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Section 1: Introduction/Overview =Overarching Themes= ==Defining and Competing for Property== * '''Basic property rights:''' ** o Right to Exclude ® exclusive possession of the property ** o Right to use ® use property to accomplish one’s own ends ** o Right to dispose ® who gets property when I’m done with it? And to what ends? * '''Limits: sources of law''' ** o Federal ® constitutional, statute, regulation/administrative rule, common law ** o State ® constitutional, statute, regulation/administrative rule, common law ** o Local ® ordinances * '''Why grant property rights?''' (1) encourage productive use of property ('''best and highest use'''); (2) reward labor and investment; (3) protect special relationships (family); and (4) enforce duties among people. * '''Types of property:''' ** o Immovable (real) property – primarily land ** o Movable (personal) property – livestock, money, etc. * '''Remedies:''' ** o Compensatory damages – make plaintiff whole ** o Nominal Damages – awarded to plaintiff when damages are immaterial ** o Punitive Damages – deter defendant (and others) from engaging in similar conduct *** See ''Jacque v. Steenberg Homes'' ** '''4 Different Types of Argument''' *** o '''Appeal to Authority''' (someone with experience agrees with me) *** o '''Rights-based''' Arguments (someone has a right to make X the outcome) (e.g. because Post invested time and money into getting the fox, he has a right to the fox) *** o '''Social Consequences''' Argument (P or D should win because it would be good for society) *** o '''Formal Realizability''' ("bright-line rule." It's a clear rule and the alternatives are messy. We can mitigate disputes going forward). ==Possession and Competition== * Relativity of Title ** o Who has best claim to ownership compared to others? ** o '''Law of Capture''': person with item under his control gains ownership. *** ''Elliff'': Correlative Rights Doctrine ® landowner has rights over things above/below property ** o '''Gray’s Rule''': bright-line rule. Person must retain control of object after incidental contact with people and things to maintain ownership ** o '''''Popov''''' '''Rule''': if person makes significant effort to gain ownership under Gray’s Rule but is interrupted by illegal act, then person has a legally cognizable pre-possessory interest in the object. ** o '''Occupying an Object''': 3 elements: *** 1: unequivocal ''attempt'' to possess object; *** 2: deprive the object of ''natural liberty''; and *** 3: bring object under possessor’s ''certain control''. ** o '''Prior Peaceable Possessor''' *** '''''Tapscott'' Rule:''' **** When land is in dispute, land goes to ''prior peaceable possessor''. ***** o PPP can’t say “D doesn’t own land” b/c D could make same claim. **** Possession ≠ ownership… improvement ≠ ownership **** '''First in Time Rule''': intruder cannot deprive peaceable possessor of land simply because he/she lacks perfect title. **** Relativity matters: Anderson (o.g. seller) has most perfect title to land. But Lewis/Cobbs (lady) has priority over Tapscott. **** Policy: special presumption in favor of familial bonds/improvements =Trademark/IP= * '''Lanham Act''': trademarks include “any word, name, symbol or device, or any combination thereof.” (Symbol is very broad/”squishy”). * ''INS v. AP'' (news case)'''' ** o Focus on relationship between owner and claimant, not relationship between owner and object or claimant and object. ** o News only has value when it is “fresh” and INS/AP compete for that “freshness”. ** o Policy: protect labor invested in obtaining object against competitor, but not public-at-large. * ''Qualitex'' (green-gold dry cleaning pads case) ** o Rule: “secondary meaning” that distinguishes specific product is protectable. *** BUT if trademark becomes ''overly'' identified (i.e. for whole industry), then it is no longer protectable b/c dilution. ** ''Virtual Works''/Cybersquatting *** o Cybersquatting statute: (1) bad faith intent to profit from another’s TM; (2) Register domain name confusingly similar to distinctive TM. *** o 9 factors, any one of which may establish bad faith (not all-inclusive list): **** 1. If TM or IP of P is in D’s domain name **** 2. Extent to which D’s domain name is a legal name of/name commonly used to identify P **** 3. Extent of D’s ''bona fide'' commercial prior use of domain name **** 4. Extent of D’s ''bona fide'' non-commercial prior use of domain name **** 5. D’s intent to divert customers or harm reputation of P using confusing domain name (create confusion, appearance of affiliation, etc.) **** 6. D’s offer to sell domain to P without previous ''bona fide'' use **** 7. D’s providing false contact info when registering domain **** 8. D’s registration of multiple domains that are all confusing (i.e. is D a serial cybersquatter) **** 9. Extent to which mark is distinctive/famous *** TM Terms: **** o '''Dilution''': decreasing TM’s effectiveness due to tarnishing or blurring. **** o '''Tarnishing''': inferior quality product associated with TM **** o '''Blurring''': TM loses association with particular company ***** '''Federal Trade Dilution Act''': grants relief when a mark is likely to cause dilution. ==TAKEAWAYS== * Tension between relationships: ** o Claimant-object ** o Claimant-claimant * Not enough to say "I have a property right". Claimant must discuss CONTOURS of that right * If asserting property right, claimant needs to articulate WHY it asserts that right * Reasons why government might want to award property rights: ** o Family relationships ** o Enforce duties among people in society * Various legal arguments that can be used to assert property Section 2 – Defining and regulating Property Rights =The Right to Exclude= ® Basic property right: people should feel secure on own property. ==Trespass== * '''3-factor test for trespass:''' ** o (1) Unprivileged; ** o (2) intentional; *** Intent to enter land, not intent to trespass (carried/dragged doesn’t cut it) *** If person’s property/agent goes onto land ® trespass *** Mistake does not excuse liability ** o (3) intrusion on property possessed by another. *** Intrusion ® person/agent/object, can be above/below surface ** '''Privileged trespass''': trespass is privileged if trespasser has any one of: *** o Permission from owner *** o Necessity (to prevent harm to person or property) *** o Entry is otherwise encouraged by public policy ** ''Jacque v. Steenberg Homes'': *** o Nominal/punitive damages awarded to P **** Policy: people should feel secure on their own property/ ==Common Law Limits on Trespass: Public Access== * '''Public Policy''' ** o ''State v. Shack'' (immigrant farmers case) ** o Property ownership ≠ dominion over humans on land. 2 basic limits: *** 1. Owner cannot isolate people *** 2. Owner cannot detriment people’s health, welfare, dignity ** '''Arbitrary Exclusion''' *** o Majority view: '''arbitrary exclusion permitted''': owner may exclude without cause. Only owners who cannot are common carriers. *** o Minority view: '''reasonable right of access''' (''Uston''): if business is open to public then members of public must have reasonable access unless disruptive or threatening. **** E.g. Gambler winning lots of money ≠ disruptive or threatening ==Statutory Limits on Trespass: Anti-Discrimination== * '''Anti-Discrimination''' ** o Statutory limits: '''Civil Rights Act of 1964''' *** Elements of claim under Civil Rights Act: **** 1. Show that P was excluded **** 2. On a protected ground (i.e. that P is protected class and that’s why P was excluded) **** 3. Show that offender was a place of public accommodation **** 4. Not private (e.g. not a private golf course) ***** o Exception: membership-based IF membership is predicated on a protected class (e.g. white-only club) **** 5. With an interstate commerce connection [DON’T WORRY ABOUT THIS ONE] [ASSUME THIS IS MET] (“assuming the interstate commerce connection is met”) *** Where cannot exclude? “any establishment which is physically located within the premises of any establishment otherwise covered or within the premises of which is physically located any such covered establishment AND which holds itself out as serving patrons of such covered establishment. **** E.g. Bloomingdales shoe counter that serves same customers as cafeteria **** Negative e.g. store w/ buzzer because not public **** Negative e.g.: store at other end of strip mall from McDonalds * '''State Civil Rights Acts''' may be ''more'' but not ''less'' restrictive ** E.g. add protected classes, expand scope of “public accommodation.” ** “including but not limited to” * Outer boundary of anti-discrimination: groups can exclude members whose characteristics violate 1st Amendment-condoned views. * o '''Civil Rights Act of 1866''': only covered discrimination on basis of race and in gov’t action (until recent reinterpretation) * o '''Civil Rights Act of 1991''': ensured that Civil Rights act also protected private conduct ==Constitutional Limits on Trespass: Free Speech Access Rights== * 1st Amendment only restricts federal government action. BUT courts interpret 14th Amendment to extend 1st Amendment to state actions. ** o '''“Trappings of Government”''' – in instances where a private entity takes on all roles of government (e.g. company town), that company is restricted by 1st (''Marsh v. Alabama'') * Context is key: ** o Protest protected when protest is related to place (e.g. against employer) * '''Shopping Mall Cases''' ** o ''Lloyd Corp. v. Tanner'' *** Vietnam War protestors @ mall not protected. Mall invites people onto property to ''shop'' not ''protest''. Protest was unrelated to mall and could be brought elsewhere. Mall ≠ “trappings of gov’t.” ** o ''Pruneyard v. Robbins'' *** Mall is open to public, and protestors’ views won’t be confused with mall’s views. Mall can simply post signs disavowing message. ** o '''Court’s concerns:''' *** Level of inviting public to property∥level of right to exclude relinquished *** GENERAL RULE: unless a property is similar to ''Marsh v. Alabama'', then trespasser does not have right to free speech on private property. But a court could look to more-inclusive state constitution to expand rights. =The Right to Use, and Contractual Obligations of Land Use Among Neighbors= ==Involuntary Transfers== * '''Clear & convincing evidence required b/c it’s taking/using someone’s property!''' * '''Adverse Possession''' ** o '''Policy: '''incentivizes people to SHARE massive expanses of land *** Big landowners need to (a) invite people to land or (b) have agents check on the land *** Encourages productive use of land *** Adjusts nuances of law to'' de facto'' situation on land *** Avoids unjust enrichment of title holder ** o Adverse possession actually transfers title to adverse possessor ** o '''6+ Elements of Adverse Possession:''' *** '''1: Actual possession''' **** Adverse possessor must ''actually'' be on land'''''' **** e.g. make improvements'''''' *** '''2: Open and notorious''' **** A reasonably diligent true owner is “on notice”'''''' **** Adverse possessor cannot be in the shadows'''''' *** '''3: Exclusive''' **** Excluding “trespassers” like a true owner would'''''' **** E.g. build a fence'''''' *** '''4: Continuous''' **** Tacking doctrine w/ predecessors in title'''''' **** Mimics presence of a true owner'''''' ***** o g. adv. poss. only @ ski condo during winter ✔💯'''''' **** '''5: Adverse/hostile''' ***** Non-permissive'''''' ***** If true owner catches adv. poss. and tells him to leave, it’s hostile'''''' ***** “No Trespassing” sign creates non-permissiveness'''''' ***** True Owner’s State of Mind'''''' ****** o Vast majority: presumption that silence is non-permissive'''''' ****** o Defenses can overcome silence: “I was in jail”'''''' ***** Possessor’s State of Mind – 1 of 2 tests'''''' ****** o Majority - Objective Test'''''' ******* P’s state of mind doesn’t matter b/c he possesses'''''' ******* “Claim of Right” – possessor acts like normal person toward land'''''' ****** o Minority - Subjective Test'''''' ******* Intentional disposition'''''' ******** Policy against: rewards wrongdoers'''''' ******* Good Faith'''''' ******** Only rewards innocent possessors'''''' ******* '''6: For statutory period''' ******** Different by state (~3-20 years)'''''' ******** Traditional common law rule is 10 years '''''' ******** IF no statute – look to statute of limitations for trespass'''''' ******* '''''Minority elements:''''' '''''' ******** “Color of title” ® imperfect title to land (e.g. title defect)'''''' ******** paying property taxes.'''''' ******** Both ''can'' shorten statutory period or courts will look more favorably'''''' '''''' * '''Prescriptive Easements''' ** o Differs from Adverse Possession ® affirmative USE not POSSESSION'''''' *** So… exclusivity is (usually) not an element. See above for the deets.'''''' ** o '''6+ Elements of Prescriptive Easement:''' *** '''1: Actual use''' **** this use is all you get ® no right to exclude owner'''''' *** '''2: Open and notorious''' *** '''3: Exclusive''' (''only sometimes'')'''''' *** '''4: Continuous''' *** '''5: Adverse/hostile''' **** Majority: presumption of silent permission'''''' **** Minority: presumption of silent non-permission'''''' *** '''6: For statutory period''' *** '''''Minority elements:''''' **** Acquiescence ® 2 ways to show:'''''' ***** o show that owner actually knew of use'''''' ****** turns “should have known” into “actually knew”'''''' '''''' * '''Improving Trespasser Doctrine''' ** o Party’s improvement innocently encroaches on other’s land'''''' ** o Remedies:'''''' *** If minimal, builder may just need to pay damages or undo improvement'''''' *** If big, '''forced sale''' (builder must buy improved land) or '''forced purchase''' (landowner must buy improvement)'''''' ==Servitudes== Rights or obligations that “run with the land”.'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''In General''' * '''Duty by servient estate to benefit dominant estate''' * Right or obligation that runs with the land * Simplest type: license – permission to entry, temporary and revocable. * Easement – irrevocable ==Easements== * Affirmative Right to do something on someone else’s land. * Test to determine if burden runs with land: ** o (1) Writing: Must be in writing *** '''UNLESS''' it falls into 4 categories of implied easements. ** o (2) Intention: Original grantor intended easement to run with land ** o (3) Notice: Subsequent owners must be aware of easement. * '''Major areas of litigation:''' ** o '''Does this easement run with the land?''' *** Look to easement test *** Look to language of easement writing to see if it was intended to stay with person (easement in gross) or land (easement appurtenant). *** When unclear, court decides. '''Majority view''': easements benefitting neighbor are appurtenant. ** o '''Scope of easement?''' *** Is a proposed use within scope of intent (e.g. widening road)'''''' *** Can dominant estate subdivide the rights of an easement? (If appurtenant, answer is usually yes if reasonable)'''''' *** Does proposed use place an undue burden on servient estate?'''''' '''''' * '''Creating easements:''' ** o '''Easement by Reservation''' *** Owner sells property but reserves easement (seller holds dom. estate)'''''' ** o '''Easement by Grant''' *** Owner sells property and provides easement on retained property (seller holds servient estate)'''''' '''''' * '''Two Types of Easements:''' ** o '''Easement in Gross:''' personal'''''' *** Granted to entity that does not own neighbor land (e.g. utilities, cable)'''''' *** '''Apportionable to 3rd '''parties unless otherwise stated in easement'''''' **** Policy: servient estate reserves no right to exercise control over easement so long as it is used within intended purpose and is not imposing undue burden.'''''' *** o '''Easement Appurtenant:''' benefits neighboring parcel'''''' **** Easement sticks with dominant/servient estate through transfers in title.'''''' **** Dominant estate may maintain, improve, or repair land covered in easement so long as it follows intent and does not impose undue burden.'''''' ***** INTENT is defined at time of granting, it does not change with times.'''''' **** '''Express Easements:''' ***** o Created by express written agreement of the parties.'''''' ***** o By reservation: former owner of land reserves easement when selling land.'''''' ***** o '''Rules:''' ****** Must be in writing (SoF will render unenforceable)'''''' ****** Common law rule: no 3rd party easements'''''' ******* BUT dominant estate can transfer easement rights.'''''' ****** Limited negative easements'''''' ****** No affirmative easements (i.e. easements that dictate how owner uses land. See covenants).'''''' ***** o '''Positive easements''': duty on serv. estate to benefit dom. estate'''.''' '''''' * o '''Negative Easements:''' ** Prevents owner from using land in a certain way ** Disfavored at law b/c difficult to observe. ** 6 narrow categories: *** Lateral support of one's building (traditional) *** Prevent blockage of light and air (traditional) *** Right to prevent flow of artificial stream (traditional) *** Conservation easement (preventing destruction of land -> environmental) (modern) *** Historic preservation easements (prevent destruction/alteration of buildings) (modern) *** Solar easements (protect access to sunlight) (modern) '''''' * '''Implied Easements''' ** o Easements that '''DO NOT need to be in writing''' and may be implied by court.'''''' ** o Policy: correct an easement that was unintentionally omitted from deed.'''''' '''''' * o '''Easement Implied from Prior Use''' ** Test: '''''' *** (1) common ownership/grantor'''''' *** (2) during period of common ownership, servient estate was used in a way that benefitted dominant estate'''''' *** (3) now that unity is severed, continued use of servient estate is necessary to enjoyment of dominant estate.'''''' '''''' * o '''Easement by Necessity''' ** Policy: nobody would buy/sell a landlocked parcel, so seller must have '''''' ** Test:'''''' *** (1) Dominant and servient estates were formerly one parcel, and'''''' *** (2) At the time of severance, dominant estate became landlocked'''''' **** o Doesn’t need to be ''impossible'' to access land, but alternate remedy is entirely unreasonable. (e.g. gorge example).'''''' *** Some states: always find an easement when no access'''''' '''''' * '''Easement by Estoppel''' ** o Imposed by court in 3 circumstances:'''''' *** 1: Parties attempted to create an easement but it is unenforceable due to Statute of Frauds (form of equitable estoppel)'''''' *** 2: Reasonable reliance on continued permission to use part of land.'''''' *** 3: Fraud/misrepresentation re: intent to create an easement'''''' '''''' * '''Constructive Trust:''' ** o Equitable exemption to Statute of Frauds'''''' ** o Imposed in an instance of fraud/mistake where property owner might deprive a person of supposed title ® forces owner to act as “trustee” for 3rd party “beneficiary” (''Rase'' '' Castle Mountain Ranch'')'''''' '''''' * '''Terminating Easements''' ** o Express agreement: parties can sign contract of termination'''''' ** o Original easement may have been limited in time'''''' ** o Merger: if dominant and servient estates become united in title'''''' ** o Abandonment: if dominant estate doesn’t use easement rights for a long time'''''' ** o Prescription: if dominant estate fails to act against servient estate’s obstruction of easement (like adversely possessing easement rights).'''''' ** o Marketable Title Act: (some states) any interest in land must be re-recorded over time or it will expire'''''' ==Covenants, Equitable Servitudes== The right to make an owner do/not do something on his/her own land.Why do covenants exist? Encourage security/alienability of land (e.g. I am more likely to be able to sell my house if buyer knows that neighbor can’t turn his property into a factory). ® covenant runs with ESTATE, not PERSON, so it sticks around. * '''Affirmative Covenants:''' ** o Obligation to DO something on land. (e.g. pay HOA fees, maintain a golf course)'''''' ** o '''Covenants in Gross?''' ''Person''’s obligation to do something with land. May be unenforceable b/c does not touch & concern land. * '''Restrictive Covenants:''' ** o Obligation to NOT DO something on land.'''''' '''''' * '''Six-Part Covenant Test:''' ** o (1) Must be in writing (SoF)'''''' '''''' * o (3) Grantor/ee intended benefit/obligation to run with dominant/servient estate'''''' ** Look to language in covenant (e.g. “heirs and assigns,” etc.)'''''' ** CYA: write that ish in the deed.'''''' '''''' * o (2) Servient estate had notice of restriction'''''' ** Types of notice:'''''' *** Actual ® verbal/written communication'''''' *** Inquiry ® condition would cause reasonably buyer to ask what’s up (e.g. every house in neighborhood looks the same)'''''' *** Constructive ® it’s recorded at the registry'''''' '''''' * o (4) Privity '''''' ** underlying policy is that ''binding land is bad'' ® make damn sure everyone involved intended it to happen.'''''' ** Horizontal privity: Ensures that original parties had mutual intent to create covenant.'''''' *** USA: Instantaneous privity ® instant in time upon transfer of land where owner can establish covenant. SO covenants can only be established upon conveyance. Get a trustworthy attorney.'''''' ** Vertical privity… 2 types:'''''' *** Strict'''''' **** o Where predecessor in title transfers entire title (e.g. sale)'''''' **** o g. sale, inheritance'''''' **** o Dominant can collect damages'''''' *** Loose'''''' **** o Where predecessor in title retains interest in land (e.g. lease, landlord/tenant situations)'''''' ***** NOT sufficient to enforce damages flowing from covenant breach, but can obtain injunction via equitable servitude'''''' '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' * o (5) Touch and Concern Land'''''' ** Does covenant affect the use of the land? *** Does burden relate to use of servient estate?'''''' *** Does benefit relate to use of dominant estate (would someone buy this)?'''''' ** Policy: ensures that covenant is actually related to the land'''''' '''''' * o (6) Cannot violate public policy'''''' ** No affirmative covenants to cook meth in the garage.'''''' * '''Equitable Servitude''': same as covenant BUT does not require horizontal privity or loose vertical privity'''''' ** o Can only enforce injunctive relief, no damages'''''' '''''''''NEW JERSEY and their BS:''' * Wipes out elements 5+6, replaces with new #5:'''''' ** o (5) Covenant must be reasonable – 3 elements of reasonableness:'''''' *** (1) whether coven ant had impact on considerations exchanged'''''' *** (2) Reasonable considering area and duration'''''' *** (3) Does covenant create unreasonable restraint on trade or interfere with public interest?'''''' '''''''''Privity Charts – Examples re: Loose/Vertical Privity''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' ==Implied Reciprocal Negative Servitudes== Used for planned subdivision developments: overcomes privity problem inherent in covenants (earlier buyers can’t enforce covenant on later buyers) and notice problem (when developer fails to include covenant writing in deed). All parcels act as both dominant and servient estate ® all parcels benefitted and burdened by IRNS. * Test for common plan ® IRNS (any one may satisfy) ® these show INTENT ** o Restrictions on all/almost all parcels in subdivision (modern rule: almost 100% required) ** o Recording of a plat at the registry ** o Restrictions in last deed sold *** Constructive notice: would a reasonably buyer check the last deed sold? ** o Sales materials show common plan ® we’re looking for ''some evidence'' that developer intended to bind all parcels ==Modifying and Terminating Covenants== * '''Same defenses as easements (see pg. 6-7 for details):''' ** o (1) Express agreement ** o (2) Covenant limited in time ** o (3) Merger ** o (4) Abandonment ** o (5) Prescription ** o (6) Marketable Title Act (some states) * '''Minor defenses – covenants only''' ** o (1) Unclean hands ® P tries to enforce covenant on D, but P is also violating the same covenant. ** o (2) Acquiescence ® P has allowed D to violate covenant in the past, so P relinquishes right to enforce. ** o (3) Laches ® A and B agree not to build X. B starts building X but A says nothing until the last second. B can defend X by arguing laches. ** o (4) Estoppel ® P tells D it’s OK to do Y that violates covenant. D proceeds to do Y. P is estopped from changing his mind. * '''Major defenses – covenants only:''' ** o '''Changed Condition''' *** Benefit to dominant estate is now impossible because of changed character of area. *** Test: has there been a fundamental change in character of neighborhood that renders benefits impossible? *** IRNS context: Evidence of changed conditions must come from within the IRNS area. ** o '''Relative Hardship''' *** Covenant will not be enforced if burden places hardship on servient estate that is an order of magnitude greater than benefit to dominant estate. ==Common Interest Communities== “Private government put in place by government” * '''Homeowner’s Associations/Condominiums''' ** o Created by '''declaration''' by developer before sale of first lot *** Conditions, Covenants, and Restrictions ('''CC&Rs''') recorded prior to first sale as a Master Deed or Declaration ** o Owners have voting rights, not renters *** Owners elect boards that can chance bylaws and covenants ® political process for owners who don’t like board decisions **** Changes must be ''reasonable'' **** HOA has fiduciary duty to owners. Courts use reasonableness to determine whether HOA is acting for community or one member *** '''Cooperatives''' * Community Land Trust ** o Created for low-income purchasers ** o Nonprofit Corp. buys land, grants '''ground leases''' to owners. *** Owners own structure, but not land. ** o On sale, owner must split equity (profits) with Land Trust. Keeps land cheap. * Limit Equity Cooperatives ** o Like a CLT/Cooperative (single building) ** o Buyer buys shares in co-op at fixed price, obtains lease to a unit. Shares can only be sold at fixed price, preventing market from affecting unit cost. * '''Court’s analysis:''' ** o (1) can HoA/condo association regulate X conduct? ** o (2) is it reasonable for HoA/condo association to regulate X? * '''Public Policy Limits on HOAs and Condo Assoc.''' ** o American Flag Rule ® always allowed ==Limitations (Racially Restrictive Covenants, Restraints on Alienation)== * '''Constitutional Limitations on Covenants – Racially Restrictive Covenants''' ** o ''Shelley v. Kraemer'' ® racially restrictive covenants unenforceable'''' *** Rationale: covenants are private. But when a judge comes along and enforces a covenant, it’s government. Government can’t enforce discrimination under Civil Rights Act 1866 and 14th Amendment'''' **** NOT USUAL RATIONALE ® this was cherry-picked to remedy this case. Judicial enforcement usually ≠ state action.'''' *** o Contrast ''Evans v. Abney'' (racist park case): '''''Cy Pres'' doctrine''' ® if will cannot be enforced, then figure out how decedent would have re-written it.'''' ** Fair Housing Act statute negates pretty much all this complex machination of law to avoid exclusion.'''' '''' * '''Restraints on Alienation:''''''' ** o Limits on to whom an owner may sell property.'''' ** o Disfavored at law ® prevents land from flowing to best and highest use'''' ** o Some courts: reject completely (WA) (“repugnant to the fee”)'''' ** o Restraints are subject to a reasonableness test:'''' *** PRESUMPTION that restraint is unreasonable'''' *** '''Is there a utility behind constraint?''''''' *** '''How much of a restraint is it?''''''' **** {| |- | {| |- |UnreasonableReasonable |} |} * Total restraint ® “can never be sold”'''' * Partial restraint ® “can be sold, but not to a circus”'''' * Indirect restraint ® Doesn’t limit alienability, but limits use by person who might want to buy'''' '''' * '''How reasonable is the restraint?''''''' ** {| |- | {| |- |Unreasonable Reasonable |} |} * Disabling restraint ® “all attempts to sell are null and void” (you literallty cannot violate this restraint)'''' * Promissory/forfeiture restraint ® “If B sells, then A enforces a promise” or “if B tries to sell, then land vests to A”'''' * Right of First Refusal ® “B can sell, but need to offer it to A first”'''' '''''''''''''''''''''''''''''''''''''''''''''''' * Grantor Consent Clause ® absolute constraint requiring grantor’s consent (unreasonable) * Right of First Refusal (reasonable) * EXCEPTION: restraint that would normally be unreasonable may become reasonable if to protect charity (i.e. protect charity from "selling out" to market forces) ** o BUT court might determine that sale is OK b/c outside of profit motive. ** o Need to look at PURPOSE of restraint ® just because a restraint ''could'' benefit a charity doesn’t mean that it’s for a charitable purpose =The Right to Dispose – Present and Future Interests= ==Formation and Interpretation== * '''Written into a deed ''''''® overarching theme is that these present/future interests effectuate grantor’s intent.''' '''''' {| |- |'''Present Interest''' |'''Future Interest (Grantor)''' |'''Future Interest (Third Party)''' |'''Writing''' |- |'''Fee Simple Absolute''' |------------------------------ |---------------------------- |O to A and her heirs |- |'''Fee Simple Determinable''' |Possibility of Reverter |--------------------------- |O to A so long as used for residential purposes |- |'''Fee Simple Subject to Condition Subsequent''' |Right of Entry(NOT automatic) |---------------------------- |O to A, but if ever used for nonresidential purposes, O may retake |- |'''Fee Simple Subject to Executory Limitation''' |----------------------------- |Executory Interest |O to A, but if ever used for nonresidential purposes, to B |- |'''Life Estate''' |Reversion |[[Remainder]] |O to A for life (reversion in O)O to A for life, then to B (remainder in B) |} * TERMINOLOGY: ** o '''Fee Simple Absolute:''' (O to A and his heirs) *** Ownership without future interest. ** o '''Fee Simple Determinable:''' (O to A so long as/while/during/until/unless) *** Ownership conveyed upon event happening (e.g. “O to A so long as A doesn’t party on the land”) ** o '''Fee Simple Subject to Condition Subsequent:''' (O to A provided that/on condition/but if) *** Ownership conveyed subject to a limitation (e.g. “O to A provided that land is used for residential purposes, if not, then O retains right of entry”) *** NOT an automatic transfer ** o '''Fee Simple Subject to Executory Limitation:''' (O to A until/unless… then to; but if… then to) *** When future interest in defeasible fee belongs to someone other than grantor *** Same as Fee Simple Determinable, except ownership transfers to 3rd party ** o '''Life Estates: (O to A for life)''' *** Conveyance for life *** '''Reversion''' (back to O) or '''Remainder''' (to B) *** Automatic shift, present life estate owner has no control *** Life estate present owner CAN sell interest, but reversion/remainder still exists (can’t sell more than he owns) ** o '''[[Contingent Remainder]]''': 2 types *** Remainder takes effect only on an uncertain event happening **** E.g. O to A for life, then to B if B has graduated from law school *** Remainder goes to person who cannot be ascertained at time of conveyance **** E.g. “O to A for life, then to A’s second son” (A has no kids yet) *** o '''[[Vested Remainder]]''' **** Non-contingent remainders (people are IDable, no conditions) 3 types: ***** '''(1) Absolutely Vested Remainder''': not subject to change ***** '''(2) Vested Remainder Subject to Open''': remainder that may be divided among multiple people ****** o g. “O to A and then to A’s children” ® land could go to any number of kids ****** o '''Rule of Convenience: open remainder vests completely at end of preceding life estate (class closes when A dies)''' ***** '''(3) Vested Remainder Subject to Divestment '''(“unless…”)'''''' ****** o Vested remainder may be destroyed by event occurring after conveyance'''''' ******* E.g. “O to A for life, then to B, unless B has flunked out of law school, then the property reverts to O”'''''' ****** '''Notes:''' ******* o “O to A for 25 years” = lease'''''' ******* o These are not covenants. They are forfeiture restraints.'''''' ******* o '''Fee Tail''': series of life estates that keeps land in family'''''' ******** “O to A and the heirs of her body”'''''' ******** Unending series of life estates'''''' ********* Abolished in 46/50 states, recognized in MA'''''' ********** o In MA, only enforced if you die intestate, can destroy fee tail by conveying the land'''''' ********* o If title ends with a contingent remainder, law will imply a reversion to the end (b/c contingency may not happen)'''''' ********* o “O to A for life, then to B’s heirs”. '''B has nothing'''. You don’t even know what someone’s heirs are until that person dies.'''''' ******** '''Doctrine of Merger''': combines logically indistinct conveyances (e.g. “O to B for life, then to B” becomes “O to B in fee simple”.'''''' ********* Occurs in interest buyouts.'''''' ******** '''Doctrine of Destructibility of Contingent Remainder''' '''(traditional/minority rule)''':'''''' ********* o If contingent remainder has not vested at end of present life estate, it’s destroyed. Property goes back to O in fee simple absolute'''''' ********* o '''(Modern/majority rule):''' If contingent remainder has not vested at end of present life estate, then property goes back to O in fee simple subject to executory limitation.'''''' ********** (i.e. contingent remainder still exists as a '''springing executory interest'''). (Condition can still not be met, which would turn FSSEL to fee simple).'''''' '''''' * '''Rule in Shelley’s Case''':'''''' ** o “O to A, then to A’s heirs” ® “O to A in fee simple.”'''''' *** Prevents unintended reversion (i.e. what if A’s heirs predecease A? It would go back to O because “A’s Heirs” acts like a contingent remainder)'''''' *** Policy: make future interests alienable.'''''' ** o “O to A for life of B, then to B’s heirs” ® Shelley’s Rule does not apply, even if B were to buy A’s interest. MUST BE IN THE SAME DOCUMENT'''''' * '''Doctrine of Worthier Title''' ** o If title gives remainder to grantor’s heirs, then law treats it as a reversion to grantor.'''''' *** E.g. “O to A for life, then to O’s heirs” ® “O to A for life, then to O”'''''' ==Limitations (Rule Against Perpetuities, New Estates, Waste)== * '''[[Rule Against Perpetuities]]''' ** o No interest is valid unless it '''must completely''' vest within 21 years of the death of a life in being at time of conveyance. *** ONLY applies to non-vested interests. *** Exempted: any interest by grantor, absolutely vested [[remainders]], vested remainders subject to divestment *** Applies to: executory interests, contingent remainders, vested remainders subject to open ** o 3-Step Process to Apply: *** (1) Is my future interest subject to the rule? **** Only executory interests, contingent remainders, and vested remainders subject to open. *** (2) How could rule possibly be met? **** Look for a validating life ® someone in title, within whose life + 21 years, the future interest will vest (if ever) ***** o ID triggering condition **** (3) strike out offending INTEREST (not just language). ***** If interest violates rule, strike out interest until title makes grammatical sense. **** o Policy: we don’t like “dead-hand control.” {| |- | |- | | |} '''''' '''Modern Modifications – some have struck this entirely, changed years to 99, etc.''''''''' # '''a) '''Wait and see: courts will not hold that a future interest violates the rule until the perpetuities period has passed and they are certain that the future interest has not vested within that period'''''' # '''b) '''Cy pres (equitable reformation): a court may reduce the age contingency of 25 to 21 if this will validate the future interest'''''' # c) Uniform statutory rule against perpetuities (USRAP): intended to supersede the common law rule against perpetuities entirely; statute authorizes the courts to reform the deed, will or trust in the manner that most closely approximates the transferor’s manifested plan of distribution and is within the allowable 99 year period # d) Abolition of the rule: at least 15 states (directly or indirectly through a long perpetuities period) Unborn widow example: * o O to A for life, then to A’s widow for life, then to A’s surviving children ** o A has life estate ** o A’s widow has contingent remainder (triggering condition *** RAP? Satisfied b/c we know who gets land at moment A dies. He is validating life. ** o A’s children have contingent remainder (triggering condition is death of A’s widow *** RAP? We don’t know who A’s widow is. It’s possible that A married someone who was not alive at time of O to A conveyance. Because A’s widow might not be alive at time of conveyance, A’s widow might not be validating life, thus violates RAP ** o (1) is this subject to rule ** o (2) (tough part) is it guaranteed to vest within RAP period (is that condition controlled by someone at time of conveyance ** o (3) strike out language Section 3 – Regulating the Housing Market =Common Ownership/Tenancies= ''Fractional Ownership of undivided possession'' * '''Tenancy in Common''' ** o Each tenant has undivided interest to entire parcel, but ownership may not be even. ** o Tenant in common may sublease his interest without consent of fellow cotenants. ** o Partition in event of severe disagreement. ** o Contractual obligations among owners can determine character of ownership. ** o '''Maintenance:''' *** Tenant IN possession is responsible for upkeep of premises, but can demand contribution from tenant OUT OF possession only if costs exceed FMV of rent. * '''Joint Tenancy''' ** o Right of Survivorship *** Cotenants “inherit” proportional pieces of dead cotenant. **** E.g. A, B, C all have 1/3 interest. C dies. A and B both get 1/2 of C's interest, so 1/6 each *** o Equal in time, title, interest possession. **** Must be equal shares in joint tenancy **** Joint tenants have future interest in each other’s estates. **** Joint tenant can sever joint tenancy by conveyance of his tenancy. ***** E.g.: A, B, C, D hold as joint tenants (so 25% each) ****** o D Dies. D's 25% is divided among A, B, C. So… ****** o A, B, C each have 1/3 joint tenancy. ****** o A sells to Z. So… ****** o B and C both have 1/3 joint tenancy, with Z as 1/3 tenant in common ****** o B dies. So B's 1/3 goes to C. So C has 2/3 and Z has 1/3 interest as tenants in common ****** o ONE OF VERY FEW TIMES THAT SELLER CAN CONVEY "MORE" THAN HE HAS ****** o b/c A had a "life estate" in property, but sells "fee simple" ****** o So… Z doesn't have "future interest" in B's and C's present interests, So in a sense Z gets more and less than A had. ***** '''Tenancy by the Entirety''' ****** o Available to married couples only. ****** o No partition right. ****** o Individual interests cannot be sold, encumbered, or transferred without spousal consent. * '''Ouster:''' ** o Booting a property owner from property. ** o Can start adverse possession clock ticking. ** o Ousted tenant is entitled to rent. ** o '''Actual Ouster''': *** Tenant(s) in Common prevent cotenant from entering premises (e.g. changing locks) *** Legal remedy: ousted tenant can demand rent from ousting tenants. ** o '''Constructive Ouster''' *** Tenant out of possession entitled to rent if circumstances are such that tenants ''cannot possibly ''live together (e.g. divorce). *** Departing tenant has burden of proving constructive ouster. *** Leaving for other reason severely hurts ousted tenant’s case *** Fault-based ouster: ''not entitled to rent'' ** o '''Fault-based ouster:''' (''Olivas v. Olivas'') *** Like constructive ouster, but rent not due because separation is fault of tenant out-of-possession (e.g. left spouse to be with another person) ** o '''Needs Based Rule:''' equitable remedy ® rent is due to ousted tenant if (a) tenant-in-possession has resources and (b) tenant-out-of-possession needs rent to live * '''Partition:''' ** o Court-ordered dividing of property held in common ** o Cuts property up and tells people to go their separate ways. *** Only real remedy of court. *** Former cotenants have fee simple absolute interest in respective partitions. ** '''Rent''': If co-tenants of joint tenancy/tenancy in common rent to a 3rd party, then co-tenants have obligation to split rent proportionally. *** o Profits from property are treated the same way. BUT a tenant-in-possession can pay himself a fair wage out of the profits ® only post-wage profits are shared. ** '''Statute of Frauds''' *** o Most states: only property interests of 366 days or more (MORE than 1 year) are unenforceable. SO… periodic oral lease agreements are generally enforceable. **** RELEVANT PERIOD matters: month-to-month =Landlord-Tenant Law= ==License vs. Lease== '''License:''' * Permission given by a property possessor to non-owners, allowing entry ** o Can be informal, verbal, implied * Permission is normally temporary * Revocable at will, non-transferrable * Implied from circumstance: ** o Entry may become trespass only if trespasser fails to leave when asked to leave ** o Cannot exclude based on discrimination * '''Licenses cannot be freely revoked in 4+ circumstances:''' ** o (1) A sells his personal property to B. Property is located on A’s land. B has irrevocable license to retrieve the purchased property. [License coupled with interest] ** o (2) Property owner promises to grant license (e.g. movie ticket) ** o (3) Easements by Estoppel ** o (4) Constructive Trust * '''Easements by Estoppel''' are irrevocable licenses. ** o '''2 basic arguments:''' *** (a) reliance (b) unjust enrichment ** o Test: *** (1) Owner gives permission for licensee to use property in a certain way *** (2) licensee relies substantially and reasonably on permission *** (3) Revocation of license would be unjust. ==Leasehold Estates== Lease usually includes the rent, the term, a description of the premises, and it has to be signed at least by the party against whom enforcement is sought (b/c SoF) * >1 year term must be in writing * ≤1 year does not need writing ® Look to renewal period * '''Work exception''' (''Vasquez'') if room & board is included with working situation, worker does not have a leasehold interest. HOWEVER courts may grant licensee the rights of a tenant in equity b/c of lack of bargaining power. * '''Grantor’s Intent – Look to Grantor’s intent to see if it’s a lease, license, or easement''' ** o '''Exclusive possession '''® right to exclude anyone, including LL ® lease'''''' ** o g. department store optometrist case ® department store could move the optometrist stand around, store staff cleaned it. So non-exclusive ® license'''''' '''''' {| |- |'''Leasehold Rights & Duties – A Mirror Image''' |- |'''Landlord''' |'''Tenant''' |- |Right to Collect Rent |Duty to pay rent |- |Right to Prevent Waste |Duty not to commit waste |- |Right to Revert at end of Leasehold |Duty to hand over property at term. of lease |- |Duty to deliver control of premises to lessee |Right to possession of leased premises |- |Implied duty of warranted habitability |Right to habitability |- |Other negotiated duties/rights |Other negotiated duties/rights |} '''''' * '''4 Categories of Lease:''' ** o Term of Years *** Tenancy lasts a specific amount of time, tenancy ends at breach trigger or at end of term. ** o Periodic Tenancy *** Renews automatically, doesn’t end automatically *** Notice to terminate required, usually w/ renewal period ** o Tenancy at Will *** Most states automatically convert to periodic tenancy ** o Tenancy at Sufferance *** Holdover tenant. See Summary Process. ==Landlord Rights== * '''Summary Process''' ** o '''Lessor cannot use self-help to boot a lessee. Must obtain court order.''' ** o Procedural process to boot tenant b/c LL is in higher position of bargaining power ** o Different by state. General process: *** (1) 14-day Pay or Quit: LL: “you have 14 days to pay or I begin process” *** (2) Find and serve tenant with complaint *** (3) File complaint form with housing court on a Monday within 7-30 days of service *** (4) Tenant has 7 days to answer, if he answers, then hearing takes place the following Thursday. *** (5) If tenant serves discovery w/ answer, then hearing pushed out 2 weeks. *** (6) Tenant has 10 days to appeal judgment. At end of 10-day period, constable can evict tenant. * '''Recovery of Lost Rent – 3 Options for LL''': ** o '''(1) Accept tenant's surrender''' ® tenant is off-hook for future rent *** Landlord can still sue for back rent + Damages *** (Back Rent) + [(Lease Value) – (Fair Market Value)] ** o '''(2) Re-Let on Tenant's Account''' *** Can re-let on tenant's account *** Found sub. tenant: (Back Rent) + [(Lease Value) – (New Lease Value)] *** No sub. tenant: (Back Rent) + [(Lease Value) – 0] **** Must make good-faith effort **** New rent must be ''reasonable'' *** o '''(3) Wait and sue''' **** Landlord ignores what tenant is doing, files lawsuit at end of lease for back rent. ***** BUT courts don’t like this ® LL duty to mitigate damages. ==Tenant Rights (Constructive Eviction, Implied Warranty)== Modern tenants basically have a right to enjoy the leased premises. * '''Implied Covenant of Quiet Enjoyment (ALL leases)''' ** o LL promises not to disturb tenant’s possession, use, enjoyment of premises'''''' ** o Does not bar LL from entry in all situations:'''''' *** LL can enter to make repairs ® notice required'''''' *** LL can enter to market apartment ® notice required'''''' *** LL can enter in emergency situation'''''' ** o Remedy for breach is typically damages UNLESS violations rise to level of constructive eviction (e.g. sexual harassment) '''''' * '''Implied Warranty of Habitability (MOST leases) '''(generally not waivable)'''''' ** o Traditional view: LLs only had duty to fix known problems not easily identifiable by tenant *** Old policy: ''caveat emptor/caveat lesee'' ** o Modern view: LL has implied duty to deliver and maintain a property that is fit for human habitation (''Javins v. First Nat’l Realty Corp.'') *** Policy: tenants aren’t leasing LAND, they’re leasing HOUSING *** Policy: LLs should comply with housing code *** Policy: K law ** o Certain aspects may be waived (e.g. heat waiver in ME apartments for lower rent) ** o '''Test for breach of implied warranty of habitability:''' *** Look to housing code. Establishes ''prima facie'' evidence of breach. **** Many small violations **** One giant violation *** Look to general standards of living in the community ** o '''Remedies ''''''® Implied Warranty of Habitability acts as a defense.''' *** ''***Tenant must give LL notice and opportunity to fix IWH violation prior to self-help remedies***'' ** Rescission ® right to terminate lease prior to term ** Rent withholding: tenant can withhold rent while LL fails to provide habitability. LL will sue for rent or for eviction, and IWH is defense. '''Tenant should hold rent in escrow'''. ** Rent Abatement: lower rent using FMV test ** Repair and deduct: tenant pays for repairs and deducts from rent. ** Injunctive relief/specific performance: equity suit compelling LL to remedy problem. ** Administrative remedies: housing inspectors entitled to bring action ** Criminal penalties: State building codes may impose criminal penalties for failing to fix dangerous conditions ** Compensatory damages: tenants may sue for damages exceeding rent if damage to personal property or hotel stay was incurred * o NOTES on IWH: ** 7 states do not recognize ** Remedies vary by jurisdiction * '''Actual Eviction''' ** o LL bars tenant from property (e.g. changes the locks). '''''' ** o Tenant duty to pay rent terminates'''''' ** o Tenant may seek damages or equitable action enjoining LL from eviction'''''' '''''' * '''Partial Actual Eviction''' ** o Traditional remedy: breached lease: tenant can leave and is not liable for future rent.'''''' ** o Modern/recently developed remedy: rent reduction'''''' '''''' * '''(Partial) Constructive Eviction''' ** o Action by LL renders part/all of property uninhabitable for purposes of tenant. *** E.g. tangibles like construction, or intangibles like sexual harassment ** o Tenant must actually withdraw from all/part of premises to make claim ** o Remedy: * '''Duties AMONG tenants''' ** o Most leases: clause directing tenants not to disturb neighbors’ quiet enjoyment ** o Breach ® LL can evict. ** o Bad breach ® other tenants may have nuisance claim ** o Linked with Implied Covenant of Quiet Enjoyment:'''''' *** Tenants will not disturb other tenants'''''' *** LL will evict disturbing tenant'''''' *** Victim tenant can terminate lease if LL fails to act'''''' '''''' ==Retaliatory Eviction== * Uniform Residential Landlord Tenant Act – LL may not retaliate by increasing rent, decreasing service, or threatening to bring an action after tenant (1) complains to gov’t agency about building code violation, (2) complains to LL about URLTA violation, (3) organized or become part of a tenant union. * Protected tenant activities: ** o (a) form tenant association ** o (b) complain to gov’t re: violation ** o (c) complain to LL re: violation *** These serve as defenses against LL eviction, NOT causes of action. ** Bringing a defense? 2-part test: *** o (1) Tenant participated in protected action and *** o (2)(a) LL’s action (rent increase, etc.) took place w/in 6 months ® presumption of violation *** o (2)(B) LL’s action took place more than 6 months ago? Presumption against violation. *** o LL can show legit reasons: **** (1) reasonable exercise of business judgment **** (2) LL’s good-faith desire to dispose of property free of tenants **** (3) LL’s good faith desire to change use of property **** (4) LL lacks financial ability to remedy housing code violations and thus wishes to cease tenancies **** (5) LL was unaware of tenant’s protected activities **** (6) LL did not act immediately after learning of tenant’s conduct **** (7) LL’s act was not discriminatory *** LL ''may'' take action in the non-retaliatory following contexts: **** o (1) Tenant caused a problem **** o (2) Tenant is in default for rent for 3+ days *** Retaliatory eviction defense may only be evoked in response to retaliation for '''tenant activity directly related to tenancy'''. **** o g. ''Fout'' case ® tenant evicted b/c free speech association ==Commercial Leases== * '''LL Consent Clauses – Subleasing/Lease Transfer''' ** o ''''''Jurisdictions are split on whether LL Consent Clause to transfer lease is reasonable.'''''' *** 13 states (minority): reasonableness test in commercial context'''''' **** Split within these states as to whether parties can K around consent'''''' *** Majority: LL consent clause is not unreasonable'''''' ** o No reasonableness in residential leases b/c they’re not for profit.'''''' '''''' * '''Bonus Value''' ** o Bonus value = FMV – rent cost.'''''' ** o Can be an actual asset of entity ® right to sublet ® profit on lease'''''' *** Some leases force lessee to share bonus value profits with LL'''''' ** '''Ground Leases''' *** o Generally lessor = city/gov’t; lessee = developer.'''''' *** o Usually term of years w/ option to renew'''''' *** o Long-ass (99-year) lease for major development'''''' *** o Developer builds, then subleases.'''''' *** o Allows cities to avoid entering LL business, allows developers to defer huge cost of buying prime real estate.'''''' '''''' * '''Robert Hale – LL Restrictions Policy Argument''' ** o There is uneven bargaining power between LLs (powerful) and tenants (powerless)'''''' *** So… LL-Tenant law must protect tenants'''''' **** E.g. make certain clauses unenforceable (consumer protection)'''''' **** E.g. LLs can’t use self-help (need courts)'''''' *** '''Alan Schwartz – counterargument to Hale''' **** o LLs admittedly do have more bargaining power than tenants'''''' **** o BUT taking a bargaining chip out of the game hurts tenants more than LLs'''''' ***** (metaphor: LL has 10 cards, tenant has 4. Taking a card away from both hurts LL by 10%, tenant by 25%).'''''' =Real Estate Transactions= * '''Deed: 4 requirements''': ** o (1) ID parties ** o (2) Describe property *** Precise description ® references to "metes and bounds", recorded plat, surveys. *** "metes and bounds" describes property in reference to existing objects ** o (3) State grantor's intent to convey property interest ** o (4) Contain grantor's signature ** o Delivery to grantee conveys title - NO NEED TO RECORD *** Recording protects grantee rights *** Notarize + witness ** o '''Transfer of ownership takes place upon delivery''' '''''''''Purchase process''' * '''Offer''' ** o Offer IDs and includes: *** The property sought (address, copy of deed premises, character) *** Includes and excludes (furnished? Chandelier? Rug?) *** Earnest money to show offeror is serious (usually $1000) **** Cannot recover if you back out as buyer *** Offer usually only good for a short period ** Purchase & Sale (P&S) *** o ¶1: “who” (buyer and seller) *** o ¶2: “what” (premises) *** o ¶3: right to buy, free and clear of encumbrances, but not exempt from building/zoning laws, party laws, property tax, municipal betterments (e.g. sidewalk clearing), easements, restrictions, reservations of record *** o Plans (if new construction *** o Purchase price (5% down) *** o Closing date/time (registry closes at 4pm so early time important) *** o '''Possession and condition of premises – KEY TERMS:''' **** '''BUYER WANTS:''' ***** No holdover tenants ***** If buyer finds tenants, buyer can back out ***** Seller has duty to present perfect title ****** o Seller will limit max $ spent to cure title defect ****** o Failure to perfect title: buyer can back out ****** o Buyer’s option to accept imperfect title ***** Homicides, deaths, reported hauntings * '''SELLER WANTS:''' ** Acceptance of deed ** Use of money to clear title ® seller will use proceeds of purchase to discharge mortgage ** Insurance: in MA, risk is with seller until moment deed is conveyed ** Adjustments: buyer must pay seller for utilities if dates don’t line up with conveyance (i.e. if seller is on hook for electric/gas for a few days) ** Buyer’s default: *** o Liquidated damages clause b/c can’t sue for specific performance in MA ** Mortgage clause – '''buyer commits to ''bona fide'' effort''' to obtain mortgage for purchase *** o NOTE: Seller will want pre-qualification letter from bank *** o NOTE: Seller should not agree to government-backed loan mort. ** Doctrine of nondisclosure – ''caveat emptor'' – inspector may be liable for missed physical defect in structure, but not seller. ** “provisions of this contract will provide for closing of the deed” ** “Buyer cannot recoup deposit in event of no closing” ** Buyer agrees that purchase is not contingent on another sale ** “agreement may be assigned and recorded without buyer’s consent ** Avoid “knew or should have known” language ® leaves seller open to challenges if defect * '''Other:''' ** Brokers – don’t get paid unless deal closes ** Deposit – held in escrow ** Merger clause – 1 K ** Access clause – buyer can access property for reasonable stuff (e.g. measurements) BUT seller not liable for damages resulting from buyer’s inspection ==Process of Residential Purchase/Sale== * SELL: Hire broker ® posts to Multiple Listing Service * BUY: Hire broker ® accesses MLS ** o (1) Offer: if seller accepts, then “agreement to agree” to buy. *** Earnest money ($1000) shows good faith of buyer ® avoid speculators *** Offer usually terminates within 24 hours ® avoid speculation ** o (2) P&S *** More detailed offer/acceptance *** Skeleton of deal *** 5% deposit minus $1000 already paid *** Buyer can still bail, but loses 5% deposit. ** o (3) Executory period *** P&S active ® sale contingent on (a) inspection, (b) mortgage, (c) title search **** Inspection ® buyer can leverage problems found to lower price **** Mortgage approval ***** o Financing due date ® but buyer would have already gotten pre-qualification letter **** Title ***** o Seller needs to show ability to convey marketable title ® no encumbrances **** Broker is nervous during executory period. He will try to smooth things along by recommending inspector, bank, etc. *** o (4) Closing **** Deed is physically transferred to buyer, remaining 95% of purchase price is given to seller. *** '''PROBLEMS''' **** o '''Loss''': ***** Traditional rule ® buyer has “equitable interest” in property, so if house burns down, it’s his loss. (stupid) ***** Modern rule ® buyer and seller almost always K around this in 1 of 2 ways: ****** (1) Seller is responsible, or ****** (2) Buyer is responsible BUT is entitled to all insurance proceeds. ***** o '''Misrepresentation''' ****** Seller is affirmatively lying about something wrong with the property. ****** This can result in damages or termination of sale ******* Seller’s defense: “opinion” or “reasonable person would observe/ask about this defect:” ****** Elements of misrepresentation: (1) a false statement concerning material fact; (2) that the maker of the statement knows is false; (3) made with the intent to induce reliance; and (4) consequent injury to the party relying on the statement. ***** o '''Suppression''' ****** Seller is engaged in affirmative act to hide a defect in property. ****** COULD be liable for EITHER ******* Misrepresentation (modern) ******* Nondisclosure (traditionally) ****** o '''Nondisclosure ''' ******* Seller simply doesn’t disclose a known defect, but makes no affirmative acts or statements. ******* Common law: seller is not liable. It’s buyer’s responsibility to perform due diligence on property. ******* Policy: ''caveat emptor ''environment ******* Policy: enhances alienability (seller sells and walks away) ******* Policy: recognizes that residential seller is not an engineer ******** BUT: ''Johnson'' case shows us that protection for buyers is expanding. * o [maybe irrelevant]: Danann rule: where a party specifically disclaims reliance upon a particular representation in a contract, that party cannot, in a subsequent action for common law fraud, claim they were fraudulently induced to enter into the contract by the very representation it has disclaimed reliance upon (or: “where a person has read and understands a disclaimer rule, he is bound by it”) ** Some courts reject, holding that non-reliance or as-is clauses still allow for fraud suits ==Brokers== * '''Work for SELLER ''''''® produce a willing & able buyer.''' * Brokers paid ~5 % of sale price ® huge incentive to push sale to completion ** o So… Brokers often stray into unauthorized practice of law by “filling in the blanks” * '''Some states: buyer’s broker''' who works directly for buyer (b/c these states enforce conflict of interest in seller’s broker dealing with buyer.) * Court may imply fiduciary obligations to broker ==Mortgages== Gotta pay for that house * 2 documents: ** o '''Note''': acknowledgement of debt ** o '''Mortgage''': recognition of lender’s right to foreclose on property in event of default * MortgagOR = borrower (homebuyer) * MortgagEE = lender (bank) * Bank will look to mortgage applicant’s credit, job history, assets, salary, value of home purchased, will do its own title search, may require buyer to purchase title insurance * Conventional loan: 80% of value of house, 20% down. ** o If buyer can’t put 20% down, bank may require Private Mortgage Insurance ® ''super duper expensive.'' ==Foreclosure== If mortgagor defaults on mortgage pursuant to the terms. * Lender begins foreclosure proceeding by showing court note, mortgage, and default. * Bank sends borrower “opportunity to cure” default ** o Some states: default triggers acceleration in payment ® entire note may become due * If no cure… public auction * '''Statutory Right of Redemption''' (majority rule): within 1 year of sale, mortgagor may buy property sold in foreclosure at foreclosure price. ** o Disincentivizes buying foreclosed property at auction * If foreclosed property sells for MORE than remaining value of note, proceeds go to mortgagor. * If foreclosed property sells for LESS than remaining value of note, mortgagee may sue mortgagor for '''Deficiency Judgment''' to protect expectancy. ** o Nonrecourse states (minority): deficiency judgment illegal. It is more difficult to get a mortgage in these states. Rates are also higher. Both b/c increased risk. * LIMITED EXCEPTION (''Spears ''case): foreclosure sale that then re-sells for MUCH higher FMV may constitute unjust enrichment to bank ® mortgagor may sue. ==Deeds== * '''Essential bits of the deed:''' ** o IDs parties ** o Describes property being conveyed: *** Sufficiently precise to locate boundaries *** Various ways to describe: can reference recorded plat, “metes and bounds” ** o State grantor’s intent to convey property interest ** o Contain grantor’s signature. * '''3 types of deeds:''' ** o '''General Warranty Deed''' *** Covenants against ALL defects in title (best for buyer) ** o '''Special Warranty Deed''' *** Covenants against defects caused by seller, but not seller’s predecessors (middle ground). ** o '''Quitclaim Deed''' *** No liability on seller, all on buyer (best for seller) (''caveat emptor'') ** o DEEDS DIFFER BY JURISDICTION *** E.g. “Quitclaim Deed” in MA = special warranty deed everywhere else. *** E.g. “Release Deed” in MA = quitclaim deed everywhere else. ** Warranties of Title – contained to various extents in deed types: *** o '''Title covenant or Warranty of Title ''''''® assurance by grantor in case of defective title''' **** Present Covenants - breached at time of closing **** Covenant of seisin - grantor promises he owns property **** Covenant of the Right to Convey - grantor promises he has the power to convey whatever is in the deed **** Covenant against Encumbrances - grantor promises that there are no mortgages, leases, liens, easements that encumber property aside from what's in the deed *** o '''Future Covenants - breached AFTER time of closing (subject to SoL)''' **** Covenant of Warranty - grantor promises to compensate grantee for any losses sustained in failure to convey property per deed **** Covenant of Quiet Enjoyment - grantor promises that grantee's ownership won't be disturbed by competing claims **** Covenant for Further Assurances - (rare) grantor promises to take steps to cure defects in title AFTER sale **** ==Recording Statutes/Systems== * Underlying Policy: Explicit delineation of relativity of title (''Tapscott'') * Traditionally: O to A, and then O to B… A wins because O can’t sell more than owns * '''Recording Acts''' ** o '''Race statutes''' - "race to the registry" - if O conveys to A and then B, but B records first, it's B's land *** Easy for courts to administer because it's black-and-white -> which instrument was recorded first? *** Minority rule – only in NC and LA ** o '''Notice statutes''' - O conveys to A and then B, neither record. It's B's land ONLY IF B was not aware of A's interest *** "''bona fide'' purchaser for value" *** Very common: 23 states ** o '''Race-notice statutes''' - O conveys to A and then B, but B records first, it's B's land O conveys to A and then B, but B records first, it's B's land only if B records AND was not aware of A's interest. *** Majority: 25 states Section 4 – Public Land Use Planning =Nuisance: Judicial Regulation of Land Use Among Neighbors= ==Nuisance== No defined relationship between neighbors ® relationship is simply nuisance.Key takeaway: Nuisance law grants judges value judgments. Judges are reluctant to exercise this power. So… Zoning laws/regulations take center stage.'''5 Elements of Nuisance:''' * '''(1) Intentional''' ** o Acted with the purpose of causing harm, or knew harm was likely to arise ** o Exception for unintentional but reckless conduct (e.g. fireworks) ** o P’s request to stop, and D’s failure to do so, constitutes intent because D is aware *** Minority jurisdictions: intent is not an element ** {| |- | {| |- |'''Substantial & Unreasonable go together:''''''Courts look to:'''(1) Extent of harm(2) Character of harm(3) Economic/social value of conflicting activities(4) Suitability of activities to location(5) The ability of either party to avoid the conflict and the practicability and fairness of making a party do so |} |} * '''(2) Substantial''' ** o Would conduct be offensive to a reasonable member of society? *** Nuisance law does not protect hypersensitive “eggshell” plaintiffs. ** '''(3) Unreasonable''' *** o Compare P’s and D’s use ® if P is a residential home and D is a nightclub **** Character of the harm **** Extent of the harm * '''(4) Non-Trespassory''' ** o Interference with ''right to use'' the land ® is D’s conduct '''physically invasive''' (trespass) or '''noninvasive''' (nuisance)? *** Grey area: smoke, radiation. Smart approach is to bring ''both trespass and nuisance claims''. Generally trespass needs ''macroscopic'' ''particulate matter''. ** '''(5) Interference with use and enjoyment of land''' *** o Flexible because each factor is subjective ® ''standards, not rules'''''''' * '''Remedies''': injunctive relief, damages. These can be contracted around ® nuisance as a bargaining tool. ** o '''Calabresi and Douglas’ nuisance remedies''' '''classification''': *** '''Property Rules''' fix absolute entitlement of either party to engage in or be secure from harm. Parties can privately negotiate payoff. *** '''Liability Rules '''prohibit A from interfering with interests of B unless A is willing to pay B a court-determined fee.'''''' '''''The Semi-Useless Table of Nuisance Remedies:''''''''''' {| |- |'''REMEDIES''' |'''P’s Entitlement''''''''' |'''D’s Entitlement''' |- |'''Property Rule'''''Absolute entitlement''''Privately negotiable'' |'''Injunction'''P can enjoin D from activityD can pay off P to continuee.g.:- D’s conduct is unreasonable and causes more social harm than good. |'''No Nuisance'''D has right to continueP can pay off D to stope.g.:- Harm to P insubstantial- D’s conduct benefit > harm, so it’s fair to impose harm on P- Harm to D of cessation would outweigh P’s current harm |- |'''Liability Rule'''''Interference with interests offset by fee'' |'''Damages'''D can continue to do nuisanceP gets $$$ damagese.g.:- D’s conduct is reasonable/beneficial but harm to P unfairly burdens P |'''Purchased Injunction'''P can stop D’s conduct BUTP needs to pay off D as determined by courte.g.:- D’s conduct is unreasonable but cessation harms D |} '''''Overarching question: at what point does owner’s exercise of right to use infringe on neighbors’ right to use?''''' * e.g. ''Prah v. Maretti'': D’s new construction’s shadow covers P’s solar panels. This is a nuisance because it’s not just aesthetic, there is an actual measurable harm. ==Law and Economics Theory of Nuisance== * Nuisances are an '''externality''' ® not taken into consideration when making judgment decisions. * PROBLEM with externalities: A is generating $10 in revenue, $12 in costs, but neighbor pays $3 of those costs. Thus, A benefits and society detriments. * Nuisance law seeks to '''internalize externalities''' by making actors realize the full expense of their actions. * '''Paguvian Analysis''': law should introduce social costs into private costs. If internalizing externalities causes A to become unprofitable, then A was inefficient to begin with. ---Alternative theory--- * '''Coase Theorem: Parties ill bargain to efficient result.''' ** o 1: If no transaction costs, then nuisance legal rule doesn’t matter b/c any legal rule will result in efficiency among parties. ** o 2: If transaction costs present, then court can increase society’s efficiency by assigning entitlement to party who would purchase them in absence of transaction cost. * '''Miscellaneous Nuisance Law''' ** o Mushy standard b/c, unlike trespass, there are infinite ways to cause nuisance. ** o Policy: “Filling Gap” doctrine: standard needs to be broad enough that it will “fill gaps” not specifically addressed by case law/statute (e.g. radiation in 1970s). * o '''Spite Fence''': conduct by one neighbor solely to interfere with neighbor ** ''Fontainebleu'': not a nuisance b/c aesthetic. ** ''Rattigan v''.'' Wile'': nuisance because harm of bad aesthetic outweighs the complete lack of benefit. ** General rule: if structure serves an actual beneficial purpose, it won’t give rise to cause of action. But if NO benefit, then it can be nuisance. ** Split: *** Some jurisdictions: ''per se'' rule that light is never nuisance ® “ancient lights” doctrine ® A has no right to enjoy light coming across B’s land. *** Some jurisdictions: balancing test ** o '''Coming to the Nuisance''' *** If A buys parcel knowing that B does X, then A is estopped from claiming that X is a nuisance. =Legislative Regulation of Land Use Among Neighbors= Municipal power to divide land into areas, restricting use of private property and thereby addressing nuisance issues before they arise. ==Zoning== * '''Policy''': promote development and mitigate nuisance before it occurs. ** o Harms and protects property rights, both by preventing violation! * '''Zoning Enabling Act''' ** o passed by state legislature allowing for municipal zoning ordinances. ** o Allows for creation of municipal zoning bodies (e.g. Town Meeting, Board of Commissioners, or powers could be held by Mayor, Selectmen, etc.) * '''Two types of zoning which are not mutually exclusive''' ** o '''Use Zoning''' ® regulates use (duh) *** E.g. Residential / commercial / industrial *** ''Usually'' (but not always) a “pyramid approach) ® you can build R, C, I in I, can build R and C in C, and can only build R in R. * o '''Area Zoning''' ® regulates size of lots, height of building, location of structures relative roads. * '''How to avoid zoning code?''' ** o (1) '''Interpret zoning code''' in a way that doesn’t prohibit use (risky) ** o (2) '''Rezoning''': petition zoning change *** $$$$$$ *** Limited by consistency with town plan ** o (3) '''Contract/Conditional zoning''' *** Contract w/ town to re-zone (disparaging: “'''spot-zoning'''”) ** o (4) '''Prior Nonconforming Use''' *** “Grandfathered in” after zoning law changes *** Must not substantially deviate from original purpose (e.g. restaurant ® nightclub not OK) *** Policy: protect owner’s reliance on previous zoning law ** o (5) '''Variance''': *** TEST: **** (1) undue hardship **** (2) unique circumstance **** (3) intent of the barring ordinance **** (4) neighborhood character *** Alternative (NH) Test: **** “what’s the variance you want? Is it inconsistent with zoning setup?” *** o (6) '''Vested Right''': **** When re-zoning occurs ''during'' construction **** Test: did developer ''actually break ground'' **** Policy: protect developers who relied on previous zoning ==Housing Discrimination: The Fair Housing Act== Combatting another way that property rights are used to effectuate discrimination. * '''§3604 – Fair Housing Act''' ** o Prohibits sale/rent (“otherwise '''making available'''”) of housing based on protected classes: (race, color, religion, sex, familial status, national origin) *** Also applicable to brokers (“steering”), finance (lending), tenants (sublet) ** o '''Two+ exceptions to FHA:''' *** (1) §3603(b)(1) “for sale/rent by owner” situation where owner is not a commercial landlord/seller and it’s a single-family home. *** (2) §3603(b)(2) rent in owner-occupied building with max 4 families living independently. **** Both cases: cannot '''advertise'''. ***** o “Subtle Signaling” advertising ® implicit discrimination ads **** Policy: forces discrimination to people’s faces (“at the door”) **** Policy: Avoids forcing property owners to ''live with'' people they dislike *** (2.5) '''Constitutional exception: §3601''': “it is the policy of the United States to provide, '''within constitutional limitations''', for fair housing…” ® judge may read First Amendment freedom of association (privacy) to trump FMA in reasonable situations (e.g. women looking for a female roommate). * '''IDing and Litigating FHA Violation''' '''''' * o '''3-Party Burden of Proof Analysis – Balancing Test''' ** (1) P shows ''Prima Facie'' claim *** '''4 element test creates ''Prima Facie'' presumption of discrimination:''' **** o (1) P must be member of a protected class **** o (2) P applied for and was qualified for rent/buy (finances) **** o (3) P was denied opportunity to rent/inspect/negotiate rent/purchase **** o (4) the housing opportunity remained available. *** (2) If 4 elements are met, then D has burden of showing no discriminatory motivation (i.e., there was another reason P was denied) *** (3) If D shows nondiscriminatory motivation, then burden shifts back to P to show that D’s defense was pretext * o PROBLEMS: ** Idiosyncratic “I don’t like you” is tough to prove to a jury ** Some legit LLs are labeled as discriminators ** Policy: better to be over-inclusive than under-inclusive with this stuff. * '''Disparate Impact – when legitimate interest disproportionately affects protected class''' ** o Different balancing act than LL FHA violation: balance legitimate interest vs. discriminatory impact. ** o Is FHA designed to protect individuals from discrimination, or shape integrated society? *** Both: (1) combat segregation and (b) prevent individual harm ** o Problems arise like ''Starrett City'': apartment complex makes nondiscriminatory decision (racially-allocated housing) but this causes FHA violation because people’s applications are rejected for protected-based reasons. ==Exclusionary Zoning== Use of zoning to make housing “otherwise unavailable” under FHA * ''Huntington City NAACP'': city’s denial of developer’s rezoning requirement to construct low-income housing ** o Disparate impact scenario b/c non-discriminatory decision became discriminatory. * '''Framework to Test:''' ** o (1) ''Prima Facie'' case: P establishes discriminatory impact ** o (2) Burden shifts to D to show nondiscriminatory motivation '''and that there are no less-discriminatory alternatives.''' ** o (3) If no alternative? Balancing Test.'''''' *** 1st Circuit: if town has legit reason that outweighs harm, then zoning is OK.'''''' *** 2nd and 3rd Circuit: Court weighs +s and –s itself.'''''' '''''''''''' * '''“Fair Share” Zoning:''' ** o '' Laurel'': NJ court ruled for rezoning so that a town would take in its “fair share” of region’s low-income residents.'''''' ** o MA: 10% of town's housing must be available to people who make less than 80% of median town income'''''' ** o Policy: law and economics (externalities) analysis applies'''''' *** Towns expel “externalities” (low income population) to large cities.'''''' =Corporations and Communities= * '''Tiebout and Peterson ''''''® Municipal Identity''' ** o '''Tiebout''': municipalities competitively “market” to individuals by offering “bundle”: e.g. schools, tax, jobs, traffic/transportation, crime, public utilities, intangible character of town.'''''' ** o '''Peterson''': municipalities competitively “market” to CAPITAL/COMMERCE'''''' '''''' * ''Youngstown Steel'': Union argued a “property right” to steel foundry located in town b/c town’s entire economy/society/identity arose from that plant.'''''' ** o Court: cannot enforce corporation to stay – private property'''''' '''''' * o THIS LEADS TO EMINENT DOMAIN/TAKINGS cases… '''''' =Eminent Domain/Takings= Government taking of private property for its use or the use of another5th Amendment: “private property [shall not] be taken for public use, without just compensation” ==Eminent Domain== * 5th Amendment Takings Clause imposes 2 limits on gov’t eminent domain: ** o (1) Substantive limit on power *** Taken property must be for “public use” *** SCOTUS interpretation: “public use” = “public purpose” *** Uncontroversial: ED to build roads, RRs, parks, etc. *** Controversial: ED to hand over to another private co. (e.g. corp. HQ) ** o (2) Process-Based Limit *** Just compensation *** FMV = just compensation (so… intangibles are lost) (e.g. ''The Castle'' Australian house) ** '''Judicial Role Argument''' *** o Current majority: local legislature is elected locally and it’s their job to decide what’s best for “public purpose” *** o Dissents: Try to stick with “use” by public ==Regulatory Takings== What does a regulation disgorge so much value from a property that it becomes a taking?'''Plaintiff’s (property owner’s) Approach''''''First Line of Defense: ''Per Se'' Takings''''''' * ''Per Se ''Takings – categories that are ''always'' disallowed * P will want to fit taking into a ''per se ''taking category * o '''(1) Permanent physical encroachments onto property''' ** Factors considered: was property already open to public? Ability of owner to control access; temporary or permanent ** Distinction between different types of gov’t physical encroachments *** Allowed: fire detector, mailbox, etc. *** Disallowed: cable box **** o Policy? Owner actually owns fire detector, mailbox **** o Policy? Detector/mailbox inherent benefit to owner *** Policy: physical encroachment doesn’t just limit one “stick” in property rights bundle, it '''chops right through the middle of the whole bundle'''. * o '''(2) Regulations that “completely deprive owner of all economic value of property”''' ** If government takes 100% of property value, but leaves it to you for liability purposes, you get compensated. ** Inquiry consists of: (i) degree of harm to public lands; (ii) social value of claimant’s activites and suitability to locality; and (iii) relative ease which harm can be avoided through claimant’s and gov’t’s measures. ** “Economic” = no use that people would pay money for *** b/c removes land from “highest and best use” ** EXCEPTION: regulation preventing common law nuisance '''Second Line of Defense – ''Ad Hoc'' Analysis''' (if P can’t fit into ''per se'' category): * ''Ad Hoc'' Analysis'' ''(''Penn Central'') * '''3 non-dispositive factors''' (gov’t almost always wins case, P ''really'' needs to smash one of these three levers to stand a chance): ** o '''(1) Economic impact:''' *** REDUCTION IN VALUE. How much is P hurt by reg.? Does P receive offsetting benefit? *** What's the denominator? (i.e. "air rights" vs. "property rights") *** ''Euclid'': this one won’t win on its own ** o '''(2) Investment-Backed Expectations of owner''' *** What did owner think he was buying? Does regulation interfere with owner's security interest in property? *** What was P’s reliance on the property? ** o '''(3) What is purpose/character of gov't action? ''' *** Does it simply cause harm or does it confer benefit? * Policy: ** o "Average Reciprocity of Advantage": A’s private land might be burdened for broader benefit, but others' are too, so it "evens out" in the end. ==Exactions== Government use of regulatory power to induce owner to relinquish a right, for which gov’t would otherwise need to compensate owner under takings law.'''''' * '''Essential Nexus Test''' ** o There must be an essential nexus between the government interest and public need/burden.'''''' *** i.e. the government’s harm (what it wants from the owner) must coincide with an actual public interest.'''''' *** E.g. ''Nollan'': Interest = viewing of beach. Harm = traverse across land. Not met because viewing ≠ traversing'''''' ** o '''''Dolan'' additional element''': “rough proportionality”: the impact of the harm must be proportional the magnitude of the public benefit'''''' ** o '''''San Remo'': ''' *** Fee charged to cheap motel owners who wanted to transform property into tourist hotel b/c San Francisco needed tax dollars''''''

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