title transferred to lender w/o ownership, power to foreclose Deeds of Trust: fill in from supp. 2d

Trustee holds title for benefit of lender until borrower pays off note Foreclosures

Power of Sale Lender may sell the property at auction shortly after the buyer defaults and apply the proceeds to the debt (only when authorized by statute)

Judicial Foreclosures: Requires lender to go to courto Buyer has right to prevent foreclosure through equitable redemption

Generally 90 days-12 months to redeem after sale (varies) Deficiency Judgments & Anti-Deficiency Statutes

o If property sells for less at foreclosure auction than the note is worth, lender may collect a judgment for the deficiency (if recourse loan)

o Statutes against deficiency judgments limited to residential real estate Right of Redemption Statutes time period where homeowner can pay to get

back property after foreclosure (vary, unwaivable in some states) Securitization

Agglomeration of many security interests into a trust is common First National Bank v. Ibanez (Supp 2)

o Ruling: you need to hold valid title at the time of the foreclosure saleo See main outline for Ex ante vs. Ex Post

o Trust: splits benefit rights and management duties Parties

Trustee: Legal owner, not beneficial owner, duty to maximize value of trust corpus (buy, sell, has fiduciary duty to beneficiaries)

Settlor: Original owner of property, loses legal rights once conveyed Beneficiary: Gets benefit of trust w/o need to manage corpus (can’t be ttustee)

Charitable Trusts/Cy Pres Doctrine: Wilber v. Owens (p. 794) Rule: when settlor’s objects are impossible, court may find general charitable

intent from language and make changes to fulfill (intended for public good) Note: Some courts construe broadly, others strike it out (esp if narrow language)

Spendthrift Trusts: creditors can’t go after the principle, only payouts Exception: some jurisdictions will allow child support to attach to payouts

Broadway National Bank vs. Adams (p. 781): No Attachment to Principleo Rule: Creditors cannot reach the assets of a life tenant’s trusto Reasoning: Dead hand control, but limited restraint on alienability

o Concurrent Interests Rights of Concurrent Tenants: Each tenant has full rights over property

Partition: ending concurrent tenancy by court action during disputeo Partition in Kind: divide proportionallyo Partition by Sale: sell and divide propertyo Delfino v. Vaelencis (p. 599)

Rule: To force a partition by sale, P must prove that a partition in kind is (1) not practicable or (2) the interests of all owners will not be better served by a partition in kind.

Trend: used to avoid resolving disputes (only partition), less strong now Joint Tenants

Right of survivorship: when one tenant dies, interest transfers to other(s)o Harms v. Sprague (p. 611): right of survivorship is a separate interest

to which liens (mortgages) do not attach. Note: not all states subscribe to the lien theory of mortgages

and thus this might be decided differently elsewhere Severance: turns into Tenants in Common

o Old Common Law Rule: convey to third party who conveys backo Some states have laws against secret severanceso A mortgage does not sever (see Harms), but does a lease by one tenant?

Tenants in Common: Do not carry right of survivorship (interest is willed or descends) Tenants by Entirety: Joint Tenancy with the Right of Survivorship but neither can

unilaterally transfer or exit while they are married Exists in 22 common law states; limited to married couples U.S. v. Craft (Supp. p. 12)

o Facts: T by E, Hubby owes taxes, transfers to wife o Ruling: take it as a bundle of sticks, he has enough to qualify as

property owner and thus the lien attaches o Takeaway: don’t try to trick the IRS

Community Property: Acquisitions during marriage are property of marital unit (minority, contrast with common law)

Divorce Common Law: generally split everything acquired during marriage (some

courts even go outside the marriage) (equitably vs. equally, ignore fault usually) Community Property States: difference is the 3rd entity which owns all

things acquired during the marriage that must be split up (traditionally 50/50) Note: lines are blurring between CL and Community Property Extramarital Relationships: used to leave losses as they lie (avoid semblance

of prostitution) but courts today are more likely split equitably (see gay couples)o See Unjust Enrichment by one who has other rely on themo Some look at it as a contract - was there an implicit bargain

Contracting around standard rules: prenups used to be unenforceable (divorce against public policy), now they are (about procedural fairness)

o General rules: Only about assets, not children/rules of marriage.o Burden of proof: on spouse seeking to get out of prenupo Bonds Case(Supplement #1)

Rule: requires (1) voluntary agreement, and (2) not unconscionable at time of signing and (a) parties had fair & reasonable disclosure of assets/obligations, (b) if waiver of (a) it must have been voluntary, (c) parties could have adequate knowledge of property/obligations (see language)

Application: disbelieved language barrier, she consented to using his lawyer, and was given advanced notice

CA changed the law to require both parties to have independent counsel in order for voluntariness to be met.

2 types of Fairness: Procedural Fairness:

o Who knew what about agreement?o Voluntariness/Not Coerciono Full disclosure of assetso Representation/signed waiver thereof o Comprehension of termso Adequate___?

Substantive Fairness:o Very unequal terms/terms so adverse that it

risks one spouse becoming a public chargeo Unconscionable terms

Ousters - see above Joint Bank Accounts: Money tracked for who deposited, rights split (i.e. gift to other if

they take out) but banks not responsible for withdrawal by one partyo Wills

See Nemo Dat See Williams v. Estate of Williams Formalism vs. Functionalism

Wills are normally read formalistically, but more weight is given to testator intent when the will is holographic (done without a lawyer).

o Gift Causa Mortis See Foster v. Reis See alsoDead Hand

Titleo Marketable Title: necessarily perfect, free of liens, judgments, mortgages, easements, servitudes

other than those disclosed (often in statutes) Not subject to a claim or defect that creates an actual and significant threat of litigation

such that the buyer could not sell at fair value (difficult standard, totality of the facts)o Chain of Title

Gives notice to the public of ownership (record notice as part of constructive notice) See procedure in main outline

Title Searches: Look through indices (name or tract) to find the Chain of Title How far backed governed by SOL or time for Adverse Possession

o Caveat Emptor (and the dilution thereof, varies by state) Old Rule (Caveat Emptor): Let buyer beware. Duty on buyer to inspect (K around it) New Default Rules: statutes have rules, burden shifted to seller (e.g. lead paint,)

Johnson v. Davis (Supp. 2): Implied warranty of fitnesso Facts: massive roof leak undisclosed by sellero Rule: Implied warranty of fitness. Seller is liable if he intended to,

and did, induce detrimental reliance on the part of the buyer by making false statements. See quote in main outline

o See concepts of Types of Notice

Actual: did the person have actual notice Record (Constructive?): was the deed actually filed at that time? Inquiry (Constructive?): was someone possessing the property in a sufficiently

notorious way to satisfy an adverse possession statute? Nemo Dat

o Priority/Recording Acts: normally not at issue (few cases) because people are smart and record

Race Jurisdiction: Awards title to first person to file at the courthouse (no longer exists) Notice Jurisdiction: Title granted to a bona fide subsequent purchaser who had no

notice of any prior claim Race-Notice Jurisdiction: Same requirements as notice, and also requires the

subsequent purchaser to record the title before any prior grantee. Miller v. Green (Supp. 2d) - Inquiry Notice

Ruling: Seller did not have marketable title, buyer had constructive notice as the lessee was openly possessing land. Lessee failure to file irrelevant if notice

o Deed Elements: Identifies party, describes property, declares conveyance, signed by grantor,

may include servitudes and warrantees Delivery: Transfer of the rights, not the recording of the deed at the office (not recording) Surveying: rectangular vs. meets and bounds

Remedieso Property Rule Protection

Specific Performance Hardship Laches Equities

Injunctiono Damages

Loss of the Bargain Punitive Damages Special Damages

Takings and Eminent Domaino Taking

Regulatory Takings Penn Central Transportation Co v. New York City (Supp 3 p.2)

o Rule: “ad hoc” test to determine if police power vs. eminent domain Reciprocity of Advantage: when interference arises from

some public program adjusting the benefits and burdens of economic life to promote the common good (weigh burdens/benefits, does the landowner get benefits)

Penn Central:o Weakest part, but they get advantage

because the whole city benefits in keeping historic buildings (tourism, aesthetic value, etc.)

o Dissent: station itself doesn’t benefit from a law burdening a very small number of buildings

Character of the Regulation: “A taking may more readily be found when the interference with property can be characterized as a physical invasion by government”

Loretto: physical invasion of small box, wires, screws is sufficient to produce taking (unless temporary, e.g. control of time or place to restrict first amendment)

Penn Central: not physical, not dispositive, take up space though

Nuisance/Nuisance-Like: what is being restricted, is this a noxious activity given location, etc.

Euclid: though not a nuisance, certain types of industry or apartment buildings are like a nuisance, laws prevent possibility of nuisance

Penn Coal Dissent: Brandeis thinks mining coal such that houses collapse is noxious

Reduction of Value: Not actionable because entire parcel is considered and station still has great value as a train station

See Denominator Problem Penn Central:

o Value is to the whole (denominator), still has train station

o Looks also compensation by Transferable Development Rights

o Dissent: Denominator is air rights only; should be remanded to see if TDR is enough compensation for taking of air rights

Penn Coal: “past a certain magnitude there must be eminent domain”

o Sees coal estate as the value Lucas: wipeout w/ exception, no building of house =

no value left (though this finding was questioned) Investment-Backed Expectations: Construes PA Coal Co. to

protect “investment backed expectations” (based on discussion of contract/expectation to mine)

o In PA Coal: Expectation was they would be able to mine coal. Actionable.

o In Penn Central: Expectation was train station. Not actionable.

o In Lucas: Expectation was building homes. Actionable.

People assume certain risks when purchasing property (e.g. casualty or economic/social trends), but politics shouldn’t be part of it

PA Coal Co. v. Mahon (p. 1268) o Facts: Estate separated so that different parties own surface home and

coal. New statute restricts coal mining when a home, not yours, is above the coalmine.

o Rule: at some point reduction of value goes too far, but government cannot operate if it must compensate every change, thus look to 3 factor test

Reduction of Value: Dependent on denominator. Here we use the coal estate and not the full estate as the denominator, which makes the taking seem more extreme.

Regulation of Nuisance: nuisance vs. nuisance-like Reciprocity of Advantage: the amount of advantage shared by

the public is roughly proportional to the burden on individuals Also weighed contractual element heavily

o Reasoning: better to spread the cost of a socially beneficial change that will burdensome across the general public (through tax money) than making the losers pay

o Brandeis Dissent: focuses less on reduction of value and more on protection/benefit to the public

Flags Denominator Problem - affects whether actionable, not damages

Numerator is amount of damages Permanent Physical Invasion

Loretto v. Telepromper Manhattan CATV  (Supp 3 p. 11) - per se rule, not de minimis

o Facts: Cable company puts equipment on P’s roof and state statute prevents him from interfering with it.

o Issue: Does a permanent, but small, physical invasion constitute a taking even if the state has a legitimate purpose?

o Rule: Taking because it is an abrogation of the right to exclude, one of the most important sticks in the bundle

Distinguishes Prune Yard Shopping Center Case: temporary and limited nature of public protests is not a taking

o Dissent: High deference to political process (as opposed to majority’s formalism). Small physical takings are not that much different from permissible zoning laws and other regulation.

Total Economic Wipeout Lucas v. South Carolina (Supp 3 p. 15)

o Facts: P buys two lots, state beachfront management act diverges from previous legislation and prevents him from building, P argues that it deprives him of all beneficial value.

o Rule: regulations depriving owners of all value in property is a per se taking UNLESS the regulation can be justified as a government effort to ameliorate or ward off significant public harm

Right must be inherent in title before “taking” (i.e. not a previous nuisance)

Nuisance must come from common law, not invented by state statute

Constructive Taking: taking in all but name/formality of titleo Kennedy Concurrence: common law nuisance is not enough, should

also be subject to some statutory environmental regulations, but this goes too far (no good line drawn)

o Blackmun/Stevens dissent: State modified law after 2 years so there was no permanent taking. Also, hard to call any law permanent since they can always be modified and repealed.

Stevens also adds that if the denominator approach doesn’t give you a 100% loss of value, you should go through other factors from Penn Central

o Souter: would dismiss because it appears that the finding below that there was a total wipeout may have been inacruate

Exactions: condition government puts on you before it grants building permit Nollan v. California Coastal Comm’n (p. 1347) - central nexus requirement

o Facts: guy wanted to build bigger beachfront house, government wanted to get lateral easement across the property to the beach

o Ruling: this is unconstitutional because there is no central nexus between the harm of the new development and the regulation sought

Dolan v. City of Tigard (p. 1348) - Roughly Proportional Requirement in addition to Central Nexus

o Facts: Plumber wants to expand store, government requires her to give easements for creek and for a public bike path

o Rule: Intermediate scrutiny given to rough proportionality. Rational to think bigger store may interfere with creek, but must go beyond rationality to make P give up her right to build.

P wins because city didn’t provide enough evidence for rough proportionality.

Horn v. USDAo Facts: raisin reserveo Rule: Nexus established (interest in a stable raisin market), and burden

on property owner is roughly proportional to the harm that would be done without the regulation. So no taking.

o Property General Rule: must be an identifiable tangible interest rather than sum of fungible money,

discrete asset, something with a “stuff-like” quality Phillips v. Washington legal Foundation: Regulations on Interest on Lawyer Trust

Accounts: (p. 1345) Lawyers hold client’s cash in special trust accounts but cannot take interest,

instead state bar associations take interest and apply it to legal service to the poor

Ruling: “interest follows principal” - the cash in the trust is the client’s property and thus any interest therefrom is also theirs (Bar associations are taking)

Almost like Increase/Principle of Accession Eastern Enterprises v. Apfel (p. 1345)

Facts: State imposed general liability on coal companies to fund benefits for retired miners

Rule: No taking because the law did not identify discrete assets, just general funds (law struck down on other due process grounds)

College Savings Bank v. Florida Prepaid (p. 1346) No property interest in being free from false advertising. Not discrete or

identifiable.o Public Use

Post-Kelo: Many states passed statutes saying economic development is not public use Kelo v. New London (p. 1223)

Facts: city makes development plan to spark economic development, Pfizer plant comes to city and city takes land around new plant for economic development zone

Rule: Beefed-up rational basis is applied but there remains broad deference to the legislature on social and economic legislation; significant enough public use to justify private enrichment

O’Connor dissent: Distinguishable from Hawaii Housing and Berman because the neighborhood taken in Kelo wasn’t  harming the public interest

o If the private property ownership has not become a negative externality eminent domain is not appropriate

Kennedy Concurrence: should apply beefed up rational basis, here the goal was to benefit the public, not a handout to Pfiser

Thomas Dissent: standard should be plausible public welfare o Cites to failed public welfare schemes o Concern: falls more harshly on poor and minoritieso Does not propose a rule

Berman v. Parker (p. 1227 in Kelo) - look to the whole Facts: took portion of DC in disrepair to use for schools and other public

facilities Ruling: ok because it was planned as a whole and for the entire community

o Although Berman’s store wasn’t a blight, as a whole, the community needed development

Hawaii Housing (p. 1227 in Kelo) - comprehensive plan Facts: transferred title from landlord to renters in exchange for just

compensation in order to diversify land ownership Rule: can take from A and give to B so long as there is a comprehensive plan for

the public interesto Here: this rationally addressed problems of land ownership

concentration that plagued the whole areao Just Compensation: normally fair market value

U.S. v. Miller (p. 1246) Facts: Government planned a dam. Undeveloped brushland was previously of

low value but increased due to speculated. Then when a railroad line had to be

flooded to build the reservoir, government took speculator’s land as a substitute right of way for the railroad.

Issue: Is just compensation the FMV of the land before or after the dam was proposed?

Ordinary Rule: FMV at time of seizure/title transfer Exception: no windfalls, when the  actions the government is taking your land

for  increase the value of the land this is not taken into account Concern: did he pay the a higher price initially based on speculation that was not

compensated for Consequential Damages: if part of property is taken you can get Consequential Damages

for the reduction in value of the remaining property (if the whole is greater than the sum of the parts)

Whole Unit Approach: Payouts when property rights are split: if LL and tenant or T in common they pay value of fee simple and split according to interests

Quick Take Government may take title immediately and pay an estimated assessment of the

land’s value into a fund held by the court After litigation, the court will either order the government to pay more or return

any excess funds to the government. Policy problem: Valuation. FMV undercompensates owners because if they valued it at

FMV they would have sold it to the government instead of litigating through lengthy taking proceedings.

FMV compensation incentivizes owners not to litigate because they won’t get any more than the government's FMV offer

Compensating above FMV: encourages holdouts and litigation Theory & Themes

o Why do we award property rights? Desert - get a reward for labor Moral - they deserve it Timing - will people go out of business before congress can act Personal/Autonomy - protect one’s identity and ability to make a living Incentives - do we see adequate incentives to produce things in society?

Social value of conduct Balance: societal need for public domain vs. protections for innovators

o Tragedy of the Commonso Free-Rider Problem - see International News Service v. Associated Presso Division of Resources/Scarce Resourceso Bundle of Sticks

Right to possess Right to Alienate Right to Use, improve, etc. Right to Abandon Right to Exclude

Jacque v. Steenberg Homes, Inc. (p. 1): right to exclude is absoluteo Facts: driving over property caseo Ruling: right to exclude is absolute - no take and pay. Therefore, large

punitive damages were offered as a (1) deterrence and (2) compensation for violation of property rights

Right to Destroy Right to Alter Theory Debate:

See Grey p. 20: “thingness” is unsatisfying, property is really an amalgamation of rights (leads to decline of property as a central line of political and legal thought - i.e. look at contractual/tort law instead of property law)

But see Penner p. 17: “it is my contention that the law of property is driven by an analysis which takes the perspective of exclusion, rather than one which elaborates a right to use” - “exclusion thesis: the right to property is a right to exclude others from things which is grounded by the interest we have in the use of things”

o Coase See class notes for Externalities, problems therefrom and solutions thereto You can always bargain around property rights Assumes: no transaction costs, rational motivations (non-idiosyncratic owners/non-

wealth maximizers), tendency to cooperate, zero wealth effects. Other Problems: valuation problems, time value of money, future uncertainty,

bilateral monopolies, assembly problems, information problems, sometimes the design of legal institutions (e.g. avoiding fragmentation), power problems, holdout problems, bad blood

o Calabresi See above See also alienability See also things like Bilateral Monopoly (flesh this out)

o Blanket Restraints on Alienability General rule: restraints not enforceable (read them out)

Morse v. Blood (p. 564)o Facts: Husband willed wife property in fee simple unless she granted or

willed it to any family member.o Ruling: Unenforced restraint on alienation. Wife had property in fee

simple absolute OK when: restraint excludes only a small number of people or is temporary and would

not significantly frustrate the value of the property Rights of first refusal: enforceable if grantee required to offer the property to someone

at FMV before putting it on the open market.o Use Restrictions

Generally: Enforceable, can lead to forfeiture. Not enforceable if restrains alienability Mountain Brow Lodge No. 82, Independent Order of Fellows v. Toscano (p. 567)

Ruling: o Restriction on alienation struck down blanket restraint on alienationo Upheld use restriction, finding fee simple subject to condition

subsequent w/ right of entry for grantor upon violation of conditiono Contract Theory (vs. Property Theory)o Institutional Competence: who can gather best info to solve problem, see constitution too.o Relative Ownership Rights: courts decide rights of parties in personam, best claim winso In rem vs. In personam

In rem: a right against the world In personam: a right against a specific person

o Injunctive Relief vs. Damageso See Coase Assumptionso Ex ante vs. Ex posto Notice/Disclosure for Property Rightso Fragmentation of Property Rights

Along axis of time Amongst People

o Construction of Terms (e.g. Wills, Leases, etc) - adherence to formalitieso Statute of Fraudso Statute of Limitationso Estoppel & Part Performanceo Surveying

o Goals of the Courts Promote public policy Disincentivize malicious behavior Reduce litigation Provide Clarity

Property OutlineProf. Julia Mahoney, Spring 2015

Acquisition of Property :o First Possession

See also Discovery and Law of Finders Continuum of Possession: Where do you draw the line?

Intent - Effort - Marked - On the Verge - Fleeting - Absolute Ex.: Creativity may fit between Intent and Effort Ex.: Pierson v. Post is On the Verge

Themes: Level of Effort

o Effort alone is never enough Proximity Intent Racing/First finder Custom – see Ghen v. Rich But-for test: close possession; would have actual possession but for adverse

action of another party Pierson v. Post (p. 82): Fox case & Ownership of Animals

Facts: Post was in pursuit of a fox, Pierson steps in and kills & takes it himself Rule: no ownership of an animal until it’s actually possessed Reasoning: Strong actual possession, reduce litigation/conflict. Dissent: allow

for close possession because policy interest in reducing fox population. (Exception: if it’s your land you may own the animal outright)

Keeble v. Hickeringill (p. 93): competition and malicious interference Facts: guy has duck decoy, neighbor shoots his gun to scare the ducks on the

plaintiff’s property away Rule: Spite acceptable only if done in honest competition; wanton malicious

behavior without purpose to benefit yourself is not acceptable. P recovers for lost property.

Today: would have been nuisance Incentives: unlike in Pierson, the intervener didn’t actually get the property and

we do not like this (not socially beneficial) Whaling:

Iron Holds the Whale: Whoever’s harpoon is in the whale has rights to it so long as he is in fresh pursuit

o Incentivizes whaling the most Tie-it-Up/Fast-Fish Rule: finder’s keeper, you must tie it up

o Incentivizes the least whaling because it is hard to assert rights Split Value Rule: Harpooner gets the whale, but finder gets reward

o Ghen v. Rich (p. 90): Facts: guy harpooned the whale, whale got off the line, whale

washed up off Cape Cod, other found it w/ the harpoon Rule: finder got salvage fee but harpooner got the whale

Based on custom Shipwrecks: for genera principle

General policy: o Finding Loot vs. Preserving Archaeological Valueo Abandoned Shipwrecks Act: current law gives first possession of

qualifying ships to government, priorities have shifted to preserving historical value of ships (over quickly getting loot). Has disincentivized search for ships.

Eads vs. Brazelton (p. 107): Notice + Due Diligenceo Facts: finder marked the shipwreck but then went to find another

o Rule: possession requires more than notice, but also due diligence in acting to achieve full domain and control over the resource

o Incentives: Encourage people to recover the loot from sunken ships; reward people with the capacity to recover it quickly.

Home Run Baseballs: Fleeting Possession vs. Absolute Possession Distinction is Continuous Control Fleeting Possession: discourages mobs, hard line to draw Absolute Possession: clears up ambiguity, but causes fighting Popov v. Hayashi (p. 109): Pre-possessory Interst

o Facts: Popov catches ball briefly, mob forms, ball ends up with Hayashi who was not part of the mob.

o Rule: Split the baby (rarely done in other cases), pre-possessory interest to one and possessory interest to the other

o Reasoning: Incentivize fans to come to games while disincentivizing violence.

o Adverse Possession Required Elements

Actual Possessiono Use as the true owner wouldo Can be proven by improvement, or any other use that distinguishes you

from a common trespasser E.g. any permanent structure

Open and Notoriouso Must give notice to the whole world including the true owner that you

are in possession of the property o True owner does not need actual knowledge of the possession, only that

a reasonable person would consider adequate notice to be provided (similar to showing you have discovered something)

o Creates expectation that owners will monitor propertyo Can be proven, like actual possession, through use and improvement.

Exclusiveo Behave as true owner would w/r/t excluding use by otherso Not sharing with the public or the true owner, but you can have guestso If sharing with true owner, see easement by prescription

Adverse or Hostileo Without permissiono Does not require a bad faith state of mindo If there was permission there must be evidence that it lapsed e.g.

request to vacate, not just running of a contracto Trend: courts are more likely to deny title to bad faith adverse

possessors Continuous

o No gaps in actual possession, though year-round not requiredo Doctrine of Tacking: Howard v. Kunto p. 208

Facts: shifted plots vs. titles Rule: tacking requires privity. Must be a relationship (e.g.

sale or gift) between each successive AP in order for continuity and exclusivity elements to be met.

o ~20 years? Counter by action for ejectment Discovery Rule: SOL does not begin to run until property owner is aware of his rights

Marengo Cave Co. v. Ross (p. 190)

o Facts: Ross buys land next to tourist attraction cave and later realizes part of it is under his land. The cave owner claims adverse possession of the part of the cave under Ross’ land.

o Rule: SOL began when Ross discovered the cave was under his land, and not when he bought the land. Not enough years have run for AP and Ross keeps his part of the cave.

o Discourages fragmentation of property rights. Methods

Claim of Right: traditional AP, comes up in court Color of Title: point to formal document that purports to have conveyed the

property to you upon which you acted in reasonable reliance. Disabilities Tolling SOL

Only matters at time of initial trespass Classes included: underage (not always, statutes vary), imprisoned, insane,

legally incompetent. Coverture: (rights of woman subsumed by husband during marriage) a disability

that no longer exists for AP Doctrine of Agreed Boundaries (Acquiescence)

If one party relies (improvement helpful, but not required) on an agreed upon a boundary discussed between the parties in lieu of an uncertainty, the other party is estopped from asserting the official boundary if he has (1) acquiesced and (2) the statute of limitations has run (~5 years)

May be oral, written, or implied Reliance will estop assertion of the true boundary

Time Doesn’t Run Against The King No AP against the government Trend : Not an absolute rule anymore; natural parks more likely to be protected

than vacant lots. Role of Bad Faith/Squatters:

Carpenter v. Ruperto (p. 203) - Squatterso Facts: AP had satisfied every element of AP by slowly but intentionally

using other’s land o Rule: Squatters cannot get good title.

J.A. Pye (Oxford) Ltd. v. The United Kingdom (p. 207) – UK Ruleo Facts: D was grazing animals on a land development company’s land

and cut down hay with their permission, wanted to continue, tried to ask them, received no response, continued without sending Pye money. Later Graham sued saying they owned the property by adverse possession.

o Ruling: not adverse possession because they knew it wasn’t theirs o Reasoning: violation of human rights to knowingly take land away

Not Take and Pay If granted title by AP, you are not required to compensate the former owner. Property Rule Protection for OP to Property Rule Protection for AP

AP of Personal Property Controlling is the Conversion SOL, Replevin SOL, and questions of the

“Discovery Rule” Thieves can never get good title; if you buy unknowingly from a thief you are a

good faith AP’er of the property.o See Nemo Dat: you can’t give what you don’t haveo Songbyrd, Inc. v. Estate of Grossman (p. 215) - Conversion

Facts: Grossman took tapes in the 70’s, Byrd waited until the 90’s to ask for them back.

Rule: SOL for conversion begins at time of conversion, not at the time the true owner attempts to assert his rights. Byrd is barred by SOL from suing for conversion.

NY Anomaly: SOL for conversion is effectively shorter than SOL for good faith purchasers to be absolved, thus for adverse possession, a bad faith converter fares better (vests rights sooner) under the law than an unknowing good faith purchaser - there is no reason for this

o Good Faith Purchasers: SOL doesn’t begin until the property is requested to be returned

o Conversion: SOL begins as soon as the property is taken Discovery Rule: treats converters and good faith purchasers the same way; SOL

begins when true owner knows or should know where the property is. Some states

Policy Encourage land use over disuse/rewards improvements to land/productivity Punishes neglect

o Encourage inspection/surveying of your own land Prevents litigation of centuries-old land disputes Resolve Clerical errors without inequitable ousting

o Color of Title: shorter SOL for AP if a BFP can present a document that purports (per a reasonable person) to convey him the property

Fix major surveying errors Resolve boundary disputes

o See Doctrine of Agreed Boundaries Reliance will estop assertion of the true boundary

Limit lengthy title searches Caps need for title searches beyond SOL Corrects clerical errors: protects those who have purchased land and act as

owner but may have problem proving title Honors Expectations/Reliance Interest: consistency

Trend Toward only allowing innocent adverse possessors (see UK) Less lenient toward openly bad-faith possessors than in the past

o NY: New law requires AP’ers to prove they reasonably believed they were the true owners all along.

o Creation General Rule: what you create is yours

Modified by:o Fair Useo Licensing/Royaltieso Copyright

Types: Copyright (long, but strong fair use doctrine) Patents (20 years, but strong protection) Trademarks (for consumer protection, thus indefinite) Trade Secret (only as strong as you make it) Right of Publicity

o Recognized in half of states, created judiciallyo Protects person’s right to their own identity and ability to profit from

their personao Midler v. Ford Motor Company (p. 143)

Facts: Ford hired a Bette Midler sound-alike for their ads. Rule: No copyright to one’s own voice; mere imitation not a

copyright infringement; but deliberate imitation of a

distinctive voice is a tort. (reversing lower court’s decision based on distinct, personal, central to identity aspects)

International News Service v. Associated Press (p. 131): Quasi Property Rights in News

o Facts: INS took news from AP and used it as their own, AP sued for protection

o Ruling: there is a quasi property right - limited right to exclude against competitors only

o Policy: concerned for unfair competition/Free-Riders - want to incentivize putting $ into research/reporting

Holmes Dissent: accreditation isn’t important Brandeis Dissent: knowledge, once disseminated, belongs to

the world; no private right to public ideas Creation of new property rights is a legislative power

(institutional competence) o Concern: is this a property right for knowledge?

Policy/Interests Involved: Unfair Competition (taking news, use of someone’s voice) Monetary Autonomy/Personal Authorship Interests of the consumer/public Locke: modification through human labor creates property rights Balancing: societal need vs. encouragement for discovery

o Gift Three Elements

Intent Delivery

o Irons v. Smallpiece (p. 863) – mere verbal promise insufficient Facts: Father promised colts to son but son never took

possession of them. Rule: No gift. Reasoning: If son had been paying for the colts’ hay or taking

some other action showing responsibility for the colts the court would have found delivery.

o Constructive delivery: see conveyances of land, what seems reasonable?

Acceptanceo Presumed for gifts of positive value (not for negative value)o Disclaimer: rejection of property transfer. Must be done in accordance

with state disclaimer statute. Disclaimer presumed when gift is of negative value (e.g. toxic

waste) Gift Causa Mortis (in contemplation of death)

Substitute to a will but are not enforceable if the person recovers Foster v. Reiss (p. 865)

o Facts: Reiss goes to hospital for surgery, wrote a note just before indicating where some hidden money, etc. was

o Ruling: not enforceable because there was no delivery o Elements: (1) in contemplation of death; (2) death is the result of

peril/disorder that sparked gift; (3) delivery; (4) competent donor; (5) intent to make the gift; (6) acceptance by donee

o Reasoning: he didn’t know where they were in the house before her death, and she didn’t personally hand him the letter

Policy: courts normally try to avoid enforcing these due to statute of frauds concerns, want to incentivize wills

See also Nemo Dat Quod Non Habet: you can’t give what you don’t have See also restrictions on alienation

o Purchase See Title information and nemo dat for double conveyances If you don’t have the property by nemo dat, then you don’t have marketable title if

concurrent interest not disclosed 4 Stages

Negotiation/Agreemento Memorialized by a writing to satisfy the SOFo Statute of Frauds: Writing must include essential terms (not all terms)

and be signed Must include physical description of property

Metes and bounds method (geographic) Rectangular method

Signed by party against whom enforcement is sought (usually the grantor)

o Can be found without a writing by part performance or estoppel. Raise both of these.

Part Performance: One party performs a substantial component of the obligations; other party may not be able to invoke SOF as defense against performing himself.

E.g.: Buyer taking possession Substantial improvements Paying all or part of the price

Reasoning varies:o Some emphasize evidentiary functiono Some emphasize fairness

Estoppel: if the promisor makes a promise that (1) A reasonable person might anticipate to cause the

promisee to rely, (2) Induces such reliance, and (3) The promisee would suffer a real loss if the

promisor did not perform Then statute of frauds is not available as a defense Hickey v. Green: (Supp. 2)

o Facts: Writing without D’s signature, but with price, description, and delivery. P demonstrated detrimental reliance on the promise to sell by selling their home. D backed out of deal and cited SOF/lack of signature.

o Rule: Estoppel. Negotiation was beyond preliminary, had specific terms, and P reasonably relied in a foreseeable way to his detriment.

o Remedy: P gets specific performance if he can prove that he is bound to sell his own house as part of his reliance on the agreement; restitution damages otherwise.

o Cites R.2d 29: same SOF definition as Mahoney above

o Review ex ante vs. ex post See remedies below

Executory Period

o When financing is obtained (not necessary)o Inspection normally occurs along with title searches and modifications

due to issues that arise Closing

o Security interest grantedo Deed delivered and property conveyed - contract is said to merge with

the deed (i.e. promises therein become part of the deed so long as the contract is included therewith)

o Types of Deeds Quick Claim: All interests seller may have; buyer assumes

risk of seller not having any interest to convey (nemo dat) General Warranty: Includes assurance that seller has title to

property, has power to convey, property is unencumbered Post-Closing: when lawsuits happen

Remedies for Breach of Sale Contract Specific Performance

o Property Rule Protection: property is unique and money damages cannot fully compensate an injured party.

o Must satisfy equitable considerations (clean hands, no remedy at law) to be grated SP

o Defenses Hardship Laches

Damageso Sellers are more likely to seek these than SPo Jones v. Lee (Supp. 2 p. 12): Calculate via Loss of the Bargain

Facts: In K to buy a home and buyer pays $6k in earnest money, buyer backs out, seller relists and sells for much less and sues for the gap plus other costs incurred

Rule: loss of the bargain – General Damages Calculate damages by subtracting the substitute

performance price from the FMV at the time of the breach

Here: stipulated FMV was purchase price, thus regained the whole difference

Compensatory (Special Damages): what a natural and reasonable buyer would see as foreseeable consequences of the breach

Punitive Damages: available, but must be remanded because they were based in part on special damages

o Discovery See also first possession and law of finders Grants sovereign property rights to the land, but does not grant power to expel pre-

existing residents. Johnson v. M’Intosh (p. 113): Pre-existing residents – right of occupancy

Facts: One party bought land from local Indians, the other had purchased it from the federal government

Ruling: nemo dat controls and the Indians had no right to transfer the land because they had previously transferred the right to the government

Discovery grants property rights to finder even if prior occupants retain right to occupancy. Even though the Indians had the right to occupy the land the government had acquired the right to alienate the property long ago.

Right of Discovery: European powers did not have to actually possess the lands to assert rights thereto against the natives

o Law of Finders

See also first possession and discovery Relative property rights: courts do not determine absolute property rights against the

world--they determine which of the litigating parties has the better claim against the other.

There are no absolute property rights in thieves, but one may have a superior claim to another.

Policy: We don’t want lawlessness amongst thieves, disincentivize antisocial behavior First finder rule: Discourages further thefts; keeps chain closer to original

owner. Last finder rule (not favored): Rewards the diligent and punishes the careless,

but encourages thieves to “find” others’ property. Armory v. Delmirie (p. 220): General Rule

Facts: chimneysweep finds a jewel, taken by appraiser after appraisal Rule: “That the finder of a jewel, though he does not by such finding acquire an

absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner, and consequently may maintain trover [conversion]”

o Overbroad? Clark v. Maloney (p. 222)

Facts: Clark “finds” logs, ties them up, somehow they come loose (suspicious?), Maloney finds the logs and takes possession

Rule: First finder, even if Clark himself may have been a thief. The subsequent loss did not divest the special property of the plaintiff

Anderson v. Gouldberg (p. 223) Facts: Anderson trespasses on a third party’s land, cuts down trees, another takes

possession of the logs believing that he had rights to take these trees from Anderson (repo man for another land owner, though Anderson’s logs were from this land)

Rule: Anderson has a right to the logs against all but the third party landowner, does not matter that Gouldberg was “dispossessing a wrongful actor”

o Principle of Accession: property rights are granted to the owner of the resource most prominently connected to the property in question and to which ownership has already been established

Increase: offspring of animals (animals only) go to the owner of the mother Objective Benefits: clarity, ease of application, cost avoiding (no need to find

the father), chain of possession (possess the mother? possess the children), practicality of raising offspring (near the mother)

See Carruth v. Easterling p. 162 Doctrine of Accession Ad Coelum (Adage): whoever owns the soil owns the sky and depths

Trend : Limited to what you’ve reduced to actual possession (e.g. you only own the sky as far up as you build; can’t restrict airplanes from flying a mile above).

o Alternate Conception : essentially it is a servitude that you give to the airlines where, in return, you get tiny portion of other servitudes given by other citizens allowing you to use air travel elsewhere

Hinman v. Pacific Air Transport (p. 10): Ad Coelum Adageo Facts: Suing airline for flying over propertyo Rule: Ad coelum becomes an adage; cannot own the sky just as you

cannot own the ocean. Each property owner gives up a servitude and in exchange gets the right to fly over others’ property.

o Remedy for airplanes: sue for trespass if too lowo Today: If you can prove that airplanes are interfering with your use

and enjoyment you can recover from nuisanceo Policy: how could you get an easement/servitude from all landowners

to have flights?

But see Google Print: not like airline industry taking servitude from ad coelum rule

o Google: wanted to put all publications online to facilitate research – produce a social benefit for searching without infringing on rights by only giving 25 word snippets

Small servitude from any book ever in exchange for putting it online

o “Google is not the government, yet. So Google does not have eminent domain power”

o Some do suffer damage from the taking Accretion/Avulsion

Accretion: gradual deposit by water producing dry land that had once been covered by the water

o Changes property lines; gains through accretion are kept Avulsion: sudden abandonment of one channel or sudden washing away and

depositing of an entire riverbank.o Does not change property lines; use the old channel.o Nebraska v. Iowa (p. 179)

Facts: Avulsion creates an oxbow bend on the river that separates the states. Part of IA’s land is now on NE’s side of the river.

Rule: Avulsion. Iowa keeps the land.o Reasoning: Court refuses to change settled doctrine just because it

inconveniences the two states. (Institutional Competency) Reliction: “land that has been covered by water, but which has been uncovered

by the imperceptible recession of the water” changes property lines Terms:

o Erosion: “gradual and imperceptible wearing away of land (bordering on water) by the natural and imperceptible recession of the water”

o Riparian: “land bordering on any type of water”o Littoral: “land bordering the ocean or a major inland sea”

Think also psychology - associate the new accumulations with the larger body of land to which it is attached, rather than the original land

Fixtures: look to reasonable expectations of parties + physical conditions Definition: a thing that, although originally movable property, has been annexed

to the land and is now regarded as part of it. Strain v. Green (p. 184): general rule

o Facts: Seller took water heater, lighting, etc.o General Rule: if removing the item makes an ugly eyesore, or makes

the house less of a house then it is a fixtureo Incentive: Parties need to speak up at time of sale

Seller’s silent intent carries no weight. Must speak up if he wishes something to be considered a fixture.

Default rule that buyers and sellers K around, if it’s close then the presumption is it is a fixture

Sometimes this is treated differently in cases of foreclosureo Lender doesn’t typically sue anyway because the borrower is already

judgment-proofo Because the lender is taking the house, no presumption that the

borrower will act in good faith. Also expectations are different Concern for Tenants and Landlords: what interest does a tenant have in making

a “permanent” improvement o Tenant doesn’t benefit from higher price as a seller would, thus the

courts tend to favor tenants more

Salvage Rule: like whaling, get finders fee Theory from Hume (General Principle of Accession): psychological, we associate small

objects with large ones E.g. North Sea Oil: assigned to country with nearest coastline because it’s clear

and objective Tests:

o Proximity/Median Line/Focal Pointo Proportion (population, etc.)o First Possession (salvage)

o Abandonment: More difficult for Real Property than Personal Property because you must give up all

right and title: Pocono Springs Civic Association, Inc. v. MacKenzie (p. 486)

o Facts: D owned negative value lot and P kept charging him condo fees. Didn’t pay taxes and government put a lien on it, but government refused to take it.

o Rule: Not abandoned because he retained titleo Possible remedy: pay someone to take if off your hands

Possible way to abandon real property: get someone to sell drugs on the land and have the land seized

o Alternatively: bargain away all servitudes and then gift to conservation group

Contrast with interests in property such as easements which can be abandoned through actions alone w/o transfer

Equitable Concepts/Actions o Basic Concepts of Equity: see also Ebay v. Mercexchange

Clean Hands No Remedy at Law: “safety valve for the law” Bends rules to do justice in individual cases, regards substance over form In personam, not in rem: injunctions asserted against individuals, not the world

o Misc. Concepts: Unfair Competition Right of Publicity (see Creation) Law of Finders

o Quiet Title Actions: Judge identifies owner of a piece of real property.o Building Encroachments and Injunctions

Traditional view: Pile v. Pedrick (p. 52) Property Rule Protection for Plaintiff (Rule 1) Facts: D built 2 inches onto P’s property in good faith reliance on a surveying

error. Cost of moving his wall would be prohibitively expensive. Rule: Despite sympathy for D’s future hardship, Rule 1 applies and D must

knock down his wall. Reasoning: Discourage take-and-pay. Awarding damages would incentivize

bad faith owners to “mistakenly” build onto others’ property and then pay for it. Coase: provides framework for D to make P and offer to buy an easement, etc.

to keep his wall. Note: estoppel (reliance on statement or agreement that possible violation would

not be a problem) and laches (burdened owner sat on his rights beyond SOL) still apply

See also: Smith v. McEnany for equivalent lease case. Modern View: Golden Press, Inc. v. Rylands (p. 55) Liability Rule Protection for

Plaintiff (Rule 2) Facts: minor underground encroachment from the base of a wall Rule: New standard for “mandatory injunction rule:”

o Deliberate, wilful, intentional encroachment? (Good vs. Bad Faith)

o Would the cost of the injunction be excessive in relation to the damage done?

Ruling: because the encroachment was (1) in good faith and (2) small in effect compared to cost of injunction, no injunction issued

o Damages: proportional to amount of land taken Concern; take and pay? Where do we draw the line? Mahoney: also place a lien on that percentage of their

structure to get proceeds therefrom Reasoning: balance equities and do justice in this case; not concerned with

setting broader take-and-pay precedent. See also Smith v. McEnany in Covenant of Quiet Enjoyment

o Mistaken Improver General Rule: Bestowing a benefit on the property of another without bargained-for

considering leaves you without recourse. Losses left where they lie, equivalent of a gift. Equity: Will grant remedy if leaving losses where they lie will result in gross injustice.

Trend: Good faith improver is more likely to recover at least reliance costs. Law vs. Equity:

o Law: treats the improvement as a fixture, does not award the improver any compensation

o Equity: generally does not give a remedy, but will consider one when gross injustice occurs

Possible remedies (assuming clean hands):o Move the improvement to the improver’s propertyo Restitution damages (beneficiary pays for enhanced value of his

property)o Forced sale to mistaken improver (take and pay)o Forced sale to third party with proceeds split proportionallyo Grant lien to improver in amount of value of improvemento De minimis = property rule protection for D (rule 3)

Waste (see also doctrine of waste below), Self-Help Producers Lumber & Supply Co. v. Olney Building Co. (p. 65)

o Facts: D owned property including lot 8, conveyed 8 to P who

planted trees there, yet D started building on lot 8 after receiving incorrect info internally

Title company IDs problem, D notifies P, yet no bargain is struck

D goes back on the property and destroys the houseo Rule: D is ineligible for relief because he destroyed wealth and took

matters for the courts into his own hands (otherwise D would have been a good faith improver and eligible for equitable relief)

o Dissent emphasized good faith nature and efforts to bargain See also Self-Help

o Nuisance General Rule – Equitable Relief: when nuisance is found the court weighs the benefits

to determine a remedy. Go to cases and discuss balancing, substantial + unreasonable, time & place, malicious intent/bad faith

Public Nuisance Interference with the general public’s rights to use and enjoyment of property.

Private Nuisance Substantial and unreasonable interference with the private use and enjoyment of

another’s lando Must show a significant harm to recover

o Usually a socially beneficial activity done in an inappropriate place, or two competing and incompatible uses of land.

o An interference may be substantial and intentional, but not a nuisance if it is not malicious.

Hendricks v. Stalnaker p. 23 (incompatible but beneficial land uses & balancing equities)

o Facts: Hendricks could only put septic system at one location on property, neighbor Stalkner got a permit for and built a well near that location before Hendricks could get approval, law prevented septic system from being placed close to the well. Hendricks sued to have well declared a private nuisance.

o Ruling: balanced interests, no reason to call the well a nuisance (though intentional, it’s a reasonable use and no proof of malicious intent) and thus it will not be declared a private nuisance

Nuisance Per Se: (rare) use that is never reasonable, regardless of time, place, or circumstances.

Not required to demonstrate damages to get injunction Nuisance Per Accidens: contextual - depends on time/place

Coming to the Nuisance: new neighbors who come to an area knowing about bothersome circumstances, where coming there changes the circumstances and makes it a nuisance

Note: government can always step in with legislation to set the rules regarding nuisance Property vs. Liability Rule Protection and the Line of Nuisance

Campbell v. Seaman (Rule 1) (p. 949): Traditional Approacho Facts: Use coal to bake bricks, causes poisonous sulfur gas to blow

over onto P’s property killing trees/vegetation where P has built a mansion

o Rule: unlike trespass, nuisance requires a weighing of interests Gives property rule for the plaintiff (injunction) because the

damage is irreparable and there’s now way to afford an adequate remedy at law

o Old rule: Sic utere tuo ut alienum non laedas: so use your land as not to injure another’s property - this is an adage, cannot apply in full

Boomer v. Atlantic Cement (Rule 2)  (p. 996) Trend Toward Thiso Facts: cement factory throws dust everywhereo Rule: balance the equities (liability rule for plaintiff)

Benefits of running the cement company outweigh the costs to the community from dust

o Remedy: Must pay damages Note: post-Clean Air Act; statute provides framework of rights

to bargain against.o Note: concern based on permanent damages for servitude on land

(taking?) Spur v. Del E Webb (Rule 4) ( p. 975) Outlier

o Facts: Retirement community built next to cattle feed lot that was in the process of expanding.

o Rule: Public nuisance. Injunction will be issued if P pays D the costs of moving, converting his property or lost profits. (Liability for D)

o Reasoning: threats to public health outweigh the fact that P knowingly came to the nuisance. He wouldn’t have won in a vacuum without the serious public policy factor in his favor.

o Takeaway: this has not been an influential ruling, not many followed Remedy Options:

Injunction Damages

Calabresi Entitlement to Plaintiff Entitlement to Defendant

Property Rule Rule 1: Pile, Campbell Rule 3: Adams

Liability Rule Rule 2: Golden Press, Boomer Rule 4: Spur

Rule 1: Property to Plaintiff: injunction issued against nuisance maker Right belongs to P and nuisance maker must negotiate out of court for price if

they wish to continue Rule 2: Liability to Plaintiff: nuisance maker must pay damages to compensate for lost

use and enjoyment Take and Pay for the nuisance maker, though the right belongs to P Note: if D doesn’t pay the price then an injunction issues

Rule 3: Property to Defendant: no relief issued. P may make Coasian deal. Essentially this is a no-nuisance case, but P can still bribe D to stop

Rule 4: Liability to Defendant: P ordered to pay damages (covering cost of moving or lost profit) to nuisance maker in order for an injunction to be enforced.

If damages are not paid, D may go on with his activity. D has the right to continue, but P can take and pay to get them to stop

NOTE: if there are no transaction costs, it doesn’t matter which one we start with - people can always bargain around this framework

See also Calabresi Nuisance law is a framework against which parties may bargain

o Trespass/Right to Exclude Trespass is strict liability: there is no weighing of the benefits. Baker v. Howard County Hunt (p. 44) (Theory: right to exclude trumps social benefits)

Facts: fox hunt club continued to trespass, destroying landowner’s garden and experiments. There was a social benefit to hunting foxes, but the owner was injured by a dog bite and his rabbit experiments were destroyed.

Rule: Equities balanced and injunction awarded because landowner had clean hands and he had no remedy available at law.

Reasoning: intangible harm of trespass outweigh the benefits of foxhunting, and thus injunction must issue to deter future harms against that right

Adams v. Cleveland-Cliffs Iron Company (p. 939): Tangible & Direct Facts: dust, noise, vibrations from a mine Rule: trespass covers physical invasions that are tangible and direct

o Tangibility: dust is intangible because it becomes part of the airo Directness: dust didn’t come onto the property because of its own

power, wind/nature carried it Martin v. Reynolds Metals (p. 947): In cases close to the line, courts will award nuisance-

like remedies (damages) even if they find trespass. o 4 Part Test for Injunction: eBay vs. MercExchange (p. 59) – formulation normal court action,

like Golden Press Rule: Injunction is available only when 4 conditions satisfied:

Irreparable injury No remedy at law is adequate Balancing of equities favors patent holder (burdened owner) Public interest would not be disserved by injunction

o E.g. not incentivizing patent trolls Ex ante approach: anticipates future disputes for the sake of clarity

Note: ex post would focus on equities in the case at bar and try and fix it

Concurrence By Roberts: these cases should generally result in the issuance of an injunction  “given the difficulty of protecting a right to exclude through mandatory remedies that allow an infringer to use an invention against the patentee’s wishes”

Concurrence by Kennedy + 3 joiners: concern is patent trolls who arguably try to make courts party to extortion

Limits of Sovereign Ownership o Nemo Dat

See Johnson v. M’Intosh: did Indians have the right to transfer - noo Owner Self-Help

See also Waste under Mistaken Improver Cannot block rescue or set up a spring gun Repossession: competing views on the availability of self-help

Policy: easier to repossess property because we don’t want people out of their homes

Progressive View: Berg v. Wiley (p. 388): always go through judicial processo Facts: P violated the terms of her lease; D decided to repossess and

brought a police officer and locksmith with him to change the locks. Suit for wrongful eviction.

o Rule: Law changed. The only lawful means to dispossess a tenant who has not voluntarily surrendered the property is through the judicial process. Landlord self-help becomes essentially illegal in MN.

o Reasoning: Judicial process always provides landlord with adequate remedy

o Incentives: Discourages possibly violent repossessions.o Note: self-help essentially banned in some states

Traditional View: Williams v. Ford Motor Credit Company (p. 394) – peaceful self-help:

o Facts: Post divorce wife had car title, but husband stopped making payments (as was agreed to), repo man came at 4:30 am, she objects, but otherwise allows repossession to continue

o Statute: UCC 9 allows creditor to repossess without judicial process if done peacefully. May sue for conversion if repossession is done with force, threats of force, or potential for violence.

o Ruling: late hour + verbal objection is not sufficient to make it a breach of the peace.

o General Rule: no breach of peace, no force, threat of force, or potential for violence

o Dissent: points to potential for violenceo Note: lower bar for abandoned property

Sue for conversion if tenant/lessor/debtor Possible synthesis: more restrictions on self-help for real property because

removing someone is more dangerous than removing property, more disruptive? See also Ploof v. Putnam Policy: self-help makes credit available at lower costs because it’s cheaper for creditors

to repossess property than go into court. Due Process in Takings

o Discrimination Powers Common Carriers/Public Accommodations: see below

o Exceptions to the Right to Exclude Necessity: creates the right to invade.

Ploof v. Putnam (p. 400)o Facts: Sloop, lake nomads, tempesto Rule: Must vacate right to exclude when human life is at stake.

Vincent v. Lake Erie Transportation Co. (p. 402)

o Must compensate when acting out of necessity (take and pay) Custom: McConico v. Singleton (p. 403) – Common Law Right to Hunt

Facts: owner told D that he absolutely cannot hunt on his open, undeveloped land, D didn’t listen

Ruling: there is a universal right to hunt on undeveloped, unenclosed, and uncultivated lands which cannot be superseded by the owner’s will

State v. Shack (p. 418): employer may reasonably ask visitors to employees to ID themselves, but cannot interfere w/ their normally dealings (e.g. assisting migrant farm workers)

Public Accommodations: right to exclude is limited, cannot be based on discrimination Public Accommodations

o Defined as lodging, food services, or entertainment (held out to public) Common Carriers: may only exclude with justification

o Defined generally as something that carries goods/peopleo Person who holds himself out to offer goods/services to publico Net neutrality: ISPs may not discriminate between contento May place reasonable limitations on conduct: dress, etc.

State v. Schmid (p. 418): right to distribute literature on college campuseso Rule: When you open your doors to the general public, you may not

exclude unreasonably. Rather, there is a duty not to act in an arbitrary or discriminatory manner toward persons who come on the premises.

Uston v. Resorts International Hotel, Inc. (p. 415) - Regulation limits Right to Exclude

o Facts: casino tried to exclude a card countero Ruling: gambling industry is so heavily regulated that the casino can’t

make this rule w/o regulating commission (wouldn’t want to upset their balance). Abrogates common law right to exclude.

o Reasoning: complex balancing by state of odds/probabilities Donovan v. Grand Victoria (p. 421)

o Facts: same as Ustono Rule: Court did not interpret this state’s gaming regulations to abrogate

the right to exclude.o Destruction and Waste: for future or concurrent interests

Affirmative Waste: misfeasance, affirmative action of the present interest holder that makes the property less valuable.

Excess use of property may be affirmative waste Grey area: Line between interest holder’s right to modify property and waste is

blurry. Permissive Waste: nonfeasance, inaction or failure to take normal behavior that results

in injury to property E.g. failure to pay taxes, make repairs

Ameliorative Waste: unauthorized changes that increase property value You may sue over this, but it’s rarely done--sentimental value, etc. Coasian element: background against which present interest holder bargains

with future interest holder Brokaw v. Fairchild (p. 552)

o Facts: Brokaw held life estate in 5th Ave. mansion, wanted to destroy it to build apartments but future interest holders wouldn’t let him

o Ruling: demolition would constitute waste o Rule: Life estate is the right to use or build, but not to permanently and

materially alter Can constitute waste even if it enhances the value of the

property.

o Traditional rule: only indefeasibly vested remainder/reversion holders may sue for waste, but trend is toward allowing holders of lesser future interests (contingent remainders and executory interests) to sue.

o Complication: the more future interest problems the harder it is to bargain (holdouts), but if only one there is a bilateral monopoly

Valuation Factors: for future interests (p. 561) Discount Rate (i.e. how much you can gain on it the current value to reach an

expected value upon transfer) Life expectancy Time Value of Money Uncertainty of the Future

o Criminal Law Larceny Criminal Trespass (distinct from civil trespass)

Low penalties, only when trespasser refuses to leave Arson Burglary Destruction of Property

o Property Torts Real Property

Trespass (formally “trespass q.c.f.”)o Right to exclude

Ejectmento Done to counter Adverse Possessor

Nuisanceo Use and enjoyment

Personal Property Conversion (formerly trover): obtain the value of goods in money damages

o I.e. if goods not available for return?o True owner’s awareness is irrelevant

Trespass to Chattels: damage property without conversiono 4 General Uses:

When the thing itself was damaged When owner is constructively dispossessed When dispossession is for a substantial time When harm against a legally protected interest is caused by

dispossession/trespass Intel Corp. v. Hamidi (p. 374): damage requirement

o Facts: former Intel employee sent thousands of employees to current employees despite Intel’s request to stop (did not overload the system)

o Rule: not trespass to Chattels because there was no damage to the email system itself - only damage was to employee productivity (they aren’t chattels) based on their decisions to read the emails

o Also not conversiono Epstien Tragedy of the Commons

Argument: since Intel owns and maintains the system, the value of the system may be degraded if they cannot exclude people

o Lemley: propertization of the internet would burden the free flow of information

Replevin: have property returned (e.g. stolen good/value of loan returned)

o Demand Rule: COA/SOL clock starts when demand is made (NY)o Discovery Rule: COA/SOL clock starts when you (could reasonably)

discover location Ouster: when cotenant exercises right to use the whole to the extent that it prevents other

cotenant(s) from exercising their rights. Must go beyond exclusive use of the land: must take affirmative step to deny others.

Gillmor v. Gillmor (p. 606):o Facts:

Three tenants in common all had rights to the land, one grazed his animals on all the land to the fullest extent

Other tenant wanted to graze her animals there, wrote a letter, the guy refused to stop

o Ruling: this is a case of oustingo Reasoning: act of grazing to the fullest extent and saying no goes

beyond simply exercising right to use the wholeo Damages: she got them from the amount that would have been earned

for grazing, but it was reduced by the amount of improvements made by him

Note: this can become adverse possessiono Doesn’t have to be adverse, lower burden to establish ouster than AP

Contribution Damages: for necessary repairs and upkeep the ouster can charge the co-tenant for expenses incurred while he was in exclusive possession

o Also applies generally to emergency costs incurred by one tenant Changing locks might be enough, incentivize public peace rather than self help Imputed Rent: money paid by ouster to other parties for profits

Encroachments Role of “Good Faith,” see also covenant of quiet enjoyment (Smith v. McEnany)

o Public Property Rights Some property, although not owned by the government, cannot be reduced to private

ownership Navigable waters

o Navigation servitude: government does not own waters but grants general public a broad right over them

o Intended to prevent trade wars between states Air

o U.S. v. Causby (p. 295): case with the chickens, can recover if planes are so low as to constitute a direct interference with the use of land

Seashore Public Trust Doctrine: Used to protect lands of extraordinary environmental value But see Takings

Formalities on Property Rightso Licenses: temporary and revocable waiver of the right to exclude

Usually includes right to use, but not to exclude See also Easement by Estoppel Profits: license to enter property coupled with a right to take something off of it

(generally irrevocable) Wood v. Leadbitter (p. 450) : Licenses are Revocable

Facts: Lord kicked out a patron of his racetrack without reason. Suit for assault and wrongful imprisonment.

Rule: P’s ticket was only a license, D had right to revoke it at any time. Property rights can only be transferred by deed (if P had a property right, D would have needed good cause to expel

o Action for breach of contract more appropriate Exception: license + grant – generally cannot revoke (e.g. profits)

Equitable Enforcement (p. 455-457): you lose the right to revoke when questions of equity arise (Easements by Estoppel, reasonable reliance w/ materially altered position, etc.)

Just be careful - going too far would make it not a license anymore Specific performance: equity normally grants this when reasonable reliance is

found, but in ticket cases, SP cannot be granted because the event is over by the time the parties get to court.

o E.x.: Hurst v. Picture Theaters (p. 457): normal damages are not acceptable when performance is unique (e.g. show is over), thus larger damages are offered to make up for it

ProCD, Inc. v. Zeidenberg (p. 458): Shrink-Wrap License Enforceable Facts: ProCD sells database with phone #s, charges 2 tiered system for

businesses and consumers who use the list for different purposes, someone buys consumer version and uses it like a business

Ruling: shrink-wrap licenses are fully enforceable as contracts unless the terms are unconscionable (even if not known to buyer)

Reasoning: you can return it, this is the only effective way for ProCD to run it’s business, price discrimination is legal

Problem: whether the license-as-contract is binding on future transferees (like an easement) or only on the original purchaser.

o Lease: Policy

Allocate governance interest and divide labor Allocate risk (tenant can avoid taking out a mortgage. landlord has source of

income to pay his mortgage) Increase mobility Make assets available to people who cannot get financing (low credit)

Views of Leases Old view: conveyance of an property interest (independent covenants) Modern view: closer to a contract with elements of a conveyance (i.e.

dependent covenants?) Types: courts (like with wills) will try to fit all language to one of these types

Term of Years: any period of time. Like a license.o No notice needed at end of lease, no automatic renewal

Period of Tenancy: automatically rolls over until someone gives notice Tenancy at Will: at will of both parties to terminate at any time

o Pure form no longer existso Today, a period of notice is required

Tenancy at Sufferance: holdover tenant after terminated leaseo Not a mere trespasser--more rightso Regulations supersede landlord’s common law powers

Covenants Pre-Covenant Approach

o Paradine v. Jane (p. 653) No Longer Valid Facts: D rented farm, was deprived of use by an invading

prince. Failed to pay his rent, landlord sued, D claimed ejectment.

Rule: D had to pay his rent because the tenant bears the risk of loss and the landlord did not eject him from the property. If the tenant did not want to bear the risk he should have contracted around it.

Reasoning: No waiver of obligation to pay when a third party ejects you. Today, the tenant would be protected by the covenant of quiet enjoyment.

Covenant of Quiet Enjoyment

o Smith v. McEnany (p. 656) Facts: Tiny (1ft) encroachment of a wall on the property built

by landlord and interrupting tenant’s enjoyment, tenant ceased rent payments

Ruling: this interference eliminates the obligation to pay rent Reasoning: rent is to the whole of the property, such is the

condition of the lease, what they’ve agreed to and thus they cannot apportion the wrong

Compare to Pile (Pile refused to change the law, here they bend it)

o Constructed Broadly Today: anything that goes against the C of QE that the landlord refuses to act on is considered constructive eviction

See e.g. MA case where leaky roof was a plausible claim, but not quite enough

Most progressive courts: breach of C of QE creates right to vacate and not pay rent.

Independent vs. Dependent?o Medico-Dental v. Horton & Converse (p. 678): Shift to Dependent

View Facts: Drugstore had noncompete clause in its lease. Doctor

moved into building and set up a co-op that distributed meds, violating the noncompete. The store tried to break its lease.

Rule: Breach of non-compete agreement create a right of rescission when they go to the heart of the bargain.

Reasoning: This covenant went to the heart of the bargain because there is no reason for the drugstore to be in the medical building if patients could fill their prescription in their doctor’s office.

o Today: most covenants are now considered dependent so long as they go to the heart of the bargain

Minor breaches do not create a right to rescind, only to sue Implied Warranty of Habitability (implied dependent covenant, not every

jurisdiction)o Old Rule: Caveat Lessee. No covenant or warranty that property

would be transferred in any particular condition. Lessee assumes risk and bears burden to inspect property before signing.

o Related to local regulations but not controlled thereby Contracts cannot violate the law so leases cannot violate

public safety codes This doctrine gives an automatic civil cause of action in

response to violation of codes Right to rescind limited to major violations; trivial code

violations result in damages or nothing.o Mostly for residential, not commercial leaseso Javins v. First National Realty Corp. (p. 685)

Facts: since tenant occupied the apartment there were hundreds of violations systemic throughout the complex, DC was not enforcing the local code

Rule: all leases will be construed to have an implied warranty of habitability as a mandatory (not default) rule that cannot be contracted around. Landlord may not alienate duty to keep premises habitable.

Reasoning: old rule was structured around farmland rather than city living, also consumer protection cases point this direction (changed circumstances)

Reasoning: cannot make it a default rule or all will contract around

Owner Re-Entry: see owner repossession, self help, limits to rights on sovereign ownership

Duty to Mitigate Damages Sommer v. Kridel (p. 702): like Kordana’s duty to covero Facts: Tenant cancelled lease a week after signing. Landlord did not

respond to his letter and refused to cancel, and actively refused to release the empty apartment (turned away prospective lessees). Landlord then sued tenant for unpaid rent.

o Rule: Landlord had duty to mitigate damages--court used the contract model, not the conveyance model.

o Reasoning: landlord is in a better position to covero Caveat to Contractual Aspect: in contract law the tenant would have

burden to prove that the landlord didn’t cover, but here the LL has burden prove they covered (because information)

Assignments vs. Subleases (p. 713) Assignment

o Ends the primary tenant’s interest in property but not his obligationso Assignee assumes the entire leasehold interesto Assignee is in privity of estate with landlord, not privity of contract

May strike his own contract with the landlord, but is not required to.

o Primary tenant/assignor is in privity of contract with both landlord and assignee.

Subleaseo Primary tenant retains an interest and acts as a sub-landlordo Sublease is carved out of primary lease, which continues to existo Subtenant has no relationship with landlord

Subtenant and landlord cannot sue one another; must work through primary tenant

o Primary tenant retains privity of contract and estate with landlord How to distinguish?

o Title of the document is important, but not dispositiveo Must question the function - is there a reversion interest retained by

the primary tenant, or any indication to maintain responsibilities by primary tenant (if language suggests full transfer then assignment)

o Distinction is less clear todayo Bailment: Owner temporarily transfers custody of property to bailee

Created by contract Understanding that property will be returned in same condition Some property rights (e.g. right to exclude) are transferred

This turns into a duty to exclude in some circumstances Allen v. Hyatt Regency-Nashville Hotel (p. 464): Bailments & Presumed Negligence

P goes to garage, gets ticket (that says the garage is not responsible), parks, locks, leaves with keys. Car gets stolen (note there was a report of someone tampering with cars, security investigated, didn’t find out), car would have to leave by the gate attendant

Rule: because this was a bailment, TN law which creates a presumption of negligence when a bailed property is damaged or stolen, was not overcome and thus garage was liable

Bailment: Garage had absolute control and possession of the car (but see key in P’s hands), so this is a bailment and not a mere license (which does not create the presumption of negligence)

Reasoning: Moral hazard. Without strong laws protecting bailors, bailees would be entitled to take and pay. Thus, large punitive damages are given.

o Servitudes: General:

Policy for Equitable Servitudes/Real Covenants:o Many issues are which burdens will be transferable (dead hand?)

But see property rights - power to do what you want with your property

o Land use restrictions w/o political process and land use regulations (picks up the slack), but see court costs of enforcement

o Distinction from contracts - once you meet the requirements you can bind future parties (shortcoming of contractual ability)

No SCOTUS decisions on covenants in a long time, so lower courts have taken more liberty to shape the law

No changes to easement law for centuries--very stable Slight merging of Real Covenants and Equitable Servitudes:

o Restatement wants on single clear doctrine: servitude is created if (1) the owner of the property to be burdened enters into a contract or makes a conveyance (2) intended to create a servitude that complies with the statute of frauds or exceptions thereto

o Trend: Courts have begun to blur the doctrine by allowing varying types of damages/remedies, but have not risen to the level of uniformity in the restatement (historical: Real Covenants = damages, Equitable Servitudes = injunction) – apply formalities of both

Real Covenants: generally enforced by damages Contract Based - reasonability/enforceability of the writing itself

o Nahrstedt v. Lakeside Village (p. 752): Notice and Reasonability Facts: P had actual notice of covenant forbidding pets, argued

it was unreasonable because her cats did not bother anyone Rule: Reasonability goes to the whole community, not to the

individual. Absent very unusual facts or explicit harms, courts will find covenants reasonable and enforced, especially if they knew about it

I.e. court reluctance to make judgments on reasonability even when statute begs the question

Legislature may determine what is not reasonable (e.g. CA banned communities from banning pets after this case)

Dissent: Judge thought the word “reasonable” invited judges, and not the legislature, to make the determination through a balancing

o Kiekel v. Four Colonies Homes Association (p. 771): Amendments Facts: Covenant could be amended by a 75% vote, or added to

with bylaws by 50% vote. D passed bylaw restricting (review process + max rental percentage) renting in response to P’s rowdy tenants.

Rule: Language in covenant referring to tenants implied a right to rent, and this could only be modified by an amendment.

Might also stand for right to rent if no existing restrictions in covenants, only restrictable by amending covenants

o Restrictions by race not enforceable by courts (see con law)o Restatement: Are invalid if they violate public policy, including but

not limited to servitudes that are Arbitrary, spiteful, or capricious

Unreasonably burdensome to a fundamental constitutional right

Imposing unreasonable restraints on trade or competition Unconscionable Examples that are acceptable:

Design controls No mobile homes Limiting displaying the American flag is suspect Note: Restrictions by race, etc. are not enforceable

Running with the lando Questions to Ask

Real covenant or equitable servitude? (ES are prefered because injunction is available)

Which remedy: just damages, or injunctive relief as well? Why?

Maximize efficient use of land Protect rights of owners to bargain around nuisance Keep property values up by enforcing will of prior

owners Encourage private ordering Avoid outside intrusions based on market forces

At what cost? Costs to the court system Costs of injunction and damages

o Requirements for a Burden to Run: see 1038 (1) Intent for the burden to run by the conveyor of interest

(e.g. no peanut use while neighbor is allergic probably is not meant to run)

(2) Horizontal Privity: relationship between original parties - normally grantor and grantee, sometimes donor/donee or landlord/tenant

Language: A transfers Blackacre to B with [restrictions]

(3) Vertical Privity: successor in burdened interest must hold the entire durational interest that the original burdened party held

Unknown what happens if successor holds a greater interest

Adverse possession counts for vertical privity Includes assignments but not subleases Includes leases (but this gets complicated)

(4) Touch and Concern: so closely related to the use of the land that the promise should be deemed to run

Eagle Enterprises, Inc. v. Gross (p. 1042)o Facts: deed contained requirement that

burdened property provide water for certain months of the year in exchange for payment

o Ruling: does not substantially affect the ownership interest of the landowners, and it is an undue burden on alienation

Important that the benefited property already has a secondary source of water

Didn’t explicitly mention changed circumstances, but it was certainly underneath the words

Neponsit Property : Pre-Eagle Enterprises, changed the law such that promises to pay money can touch and concern the land (think condo fees)

Benefit Running with the Land: see 1040o Intent for the benefit to runo Vertical Privity: must be successor to some estate, not the whole thingo Touch and Concern

Modification and Terminationo Expiration: end of a period of years specified by covenanto Release: done through bargainingo Abandonment or Waiver: harder to establish than for easements:

prove that original purpose of restrictions can no longer be vindicatedo Merger: dominant and servient tracts come under common ownershipo Estoppel: if the person asserting the servitude makes statements that

would lead a reasonable person to believe the servitude has ended and that person reasonably relies on these statements

o Prescription: adverse possession, see easementso Condemnation: If eminent domain is exercised over either the

burdened or benefitted property, servitude may become unenforceableo Changed Conditions: courts more willing to modify a covenant if

conditions which brought it about are no longer present, or if new conditions frustrate implementation (e.g. too expensive) – this is post finding real covenant

Bolotin v. Ringe (p. 1054) Facts: Neighborhood has residential use restriction,

owner of edge lot argues that circumstances have changed as property around his lot is now occupied by businesses.

Ruling: o Explicitly rejects looking to the changed

values of properties in the area (subjective value is protected)

o Explicitly rejects looking changed circumstances near the property - changed circumstances requires the initial circumstance to be impossible, or that the condition is broadly disregarded among other similarly burdened properties (persistent use within the development)

Policy: Mahoney finds this doctrine too rigid. Apply cy pres to covenants--apply language as nearly as possible under the current circumstances. Allows some flexibility for practical changes in circumstance.

Also gives rise to good Abandonment claimo Disappearance of Holder: Servitudes in gross unenforceable if person

who holds interest cannot be locatedo Peckham v. Milroy (synthesis) (p. 1058) Laches, Estoppel,

Abandonment, Public Policy Facts: D moves into mother’s house burdened by non-

commercial use restriction and opens a day care which involves noisy kids and modifications to house. P takes

pictures of construction but doesn’t sue until day care is built. D claims abandonment, laches, estoppel, and public policy.

Abandonment: a few examples of violations are neither habitual nor substantial, it must rise to a level that the scheme of residential neighborhood can no longer be obtained

Laches: Requires (1) knowledge of the COA, but (2) unreasonably delayed in a way that would (3) damage the defendant - initially he didn’t know it would be used for day-care and he also objected verbally as soon as he found out

Estoppel: Requires (1) admission/act inconsistent w/ claim, (2) action in reasonable reliance, and (3) injury suffered due to reliance. (Here: P objected from beginning, delay reasonable)

Public policy: However strong the interest in home day care it’s not a right the courts will create. Up to legislature.

Equitable Servitudes (Negative Reciprocal Easements): enforced by injunction Running with the Land

o Questions to Ask Real covenant or equitable servitude? (ES are prefered

because injunction is available) Which remedy: just damages, or injunctive relief as well? Why?

Maximize efficient use of land Protect rights of owners to bargain around nuisance Keep property values up by enforcing will of prior

owners Encourage private ordering Avoid outside intrusions based on market forces

At what cost? Costs to the court system Costs of injunction and damages

o Requirements for a Burden to Run (1) Intent (2) Notice

Actual notice (in grant) Record notice (at office) Inquiry notice: reasonable inquiry would have

discovered the servitude (like AP)o Sanborn v. McLean (p. 1047) - implied

equitable servitude from general plan in locality – Negative Equitable Servitude

Facts: owners want to build gas station in their neighborhood, land did not have restriction against business in the deed but many around it did (and the area looked uniform)

Ruling: even though the common owner didn’t include covenants in all tracts upon conveyance, it was implied on all tracts and could be found via inquiry notice looking to other tracts

Policy: Outlier; furthest possible extension of inquiry notice, most courts will require the notice to be

discoverable within the chain of title. (Not recognized in all states)

It’s inequitable for a burden to run without some form of notice

(3) Touch and Concern NO PRIVITY Tulk v. Moxhay (p. 1026): Basis for Equitable Servitudes

Facts: Original grantee received restriction that they must maintain garden, future owner deed not have restrictions in the deed, yet he knew the predecessor had promised to keep the garden

Ruling: If equity is attached to property by the owner, no one purchasing w/ notice of that equity can stand in a different situation from the party from whom he purchased even if there is no vertical privity

Reasoning: Privities not required if purchaser was on notice because of principles of equity

o Requirements for a Benefit to Run (1) Intent (2) Touch and Concern No Notice Requirement, not “unfair” to have a secret benefit

o See Real covenant for Termination Easement

Types:o Easements Appurtenant

Attached to a parcel of property transferable therewith Dominant Estate: tract that is benefited by the easement Servient Estate: tract that is burdened by the easement Policy: easier to find because you only have to find the land,

and geographically limited (only a certain number of ways you can divide the land)

o Easements in Gross Attached to particular parties (disfavored by courts because of

difficulty in tracking ownership) More often used for government projects like RRs,

water lines, Concern: hard to find owner of the easement, easy

fragmentation of property rights (no geographic limitation), notice

Parties: benefitting party and burdened party Methods of Creation

o Express Easemento Implied Easements:

Lost grant theory: assume based on prolonged use that this was the intention of the parties and grant may simply have been lost

Easement Implied from Prior Use (1) 2 parcels under common ownership at one time

o Only inflexible element. Courts more lenient on the rest

(2) Before division permanent use benefitting one part of the property and burdening the other part

(3) Use was apparent upon reasonable inspection (i.e. use was in existence and noticeable at time of division)

(4) Easement is reasonably necessaryo Look to use of similar properties

Easement by Necessity (1) Necessity must have been in existence at the time

the property was divided (severed) (2) Common grantor must have created condition of

necessity (3) Must be strictly necessary No prior use requirement (although common)

Schwab v. Timons - stable doctrine, courts won’t change it Facts: property owner believed he could extend a

private road up to his land, split the property himself making it difficult get to the property (dunes, lake in the way)

No easement implied by prior use because there was no road at the time of division benefiting one part of the property (2)

No easement by necessity because it wasn’t strictly (absolutely) necessary (3) to build a road (could get there inconveniently over dunes) and P, not the government, created the condition of necessity by landlocking his own land (2).

o Easement by Estoppel (Irrevocable License) Holbrook v. Taylor (p. 997)

Facts: neighbors got permission to use private road, improved it and used it to build house, continued use thereafter. P tried to get $ from them for continued use

Ruling: reliance turns a license into an irrevocable easement by estoppel

o Point of no return: when user makes a significant improvement to the property (usually by spending big $). After this point, against principles of equity to revoke license.

o Important that the owner stood by and acquiesced without asking for compensation up front

Not an Easement by Prescription because it wasn’t adverse, (permission) continuous, or uninterrupted

Policy: may be used to expand existing easements over time E.g. easement for carriages may be widened to

support cars If no acquiescence/permission see easement by prescription Counter by action for ejectment

o Easement by Prescription Note: also consider Adverse Possession State of mind is generally irrelevant for this, unlike some AP Counter by action for ejectment Requirements

Open and notorious use (not possession) Continuous use

o Route must be clear--use same route every time you cross the property

Adverse (without permission)

o Relaxed slightly, cannot be explicit permission

o BUT granting permission can open possibility of easement by estoppel

For the statutory periodo Usually 5 years

Note: if use is exclusive, see Adverse Possession Counter by action for ejectment

Common law principle: getting an easement by prescription creates no obligation to pay

Reasoning: property rule protection for plaintiffs; reward land use

Argument against: private eminent domain (via court enforcement) without just compensation

Warsaw v. Chicago Metallic Ceilings, Inc. (p. 1002) Example Facts: P used neighbors driveway for years without

permission, litigated the issue and in the middle D put up a building

Ruling: all elements of easement by prescription are met, and D had many other options to prevent the easement from coming into existence (jerk loses)

o D doesn’t get damages for removing the building because of bad faith

Remedies Analysis (see Calabresi)o W/o Compensation:  Property rule for

defendant to Property rule for plaintiffo W/ Compensation: Property rule for

defendant to Liability rule for plaintiff (must pay the price for their right)

o Concerns: fairness, private eminent domain? Methods of termination

o Expiration: easements may be explicitly limited in time either to a term of years or defeasible like a fee

o Explicit Bargain or Release: writing that releases burdened party or property--does not apply to conservation easements

o Merger: dominant and servient estates come under common ownership Does not automatically return if property is split again

o End of Necessity: if necessity ends then so does the easement (for easements by necessity)

o Abandonment: statements or actions by benefited party inconsistent with continued use of easement, something beyond mere nonuse

o Prescription: owner of servient property acts as if easement isn’t there; see rules for easement by prescription

o Condemnation: if the government takes the servient estate it can pay for the easement across it to be terminated

o Estoppel: if the benefited party makes statements about the state of the easement (i.e. that they won’t use it) and the servient party reasonably relies then it may terminate the easement

o Sale of Servient Estate to BFP without knowledge of easement Only applies to unwritten easements, not to written ones

o Excessive Use/Misuse Simple misuse generates damages, not termination. Misuse

must be gross or malicious. Penn Bowling and Recreation Center v. Hot Shoppes (1021)

Facts: Appurtenant easement benefitted only one of P’s properties; P used it for the benefit of his other property and incorrectly (parking cars, not just transportation)

Rule: Easements appurtenant must be used only for the intended dominant tract, use for benefit of other properties can result in injunction or termination of easement

o Today courts would also consider damages for past use

o “An authorized use and an unauthorized use may be intermingled in such a way as to justify enjoining any use until the circumstances have so changed that the authorized use may be permitted without affording opportunity for the unauthorized use, which it would be difficult to discover or prove”

License vs. Lease vs. Easemento Baseball Publishing v. Burton (p. 983): Lease=Possess, License=use,

Easement = Exclusive Right to Use Facts: Document called a “lease” gives P the right to put up a

billboard on D’s property for one year with option for 4 more years at same price, D cancels and takes it down

Rule: Easement, not a license, because it’s a conveyance of an exclusive right and privilege to use (not possess, but also conveys some interest in land?)

That paperwork says “lease” is not dispositiveo Not a lease because landowner retained

possession Licenses can be done orally, easements are done by

writing THIS IS NOT A RULE, hard line to draw

Conservation Servitudes (often called conservation easements but don’t look like easements)

Protect values other than the pecuniary: ecological, historical, or aesthetico Would not be protected by the marketo May make the property less valueo Often come with a government payment or tax benefit

Perpetualo Cannot easily be extinguished through releaseo Merger does not kill them

o Zoning Part of three-part system of regulating land use (nuisance, servitudes) Come from all levels of government, at state level developed from police power Reflect the public/democratic view

Concern: tyranny of the majority Policy: If ordinance is properly implemented and property is alienable, all property

owners benefit as the winners will see their property value go up by enough to compensate the losers.

Also non-pecuniary benefits:o Public health and safetyo Aestheticso Preventing infliction of harm and nuisance/nuisance-like activity

History:

Initially not very comprehensive, dealt mostly with noxious businesses Buchanan v. Worley (p. 1062): racial-based zoning laws struck down as due

process violation: restraint on alienation (liberty to sell taken w/o due process) Impact of Buchanan was that private ordering began to dominate these types of

regulations Euclid v. Ambler Realty Co. (p. 1064): Nuisance-like behavior - preemptive

o Facts: comprehensive ordinances for use districts, height districts, and area districts. D makes facial challenge to law as a due process violation, does not make an individual claim

Cumulative/Euclidian Districts: types of districts are numbered and you can participate in listed restrictions of your class as well as those below

o Ruling: Zoning ordinance is not facially unconstitutional as they attempt to prevent nuisance-like behavior, which is w/in state police power. Ordinances may be unconstitutional as applied to individuals

o Policy takeaway; Some things that the law has not yet found to be a nuisance (e.g. apartment buildings) are nonetheless reasonable enough threats to the public welfare that the state may extend police power to take pre-emptive steps against them.

o Policy Takeaway: we want Euclid to protect itself as a politically distinct unit and to be able to resist encroachments from Cleveland

Amortization: period of time a non-conforming land use has to conform with zoning Harbison v. City of Bufffalo (p. 1074) - pre-existing nonconforming uses

o Facts: Barrelmaker had a pre-existing nonconforming use and was grandfathered in despite residential zoning laws. Then the city changed the law and gave him 3 years to stop business.

o Rule: right to a nonconforming use may be terminated after reasonable period of time to amortize investment in light of nature of the business, the property, improvements, character of the neighborhood

Here: 3 years in this case is enough timeo Amortization is a constitutionally permissible method of stripping

vested rights from non-conforming owners.o Dissent: this is an over-extension of zoning once used only for future

planning of neighborhoods - this is now pandora’s box and rights are ripe for the taking

Counterargument: original proponents of zoning thought that nonconforming use would wither away, but instead it has become more valuable

o Estates p. 504 Fee Simple Absolute: basic form of full property ownership

“To Marge and her heirs” “To Marge in fee simple” “To Marge” Old Rule: must include “and his heirs,” otherwise life estate New Rule: silence means fee simple absolute

Fee Tail: successive life estates to keep land in family Life Estate: present possessory estate that lasts the duration of a measuring life

Per autre vie: measuring life is not that of the estate holder Note: value decreases as the person gets older Future Interests

o If only “to X for life”: reversion in grantor (or grantor’s estate)o If “to X for life then Y”: remainder in Y (or Y’s estate)

Indefeasibly vested remainders Only when the heirs are known and follow a life

estate

For parties other than grantor Contingent remainders

Only when there is question as to a condition or limitation (i.e. defeasible)

Becomes Vested when the condition or limitation is broken

For parties other than grantor Vested remainders subject to complete divestment

For parties other than grantor Lisa in “to Homer for life, then to Bart; but if Bart

fails to graduate from high school by age 19, then to Lisa”

Bart’s remainder is subject to complete divestment Lisa here has a Shifting Executory Interest

Alternative contingent remainders For parties other than grantor Bart’s interest in “to Homer for life, then to bart if he

graduates from high school by age 19, otherwise to Lisa and her heirs”

Subject to Open For those in a class, such as children, where it is not

yet closed Uncertainty is to whether there are others in their

class, not whether it’s vested Can be vested remainders, etc. subject to open:

CAN be combined with defeasible fees Defeasible Fees

Important: Courts don’t like finding defeasible fees. They are more likely to find a fee simple absolute with advisory language unless the language specifically creates a defeasible fee.

Fee Simple Determinable: automatically ends and returns to the grantor upon occurrence of a specific event, i.e. if a condition is violated

o Future interest held by grantor (possibility of reverter in grantor)o Contains language like “as long as...then”o “To Springfield law school so long as it is used for instruction in the

law, then to O”o “As long as”o “So long as”o “While”o “During”o “Until”o Limitation, not a conditiono Need not say “then to O”

Fee Simple Subject to Condition Subsequent: terminates upon the demand (self-help or lawsuit) of someone with a future interest upon the meeting/violation of a condition. Exercise of option.

o Future interest: right of entry/power of termination (held by grantor)

o Contains language like “then has the right to”o “To Springfield Law School, but if it is not used for instruction in the

law, then O has the right to reenter and take the premises”o “But if”o “On condition that”o “Provided however”

o “If”o Condition subsequent separated by a comma

Fee Simple Subject to Executory Limitation: conveyed to a third party upon occurrence of a specific event

o Future interest: executory interest (held by the third party)o “To Springfield Law School as long as it is used for instruction in the

law, then to the Springfield Animal Hospital”o “To Springfield Law School, but if it is not used for instruction in the

law, then to the Springfield Animal Hospital”o “As long as” vs. “But if” used interchangeably,

Future Interests Reversion: future interest held in a life estate by the grantor, only for non-

defeasible feeso Presumed if nothing is written

Remainder: future interest held in a life estate by a third partyo Must be explicitly created

Possibility of Reverter: interest held grantor after a condition is violated, only for defeasible fees

o Presumed to go on forever unless SOL or rule against perpetuities Right of Entry/Power of Termination: interest held grantor at grantor’s

discretion after a condition is violatedo Presumed to go on forever unless SOL or rule against perpetuities

Executory Interesto No governing law on whether they are automatic like a possibility of

reverter, or must be acted upon like a right of entry.o They can be cut short, see p. 513-515o Always to a third partyo Differs from remainder (activated at death) because it cuts short a

living interest holder’s interest. o “to Bart, but if alcohol is ever consumed on the premises, then to Ned

Flanders” Subject to Open: if class is listed that may change

o Generally “to children/heirs”o Also Subject to Partial Divestment

Valuation Methods: Value of fee simple minus value of life estate (calculated by estate holder’s age) equals value of remainder or reversion.

Williams v. Estate of Williams (p. 519): ex. constructon Facts: Holographic Will to guy who had many kids but 3 unmarried daughters

living at homeo Wanted to create a life estate for his 3 daughters not to be sold (i.e.

ensure they had a home if alive and not married)o Living daughter wanted it to be considered a fee simple absoluteo Heirs of other daughters think it is a life estate

Ruling: Finds o A defeasible life estate, each daughter had executory interest in each of

the other two daughters that vests upon death/marriage of that daughtero Other heirs have a reversion in fee simple once all three daughters have

married or died. Applicability to Non-real Property: Gruen v. Gruen (p. 549)

Facts: Guy attempted inter vivos gift of a remainder in a painting (i.e. future interest in the painting upon his death - father having life estate and the son having a remainder)

Rule: estate system that applies to real property can apply to personal property

o Exception: no future interests in things that are perishable (e.g. animals or crops)

o Security Interests: transferable property interest to secure obligation (debt usually), alienable Mortgages

Mortgage vs. Promissory Noteo Mortgage can’t exist without the noteo Mortgage is the security interest, recorded at the records officeo Note is a promise to pay that includes terms, schedule, interest rateo Either can be held and transferred by financial institutionso Old Rule/Mary's Little Lamb Rule: mortgage is merely a security for

the debt, promissory note contains the real promise to pay (everywhere the note goes, the mortgage follows but not the other way around)

Lien Theory: mortgagor (borrower) transfers to the lender a lien on the property until the amount on the note is repaid

Trust Theory: title is transferred to the lender, though without ownership, giving them power to foreclose

Deeds of Trust: fill in from supp. 2d Trustee holds title for benefit of lender until borrower pays off note

o If fully repaid, trustee transfers title to borrowero In foreclosure, trustee sells and holds proceeds for benefit of lender

Lender prefers to mortgage because in many states they have a statutory power of sale at foreclosure whereas mortgages do not imply this

Foreclosures Power of Sale

o Only when authorized by statuteo Lender may sell the property at auction shortly after the buyer defaults

and apply the proceeds to the debt o In many states statutory power of sale only granted to deeds of trust

Judicial Foreclosureso Requires lender to go to courto Buyer has right to prevent foreclosure through equitable redemption

Generally 90 days-12 months to redeem after sale Varies though See also right of redemption statutes

Deficiency Judgments & Anti-Deficiency Statuteso If property sells for less at foreclosure auction than the note is worth,

lender may collect a judgment for the deficiencyo Statutes against deficiency judgments are limited to residential real

estate Stronger for power of sale foreclosures

o Not available if it is a nonrecourse loano Equitable redemption available (see judicial foreclosures)

Right of Redemption Statutes time period where homeowner can pay to get back property after foreclosure (vary, unwaivable in some states)

o Foreclosure doesn’t end borrower’s rights - some states allow them to redeem the property for a specified period of time after the sale

o Some treat Deeds of Trust and Mortgages differently Securitization

Agglomeration of many security interests into a trust is common First National Bank v. Ibanez (Supp 2)

o Facts: Mortage and note changed hands between several banks before being securitized. Bank foreclosed on home, but had never properly been assigned the mortgage and filed it at the records office.

o Issue: could FNB foreclose given incomplete paper trail?

o Ruling: no, you need to hold valid title at the time of the foreclosure sale

o Reasoning: incentivize banks to follow the letter of the law, punish those that work sloppily and helped create financial crisis

o Note: listing of address in conveyances of packages would have been enough

o Ex ante vs. Ex Post Ex Ante: incentivizing banks to have good records Ex Post: potential for much litigation on similar sloppy titles

o Trust: splits benefit rights and management duties, in writing because SOF Parties

Trusteeo Legal owner but not beneficial owner: right to control but not enjoy.o Duty to maximize value of trust corpus (property held in trust)o May buy or sell assets in trusto Fiduciary duties to beneficiary

Standard of care: as if property was his own Settlor

o Original owner of property, loses legal rights once conveyed Secure from creditors so long as the trust was created before

the creditors sought to collect the asseto Keep your eye out for fraudulent conveyances, cannot give rights

away this way Beneficiary

o Gets benefit of trust without need to manage the moneyo See Spendthrift Trust

Notes:o Need not be the same parties, but sole trustee and sole beneficiary

cannot be the same persono Creditors and Trust:

Settlor: assets are secured unless fraudulently conveyed Trustee: creditors cannot target the trust because the

beneficiary own the trust corpus, and trustee has no ownership stake

Beneficiary: depends on type of trust (see spendthrift trust) Charitable Trusts/Cy Pres Doctrine: Wilber v. Owens (p. 794): Limit on Dead Hand

Facts: deceased set out $ to be given to Princeton that was conditional on them continuing and publishing his research

Rule: when settlor’s objects are impossible, the court may find a general charitable intent (not specific charitable intent) and make changes to the trust in order to fulfill the intent with an adequate replacement

o General charitable intent is when the trust is intended for the public good, not a private benefit

Reasoning: if we don’t apply cy pres doctrine the $ will go unused or not put to good use

Counter-reasoning: trusts are intended to preserve resources as desired by the testator, not spend them at will

Notes on Cy Pres:o Some courts will construe it broadly, applying $ to things far from

intent, others more narrowly to preserve the $ for a closely related purpose

o Liberal View/Trend: broaden cy pres to ensure $ is put to good, not private use, even if it doesn’t parallel settlor’s intent

o Narrow View: only applies if there is a true general charitable intent and obvious replacement (respect intent)

o If very narrow they just strike it out and don’t apply the doctrine (leave to heirs)

o For general charitable intent look to explicit language Spendthrift Trusts

Secure from the beneficiary’s creditors. Creditors cannot attach themselves to the trust, but can go after the beneficiary after he takes payouts.

Exception: some jurisdictions will allow child support to attach to payouts Broadway National Bank vs. Adams (p. 781): No Attachment to Principle

o Facts: Brother placed money into trust for debtor Charles and his children. Charles’ creditors wanted to come after the assets of the trust.

o Rule: Creditors cannot reach the assets of a life tenant’s trust. They have to wait for him to take payouts.

o Reasoning: Dead hand control. The intent of the settlor governs--the brother wanted this money to go to Charles’ children and be secure from his financial irresponsibility. Letting him use all the money at once to pay off debts defeats the purpose of the spendthrift trust.

o This is a limited restraint on alienability that is enforced because of dead hand control.

Policy: Dead Hand Control: settlor’s intent to protect beneficiary from his own

creditors governs Burdens on Creditors: must watch beneficiary for payouts and distinguish his

trust fund from his accessible forms of wealth No tort/contract tort creditor distinction Trend: child support liens may attach to spendthrift trusts

o Concurrent Interests Rights of Concurrent Tenants

Each tenant has full rights over the property no matter how many tenants there are

o Right to use, exclude, transfer interests, etc. Partition: ending concurrent tenancy by court action during dispute

o Partition in Kind: divide proportionallyo Partition by Sale: sell and divide propertyo Delfino v. Vaelencis (p. 599)

Facts: Ps and D own property in common Ps want to develop property into residences, but D

has garbage business there Concern: garbage business will reduce value of property, or

even prevent residential use Rule: To force a partition by sale, P must prove that a

partition in kind is (1) not practicable or (2) the interests of all owners will not be better served by a partition in kind.

D was entitled to partition in kind because property was easily divisible; and D’s best interests were keeping her land and business, not getting money damages.

o Some hornbooks say there is a trend toward partition by sale, but Mahoney disagrees and thinks there are too few cases to prove this

Trend for Disputes:o Courts used to say either work it out amongst yourselves or come to us

for a partitiono Today courts are more willing to hear an action for waste from one

tenant against the others

Joint Tenants Carry the right of survivorship

o When one tenant dies, interest transfers to other tenant(s)o Last living tenant holds the property in fee simpleo Harms v. Sprague (p. 611): right of survivorship is a separate interest

to which liens do not attach. Facts: Brothers had joint tenancy. One brother had a mortgage

lien against his tenancy. When he died, the mortgage holder claimed that the lien now attached to the other brother’s interest by the right of survivorship.

Ruling: Right of survivorship means the dead brother’s interest died with him, and so did the lien. The living brother’s interest, the right of survivorship, existed long before the lien did and was independent of it.

Note: not all states subscribe to the lien theory of mortgages and thus this might be decided differently elsewhere

Severance: turns into Tenants in Commono Old Common Law Rule: use a straw man, i.e. convey to a third party

who then conveys backo Some states have laws against secret severances, where the other joint

tenant doesn’t know (just tell them, don’t do in secret)o A mortgage does not sever a joint tenancy (see Harms)o Outstanding issue: does a lease by one tenant sever?

Tenants in Common Do not carry right of survivorship

o When one tenant dies, the interest is either willed or descends according to intestacy laws.

Tenants by Entirety Joint Tenancy with the Right of Survivorship but neither can unilaterally

transfer or exit while they are married Exists in 22 common law states; limited to married couples

o VA and a few other states allows this for personal property; most only allow it for real property

U.S. v. Craft (Supp. p. 12)o Facts:

Couple has T by E, husband owes back taxes and lien is placed on the property

Husband transfers via a quitclaim deed to his wife for $1 Wife tries to sell, but lein shows up with government asking

for half of the property (sells, holds half in escrow) o Ruling: take it as a bundle of sticks, he has enough to qualify as

property owner and thus the lien attaches Has use, possession, exclusion, survivorship Does not have: right to alienate or borrow against without

consento Takeaway: don’t try to trick the IRS

Community Property Minority of States (8 mostly in the west, formerly Mexico) Consider earnings and acquisitions during the marriage as property of the

marital unit (contrast CL states that treat it as individual property throughout until it is divided at divorce)

Divorce Common Law: generally split everything acquired during marriage up (some

courts will even go outside the marriage) o Look to length of marriage, but not fault except in egregious cases

o Some split equitably, some equally Community Property States: difference is the 3rd entity which owns all

things acquired during the marriage that must be split up (traditionally 50/50) Note: lines are blurring between CL and Community Property (used to be better

in Community Property for women) Extramarital Relationships: used to leave the losses as they lie (avoid

semblance of prostitution) but courts today are more likely to make equitable distribution and treat it as marriage (e.g. gay couples)

o Unjust enrichments: if 1 partner worked for the other unpaid, in exchange for getting their bills paid and having sex, the courts will compensate this partner.

o Some look at it as a contract - was there an implicit bargain Contracting around standard rules: prenups used to be unenforceable

(disfavored as for divorce and therefore against public policy), now they are (about procedural fairness)

o General rules: Only assets can be contracted to; couples cannot contract about children or change the general rules of marriage.

Courts won’t enforce personal conduct rules, eg. fat clauses.o Burden of proof: on spouse seeking to get out of prenup to prove there

was a procedural or substantive issueo Bonds (Supplement #1)

Facts: Barry made Sun sign a prenup. She did not get independent counsel because she wanted to speed up the wedding.

Rule: requires (1) voluntary agreement, and (2) not unconscionable at time of signing and (a) parties had fair & reasonable disclosure of assets/obligations, (b) if waiver of (a) it must have been voluntary, (c) parties could have adequate knowledge of property/obligations (see language)

Application: disbelieved language barrier, she consented to using his lawyer, and was given advanced notice

CA changed the law to require both parties to have independent counsel in order for voluntariness to be met.

2 types of Fairness: Procedural Fairness:

o Who knew what about the agreement and when relative to signing?

o Voluntariness/Not Coerciono Full disclosure of assetso Representation/signed waiver thereof o Comprehension of termso Adequate___?

Substantive Fairness:o Very unequal terms/terms so adverse that it

risks one spouse becoming a public chargeo Unconscionable terms

Ousters - see above Joint Bank Accounts

Money is tracked for who put it in, if you want it to go to another you must treat it as a gift

Putting someone on your account doesn’t give them rights to half the account, only what they put in

See NY statute though protecting the bank if one person withdraws the wholeo Wills

See Nemo Dat

See Williams v. Estate of Williams Formalism vs. Functionalism

Wills are normally read formalistically, but more weight is given to testator intent when the will is holographic (done without a lawyer).

o Gift Causa Mortis See Foster v. Reis See also Dead Hand

o Marital Agreements – different from prenuptuals? Title

o Marketable Title Not necessarily perfect title Free of liens, judgments, mortgages, easements, servitudes other than those disclosed Not subject to a claim or defect that creates an actual and significant threat of litigation

such that the buyer could not sell at fair value (difficult standard, totality of the facts) Marketable Title Statutes dictate what condition the title must be in, vary by jurisdiction Think Nemo Dat

o Chain of Title Gives notice to the public of ownership (record notice as part of constructive notice) Grantee presents a document (e.g. purchase/sale agreement, easement, etc.) to the

recorder who then stamps a date and time, titles it, copies it, and then indexes it either under names or tracts

Note: the records office does not guarantee the deed Title Searches:

Look through indices (name or tract) to find the Chain of Title Chain of Title: chronological chain of grants going back into the past Statute of Limitations or Law for Adverse Possession still dictate how far you

must search backo Caveat Emptor (and the dilution thereof)

Varies state by state, dead in FL (see Johnson) but not everywhere Old Rule (Caveat Emptor): Let the buyer beware. Duty on buyer to inspect and find

out what he was getting into. Sellers could enter into agreements/contracts where they bear some

responsibility for property condition at delivery. New Default Rules: statutes have rules (e.g. lead paint)

Includes things like haunted houses/famous murders New Houses vs. Old Houses: more responsibility for old houses Johnson v. Davis (Supp. 2):

o Facts: Contract signed for sale of home, buyers tender $5k deposit

and an additional $26k at closing Roofers disagree over how much the damages will be (just

$1k vs. new roof @ $15k is required)o New Rule: “we hold that where the seller of a home knows of facts

materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer”

o Rule: Implied warranty of fitness. Seller is liable if he intended to, and did, induce detrimental reliance on the part of the buyer by making false statements.

May include: structural defects, nuisance neighbors, planned zoning changes, etc.

Note: includes impending zoning changes, structural defects, construction, noisy neighbors, etc.

o See concepts of Notice

Types:o Actual: did the person have actual notice o Record (Constructive?): was the deed actually filed at that time?

Buyer presumed to know everything record office doeso Inquiry (Constructive?): was someone possessing the property in a

sufficiently notorious way to satisfy an adverse possession statute? Nemo Dat

o Priority/Recording Acts: normally not at issue (few cases) because people are smart and record Race Jurisdiction

No longer exists Awards title to first person to file at the courthouse

Notice Jurisdiction Title granted to a bona fide subsequent purchaser for value who had no notice

of any prior claim Race-Notice Jurisdiction

Same requirements as notice, and also requires the subsequent purchaser to record the title before any prior grantee.

Miller v. Green (Supp. 2d) - Inquiry Notice Facts: Seller sells to buyer while lessee is in possession of land. The lessee was

in open possession of the land, using it as an owner would (AP). Manure case Ruling: Seller did not have marketable title, and buyer had constructive notice

as the lessee was openly possessing the land. Buyer bore the risk and needed to inspect the property and make a title search.

o That the lessee failed to file his lease at the records office did not spare the buyer of his obligation to make a reasonable inspection of the property.

o Deed Elements

Identifies party Describes property Declares conveyance Signed by grantor May include servitudes and warranties

Delivery Transfer of the rights, not the recording of the deed at the office

o Recording is not required--simply for notice Normally done simultaneously with transfer of consideration

Surveying: rectangular vs. meets and bounds Remedies

o Property Rule Protection Specific Performance

Hardship Laches Equities

Injunctiono Damages

Loss of the Bargain Punitive Damages Special Damages

Takings and Eminent Domaino Taking

Regulatory Takings Penn Central Transportation Co v. New York City (Supp 3 p.2)

o Facts: Grand Central designated as one of a small number of NYC historic sites. Owners denied permit to build office building in airspace above station.

o Rule: “ad hoc” test to determine if police power vs. eminent domain Reciprocity of Advantage: when interference arises from

some public program adjusting the benefits and burdens of economic life to promote the common good (weigh burdens/benefits, does the landowner get benefits)

Penn Central:o Weakest part, but they get advantage

because the whole city benefits in keeping historic buildings (tourism, aesthetic value, etc.)

o Dissent: station itself doesn’t benefit from a law burdening a very small number of buildings

Character of the Regulation: “A taking may more readily be found when the interference with property can be characterized as a physical invasion by government”

Loretto: physical invasion of small box, wires, screws is sufficient to produce taking (unless temporary, e.g. control of time or place to restrict first amendment)

Penn Central: not physical, not dispositive, take up space though

Nuisance/Nuisance-Like: what is being restricted, is this a noxious activity given location, etc.

Euclid: though not a nuisance, certain types of industry or apartment buildings are like a nuisance, laws prevent possibility of nuisance

Penn Coal Dissent: Brandeis thinks mining coal such that houses collapse is noxious

Reduction of Value: Not actionable because entire parcel is considered and station still has great value as a train station

See Denominator Problem Penn Central:

o Value is to the whole (denominator), still has train station

o Looks also compensation by Transferable Development Rights

o Dissent: Denominator is air rights only; should be remanded to see if TDR is enough compensation for taking of air rights

Penn Coal: “past a certain magnitude there must be eminent domain”

o Sees coal estate as the value Lucas: wipeout w/ exception, no building of house =

no value left (though this finding was questioned) Investment-Backed Expectations: Construes PA Coal Co. to

protect “investment backed expectations” (based on discussion of contract/expectation to mine)

o In PA Coal: Expectation was they would be able to mine coal. Actionable.

o In Penn Central: Expectation was train station. Not actionable.

o In Lucas: Expectation was building homes. Actionable.

People assume certain risks when purchasing property (e.g. casualty or economic/social trends), but politics shouldn’t be part of it

o Policy Arguments: Majority: look to the bundle of sticks and see if character has

changed Penn Coal: you’ve taken an entire stick, compensate us

PA Coal Co. v. Mahon (p. 1268) o Facts: Estate separated so that different parties own surface home and

coal. New statute restricts coal mining when a home, not yours, is above the coalmine.

o Rule: at some point reduction of value goes too far, but government cannot operate if it must compensate every change, thus look to…

Reduction of Value: Dependent on denominator. Here we use the coal estate and not the full estate as the denominator, which makes the taking seem more extreme.

Pre-Investment Backed Expectations: weight contractual element heavily, expected to mine coal

o Reasoning: better to spread the cost of a socially beneficial change that will burdensome across the general public (through tax money) than making the losers pay

o Brandeis Dissent: focuses less on reduction of value and more on protection/benefit to the public

Flags Denominator Problem - affects whether actionable, not damages

Numerator is amount of damages Permanent Physical Invasion

Loretto v. Telepromper Manhattan CATV  (Supp 3 p. 11) - per se rule, not de minimis

o Facts: Cable company puts equipment on P’s roof and state statute prevents him from interfering with it.

o Issue: Does a permanent, but small, physical invasion constitute a taking even if the state has a legitimate purpose?

o Rule: Taking because it is an abrogation of the right to exclude, one of the most important sticks in the bundle

Distinguishes Prune Yard Shopping Center Case: temporary and limited nature of public protests is not a taking

o Dissent: High deference to political process (as opposed to majority’s formalism). Small physical takings are not that much different from permissible zoning laws and other regulation.

Total Economic Wipeout Lucas v. South Carolina (Supp 3 p. 15)

o Facts: P buys two lots, state beachfront management act diverges from previous legislation and prevents him from building, P argues that it deprives him of all beneficial value.

o Rule: regulations depriving owners of all value in property is a per se taking UNLESS the regulation can be justified as a government effort to ameliorate or ward off significant public harm

Right must be inherent in title before “taking” (i.e. not a previous nuisance)

Nuisance must come from common law, not invented by state statute

Constructive Taking: taking in all but name/formality of title

o Kennedy Concurrence: common law nuisance is not enough, should also be subject to some statutory environmental regulations, but this goes too far (no good line drawn)

o Blackmun/Stevens dissent: State modified law after 2 years so there was no permanent taking. Also, hard to call any law permanent since they can always be modified and repealed.

Stevens also adds that if the denominator approach doesn’t give you a 100% loss of value, you should go through other factors from Penn Central

o Souter: would dismiss because it appears that the finding below that there was a total wipeout may have been inacruate

o Others: Freeze land use at some point?o Carve out: really? So if you reduce to negative value it may still be ok

if it’s for strong public policy? Sloppy?o Look to the market to determine if it’s a total wipeout

Exactions: condition government puts on you before it grants building permit Nollan v. California Coastal Comm’n (p. 1347) - central nexus requirement

o Facts: guy wanted to build bigger beachfront house, government wanted to get lateral easement across the property to the beach

o Ruling: this is unconstitutional because there is no central nexus between the harm of the new development and the regulation sought

Dolan v. City of Tigard (p. 1348) - Roughly Proportional Requirement in addition to Central Nexus

o Facts: Plumber wants to expand store, government requires her to give easements for creek and for a public bike path

o Rule: Intermediate scrutiny given to rough proportionality. Rational to think bigger store may interfere with creek, but must go beyond rationality to make P give up her right to build.

P wins because city didn’t provide enough evidence for rough proportionality.

Horn v. USDAo Facts: raisin reserveo Rule: Nexus established (interest in a stable raisin market), and burden

on property owner is roughly proportional to the harm that would be done without the regulation. So no taking.

o Property General Rule: must be an identifiable tangible interest rather than sum of fungible money,

discrete asset, something with a “stuff-like” quality Phillips v. Washington legal Foundation: Regulations on Interest on Lawyer Trust

Accounts: (p. 1345) Lawyers hold client’s cash in special trust accounts but cannot take interest,

instead state bar associations take interest and apply it to legal service to the poor

Ruling: “interest follows principal” - the cash in the trust is the client’s property and thus any interest therefrom is also theirs (Bar associations are taking)

Almost like Increase/Principle of Accession Eastern Enterprises v. Apfel (p. 1345)

Facts: State imposed general liability on coal companies to fund benefits for retired miners

Rule: No taking because the law did not identify discrete assets, just general funds (law struck down on other due process grounds)

College Savings Bank v. Florida Prepaid (p. 1346) No property interest in being free from false advertising. Not discrete or

identifiable.o Public Use

Post-Kelo: Many states passed statutes saying economic development is not public use Kelo v. New London (p. 1223)

Facts: city makes development plan to spark economic development, Pfizer plant comes to city and city takes land around new plant for economic development zone

Rule: Beefed-up rational basis is applied but there remains broad deference to the legislature on social and economic legislation; significant enough public use to justify private enrichment

O’Connor dissent: Distinguishable from Hawaii Housing and Berman because the neighborhood taken in Kelo wasn’t  harming the public interest

o If the private property ownership has not become a negative externality eminent domain is not appropriate

Kennedy Concurrence: should apply beefed up rational basis, here the goal was to benefit the public, not a handout to Pfiser

Thomas Dissent: standard should be plausible public welfare o Cites to failed public welfare schemes o Concern: falls more harshly on poor and minoritieso Does not propose a rule

Berman v. Parker (p. 1227 in Kelo) - look to the whole Facts: took portion of DC in disrepair to use for schools and other public

facilities Ruling: ok because it was planned as a whole and for the entire community

o Although Berman’s store wasn’t a blight, as a whole, the community needed development

Hawaii Housing (p. 1227 in Kelo) - comprehensive plan Facts: transferred title from landlord to renters in exchange for just

compensation in order to diversify land ownership Rule: can take from A and give to B so long as there is a comprehensive plan for

the public interesto Here: this rationally addressed problems of land ownership

concentration that plagued the whole areao Just Compensation: normally fair market value

U.S. v. Miller (p. 1246) Facts: Government planned a dam. Undeveloped brushland was previously of

low value but increased due to speculated. Then when a railroad line had to be flooded to build the reservoir, government took speculator’s land as a substitute right of way for the railroad.

Issue: Is just compensation the FMV of the land before or after the dam was proposed?

Ordinary Rule: FMV at time of seizure/title transfer Exception: no windfalls, when the  actions the government is taking your land

for  increase the value of the land this is not taken into account Concern: did he pay the a higher price initially based on speculation that was not

compensated for Consequential Damages: if part of property is taken you can get Consequential Damages

for the reduction in value of the remaining property (if the whole is greater than the sum of the parts)

Whole Unit Approach: Payouts when property rights are split: if LL and tenant or T in common they pay value of fee simple and split according to interests

Quick Take Government may take title immediately and pay an estimated assessment of the

land’s value into a fund held by the court After litigation, the court will either order the government to pay more or return

any excess funds to the government.

Policy problem: Valuation. FMV undercompensates owners because if they valued it at FMV they would have sold it to the government instead of litigating through lengthy taking proceedings.

FMV compensation incentivizes owners not to litigate because they won’t get any more than the government's FMV offer

Compensating above FMV: encourages holdouts and litigation Theory & Themes

o Why do we award property rights? Desert - get a reward for labor Moral - they deserve it Timing - will people go out of business before congress can act Personal/Autonomy - protect one’s identity and ability to make a living Incentives - do we see adequate incentives to produce things in society?

Social value of conduct Balance: societal need for public domain vs. protections for innovators

o Tragedy of the Commonso Free-Rider Problem - see International News Service v. Associated Presso Division of Resources/Scarce Resourceso Bundle of Sticks

Right to possess Right to Alienate Right to Use, improve, etc. Right to Abandon Right to Exclude

Jacque v. Steenberg Homes, Inc. (p. 1): right to exclude is absoluteo Facts: delivery people drove over Jacque’s lawn after Jacque refused to

bargaino Ruling: right to exclude is absolute - no take and pay. Therefore, large

punitive damages were offered as a (1) deterrence and (2) compensation for violation of property rights

o See note 6 p. 9 regarding potential unconstitutionality (might violate due process)

Right to Destroy Right to Alter Theory Debate:

See Grey p. 20: “thingness” is unsatisfying, property is really an amalgamation of rights (leads to decline of property as a central line of political and legal thought - i.e. look at contractual/tort law instead of property law)

But see Penner p. 17: “it is my contention that the law of property is driven by an analysis which takes the perspective of exclusion, rather than one which elaborates a right to use” - “exclusion thesis: the right to property is a right to exclude others from things which is grounded by the interest we have in the use of things”

o Coase See class notes for Externalities, problems therefrom and solutions thereto You can always bargain around property rights, e.g. being adjudged a nuisance - it just

provides a framework Coase Assumes: no transaction costs, rational motivations (non-idiosyncratic

owners/non-wealth maximizers), tendency to cooperate, zero wealth effects.. Other Problems: valuation problems, time value of money, future uncertainty,

bilateral monopolies, assembly problems, information problems, sometimes the design of legal institutions (e.g. avoiding fragmentation), power problems, holdout problems, bad blood

o Calabresi See above

See also alienability See also things like Bilateral Monopoly (flesh this out)

o Blanket Restraints on Alienability General rule: restraints not enforceable

Courts will read them out; interpret as a hope of the grantor, not a term Morse v. Blood (p. 564)

o Facts: Husband willed wife property in fee simple unless she granted or willed it to any family member.

o Ruling: Unenforced restraint on alienation. Wife had property in fee simple absolute

o Reasoning: If she violated by selling to family, it would revert to the estate, and the heirs were the same family member that the husband wanted to keep the land away from.

OK when: restraint excludes only a small number of people or is temporary and would not significantly frustrate the value of the property

Rights of first refusal: Enforceable if grantee required to offer the property to someone at FMV before

putting it on the open market Not enforceable if sale is absolutely restricted to one person.

o Use Restrictions Generally: Valid, enforceable, can lead to forfeiture.

Courts will try to find language advisory instead of binding Not enforced when they are a backdoor to alienation restraints

Mountain Brow Lodge No. 82, Independent Order of Fellows v. Toscano (p. 567) Facts: Property given to the Lodge with restriction on use (for the lodge only)

and alienation (couldn't) Ruling:

o Struck down blanket restraint on alienationo Upheld use restriction, finding a fee simple subject to a condition

subsequent providing a right of entry for the grantor or his assigns upon violation of the condition

o Contract Theory (vs. Property Theory): see leaseso Institutional Competence

Which body can best compile information on the problem/possible solutions Constitutional Considerations See International News Service v. Associated Press (found quasi property right) See Nebraska v. Iowa (did not find new property rule) Uston v. Resorts Int’l Hotel: casino industry is so tightly regulated by legislature that

casinos cannot exclude anyone the legislature has not specifically acted to exclude.o Relative Ownership Rights: courts decide rights of parties in personam, best claim wins

See Johnson v. M’Intosh See Nemo Dat See Armory v. Delamire

o In rem vs. In personam In rem: a right against the world In personam: a right against a specific person

o Injunctive Relief vs. Damageso See Coase Assumptionso Ex ante vs. Ex posto Notice/Disclosure for Property Rightso Fragmentation of Property Rights

Along axis of time Amongst People

o Construction of Terms (e.g. Wills, Leases, etc) - adherence to formalities

o Statute of Fraudso Statute of Limitationso Estoppel & Part Performanceo Surveyingo Goals of the Courts

Promote public policy Disincentivize malicious behavior Reduce litigation Provide Clarity