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Property OutlineCheck emailed Singer outline to make sure you got everything* = make flashcards for terms in this sectionBasic Premise: Property rights in the United States are best thought of as a “bundle of rights,” which include the right to use, possess, transfer, and exclude people from your land, which can be said to be the most central right. None of these rights are absolute, as common law states, “one should so use his property as not to injure the rights of others.” Rights are relative and there must be accommodations when they meet. While rights can be transferred, no person can ever give away more than they have. In thinking about property rights, it is important to identify a) who has the entitlement; b) against which specific individual, and c) what specific acts are encompassed by the entitlement. Each topic covered explores the limitations of those rights, and who is allowed to limit them. LIMITATIONS TO THE RIGHT TO EXCLUDETrespassLegal rules limit the possessor’s right to exclude non-owners from the property. In such cases, non-owners may have a right of access to the property. These rights are created by different sources of law, including common law, federal and state pubic accommodations statutes and labor relations statutes, and federal and state constitutional guarantees of freedom of speech. Trespass is defined as the “unprivileged intentional intrusion on property possessed by another.” (Note: unprivileged assumes that there is no consent.) The intent requirement is met if the defendant engaged in a voluntary act, such as walking onto the property. It is unnecessary to show that the trespasser intended to violate the owner’s legal rights. The intrusion occurs the moment the non-owner enters the property and may include physical entry by a person, an agent, or an object. A trespass may also occur either above or below the surface. Trespass statutes are intended to protect ownership and possession of land. A trespass is privileged, and thus not wrongful if a) the entry is done with the consent of the owner (a person who enters property with permission is referred to as a licensee); b) the entry is justified by the necessity to prevent a more serious harm to person or property or c) the entry is otherwise encouraged by public policy. State v. Shack: A field worker and a staff attorney from the Farm Workers Division attempted to enter private property to aid migrant farmworkers employed and housed there. They were forcibly removed from the property. (Note: in the lower court they were convicted of criminal trespass). The issue was whether a trespass statute allows an owner to bar access to governmental services. The court held that the conduct of the defendants (attorney/worker) was outside the purview of the statute, since owners do not have the right to deny workers the opportunity for aid available from federal, state, or local services, and hence there was no trespass. In doing so, they acknowledged that the right to exclude was not absolute. Further, the law will not allow occupants to contract away what is deemed essential to their health, welfare, or dignity. Necessity, private or public, may justify entry upon the lands of another. (Themes of relative rights, necessity as an exception to trespass, no ability to contract away certain rights, and owners cannot bar access to certain services.)Desnick: Desnick was the owner and primary surgeon of an ophthalmic clinic. ABC used test patients to enter the office and record what they claimed was malpractice. Desnick sued alleging trespass on the part of the test patients because the consent was based on a “misleading omission.” This case brings up the idea of consent, defining trespass as “entering upon another’s land without consent.” There can be no consent, express or implied when it is procured by misrepresentation or misleading omission. However, some cases deem consent effective even though it was procured by fraud (in the case of reviewers). Factors to be considered when determined whether fraudulent consent still acts as consent: whether the trespass occurs in a private or public place and the interests protected (does trespass seek to protect the interest?). Here, the court determined that there was consent because there was no trespass-protected interest. (Food Lion offers an interesting contrast, where the court determined that reporters recording in a grocery store entered by consent but then trespassed when they videotaped because the action exceeded the scope of the initial invitation.)Uston: The resort/casino denied Uston access to their blackjack tables because his strategy increases his chances of winning, though the Casino Control Commission allowed his strategy under regulations. Uston contended that the resorts had no common law or statutory right to exclude him based on his strategy. In common law, an amusement place owner has the right to exclude unwanted patrons. Simultaneously, a patron has a common law right of reasonable access, though at that time the court often disregarded that right, allowing owners an absolute right to arbitrarily eject or exclude any person consistent with state and federal civil rights laws. The court recognized that “the more private property is dedicated to public use, the more it must accommodate the rights which inhere the individual members of the general public who use that property.” Thus, the level of scrutiny in determining the right to exclude increases the more a space is dedicated to public use. If property owners open their premises to the general public in the pursuit of their own property interests, they have no right to exclude people unreasonably, with the exception of patrons who interfere with the regular and essential operations or who threaten the security of the property. (Uston has the right to be on the property.) Uston extends the right of reasonable access to all businesses open to the public. (However, most states retain the traditional absolute right to exclude without cause and limit the duty to serve the public to innkeepers and common carriers. Glavin: The Glavins neighbors, the Eckmans, hired a landscaping company to cut down trees that were limiting their view at their vacation home. The trees were on the Glavins property. The trial court granted damages on the loss of the value of the timber-restoration damages (the reasonable cost of restoring the property as nearly as reasonably possible to its original condition, or if that is impossible, paying damages for the loss of that condition). The issue was whether restoration costs were an appropriate measure of damages? The court held that when applying a restoration cost measure of damage, as test of reasonableness (in regard to the cost of replacement and the replacement itself in light of the damage) is imposed, with knowledge that often such damages are used as a punitive measure to dissuade wrongdoers. Jacque v. Steenberg Homes, Inc.: Case in which Steenberg Homes delivered a mobile home via a snow-covered path across the property of Jacque despite his express denial of permission to do so (intentional trespass). The court held that when nominal damages are awarded for an intended trespass, punitive damages may, in the discretion of the jury, be awarded to prevent intentional trespassers who determine that they’ll take the risk of nominal damages (additional damages used as a deterrent for injuries that are hard to detect or have noneconomic harm). To determine whether a punitive damage award violates due process, the court considers: 1) the degree of reprehensibility of the conduct; 2) the disparity between the harm or potential harm suffered by the plaintiff and punitive damage award; 3) the difference between the remedy and the civil/criminal penalties authorized or imposed in comparable cases. The court also considers the profit made by the trespasser and the availability of alternative routes. Public AccommodationStatutesCivil Rights Act of 1866 (§§1981-1982) v. Civil Rights Act of 1964 (§2000a-2000a-6) (p.33): The 1866 act, which only prohibited race discrimination, had very broad language and was not initially applicable to private individuals. It also did not include any exceptions and allowed for the collection of damages. Through common law, the Supreme Court ruled that the 1866 Act did apply to private conduct. The 1964 Act also sets out the private establishment exception: “the provisions of this subchapter shall not apply to a private club or other establishment not in fact open to the public, except to the extent that the facilities of such an establishment are made available to the customers or patrons…” Courts generally look to see whether the organization is selective in its membership and has limits on the number of person who can join to determine whether they are a public organization. 1866 narrower because it’s only about race, broader because it includes transactions.To make a claim of discrimination under the 1964 Act, one must show: the establishment is a place of public accommodation: it must be listed in the statute or its nature as a place of accommodation must be implied; must serve the public, or its operations must affect commerce.Note: There is no prohibition of sex discrimination in public accommodations. The Supreme Court has never addressed the question of the whether the §1981, with the focus on not restricting the right to “make and enforce contracts” extends to restaurants, innkeepers, or retail stores or to answer whether the list of establishments in the 1964 act is illustrative or exhaustive. Most courts have interpreted the “right to make contracts” extremely narrowly, holding that the right is denied only when the patron is actually prevented and not merely deterred from making a purchase or receiving service after attempted to do so. The Americans with Disabilities Act (ADA) requires that accommodations be made in public places for people with disabilities. Public Parks and Public TrustPublic Trust Doctrine: The government holds lands that are submerged beneath the water, or that are capable of being submerged, in trust for the public’s benefit.Matthews v. Bayhead Improvement Association: The Association’s property and rules limited the public’s access to the ocean/sand to times when they could access it from adjacent plots of lands (during low tide). Primary issue in the case is whether, ancillary to the public’s right to enjoy the tidal lands, the public has a right to gain access through and to use the dry sand area not owned by a municipality but by a quasi-public body. The court ruled that the public’s right to enjoy tidal lands includes a right of access over privately held dry sand areas since the right to enjoy is meaningless without proper access. The court considered the location of the sand area in relation to the foreshore, the availability of public owned sand area, and the nature and extent of the demand. A quasi-public organization’s power to exclude must be reasonably and lawfully exercised in furtherance of the public welfare related to its public characteristics.Public parks can place time/manner restrictions but cannot deny people the right to protest. Democratic Property and Consumer ProtectionDePeyster: This was an action of ejectment brought to recover land on the ground of breach of the condition to pay quarter sale monies. The issue was based on a lease between the parties mandated that if the lessee decided to sell he had to first offer the property to the lessor and if the lessor did not take it, he still received ? of the price it eventually sold for. Issue: Whether the condition in the lease to pay quarter sales is valid or void? The condition was declared void on the basis that it acted as a restraint on alienation (right to transfer property). In a fee simple grant of land (discussed later), a condition that the grantee shall not alien, or that he shall pay a sum of money to the grantor upon alienation is void on the ground that it is repugnant to the estate granted. Commonwealth v. Fremont Investment: The Attorney General began a consumer protection action against the defendant claiming that it had been originating and servicing certain subprime mortgage loans. The AG requested an injunction that restricts, but does not remove, Fremont’s ability to foreclose on loans with “presumptively unfair” features on the basis of a state consumer protection law guaranteeing security against “unfair or deceptive acts or practices in the conduct of any trade or commerce.” The court upheld the injunction, stating that it was created to strike a balance between the interests of borrowers facing foreclosure and the interest of the lenders. COMPETING CLAIMS TO PROPERTYSovereignty vs. OccupancyJohnson v. M’Intosh: Dispute over land in Illinois that the plaintiffs purchased under conveyance from the Pinkeshaw Indians and the defendant purchased by grant from the United States. The court was trying to determine whether such grants from Indian chiefs were valid or if the government had the exclusive prerogative to purchase/grant land. The court determined that the United States had clear title to all lands within its boundaries and that such title gave it the exclusive right to extinguish the Indian title of occupancy by purchase or by conquest. “Conquest gives a title which the Courts of the conqueror cannot deny…[regardless] of the original justice of the claim.” The Indian inhabitants were thus deemed merely occupants to be protected when in peace, in the possession of their land, but to be deemed incapable of transferring the absolute title to others. (Set forth idea that discovery has to be consummated by possession through conquest or purchase to be considered valid and capable of taking over land rights.)Tee-hit-ton Indians v. United States: Claim by group of American Indians in Alaska for compensation for a taking by the United States of certain timber from lands allegedly belonging to the group. The claim is based on a constitutional right of the Indians to recover. The Secretary of Agriculture took the area claimed by resolution “notwithstanding any claim of possessory rights.” The court held that the title was not a sufficient basis to maintain the suit as Congress did not grant the Indians any permanent rights to the land occupied by them, thus assigning the Indian interest as right of occupancy rather than a property right. Holding: Indian occupancy, not specifically recognized as ownership by action authorized by Congress, may be extinguished by the government without compensation.” Labor and InvestmentInternational News Service v. Associated Press: the parties were competitors in the gathering and distribution of news and its publication for profit in newspapers across the country. The Associated Press filed to restrain the pirating of its news by INS. The issues to be considered were whether news can be considered property and whether the appropriation of the news from the bulletin boards violated a property interest. News is quasi-property in that it is potentially profitable material, but the transmission of news may be a right that can be infringed upon. The court held that INS was restricted from reaping the benefits of AP’s efforts, enjoining them from publishing news acquired from AP unless it gives credit to them. Notably, the dissent states the property does not arise from value but from the exclusion by law from interference. The case is an outlier because it stands for the idea that you may be able to create some property right that endures after you release it to the public. Cf. with: The silk scarf case (Cheney Brothers v. Doris Silk Corp.) in which a silk manufacturer sued another company for copying the patterns on its fabric and undercutting its price, claiming that this was an infringement on the plaintiff’s property rights in design and citing INS. The court rejected that argument and held, “a man’s property is limited to the chattels which embody his invention. Others may imitate these at their pleasure,” since imitation creates and allows competition. A common law claim for misappropriation can be based on disseminating facts (as in INS) only where: a) the plaintiff generates or gathers information at a cost; b) the information is time-sensitive; c) a defendant’s use of the information constitutes free riding on the plaintiff’s efforts; d) the defendant is in direct competition with a product or service offered by the plaintiffs; and e) the ability of others parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened. Note: as determined in Feist Publications, copyright law protects only original works of authorship, not facts.PossessionPossession creates a rebuttable presumption of ownership that can only be refuted by evidence of a superior claim. Possession requires both physical control over the item and the intent to control it or exclude it from others. Pierson v. Post: (Fox and the hounds case.) Court held that possession of wild animals is gained through occupancy; pursuit is not enough, mortal wounding is necessary. In Popov, there was a dispute over who had the right of possession of a homerun ball when Popov had the ball, was overtaken by a “gang of bandits,” and dropped the ball, which Hayashi collected. Popov sued for conversion, the wrongful possession of personal property rightfully owned or possessed by another. The court determined that the ball was intentionally abandoned property (abandoned by MLB) and that the person who came in possession of it was the new owner. (Issue was whether Popov had exclusive dominion and control). “Where an actor undertakes significant but incomplete steps to achieve possession of a piece of abandoned personal property and the effort is interrupted by unlawful acts of others, the actor has a legally cognizable pre-possessory interest in the property which can support a cause of action for conversion.” However, in this case, conversion was not the proper action because Hayashi was an innocent party who had different issues and also maintained possession. The court decided to equitably divide it. Elliff v. Texon Drilling Co. dealt with the question of whether the law of capture absolves liability for the negligent waste or destruction of another’s gas and distillate. A landowner has absolute title to the oil and gas beneath his land, subject to the law of capture (you have an interest in what is below your land, but you have to capture it to realize that interest). No owner is permitted to carry on the operation of capturing that oil/gas recklessly, but rather he must exercise ordinary care to avoid injury or damage to the property of others. FindingsMany states have statutes regulating findings. Courts have generally divided lost personal property into three categories: a) property is lost when the owner accidentally misplaced it; b) property is mislaid when the owner intentionally left it somewhere and then forgot where he put it; c) property is abandoned when the owner forms an intent to relinquish all rights to the property. A true owner always has the right to recover lost property from the finder unless the owner relinquished his rights by abandoning it. Willcox v. Stroup: Wilcox found 444 documents from the administrations of two South Carolina governors during the Civil War in a closet in his late stepmother’s house. The state, through a director of archives and history, sued to prevent the sale of the property, claiming ownership. The court determined that without the benefit of clear chain of title, evidence of original ownership, eyewitness testimony, or other typically useful aids in determining ownership, the court presumes ownership in favor of possession. Such a presumption is used to resolve otherwise impenetrable difficulties arising from neither party being able to establish title, when doing so promotes stability, protects public peace against violence and disorder and when such presumption does not frustrate the public interest. Charrier: Charrier was an amateur archeologist who excavated several burial plots on land that belonged to the Tunica Indians. He then sued to try and keep the artifacts recovered from those plots, claiming that to allow the owners of the land to keep them was to allow unjust enrichment for his time and expenses and further that the artifacts should be considered abandoned property. The court determined that burial is not equivalent to abandonment or relinquishment of ownership. The court also rejected his claim of unjust enrichment on the basis that he could not show a resulting impoverishment because the majority of the excavation occurred while he had knowledge that he did not have consent to be on the land. Tapscott: This case dealt with an attempted ejection of a possessor when there was no clear title to the land. (Lewis, who never had title to the land of which she was in possession until her death, bequeathed the land to Cobbs. Tapscott took possession of the land. Cobbs sued to eject Tapscott.) The law protects a person who peaceably possesses land from ejection unless the person who seeks to eject is the one who has the actual right to possession (the owner). A possessor has the right to possession “against all except him who has the actual right to possession.” A new possessor cannot oust a prior possessor-Cobbs is presumed to be in possession when Tapscott ousted her.HUMANS AS PROPERTYDred Scott: Scott, a former slave, claiming to be a citizen of the State of Missouri sued for his freedom. The issue was whether he was a citizen under the Constitution and thus entitled to all the “rights, privileges, and immunities” of citizenship. The Court determined that he was not a citizen, but rather property (a slave). The court also repealed the Missouri Compromise, which outlawed slavery in certain territories. The legacy of Dred Scott is significant because the history of slavery and the idea of ownership of humans is a worry that hangs over the remainder of property cases.Baby M: This case dealt with a surrogacy contract in which the Stern (the father’s) sperm (biological material) was used to artificially inseminate the surrogate. The surrogate then attempted to keep the child and Stern filed a claim to enforce the surrogacy contract. The court determined that the surrogacy contract was invalid because it conflicted with a statute (prohibiting the use of money in connection with adoptions) and was in conflict with the public policies of the State (law requires proof of parental unfitness or abandonment before termination of parental rights is ordered or an adoption granted, while surrogacy offers no such procedural safeguards, and the law also makes the surrender of custody and consent to adoption revocable). Court rejects surrogacy as necessarily entailing the purchase of a woman’s procreative capacity. Void and voidable contracts: A contract is void if the court determines that there is no legal basis for its creation, it is voidable if one or both parties has the ability to reject the contract. States differ on their surrogacy laws, with some holding that they are voidable and others holding that they are purely void, with many ruling on them under the standard of “what’s best for the child.” Embryos present an interesting question of whether they should be considered persons or property. In Davis v. Davis, following a divorce the ex-wife sought to have frozen embryos implanted so that she could have a child and the husband objected. There, the Tennessee court determined that embryos occupy a space between persons and property (“quasi-property”). With frozen embryos, the right of one party to procreate is in conflict with the right of the other party not to be forced to become a parent against his or her will. The latter right typically trumps, though some courts make an exception when the party seeking to implant the embryos could not do so any other way. In cases in which the parties sign an agreement regarding disposition of the pre-embryos, the courts have generally held that the wishes of the parties should be honored if ascertainable. Moore v. Regents of UCLA: Moore underwent treatment for hairy-cell leukemia at the University of California, where the doctors drew blood, bone marrow, and other bodily substances. The doctors were aware that some of those products were of great value to the scientific community and that access to a patient with those cells would provide a competitive and commercial advantage. Moore signed an agreement authorizing the removal of his spleen, without the knowledge that the doctors intended to obtain portions of it to sell. Moore sued for breach of fiduciary duty (for the doctors’ failure to disclose facts material to his consent or lack of informed consent) and conversion. The court rejected the conversion claim on the basis that Moore did not expect to retain possession of his cells and to prevent the hindering of research. The dissent notes that every individual has a legally protectable property interest in his own body and its products. ADVERSE POSSESSIONDefinition: While an unprivileged entry on property possessed by another is a trespass, when one possesses another’s property in a manner that is exclusive, visible (“open and notorious”), continuous, and without the owner’s permission (“adverse and hostile”) for a period defined by state statute, the rules in force transfer title from the title holder to the adverse possessor. If possession lasts for more than the period defined by the relevant statute of limitations, the owner is barred from bringing an action in ejectment against the possessor. Thus, adverse possession doctrine magically transforms trespassers into owners. (Elements of the claim include: 1) Actual possession that is 2) open and notorious, 3) exclusive, 4) continuous, and 5) adverse and hostile 6) for the statutory period.) Some states have enacted different statutes of limitations depending on whether the possessor has acted under color of title (title presumes to convey property that is not legally a part of the title; the number of years required to obtain adverse possession is typically lower when the owner has color of title), or has paid property taxes on the land. Adverse possession claims may be brought by the adverse possessor against the record owner for a declaratory judgment of “quiet title” or may be used as a defense to trespass or ejectment claims by record owners. If the scope of the non-owner’s action is limited rather than general, he may be granted a prescriptive easement rather than adverse possession. Easements are limited rights to use the property of another (for example, the right to cross neighboring property). Affirmative easements are the right to do something specific on the land of another, while negative easements are rights to limit or control the use of neighboring property (e.g. preventing a neighbor from adding an extra story on their building). Affirmative easements are acquired by prescription. The elements for prescriptive easements are substantially the same as those for adverse possession, except that “actual possession” is replaced by “actual use.” Generally, adverse possession claims cannot prevail against government property. Those who possess or use public property can never acquire prescriptive rights in that property. The fact that the true owner is a government entity constitutes an absolute defense to an adverse possession claim, though some states have passed statutes limiting or abolishing governmental immunity from adverse possession. Adverse possessors typically obtain ownership rights subject to preexisting liens, easements, restrictive covenants, and mineral interests. Adverse possession doctrine not only makes the adverse possessor’s use privileged (permission to act in a certain manner without being liable for damages to others and without others being able to summon state power to prevent those acts), but also makes the true owner’s use unprivileged. Expanding the Elements:Actual possession: an adverse possessor must physically occupy the property in some manner, through physical structures, occupancy, or engaging in significant activities on the land. An adverse possessor who has a deed purporting to transfer land but is ineffective to transfer title because of a defect in the deed or the process by which the deed was issued has “color of title” to the property, in which case occupation of any portion of the land described in the defective title is generally deemed to be actual possession of the whole lot described in the void deed. Open and Notorious: Possessory acts must be sufficiently visible and obvious to put a reasonable owner on notice that his property is being occupied by a non-owner. The adverse possessor need not demonstrate that the true owner (formal title holder) observed or knew about the adverse possessor’s use of the property, rather the true owner is charged with seeing what reasonable inspection would disclose. Enclosing land by a fence or a wall is universally recognized as sufficiently open and notorious. Other acts deemed sufficient include building a structure, clearing the land, laying down a driveway, mowing grass, and using the strip for parking, storage, garbage removal, or picnicking. Exclusive: This requirement does not mean that no one but the adverse owner used the land for the statutory period. Rather, exclusivity generally means that the use is of a type that would be expected of a true owner of the land in question and that the adverse claimant’s possession cannot be shared with the true owner-which may require a showing that the record owner has been effectively excluded. Ordinarily, occasional entry by the true owner may not defeat the claim. Two adverse possessors who possess property jointly may acquire joint ownership rights as co-owners (becoming tenants in common, to be discussed later). Continuous for the statutory period: All of the elements continuous for the period. Depending on the type of property in question, extended absences by the adverse possessor may not defeat the claim of continuity (e.g. an adverse possessor using a seasonal home during one season may have sufficient proof to make a claim). The continuity requirement merely means that the adverse possessor must exercise control over the property in the ways customarily pursued by owners of that type of property. If an adverse possessor purports to sell property, the succeeding periods of possession are added together in consideration of the statutory requirements to establish adverse possession through “tacking.” Tacking is customarily available only when the parties are in privity with each other, meaning that the original adverse possessor purported to transfer title to the property to the successor. Statutory period: The statutory period required to establish a claim of adverse possession may change depending on the rules in the state regarding color of title. Legal disability may also change the toll-may lengthen it or determine that the toll doesn’t start until the disability is removed. Adverse or hostile (298-300): This requirement has caused the most confusion. Courts agree that the requirement means that the use is non-permissive (thus permission is the crux of this element)-and a showing that the true owner permitted the use will defeat the claim. However, there is a lot of disagreement about the requirements of the state of mind of the owner versus the requirements of the state of mind for the adverse possessor. There is a presumption that possession of another’s property is nonpermissive. An adverse possessor must show that her use was nonpermissive to obtain ownership by adverse possession. There are four approaches to considering the adverse possessor’s state of mind (may write this as a separate issue): 1) an objective test based on possession and subjective tests based on a 2) claim of right, 3) intentional dispossession, and 4) good faith. An objective test makes the adverse possessor’s state of mind irrelevant, with all that matters being that the possessor lacked permission from the true owner. This is the law in the majority of states. However, some states state that the adverse possessor must allege a claim of right, meaning that it was the possessor’s intention to appropriate and use the land as his own to the exclusion of all others. (This test can be said to be duplicative of the actual possession test because in practice it typically requires only a showing that the adverse possessor acted toward the land as an average owner would and does not require proof of what the adverse possessor was thinking.) In other states, claim of right is identical to intentional dispossession. Under this test, the adverse possessor must be aware that she is occupying property by someone else and must intend to oust or dispossess the true owner. In the states that require this element, mistaken occupation of land cannot give rise to adverse possession if the possessor has no intention of taking over property she does not own. This test is ordinarily limited to boundary disputes. A good faith showing requires that only innocent possessors-those who mistakenly occupy property owned by someone else-can acquire ownership by adverse possession, based on the premise that those who knowingly occupy the land of others are trespassers or squatters. Some states provide a shorter statute of limitations if the possession was in good faith. To acquire possession against a co-owner, one must make an explicit statement of intent to take possession of the entire property by adverse possession (ouster). Similarly, possession that begins as permissive will stay that way unless the owner explicitly revokes permission or the adverse possessor announces that she is ousting the true owner and claiming the property as her own. However, if the owner allows another to possess his property for a very long time and the possessor reasonably relies on that permission to invest in the land, she may be granted possessory rights on the ground that the owner is estopped from denying continued permission. Policy Justifications for Adverse Possession:The purpose of the adverse possession doctrine is to create security by encouraging owners to rely on existing practical arrangements that have persisted for a long time. Thus, the right of all owners generally to rely on actual use and occupation, rather than the formal title, creates more security and predictability for all property owners. The failure of the true owner to object might be understood as effective abandonment of the owner’s rights. Finders generally become owners of abandoned goods. If an owner abandons her right, it is inaccurate to call the intentional trespasser a pirate or thief. Since the doctrine requires that the occupation be open and notorious, a true owner who does not object to such occupation may indicate a lack of concern about the encroachment.A policy behind the statute of limitations is to give victims incentives to bring lawsuits within a reasonable time so that everyone has repose, knowing that she is not subject to lawsuits for actions undertaken long ago. It is wrong for the victim to wait too long to vindicate her rights because it creates expectations in the intentional encroacher that ripen into legitimate interests. Relative Hardship Doctrine: If the encroachment is innocent (the result of a mistake), the harm minimal, the interference in the true owner’s property interest small, and the costs of removal substantial, the courts often refuse to grant an injunction ordering removal of the structure, and instead order either the encroaching party to pay damages to the landowner to compensate for the decrease in market value of the owner’s land or by ordering a forced sale of the property from the landowner to the encroacher with damages equal to the value of the land taken. However, if the cost of removal is not substantial or the interference with the landowner’s ability to use its property is substantial, removal may be ordered. When an entire structure is built on land belonging to another party, the court will ordinarily hold that the structure belongs to the owner of the land on which it sits. (See Somerville) Courts agree that a bad faith improver-one who deliberately builds on someone else’s property, is not granted a right to compensation and will generally be required to remove the encroaching structure if the landowner so wishes. CasesBrown v. Gobble: The Browns sought an injunction to prevent the defendants from interfering with their intent to use a two feet wide tract of land on the boundary between their houses for the building of a road. The defendants counterclaimed alleging ownership to the tract of land by adverse possession, based on their title which suggested that the land was part of their property. Although the plaintiffs had knowledge that the land was in fact theirs, they did nothing to show ownership prior to their claim. West Virginia statute mandated that adverse possession, in addition to its normal elements, be proven under claim of title or color of title The court allowed tacking and held that the party who claims title by adverse possession has the burden to prove, by clear and convincing evidence, all of the elements of adverse possession. Romero v. Garcia: Romero filed suit to quiet title (establishing a title to a property against all other claims through declaratory judgment) against her former parents-in-law based upon adverse possession for more than ten years under color of title and the payment of property taxes. The defendant’s appealed the grant of the title, arguing that the deed on which she based her claim was inadequate for color of title and that its description was inadequate because it failed to describe a specific piece of property. The court held that if a surveyor can ascertain the boundaries of property from a deed then it is not void and further that “an indefinite and uncertain description can be clarified by subsequent acts of the parties,” and granted Romero the property under adverse possession. Nome 2000 v. Fagerstrom: Nome filed suit to eject the Fagerstroms from a tract of land. The Fagerstroms counterclaimed on the basis that they had acquired title by adverse possession. The Fagerstroms had built a cabin and an outhouse and parked their camper on the land. They also used the land for seasonal activities. The issue was whether the Fagerstroms, through their seasonal use of the land and erection of permanent structures, use of the land was “continuous, open and notorious, exclusive, and hostile” such that they could make a claim of adverse possession. The court divided the land into north and southern parcels, based on where the structures were, in consideration of that question and determined that the conditions of adverse possession require only that the land be used for the statutory period as an average owner of a similar property would use it. Thus, to determine whether there is adverse possession, the court asks, under the hostility prong, whether the claimant acted as if he owned the land, without permission. Improvements and substantial activity can be used to establish the “open and notorious” prongs of adverse possession. Somerville v. Jacobs: The Somervilles owned lot 44, 45, and 46. On reliance of a surveyor’s report, they constructed a building on lot 47, owned by the defendants, believing that they were constructing on their lot. Soon after the building was completed, the defendants learned that it was on their property and claimed ownership. The plaintiffs then initiated the lawsuit for equitable relief for the value of the improvements made on the lot. Common law has held it inequitable to allow one to be enriched under such circumstances by the labor and expenditures of another who acted in good faith and in ignorance of any adverse claim or title, and will typically require the landowner to compensate for the permanent and beneficial improvements. The issue here is that both parties are innocent. The court rules that the landowners have to either compensate the encroachers for the improved value of their land or sell the lot with the encroachment to the encroacher for the value of the land pre-improvement. The dissent views this as a taking for private use and that the property owner should not be forced to purchase the building. Other Ways to Transfer Title to Real Property:(Boundary Settlements)Oral Agreement: Courts may uphold oral agreements between neighbors that set the boundary between their property if both parties are uncertain where the true boundary lay or a genuine dispute exists over the location of the boundary; the parties can prove the existence of an agreement setting the boundary; the parties take (and/or relinquish) possession to the agreed line. Acquiescence: A court may recognize longstanding acquiescence by both neighbors in a common boundary even without an oral agreement. “Adjoining owners who occupy their respective tracts up to a clear and certain line, such as a fence, which they mutually recognize and accept as the dividing line between their properties for a long period of time, cannot thereafter claim that the boundary thus recognized is not the true boundary.”Estoppel: A boundary may be established by estoppel when one owner “erroneously represents to the other that the boundary between them is located along a certain line and the second, in reliance on the representations, builds improvements which encroach on the true boundary or take other detrimental actions. The party who made the representations is then estopped to deny them, and the boundary in effect shifts accordingly. Some states may find estoppel even when no explicit representation is made, finding representation from the owner’s silence in the face of knowledge that his neighbor is building an encroaching structure.Laches: An owner who delays in asserting a property interest may be barred from asserting the interest by the equitable doctrine of laches. Laches is an equitable defense based primarily on circumstances that render inequitable the granting of relief to a dilatory plaintiff (one who causes delay). The doctrine applies when there has been an unexcused or unexplained delay in commencing an action and a corresponding change of material condition, which results in prejudice. Mere lapse of time is insufficient to support the defense. Rather, it must appear that the delay resulted in some prejudice to the party asserting laches, which would make it inequitable to disregard the lapse of time and incidental consequences. (E.g. if an owner has knowledge of an encroachment and does nothing to stop it, the delay in asserting his right may cause the encroacher to invest in reliance on the belief that the occupation is not wrongful. A court may deny injunctive relief even if the statute of limitations has not run.)Dedication: A dedication is a transfer of real property from a private owner to a government entity such as a city. A valid dedication requires an offer by the owner of the property and acceptance by the public. LEASEHOLDSA leasehold, also called a tenancy, is a tenant’s possessory estate in land or premises. Tenants have certain non-disclaimable rights, including the right to receive visitors and live with a new spouse. Commercial v. Residential Tenancies: While residential tenancies involve renting property for the purpose of establishing a home, commercial tenancies involve any nonresidential use, including operation of a business for profit or operation of a nonprofit institution such as a church, hospital, or university. Although the vast majority of the rules are the same for both types of tenancy, courts analyze the two situations separately, on the assumptions that the underlying policy considerations and justified expectations of the parties may differ. Generally, courts are more inclined to adopt common law rules regulating the terms of residential leases than of commercial leases on the assumption that commercial tenants are more likely to have sufficient bargaining power in their contractual agreements. Statute of frauds: Most states have a statute of frauds, which requires that interests in real property be in writing to be enforceable, with the exception of adverse possession, prescriptive easements, easements by estoppel, and necessity. Most states require that leases of more than one year be in writing, while leases of one year or less are enforceable regardless of whether they are written or oral. Oral period tenancies are generally enforceable so long as the period is one year or less, as are oral tenancies at will.The Uniform Residential Landlord and Tenant Act imposes procedural and substantive regulations for the landlord-tenant relationship. The procedural regulations deal primarily with the procedures required to terminate the relationship and the substantive regulations define the parties’ obligations to each other. The main rights reserved by the landlord in relation to the tenant are 1) the right to receive the agreed-upon rent; 2) the right to have the premises intact and not damaged, subject to normal wear and tear (the tenant’s duty not to commit waste), and 3) the landlord’s reversion. Categories of Tenancies* (there are four types of tenancies or leaseholds)Term of years: A term of years lasts for a specified period of time determined by the parties. The period can be of any length (days, months, or years). A term of years ends automatically at the agreed-upon time, but it may be terminated before the end of the fixed period on the happening of some event or condition stated in the lease agreement. The future interest retained by the landlord is called a reversion. If, at the time the lease is signed, the owner provides that the property will shift to a third party at the end of the leasehold, the future interest in the third party is called a remainder. The death of either party does not terminate the tenancy. The landlord is not entitled to evict the tenant before the end of the term, the only exception occurs when the tenant is breaching a material terms of the lease, such as the covenant to pay rent. The landlord has no obligation to renew a leasehold, however, and can refuse to do so for any reason. There are exceptions to this rule: federal and state antidiscrimination statutes prohibit landlords from failing to renew leaseholds if the landlord’s motivation is discriminatory. Tenants in units that are subject to statutory or local rent control ordinarily are protected from eviction unless the landlord can show just cause. Some states or localities also regulate eviction for the purpose of converting apartment units into condominiums. Federal law protects occupants of public housing from eviction without just cause. Tenants are also protected from eviction if the landlord’s motivation is to retaliate against them for asserting their right to habitable premises. Periodic tenancy: These renew automatically at specific periods unless either the landlord or the tenant chooses to end the relationship. For example, many tenants have no written leases or specified ends to their tenancy but pay monthly rent to the landlord. These arrangements create month-to-month tenancies, a form of periodic tenancy, meaning that they renew automatically at the end of each month if neither party notifies the other that he intends to end the relationship. Notice is required before either party can terminate the relationship and end the periodic tenancy. Many states require a month’s notice to end a month-to-month tenancy. The death of either the landlord or tenant does not terminate the tenancy, however the heirs or devisees of the deceased landlord or tenant may choose to end the tenancy, unless statute or common law rule prevents it. Under this arrangement, the landlord can evict tenants only by providing the requisite notice that the tenancy will not be renewed.Tenancy at will: This is similar to periodic tenancy, except that either party can end it without notice. Many states have effectively abolished tenancies at will by requiring notice before tenancy can be terminated. Traditionally, the death of either the landlord or the tenant terminates the tenancy at will. Although a landlord still needs to give statutorily required notice to evict, he may have an absolute right to do so since the tenancy is at an end. In contrast, a landlord under a periodic tenancy may not be able to terminate the tenancy if the tenant has a defense to eviction, such as violation of the implied warranty of habitability. Tenancy at sufferance (holdover tenant): A tenant rightfully in possession who wrongfully stays after the leasehold has terminated is called a holdover tenant, distinct from a trespasser, who never had a right to possess the property. The legal procedures for ejecting trespassers often differ in significant ways from those evicting holdover tenants. It may be lawful for an owner to physically eject a trespasser herself (self-help), or to call on the police to do so, while an eviction proceeding and a court judgment are generally required to evict a tenant. A landlord who accepts rent checks from a holdover tenant may be held to have agreed to a new tenancy calculated by the rental payment schedule.CasesVasquez v. Glassboro Service Association: The issue in this case was whether migrant farmworkers who reside in facilities provided by their employer are entitled to a court hearing before being evicted-in other words, whether the workers are tenants, entitled to legal process, or occupants, ordinarily not entitled to such process. The court determined that the workers were not tenants, but that the unconscionability of their employment contract, which along with having a huge disparity in bargaining power also deprives a worker from his reasonable opportunity to find alternative housing and disregards his welfare after the termination of his employment, requires that dispossession proceed in a summary manner (with procedural safeguards-such as a requisite amount of time for notice, etc.). Self-help is therefore not available to employers/landowners whose employees live on their land. (Farmworkers entitled to common law protection even if they were not tenants and even if the statutory procedures did not apply to them.)College Block: College Block owned a parcel of undeveloped real property. It signed a 20-year lease with Atlantic Richfield Company (ARCO) in which ARCO agreed to build and operate a gasoline service station on the property, with provisions allowing ARCO to build, maintain, and replace any buildings and prohibiting College Block from operating a gas station on other properties it owned or controlled. The rent fluctuated depending on the percentage of the gasoline delivered, with College Block receiving a minimum of $1000 per month. ARCO ceased operations prior to the end of the lease but continued paying the minimum. College Block brought suit alleging that ARCO was also responsible for the additional sums CB would have received had the station remained in business because the covenant of continued operation was implied in the lease. Implied covenants will be found if after examining the contract as a whole it is so obvious that the parties had no reason to state the covenant, the implication arises from the language of the agreement, and there is legal necessity. A covenant of continued operation (also called a good faith duty to operate) can be implied into commercial leases containing percentage rental provisions in order for the lessor to receive that for which the lessor bargained. Note: the court will not find this duty if the minimum rent being paid is “substantial.” Transfer of LeaseholdsRecall that the tenant’s leasehold includes the right to possess the property in exchange for rent, subject to other terms of the agreement between the parties, and the landlord’s right include reversion, the right to obtain possession when the leasehold ends, as well as the bargained-for right to collect rent from the tenant, also subject to the terms of the agreement between the parties. Either party may transfer her property interest. If the landlord sells the property or it is inherited, the new owner receives what the landlord was able to sell or give (the landlord’s reversion subject to the tenant’s leaseholds, with the attendant contractual rights to collect rent and enforce the other terms of the lease. The tenant’s leasehold interest survives. In the absence of a statute to the contrary, when the landlord’s title ends through foreclosure, so does the tenant’s lease. With a life estate, if the landlord owns the property for life and leases it to the tenant, the landlord’s interest ends when the landlord dies and the tenant’s lease ends automatically as well. The transfer of the leasehold is called either an assignment, which conveys all the tenant’s remaining property interests without retaining any future rights to enter the property; or a sublease, where the tenant retains some future interest or the right to control the property in the future. Under assignment, the new tenant/assignee is responsible directly to the landlord for all the undertakings under the original lease. However, under a sublease, lease covenants do not run with the land as real covenants, and the landlord has no right to sue the subtenant to enforce any of the covenants of the original lease, including the covenant to pay rent except when the subtenant expressly promises to pay rent, in which case the subtenant can be sued as a third-party beneficiary. In this case, the landlord can sue the original tenant, who in turn can sue the new tenant. A tenant can transfer her leasehold, unless the lease restricts the tenant’s ability to do so. If these lease agreement does not say anything about assignment or sublease, generally the tenant is entitled to transfer her possessory interests in the premises by either assignment or sublease. Courts typically uphold restraints on alienation when it comes to transfer of leaseholds. Whether or not a provision mandating that the landlord give consent before leasehold can be transferred is subject to a reasonableness standard is an unsettled issue in the court. The minority of jurisdictions holds that consent can be withheld only where the lessor has a commercially reasonable objection to the assignment, even in the absence of a provision in the lease stating that consent to the assignment will not be unreasonably withheld. Cases (in relation to transfer)Kendall v. Ernest Pestana, Inc.: Attempted to address whether, in the absence of a provision that a landlord’s consent will not be unreasonably withheld, a lessor may unreasonably and arbitrarily withhold his or her consent to an assignment. (Case dealt with the effect of a provision in a commercial lease of an airport hangar that the lessee may not assign the lease or sublet the premises without the lessor’s prior written consent.) Bixler brought suit for declaratory and injunctive relief and damage seeking a declaration that Pestana’s refusal to consent to the assignment of the lease was an unreasonable and unlawful restraint on the freedom of alienation. The court subscribed to the minority view (withholding of consent is subject to a “commercially reasonably objection” standard). “Reasonableness is determined by comparing the justification for a particular restraint on alienation with the quantum of restraint actually imposed by it.” The greater the restraint, the greater the justification for that restraint must be. Some of the factors considered in determining reasonableness are: financial responsibility of the proposed assignee, suitability of the use for the particular property, legality of the proposed use, need for alteration of the premises, and the nature of the occupancy. The court rejects the claim that a lessor has a right to deny based on the increased value of the property. Note: this holding only applies to commercial leases. Slavin: A landlord sought to evict a tenant who allowed another person to occupy his apartment without first obtaining the landlord’s written consent, against an express provision in the lease requiring such consent. The tenant claimed that the landlord should be precluded from evicting him because his denial of consent was unreasonable. Issue: does a tenant’s obligation to obtain the written consent of a landlord before transferring his leasehold imply an obligation on the part of the landlord to act reasonably in withholding consent. The court follows the majority of jurisdictions by determining that a residential lease provision requiring the landlord’s consent permits the landlord to refuse arbitrarily or unreasonably, distinguishing residential leases from commercial leases on the basis that the policy behind commercial leases is to prevent commercial landlords from exercising their power to withhold consent for unfair financial gain and to limit restraints on alienation since the necessity of commercial building space has become increasingly paramount, concerns which statutes regulate in residential leases. (Emphasis on not clogging the court). Mitigating DamagesLandlord remedies: If a tenant breaches the lease by ceasing rent payments and moves out before the end of the lease term, the landlord cannot sue for possession (since its already reverted), the landlord can choose among three remedies: 1) Accept the tenant’s surrender: this means that the landlord agrees that the tenant will not be legally obligated to pay the future rent. However, the tenant is not relieved of all financial liability and may still have to pay back rent for the time before the tenant abandoned the property. The landlord may also sue for damages for breach of the lease. Damages are typically measured, not by the remaining rent, but the agreed upon rental price minus the fair market price; 2) The landlord may refuse to accept the surrender and may instead actively look for a new tenant and re-let that apartment on the tenant’s account-when a new tenant is found, the landlord can sue the former tenant for the difference between the old rental price and the new rent received from the new lessee. In some states, the landlord must notify the tenant that she is re-letting on the tenant’s account. (If the second tenant moves out with time still remaining on the original lease in this situation, the landlord may sue the first tenant for the remaining rent.); 3) The landlord can wait and sue for the rent at the end of the lease term rather than mitigating damages: the landlord can thus do nothing, wait for the end of the lease term, and then sue the tenant for the remaining unpaid back rent. Almost all states reject this option, requiring the landlord to attempt to mitigate damages by acting reasonably in seeking another tenant. If the landlord fails to mitigate damages by finding another tenant and sues for back rent, the amount of damages will be reduced by the amount that could have been avoided had the landlord mitigated damages. On the issue of whether a landlord has a duty to mitigate damages, in Sommer v. Kridel, the court determined that a landlord has a duty to mitigate damages where he seeks to recover rents due from a defaulting tenant. Tenant’s Rights to Habitable PremisesQuiet Enjoyment, Constructive Eviction, and Implied Warranty of HabitabilityIn any rental agreement, there is an implied warranty that the premises are habitable and that the landlord will not interfere with the tenant’s right to quiet enjoyment and not to constructively evict the tenant. A constructive eviction occurs when the landlord substantially interferes with the tenant’s quiet enjoyment of the premises, thus the “substantial” nature of the interference is essential to such a claim. To establish such substantiality, the tenant must show that both the interference and the duration of interference were substantial. The Second Restatement departs from traditional law by describing constructive eviction as interference that is more than significant and by making the landlord liable for the acts of third parties “performed on property in which the landlord has an interest, which conduct could be legally controlled by him.” The obligation of a landlord to provide habitable premises, alternately referred to as the implied warranty of habitability, was read very narrowly before the 1970s. However, it has been read more broadly to include an implied duty to repair and maintain the habitable condition. Also, the contractual obligations of the landlord and tenant are independent, meaning that the parties’ obligations to perform are not contingent on the other party’s performance. Pre-1970, the idea of caveat emptor “let the buyer beware” ruled. (See Javins) Tenant remedies: Tenants have several options to vindicate their rights following a breach of the implied warranty of habitability. 1) Rescission, or the right to move out before the end of the lease term-the landlord’s violation of his contractual obligation to provide a habitable apartment entitles the tenant to stop performance of her contractual obligations without being liable for rent for the months remaining on the lease. This is the case when the breach results in a material change in the housing conditions, even when that change would not amount to constructive eviction. 2) Rent withholding: if the landlord breaches the implied warranty, the tenant has the right to stop paying rent and continue living in the premises and may raise the violation of the warranty as a defense to the claim for back rent. (This distinguishes the implied warranty from constructive eviction doctrine, which ordinarily requires a tenant to move out to become entitled to stop paying rent before the end of the lease term. 3) Rent abatement: A tenant is ordinarily entitled to a reduction in the rent when the landlord violates the implied warranty and can sue the landlord for a declaratory judgment on that issue. The amount of rent reduction depends on the jurisdiction-some states apply a fair market value test, deducing the fair market value of the property without the defect from the rent. Others simply reduce the rent by a percentage that reflects the seriousness of the violation. Other remedies include repair and deduct; injunctive relief or specific performance, administrative remedies, criminal penalties, or compensatory damages. Minjak v. Randolph: (Loft case): a landlord sued for summary non-payment proceeding against Randolph. In response, Randolph asserted an affirmative defense that because they were unable to use two-thirds of the loft space due to the landlord’s renovations and other conditions, they were entitled to an abatement of two-thirds of the rent, and that they were excused from paying the remainder of the rent due to the landlord’s failure to supply essential services (breach of warranty of habitability). (Note: the tenants signed a commercial lease although they were using the space residentially). The court held that “a tenant may assert as a defense to the nonpayment of rent the doctrine of constructive eviction, even if he or she has abandoned only a portion of the demised premises due to the landlord’s act in making that portion of the premises unusable by the tenant.” Additionally, while compensatory damages for breach of contract claims by a tenant are typically sufficient, punitive damages may be awarded when to do so would “deter morally culpable conduct,” with the determining factor being whether the defendant’s conduct implies a criminal indifference to civil obligations. Punitive damages may be awarded in breach of warranty of habitability cases where the landlord’s actions or inactions were intentional and malicious. Blackett v. Olanoff: A landlord owned two properties, one a residential lease, the other a commercial lease. The court ruled that the landlord could be held responsible for the conduct of tenant’s in the commercial space because the landlord had it within his control to correct the conditions which amount to a constructive eviction of each tenant, and that the landlord had thus violated the tenants’ implied covenant of quiet enjoyment. The court also ruled that the landlord’s conduct, and not his intentions, is controlling in determining whether there was a constructive eviction. Javins v. First National: Tenants failed to pay rent alleging that the landlord violated the building code. The issue was whether housing code violations that arise during the term of a lease have an effect upon the tenant’s obligation to pay rent. The court held that the warranty of habitability was implied in leases of urban dwelling units and a breach of such warranty gives rise to the usual remedies for breach of contract. This decision was significant because the court treated leases as contracts for the first time, with a duty to repair, and an implied expectation that a property that is fit for habitation at the time it was rented will remain that way for the duration of the lease. In order for a tenant to collect or receive reprieve from rent under a claim for breach of the implied warranty of habitability, the fact-finder must determine 1) whether the alleged violations existed during the period for which past due rent is claimed, and 2) what portion, if any or all, of the tenant’s obligation to pay rent was suspended by the landlord’s breach. If no part of the tenant’s rental obligation is found to have been suspended, the judgment for possession may continue. NUISANCE and SERVITUDEA nuisance is a substantial and unreasonable interference with the use or enjoyment of land. Nuisance is a property tort because it deals with the abridgement of one of the rights included in the property bundle, namely the right to use. Nuisance is distinguished from trespass as trespass deals with the invasion of the plaintiff’s interest in the exclusive possession of his property while nuisance is about the invasion of his right to use. Nuisance is distinguished from negligence in that it focuses on the result of the conduct rather the conduct itself, asking not whether the defendant’s conduct was unreasonable but whether the interference was unreasonable. A permanent nuisance either irreparably injures the plaintiff’s property or is of such a character that it is likely to continue indefinitely. In such a case, the statute of limitations for bringing a claim begins at the time the nuisance begins. A temporary nuisance can be alleviated by changes in the defendant’s conduct and the claim starts over with each new injury. Although most nuisance cases involve physical harm to land or discomfort or danger to persons, the doctrine is broad enough to encompass any conduct that causes unreasonable or substantial harm to the use and enjoyment of land. *A servitude is a legal device that creates a right or an obligation that runs with the land or with an interest in land. (Anything that you can do to hinder/benefit your land in a permanent way that can be transferred). A right or obligation runs with the land if it passes automatically to successive owners or occupiers of the land or the interest in land with which the right or obligation runs. Licenses are typically not considered servitudes because the permission is informal and revocable at will by the grantor. No writing is required to create a license, and many licenses are implied by the circumstances. The entrance becomes a trespass only when the licensee refuses to leave after being asked to do so. Revocable licenses are not transferable, nor they can they be inherited or left by will. EASEMENTS*Easement (the right to use or control the area for a specified purpose, in which permission is intended to be permanent or irrevocable) is a type of servitude. Easements can also be called right of ways. A right of way places an obligation on the owner of the land on which the road sits to allow the neighbor to use the road for passage. If the obligation is intended to continue even if that owner sells the land on which the road sits, we say the “burden” of the servitude runs with the “burdened or servient estate.” This means that subsequent owners of that land have a continuing obligation to allow the road to be used by the easement owner-the beneficiary of the servitude. If the right to use the road is intended to pass to future owners of the neighboring land, we say the right runs with the “benefitted or dominant” estate (the estate benefitting from the easement).Servitudes may be negative as well as affirmative. Restrictive servitudes can be created in three forms: negative easements (rights to limit or control the use of neighboring property), restrictive covenants, and equitable servitudes. Covenants are contractual agreements between landowners agreeing to restrict the use of their land for the benefit of either their landlord or neighboring owners. Covenants were traditionally enforced by damages. Equitable servitudes impose land use restrictions to enforce covenants when technical and substantive rules limited the ability of owners to do so. Typically, the relief was injunctive. Restrictive covenants are obligations that restrict what one can do with one’s own land. Profit is the right to remove materials from another’s property. An affirmative covenant is an obligation to do something for the benefit of another owner or owners.Easements by estoppel: A court can prevent a real property owner from revoking a license if the owner grants the licensee the right to invest in improving property or otherwise induces the licensee to act in reasonable reliance on the license. The owner is estopped from denying continued access to his land for whatever period is deemed just under the circumstances.(Notably reliance has to be in good faith.) Oral easements, in which a grantor may purport to convey an easement but fail to comply with the requisite formalities by only granting the easement orally; writing in a way that doesn’t comply with the local statute of frauds, or writing with an ambiguous deed reference, are typically recognized by the court if there is presumed intention of the grantor to grant the easement and the grantee invests substantially on that easement. A trust is a property arrangement in which an owner, called the settlor, transfers property to another person, called the trustee, with instructions to manage the property for the benefit of a third party, called the beneficiary. The trustee is said to have legal title to the property, while the beneficiary has equitable or beneficial title. Constructive Trust: while trusts are ordinarily created by a trust document or will, sometimes a court finds a trustor-trustee-beneficiary relationship where it may not have been expressly contracted, treating a property arrangement as if the grantor had created a trust arrangement, regardless of the grantor’s intent. The laws of irrevocable licenses, whether under a theory of easement by estoppel or constructive trust, is based on a contrary moral promise that when owners open up their property to others, they may, by words or actions, create reasonable expectations of continued access to the property. When non-owners expend resources or labor in reasonable reliance on permitted access, the owner may be held to have waived the legal power to revoke that access. If a grantor only intended to grant a revocable license, recognition of an easement by estoppel is likely to contradict the original intent of the grantor and owners generally have the rent to revoke the licenses at will. In these situations, the court has to balance between the grantor’s right to exclude and the grantee’s reliance interest. Negative easements cannot be acquired by prescription in the United States. While express easements are created by the explicit agreement of the parties, implied easements are recognized in particular kinds of relationships despite the absence of an express contract to create an easement. Sometimes, implied easements effectuate the intent of the parties, as manifested by their conduct, other times it contradicts the actual intent but is enforced based on public policy. An easement implied from a prior existing use, often called a quasi-easement arises when an owner of an entire tract of land or of two or more adjoining parcels, after employing part thereof so that one part of the tract or one parcel derives from another a benefit or advantage of an apparent, continuous, and permanent nature, conveys or transfers part of the property without mention being made of those incidental uses. Such an easement is established by proof of three elements: 1) common ownership of the claimed dominant and servient parcels and a subsequent conveyance or transfer separating that ownership; 2) before the conveyance or transfer severing the unity of title, the common owner used part of the united parcel for the benefit of another party, and this was use was apparent and obvious, continuous and permanent; 3) the claimed easement is necessary and beneficial to the enjoyment of the parcel conveyed or retained by the grantor or transferor. Easements created by implication arise an inference of the intention of the parties to a conveyance of land. This inference, which is drawn from the circumstances surrounding the conveyance alone, represents an attempt to ascribe an intention to parties who had not thought or bothered to put the intention into words, as the courts attempts to fill common gaps resulting in incomplete thought. It requires proof of a known existing use from which to draw the inference of intention.An easement by necessity arises when an owner of land conveys to another an inner portion thereof, which is entirely surrounded by lands owned either by the grantor or the grantor plus strangers. Unless a contrary intent is manifested, the grantee is found to have a right of way across the retained land of the grantor for ingress to, and egress from, the land-locked parcel. Where an easement by necessity is claimed there is no requirement of proof of known existing use from which the draw the inference of intention (unlike easement implied from a prior existing use.)Cases Easement by EstoppelIn Holbrook v. Taylor , the plaintiff wanted a declaration that they could use a roadway on the basis of prescription and estoppel. There was no evidence indicating that the use of a haul road was adverse, continuous, or uninterrupted (as required for a showing of prescription). Estoppel for a roadway is found when one has spent money improving the path with the knowledge and permission of the owner, creating an irrevocable contract. Because the use was not adverse, prescriptive easement did not apply, but the repair of the roadway made the right to use the roadway irrevocable. Castle Mountain Ranch: Both parties appealed from a judgment imposing a constructive trust for more than 40 cabin sites. The nature and extent of the agreement between the cabin owners and the operator of the surrounding ranch. For at least 50 years, cabins were inherited, bought, and sold without interference by the ranch owners, with no documents between them. Sometime later, the owners signed lease agreements, with no acted consequence for breach. However, the owner wanted to sell the property and sent notice of termination of the lease to the occupants consistent with the lease agreement. The cabin-owners responded by filing an action for permanent injunctive relief to establish permanent easement of their cabins. Since their occupancy was based on permission, the owners had no adverse claim, but for the sake of their improvements, could continue living there for a limited period of time. Prescriptive EasementsCommunity Feed Store: Plaintiff operated a small wholesale and retail animal feed business adjacent to the defendant’s business. Plaintiff used a gravel lot for the purpose of unloading and loading. The defendant discovered, some 30 years after buying the land, that the bulk of this lot actually belonged to him and then erected a barrier to prevent cars and trucks from using that part of the area. When prescriptive easement is claimed, the extent of the use must be proved not with absolute precision, but only as to the general outlines consistent with the pattern of use throughout the prescriptive period. Where a claimant adduces enough evidence to prove those general outlines with reasonable certainty, it has met its burden on that issue. (Thus the court rejected the lower court’s finding that the area of the alleged easement was not certain enough). Courts requiring proof of a claim of right generally mean that the use is not permissive but is engaged in by the prescriptive easement claimant regardless of the wishes of the owner of the land. A significant number of states require the prescriptive easement claimant to prove acquiescence by the true owner as one of the elements of the claim (may have some issues reconciling this with the non-permission requirement.) Acquiescence in the prescriptive easement sense merely means that the owner did not assert her right to exclude by bringing a trespass action. In other courts, it means that the landowner must have known about the use and passively allowed it to continue without formally granting permission. Easements Implied from Prior Use Granite Properties Limited Partnership: plaintiffs sought to enjoin the defendants from interfering with the plaintiff’s use and enjoyment of two claimed easements over property (allowing access to a parking lot and an area to deliver shipments to a grocery store.) The issue was whether the plaintiffs retained their easements by implication when the property was conveyed to the defendants (by the plaintiffs). The Restatement sets forth eight circumstances from which the inference of intention to create or reserve an easement can be drawn: 1) whether the claimant is the conveyor or the conveyee, 2) the terms of the conveyance; 3) the consideration given for it; 4) whether the claim is made again a simultaneous conveyee; 5) the extent of necessity of the easement to the claimant; 6) whether reciprocal benefits result to the conveyor or conveyee; 7) the manner in which the land was used prior to its conveyance; 8) the extent to which the manner or prior use was or might have been known to the parties. In applying these factors, the court inferred that the parties intended the easements to continue following the severance of the parcels. Easement by NecessityFinn v. Williams: The plaintiffs acquired title to 40 acres of the owner’s land while the defendant inherited the remaining 10 acres of the land. Plaintiffs charge that the only available means of egress and ingress from their land to a highway or market is by means of an easement over the defendant’s tract and thus sought a declaration of an easement of necessity across the defendant’s tract while the defendant’s claimed that there was an alternate route. The court found that an easement by necessity was necessarily implied in the conveyance severing the two tracts on the basis of the rule that “where an owner conveys a parcel of its owned plots which has no outlet to a highway except over the remaining lands of the grantor or over the land of strangers, a way by necessity exists over the remaining lands of the grantor. If, at one time, there was unity of title, the easement may lay dormant through several transfers of title and yet pass with each transfer as appurtenant to the dominant estate.” Running with the landWhen do easements “run with the land”? Easements created by implication, necessity, or estoppel are generally held to run with the land if they were intended to do so and are reasonably necessary for the enjoyment of the dominant estate. Notice: Easements are binding on subsequent owners only if they have notice of them. Three kinds of notice exist: 1) Actual notice: when the subsequent owners in fact know about the existence; 2) Inquiry notice: when there are visible signs of use by non-owners, such as telephone poles, above-ground utility lines, or a path across the property, and a reasonable buyer would do further investigation to determine whether an easement exists. 3) Constructive Notice: if the deed conveying the easement is recorded in the proper registry of deeds in the proper place, and if the deed is in the chain of title-meaning that a title search of prior owners of the property would lead to discovery of the deed. When do the benefits of easements run with the land? An appurtenant easement is one in which the benefit granted by the easement runs with the land/is treated as if it were attached to that particular parcel of land. An easement in gross is one in which the benefit does not run with the land but rather with the person upon whom the benefit is conferred (with the servient estate). The benefit is not attached to a particular piece of land, thus there is no dominant estate. The test for distinguishing the two types is intent. Intent may be clearly stated or implied. To determine whether the owner of an easement is misusing it by going beyond the scope of the activities contemplated by the grantor, the court considers: a) whether the use is of a kind contemplated by the grantor; b) whether the use is so heavy that it constitutes an unreasonable burden on the servient estate not contemplated by the grantor, and c) whether the easement can be subdivided. On the first element, many courts hold that a general easement may be used for any reasonable purpose. The issue of divisibility in easements generally arises when the owner of the dominant estate subdivides the property and attempts to transfer the new owners right to use the easement to obtain access to their property. When an easement in gross is nonexclusive-meaning that the grantor or owner of the servient estate has reserved for herself the right to use the easement in conjunction with the grantee-the easement is generally held to be non-apportionable. When, however, the easement is exclusive, meaning the grantor has no right to use the easement in conjunction with the grantee, the easement is generally held to be apportionable (since the grantee is not interfering with any rights of the grantor to sell or lease use of the easement to others.)Appurtenant vs. In Gross (Scope of Easement cases)Green v. Lupo: The plaintiffs sued to enforce an agreement to grant an easement orally promised by the defendants. The issue was whether the easement was personal or appurtenant, and whether that can be determined when there is nothing in the grant to suggest that it was intended to be tied to the land retained or conveyed. The court determined that an easement is not personal if there is anything in the grant to suggest that it was intended to be tied to the land retained or conveyed-there is a presumption against personal easements. Here, the easement was express and granted to gain access to a piece of land (appurtenant). Parol evidence is admissible to demonstrate intent if the written instrument is unclear or ambiguous. Cox v. Glenbrook Co.: The plaintiff and defendant, copartners of a family corporation, each requested a declaratory judgment as to the scope and extent of an easement which is the only existing egress and ingress from the tract. One party wanted to widen the road of the easement for the purpose of building a subdivision. The court rejected the restriction of the easement for the use of a single family occupancy, determining that it was appurtenant and not restricted by the terms of the grant, but also ruled that the owners can maintain, repair, and improve an easement in a manner reasonably calculated to promote the purpose for which the easement was created, but cannot widen it in any way. Henley v. Continental Cablevision: The plaintiff’s predecessors were expressly granted the right to construct and maintain electric, telephone, and telegraphic service. Those owners granted easements to other parties for the purpose of creating and maintaining such systems. The defendant acquired licenses from the grantees and attempted to enter upon the easements, and the plaintiffs sought to enjoin that action. The issue was whether easements in gross are transferable. The court determined that the grantees had the right to apportion their easements so long as the use was not outside the scope of the original easement. Easements in gross are thus freely transferable. Terminating EasementsEasements last forever unless they are terminated 1) by agreement in writing (release of the easement by the holder); 2) by their own terms (e.g. if the deed conveying the easement includes a time provision); 3) by merger, when the holder of the servient estate becomes the owner of the dominant estate; 4) by abandonment, if it can be shown that the owner of the easement, by her conduct indicated an intent to abandon the easement, or 5) by adverse possession or prescription by the owner of the servient estate or by a third party. Courts may also occasionally terminate easements because of 6) frustration of purposeESTATESPresent and future interests*The legal system authorizes owners to divide present from future ownership. The present estate owner has the right to possess the property while her property rights last, the future interest holder obtains the right to possess the property when and if the present interest terminates. Present and future interests are created by sale, lease, will, or trust. The grantor specifies the circumstances under which the property will shift in the future from the present interest holder to the future interest holder. Future interests may be certain to come into possession or may be contingent on events that may or may not happen. Future interests exist the moment they are created even though the future owner has no right to possess the property until the happening of the triggering event. There is a limit to future interest necessitated by the “dead hand problem,” when owners seek to control property long after they die and our country’s dislike for concentrating ownership in the hands of certain groups and excluding others. Property ownership without an associated future interest is called a fee simple, or alternately, a fee simple absolute. An owner of a fee simple interest in real property has the right to possess and use the property, the right to sell it or give it away, and the right to devise it by will or leave it to her heirs. Such interests have a potentially infinite duration. A conveyance of a fee simple interest can be accomplished through the following language: O to A, O to A and her heirs, O to A in fee simple. Present interests that terminate at the happening of a specified event, other than the death of the current owner, are called defeasible fees. There are categories of defeasible fees distinguished by whether the future interest is in the grantor or a third party, and whether the future interest becomes possessory automatically when the stated event occurs or becomes possessory only if the future interest holder chooses to assert his property rights. Any language denoting that the ownership is limited to a time period during which certain conditions are met will generally be interpreted as evidence of the grantor’s intent to cut off ownership rights automatically when the condition is violated or met. A fee simple determinable is an interest automatically created by the violation or existence of a condition. It is the present interest at the time the agreement is made. The future interest is called a possibility of reverter because there is a chance that the interest will never actually revert to the holder of the right. If the grantor can choose to retain for herself or her heirs the right to decide, at the time the condition is violated, whether to retake the property, the current interest is called a fee simple subject to a condition subsequent and the future interest is called a right of entry, since the owner can assert his rights any time, subject to the limitations of adverse possession and laches. Future interests are alienable in the vast majority of states. The major difference between the possibilities of reverter and the rights of entry is based on the statute of limitations for adverse possession, which starts immediately when the fee simple determinable is violated, but does not start until the holder of the reverter right asserts that right in fee simple subject to condition subsequent. When a future interest in a defeasible fee belongs to someone other than the grantor, the present interest is called a fee simple subject to executory limitation, and the future interest is called an executory interest. The conveyance of present ownership rights held during the life of a designated individual is called a life estate. The future interest following a life estate can be either in the grantor or in a third party. If the property reverts to the grantor when the designee dies, the future interest is called a reversion; if the grantor designates a third party to obtain ownership when A dies, the future interest in the third party is called a remainder. A life estate owner has no right to determine who owns the property on her death since ownership automatically shifts to the reversioner or remainder holder. If a life estate owner sells her property to a buyer, the buyer gets exactly what the seller had: an estate for the life of the seller. Remainders are divided into two kinds. 1) Contingent remainders: remainders are contingent if a) the remainder will take effect only upon the happening of an event that is not certain to happen or b) the remainder will go to a person who cannot be ascertained at the time of initial conveyance. 2) Vested remainders: Remainders that are not contingent remainders-remainders to persons who are identifiable at the time of initial conveyance and for whom there are no conditions precedent (conditions that must occur before they will have the right to control the property) other than the natural termination of the prior life estate when the life estate owner dies. There are three types of vested remainders: a) absolute vested remainders: remainders that are not subject to change; b) Vested remainders subject to open: remainders that may be divided among persons who will be born in the future (thus if at the time of the conveyance from “O to A for life, then to the children of B,” B has living children, the remainder is subject to open because any children of B born after the conveyance will own the property jointly. Under the rule of convenience, the courts will close the class when A dies so that the children can taken possession at A’s death.); c) vested remainders subject to divestment: a vested remainder that may be destroyed by an event that occurs after the original conveyance (functionally equivalent to some contingent remainders.) Contingent remainders were previously destructible if they did not vest before the preceding life estate ended or by merger, but the modern approach holds that contingent remainders are indestructible. A fee tail is an estate whose purpose is to keep the property in a family dynasty, traditionally created by the words O to A “and the heirs of his body.” This conveyance traditionally created a set of life estates in A, that would eventually revert to O or his heirs. Because of its effect on marketability, fee tail is only recognized in four states. See Table p. 615Interpretation of Ambiguous ConveyancesIn property cases, a frequent problem is determining how to interpret an ambiguous conveyance. Grantors often use unclear, sometimes conflicting language in describing the kind of estate conveyed. In interpreting ambiguous conveyances, two policies are important: 1) the court seeks to implement the intent of the grantor. When the grantor’s intent is unclear, the court turns to public policy consideration by 2) attempting to further the free use and alienability of property by a presumption against finding a future interest. Further, most courts read a presumption against forfeitures. Wood v. Board of County Commissioners: A couple conveyed land by deed for the construction of a county hospital and contended that it created either a fee simple determinable or fee simple subject to condition subsequent with a right of reversion to them if the land ceased to be used for the hospital. Words such as “so long as,” “until,” or “during” are commonly used in such conveyance. In their absence, the requirement is that the language of special limitation must clearly state the particular circumstances under which the fee simple estate conveyed might expire. Language of conveyance that grants a fee simple estate in land for a special purpose, without stating the special circumstances that could trigger expiration of the estate is not sufficient to create a fee simple determinable. Similarly, there is a presumption against a fee simple subject to a condition subsequent, so no provision is interpreted to create such a condition unless the language unequivocally indicates the intent on he part of the grantor to that effect. Cf. to the Cathedral case, p. 619, in which a court found that “absent any language in the deed providing for automatic termination of the estate…” it could not find a possibility of reverter. The court oddly interpreted that use to create a right of entry. Edwards v. Bradley: the issue was whether a testatrix devised a fee simple estate or a life estate in real property through the provisions in her will. (Case where mother attempted to prevent her daughter from getting anything after her death due to her daughter’s contesting the sale of a farm bequeathed to the mother on the condition that no encumbrances ever be placed on it). The court determined that it was a life estate, thus no changes could be made to the terms by the mother, based on their reading of the intention of the original testatrix since a conditional limitation imposed on a life estate is valid but a condition prohibiting alienation of a vested fee simple estate is void. Cy Pres DoctrineThe cy pres doctrine is applied when a settlor establishes a charitable trust and has a general intent to contribute to some form of charity, and the particular charitable purpose identified becomes impracticable or impossible to achieve. (Answers the question: what happens when charitable conditions are no longer valid/existent?) In this case, the doctrine is used to carry out the settlor’s charitable intent as far as possible b authorizing that the trust income be used for some other charity. This doctrine requires the court to determine whether the settlor’s intent was general or particular, meaning whether the grantor intended to aid only the particular charity or just wanted a charitable beneficiary. If the intent is read generally the court can determine whether an alternate charity can benefit. REGULATORY RULES There are many structural rules that regulate future interests including 1) the rule prohibiting the creation of new estates; 2) the rule against unreasonable restraints on alienation; 3) the rule against perpetuities; 4) the interpretive rule prohibiting waste of the present estate; 5) the prohibition on invalid racial conditions, and 6) the rule against unreasonable restraints on marriage.Rule prohibiting the creation of new estates: The rules underlying the creation of future interests are intended to discourage the social hierarchy characteristic of feudalism and to promote a market system involving a wide dispersal of property rights to prevent local monopolies. As a result, courts follow a general rule against the creation of new estates, such that a conveyance that does not fit within any of the established categories must be interpreted to create the most closely analogous estate. It is for this reason that the fee tail has been abolished in almost all states and is instead often converted into a fee simple. (as exemplified by Johnson v. Whiton, in which a person tried to bequeath to his granddaughter a fee simple limited to the heirs on her father side, essentially creating a fee tail, and the court reconstructed it as a fee simple.)Restraints on AlienationCommon law includes a presumption that a property owner should be able to transfer their interests. Attempts by owners to impose covenants restricting the ability of future owners to transfer property are strictly regulated and often held invalid. Traditionally, any restraint on a fee simple interest was considered void. Modern law, however, tends to view such restraints as subject to a general test of reasonableness (determined by weighing the utility of the restraint against the injurious consequences of enforcing the restraint.). Rules promoting alienability promote efficiency in property transfer, promote liberty from undue restrictions, and promote equality through the promotion of dispersal of ownership. They also prevent arbitrary and exclusionary interests, encourage individual autonomy by vesting control of resources in current owners), and can also promote the interests of the grantors. Restraints can be distinguished into three categories: a) disabling restraints: One which directly forbids the owner from transferring her interest in the property; b) Promissory restraints: a covenant by which the grantee promises not to alienate his interest in the property; c) Forfeiture restraints: provides for a future interest that will vest if the owner attempts to transfer the interest in the property. Types of restraints on alienation: 1) Direct Restraints: Horse Pond: The Horse Pond Fish and game Club was organized by deed, free of restrictions. They deeded the property to two members who conveyed back on the same day with a new restriction that the buildings included in the deed not be alienated from the club without 100% agreement by its members of the dissolving of the club. Later, when they wanted to sell and were prevented from doing so they filed a bill of equity to have the restriction declared void as an unreasonable restraint against alienation. The court determined that “the rule of reasonable restraints (measuring the validity of the restraint against the justifiable interests of the parties) does not apply in the case of a gift to a charitable trust or charitable corporation.” In other words, an express provision or condition against alienation contained in a gift made to a charitable trust or charitable corporation may constitute a valid restraint. 2) Servitudes requiring the consent of either the grantor, developer, or association to transfer the property (grantor consent clauses): Northwest Real Estate Co. v. Serio: The issue in the case was whether a provision that the land conveyed in fee simple could not be sold or rented, prior to a designated date, without the consent of the grantor was valid. The court ruled that it was not, finding grantor consent clauses to be repugnant to the interests protected in fee simple. The dissent disagreed, finding that grantors should be allowed time to secure a return on their interest. In Riste (Bible Camp case), owners of land attempted to include a restriction on the deed on occupancy and resale, mandating that future owners act in accord with the principles of their church. The court, finding that there was a presumption of invalidity against disabling restraints, determined that the restriction was void. 3) Rights of First Refusal (Preemptive Rights): A right of first refusal allows one to match a prospective buyer’s price to prevent the purchase by that buyer; in Wolinsky v. Kadison, in which the plaintiff contended that the right of first refusal was an unreasonable restraint on alienation when exercised, as here, to exclude certain members of the association (she alleged she was refused because of her unmarried status). The court set forth the following test for determining whether the right of first refusal has been exercised reasonably by an association: 1) whether the reason for exercising the right of first refusal is rationally related to the protection, preservation, or proper operation of the property and the purposes of the association as set forth in its governing instruments, and 2) whether the power was exercised in a fair and nondiscriminatory manner. The opposite of a preemptive right is an option to purchase, the right to buy property when one chooses to do so, thus the right to force an owner to sell. Note: partial restraints are sometimes upheld, for example when they last for a limited time or limit transfer to certain person, because the restraint has a legitimate purpose justifying the limit on alienability and does constitute a wholesale prohibition. 4) Leasing Restrictions: Woodside Condo Association case: A condo development, created under Florida statute, consistently amended its requirements to place restrictions on lessors, including the requirement to receive prior approval from the board before leasing, prevention of leasing during the first year of ownership, etc. The court determined that such restraints are presumptively valid unless it can be shown that the restrictions are arbitrary, against public policy, or in violation of a fundamental constitutional right. Such restraints can be retroactively imposed on owners who purchased units before the restrictions were adopted. 5) Restraints designed to keep housing affordable to low and moderate income familiesRule Against PerpetuitiesThe rule against perpetuities invalidates future interests that may vest too far in the future. Future interests are invalid unless they are certain to vest (be given to a person), or fail to vest, within the lifetime of someone who is alive at the creation of the interest or no later than 21 years after her death. It attempts to promote alienability by limiting the powers of present owners to control the future use of their propertyPolicy rationale: Desire to limit dead head control: property owners may attempt to use future interests to control the use and disposition of property far into the future, thus promoting the free transfer of property in the marketplace. The rule tries to deal with the tension between allowing owners to determine who will own their property and freeing owners from control by prior owners. Application: 1) Determine what future interests have been created. The rule applies only to non-vested interests, meaning that it cannot apply if there is a possibility of reverter, right of entry, reversion, or vested remainder (unless the vested remainder is subject to open). (In other words, all future interests in the grantor are exempt from the rule and enforceable.) 2) If the rule applies, determine whether the future interest in question is valid or invalid under the rule (will it vest more than 21 years after the death of everyone alive at the time of the creation of the interest? If so, it is invalid.). 3) If the future interest is invalid, determine what interests remain by striking out the invalid interest and seeing what is left. Whatever is left must comply with the rule as well. Options to purchase are typically subject to RAP, while preemptive rights are more debatable because they allow the current owner either to obtain the fair market value or to have an offer by a third party matched by the owner of the preemptive right, either way, the property is alienable. Other courts reject this rationale and submit both types of right to the rule. The perpetuities period is “life in being + 21 years” (the lifetime of the life in being plus 21 years). It begins at the time of the creation of the interest and ends 21 years after the death of every person alive at the creation of the interest. Corporations are not counted as “lives in being.” A future interest is created by conveyance at the moment of the conveyance. It is created in a will at the moment the testator dies. It is created in a trust the moment the trust document is signed and the trust created if the trust is irrevocable. If the trust is revocable, it begins at the moment it becomes irrevocable. The “vesting moment” is the moment when the contingency occurs that renders the interest into possession, e.g. if a conveyance reads “O to A so long as used for residential purposes, then to B,” the interest in B vests at the moment the property is used for nonresidential use.Remedies and Modifications: If a conveyance violates the rule, strike out the offending language. Several states have modified the rule, adopting the “wait and see” and “cy pres” doctrines. A) Wait and See: Under this test, the court 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 (versus the traditional rule voiding the interest if there was a possibility that it would vest outside the perpetuities period). Under this test, the court waits until the condition occurs or the perpetuities period ends, whichever comes first. B) Cy Pres (equitable reformation): a conveyance may violate the rule against perpetuities because it contains an age limit greater than 21, e.g. “O to A for life, then to the first child of B to attain 25 years of age.” In that case, the court will reduce the age of contingency to 21 if this will validate the future interest. C) The Uniform Statutory Rule Against Perpetuities (USRAP) also validates future interests in donative transfers (those created in gifts or trusts or wills) that would ordinarily violate the traditional rule against perpetuities if the interest vests at any time within 90 years of the date of its creation. It has been adopted in about half of states. D) Abolition: At least 15 states have abolished or substantially altered RAP to allow the creation of dynasty trusts, which generate income for the beneficiaries in perpetuity. Options to PurchaseCentral Delaware v. Greyhound Corp.: In determining whether a restrictive covenant giving the grantor the right to “repurchase, retake, and reacquire” the land in the event that it ceased to be used for public purposes violated the rule against perpetuities, the court determined that to resolve an ambiguity in a deed that may be read to create either a fee simple subject to a condition subsequent or an option to purchase, the court should favor the reading which brings the restriction under RAP. As a result, the court reads it as an option to purchase and declares it invalid. In doing so, the court ignored an earlier case, SEPTA, in which such an option was deemed valid, citing public policy rationales. (Remember: options to purchase are still regulated by the common law rule against unreasonable restraints on alienation.) WasteMoore v. Phillips: A claim for waste asserted against the estate of a life tenant by the remaindermen, seeking to recover damages for the deterioration of a farmhouse resulting from neglect by the life tenant. The executrix of the life tenant denied any neglect or breach of duty and asserted the defenses of laches, statute of limitations, and abandonment. The court determined that a life tenant is considered to be a trustee or quasi-trustee with a fiduciary relation to the remaindermen. The law imposes upon a life tenant the obligation to return the premises to the landlord or remaindermen at the end of the term unimpaired by the negligence of the tenant. Waste implies neglect or misconduct resulting in material damages to or loss of property, but does not include ordinary depreciation of property due to age and normal use over a comparatively short period of time. There are two types of waste: 1) Voluntary waste: the commission of some deliberate or voluntarily destructive act; 2) Permissive waste: the failure of a tenant to exercise the ordinary care of a prudent man for the preservation and protection of the estate. In some states, when a remainderman bases a complaint on permissive waste, the injury is assumed to be continuing in nature and the statute of limitations does not run until the expiration of the tenancy. In other states, the statutory commences at the time the waste is committed. If the life tenant’s actions in changing the property increases the property value or utility of the property, it is sometimes called ameliorating waste, which is sometimes condoned by courts. Remedies: An owner of a reversion or remainder can recover compensatory damages for the injuries sustained. He may also have injunctive relief in equity or may obtain receivership. Racial ConditionsRacially restrictive covenants limit the sale, lease, or occupancy of real property to members of a particular race or exclude members of a particular race or races. Historically, most racially restrictive covenants were used to exclude Blacks. Shelley v. Kramer: Owners of property agreed to restrict the use and occupancy of land, as well as all conveyances thereof, to whites. When the agreement was signed, blacks owned five of the parcels included in the agreement. The Shelleys, a black family, contracted to purchase land included in the parcel encumbered by the restrictive covenant, without knowledge of it. The rest of the owners then brought suit to restrain the Shelleys from taking possession of the property. The issue was whether state enforcement of restrictive covenants deprive blacks of equal protection and due process under the 14th Amendment. (At this time, the amendment applied only to actions of the state.) The court, construing itself as a state actor, determined that the state enforcement of restrictive covenants was a violation of the Shelley’s rights and allowed them to occupy the property. Evans v. Abney: A U.S. Senator conveyed a park for the use of white residents only. When the city allowed blacks to use the park, several members of the board of managers of the park sued to have the city removed as a trustee so that they could operate the park on a segregated basis. The Supreme Court held that the park had to be treated as a public institution subject to the command of the Fourteenth Amendment, regardless of who had the title. The Georgia Supreme Court determined that the sole purpose of the trust (operation of a segregated park) had failed and that the park should be closed, a ruling the Supreme Court held did not violate the equal protection clause. There has been conflicting precedent on whether court enforcement of a reverter based on an unlawful condition constitutes state action. Charlotte Park said no, conveyance between individuals with the clause was not invalid because it was not state action; Capitol Federal Loans said that regardless of whether the restriction was a covenant or executory future interest, Shelley applied. Note: both of these cases were decided before the passing of the Fair Housing Act. In the case of racially discriminatory trusts, the court has either dealt with the language by removing it or, if doing so would change the nature and quality of the estate, it reverts to the grantor or to the last place that does not contain a violation. (Hermitage.)COMMON OWNERSHIP*There are two forms of common ownership: 1) Co-ownership, which includes tenancy in common, joint tenancy, and tenancy by the entirety; and 2) Family property, which includes the effects of marriage on property rights, the rights of unmarried couples, and child support. Tenancy in common: Co-ownership in which each tenant in common, no matter how small her fractional interest, has the right to possess the entire parcel, unless all the tenants agree otherwise by contract. Each co-tenant has an undivided interest, meaning that each owner has the right to possess the whole property, and their fractional interest is only relevant for questions like how the purchase price will be divided when the property is sld. When a tenant in common dies, his interest goes to his devisees under his will or to his heirs under state statute if he has not left a will or otherwise disposed of the property. Joint Tenancy: Like tenants in common, each joint tenant has the right to possess the entire parcel. Unlike tenants in common, joint tenant are typically required to possess equal fractional interests in the property. When a joint tenant dies, her property interest is immediately transferred to the remaining joint tenants in equal shares (“right of survivorship”). Joint tenants have no right to devise their fractional interest. The creation of joint tenancy requires more formality than the creation of a tenancy in common. The interest of each joint tenant must be created at the same moment in time (unity of time); all joint tenants must acquire title by the same instrument or title (unity of title); all joint tenants must possess equal fractional undivided interest in the property lasting the same amount of time (unity of interest); and all joint tenants must have the right to possess the entire parcel (unity of possession). (To summarize: joint tenancy requires unity of time, title, interest, and possession.) In a joint tenancy, the right of survivorship is contingent because a joint tenant can destroy the right of survivorship of her fellow owners by selling their undivided interest, severing the joint tenancy and destroying the right of survivorship. The result is that the third party who received the interest becomes a tenant in common with the remaining parties. A party could also convey their joint tenancy interest to another party, severing it, who then conveys it back, creating a tenancy in common. Severance only occurs between the selling owner and the remaining owners; it does not change the relations of the remaining owners among themselves. It is possible to create an indestructible right of survivorship through the use of life estates and remainders. Tenancy in Common vs. Joint TenancyIf a conveyance is ambiguous as to whether the grantor intended to create a tenancy in common or a joint tenancy, the current practice is to interpret the conveyance as a tenancy in common. Neither tenants in common nor joint tenants need to give notice of their intent to transfer the interest. Unless a severance is created, a joint tenant still receives the interest under the right of survivorship. Partition: Joint tenants and tenants in common have the power to file a lawsuit for judicial partition of commonly held property. In these proceedings, the court may order the property physically divided among the co-owners. If this is not feasible or appropriate, the court will order the property to be sold and the proceeds divided. Co-owners can agree among themselves to partition the property, either by physical division or by sale, through voluntary partition. Agreements not to partition are typically upheld if they are reasonably limited in time and have a reasonable purpose. If co-owners cannot agree how to use/possess joint property, they can request an accounting, a procedure by which you sue the co-tenant to collect, and ultimately partition. Benefits and burdens: Concurrent owners are legally obligated to share certain benefits and burdens of ownership, although they are free to vary those arrangements by contract. If a co-owner chooses to live elsewhere, the tenant in possession has no duty to pay rent to the non-possessing tenant (since possession is her legal rights). However, joint tenants and tenants in common do have a duty to pay rent to their co-owners if they have ousted them. Ouster refers to an explicit act by which one co-owner wrongfully excludes others from jointly owned property. Co-owners have the right to share any rents paid by third parties who are possessing the property and can lease his interest without obtaining the consent of the other co-tenants. Co-owners generally have a duty to share basic expenses needed to keep the property, including mortgage payments, property taxes and insurance, in accordance with their respective shares. (Although in most states a co-owner who exclusively possesses the premises has to bear the entire burden of expenses if the value of her occupation exceeds those payments). A co-tenant cannot obtain adverse possession against another unless the possessing tenant makes clear to the non-possessory tenant that he is asserting full ownership rights in the property to the exclusion of the other co-tenants. The courts generally require some affirmative act by which the non-possessory tenant is put on notice that her co-tenant is claiming adversely to the non-possessory tenant’s interests. (If the property is too small to be physically occupied by all the co-owners or if the co-owners have been effectively excluded from the property, it is described as “constructive ouster.”)Tenancy by the entirety: A form of joint tenancy available only to married couples. It has been abolished in the majority of states. The co-owners must 1) be legally married; 2) the property cannot be partitioned except through a divorce proceeding; 3) in most states, the individual interest of each spouse cannot be sold, transferred, or encumbered by a mortgage without the consent of the other spouse with the result that the right of survivorship cannot be destroyed by transfer of the interest of one party; 4) in most states, creditors cannot attach property held through tenancy by the entirety to satisfy debts of one of the spouses. CasesOlivas v. Olivas: Husband requesting rent claiming that emotional ouster is equivalent to constructive ouster since it was impracticable or impossible for them to live together. The court ruled that the person who leaves the property has the burden of showing ouster. If hostility flows only from the non-possessing co-tenant, there is no constructive ouster. Carr v. Deking: (case where father and son owned land as tenants in common, leased the land with an agreement about receiving 1/3 of the annual crop for rent, then the son attempted to change the agreement and the third party executed a different agreement with the father.) The court ruled that a cotenant may lawfully lease his own interest in the common property to another without the consent of the other tenant and without his joining in the lease. The non-joining tenant is not bound by these leases of the common property to third persons. The lessee “steps into the shoes” of the leasing cotenant and becomes a tenant in common with the other owners for the duration of the lease. A non-joining tenant cannot claim exclusive possession against the lease, but may only demand to be let into co-possession. Tenhet v. Boswell: Does a lease sever a joint tenancy? No, the lease simply expires upon the death of the lessor joint tenant. (Thus not advisable to sign a lease from a joint tenant.)Kresha v. Kresha: Following a divorce proceeding, one party cannot encumber the other’s interest in co-owned land, however a lease by a spouse survives the divorce.Sawada v. Endo: Plaintiffs sought to set aside a conveyance of real property from the defendant to his son on the basis that the conveyance was a fraudulent attempt to avoid payment from an earlier claim (car accident). The issue was whether the interest of one spouse in real property, held in tenancy by the entirety, is subject to levy and execution by his or her individual creditors. States are divided on this issue, here the court determined that it was not. Marital Property There are community property and separate property states, with the latter being the policy in the majority of states. In separate property states, spouses own their property separately unless they choose to share it, and thus each spouse is individually liable for prior debts. Creditors cannot go after a spouse’s property to satisfy a debt individually undertaken by the other spouse. Property earned after the marriage is also owned separately. Following a divorce, equitable division occurs, in which the property is divided between spouses subject to a range of factors including economic need, status, rehabilitation, contributions of the parties, and sometimes, fault. While a spouse is entitled to dispose of her property by will, states may limit her ability to determine who gets her property on death. Many states provide for a forced share of the decedent’s estate, effectively allowing the widow or widower to override the will. In community property states, property owned prior to the marriage and property received afterward in the form of gift, devise, bequest, or inheritance is separate property. All other property acquired during marriage, including earnings, is community property and is owned equally by both spouses. Marriage in these states is most similar to partnership. Premarital agreements are typically enforced on the basis of whether they are reasonable and were entered into voluntarily. Some states have adopted the UPAA, which requires that the agreement not be unconscionable and provide a fair and reasonable disclosure of the property or financial obligations of the other party. Homestead laws allow the surviving spouse and children to stay in the family home following the death of the other spouse. CasesIn the King case, the father contended that he could pay child support on his own and that it should be separate from a division of property. However, the court, determining that equitable apportionment is only a guideline for applying factors, and looking at his career as a professional gambler, determined whether the means chosen to collect child support (giving the wife possession of the home) had a lawful basis of support in the record. The court determined that it did, since where a husband is financially unable to contribute to support minor children, the wife can be granted a proportionally larger share of the marital property to offset her increased obligation. O’Brien v. O’Brien: A wife sued for equitable division for the value of a medical license acquired by the husband during their marriage. The court determined that the license could be considered marital property because it was a thing of value arising out of the marital relationship. Under New York’s Domestic Relations law, an interest in a profession or professional career potential is marital property which may be represented by direct or indirect contributions of the non-title holding spouse, including financial contributions and nonfinancial contributions. Watts v. Watts: This was a case of unmarried partners, with the “wife” suing for equitable division, claiming that the wealth accumulated during their relationship was based in part on her contributions. The court ruled that she might have an argument based on unjust enrichment and breach of an implied contract. (Note: courts have adopted different approaches to dealing with the problem of property rights between unmarried cohabitants. Some deny any remedy on the grounds that a relationship between unmarried couples is precluded and there can be no clams for breach of promise to marry; some allow the enforcement of a written or oral agreement between the parties to provide support in exchange for services; and some allow for property distribution even in the absence of any explicit agreement pertaining to support or property rights.)(Child Support) Bayliss v. Bayliss: this case dealt with the issue of whether college education is a necessity for which a parent, following a divorce, must pay. The court expanded the exception to the rule that a divorced, noncustodial parent has no duty to contribute to the support of his or her child after that child has reached the legislatively prescribed age of majority to include college education. Note: other courts have found that there is no obligation for a divorced parent to pay for children’s education, since imposing such an obligation would violate equal protection in that children of married parents cannot claim such a right to have their college education paid for by their parents.(Domestic Violence Protection vs. Takings): Cote v. Cote: Although ordinarily barring someone from their personal property is conceived as a forfeiture or taking, when property is taken to prevent the facilitation of criminal activity it does not constitute a taking. FAIR HOUSING ACT (Title VIII)Housing practices that are unlawful under FHA are those that “refuse to rent or make available any dwelling…based on race, color, or national origin,” including not only those motivated by a racially discriminatory purpose, but also those that disproportionately affect minorities. The fair housing act, passed in 1968, is more expansive than either Civil Rights act that preceded it. It includes exemptions in §3603 b, called the “Ms. Murphy exception,” which exempts owners from the act if their dwelling has three or less families and they live in the dwelling as well (as the fourth family). Note: FHA does not cover sexual orientation. The act was amended to prohibit discrimination on the basis of sex, familial status (presence of children) and handicap (there must be reasonable accommodations for persons with disabilities). Claims under the FHA can be based either on a showing of discriminatory treatment (intent) or disparate impact. Discriminatory treatment: defendant intentionally discriminates against members of a statutorily protected category because of their membership in that group. Such intentional discrimination can be shown through circumstantial or direct evidence. Disparate impact: Defendants’ facially neutral policy has a disproportionate effect on a statutorily protected category. Here, alleged adverse effects are weighed against the defendant’s justifications. A plaintiff can create a rebuttable presumption that a defendant’s policies or practices create an unlawful disparate impact either a) by showing statistical evidence that the policy has a significantly greater impact on a class of persons protected by the FHA than it does on others. Such data focuses on percentages rather than absolute numbers. Or b) that the policy or practice tends to perpetuate segregation. The challenged discriminatory effects must be “significant.” Some courts require defendants to rebut that presumption by showing “bona fide [the actual reason rather than a post hoc rationalization] and legitimate justifications for its action with no less discriminatory alternatives available.” Racial steering is the practice where realtors show black customers housing in certain areas and white customers housing in other areas, and not telling blacks about the availability in the white areas. Such practices violate the act by “otherwise making unavailable” housing because of race. Two groups have standing to sue under the act: 1) Those who are directly injured by discriminatory acts and 2) those who have sufficient incentive to litigate the case. Cases:Race Discrimination: Asbury v. Brougham: Asbury alleged that she was prevented from renting housing in the apartment, and sought to lay out a prima facie case by sending a test renter, her white sister in-law, who had the same qualifications and was given a conflicting statement about the availability of housing. The court applied an employment discrimination case analysis requiring that 1) the plaintiff prove a prima facie case of discrimination; 2) if the plaintiff proves a prima facie case, the burden shifts to defendants to produce evidence that the refusal or rent or negotiate for a rental was motivated by legitimate, non-racial (discriminatory) reasons; 3) once the defendants by evidence articulate non-discriminatory reasons, the burden shifts back to plaintiffs to show that the proffered reasons were pretextual. To establish a prima facie case a plaintiff had to prove: a) he/she is a member of a racial minority (or other protected class); b) she applied for and was qualified to rent an apartment or townhouse; c) she was denied the opportunity to rent or inspect or negotiate for the rental, and d) housing remained available. Note: Every racial distinction is not a violation, rather such discrimination must have an intent or effect of deprivation (under §3604 (a)). Tipping: U.S. v. Starett City Associates: Starett City was the largest housing development in the nation and sought to maintain racial distribution in the apartment to avoid tipping-the loss of white tenants. A group of black applicants brought an action alleging that the procedure violated federal and state law by discriminating on the basis of race. The court held that Title VIII does not allow the use of rigid racial quotas of indefinite duration to maintain a fixed level of integration by restricting minority access to scarce and desirable rental accommodations otherwise available to them (and was discrimination). (Recall that §1982 of the Civil Rights Act was applied to private acts of discrimination as well as to discriminatory legislation in 1968. There is sometimes tension between the FHA and §1982 because the former provides exemptions while the latter does not.) City of Memphis v. Greene: the city of Memphis closed a road preventing traffic from a black neighborhood from obtaining access to the street-the black residents challenged the closing as a violation of §1982. Focusing on the relationship between the street closing and the property interests of the blacks, the court held that the injury did not involve any impairment to their property interests that fell within the scope of §1982, since inconvenience is not considered. A vehement dissent argued that the psychological effect of the barrier was significant. Sexual Discrimination/Harassment: Edouard v. Kozubal: Plaintiff sued under Massachusetts statute alleging that she was sexually harassed and discriminated against because of her sex (with the result that she had to pay higher rental prices than originally agreed upon). She alleged quid pro quo sexual harassment (court again applied an employment discrimination standard). The court laid out the following structure to establish a prima facie case of discrimination by quid pro quo harassment: complainant must demonstrate that a) she is a member of a protected class; b) she was subject to unwelcome sexual conduct; c) the tangible terms or conditions of her situation adversely changed; d) the change was casually connected to her rejection of the sexual advances. She did so, and the landlord was unable to rebut that (actually didn’t even show up). Severe or pervasive is the standard for proving a hostile environment.Familial Status: LaBrie: Plaintiffs sued LaBrie, alleging unfair and discriminatory practices based on provisions set forth in a rental agreement for mobile homes, requiring that there be no more than two occupants and that lessees were not permitted to have minor children in their home. LaBrie claimed that they had legitimate reasons for such prohibitions, outside of discrimination, but the court rejected those claims on the basis that there were less restrictive alternatives to accomplish the same goals. This case was based on a Vermont statute/interpretation of FHA prohibiting discrimination in renting “because a person intends to occupy a dwelling with one or more minor children.” Marital Status (Unmarried Couples): (note: marital status is protected under the Civil Rights Act, not under FHA): McCready v. Hoffius: Plaintiffs answered defendant’s advertisement about property. When the defendants realized the plaintiffs were unmarried they refused to let them rent the apartment, citing religious reasons. The plaintiffs sued under the Michigan codification of the Civil Rights Act. The court had to decide which rights were paramount: the landlord to practice his religion freely (status v. conduct argument) or the plaintiff’s right to rent housing free from discriminatory practices. Applying the five-part test of the State in determining whether there was a compelling state interest in protecting their religious freedom on the particular issue, p. 965, the court rejected that claim and found in favor of the plaintiffs. Notably, other states have found the exact opposite result, ruling that restrictions against cohabitating couples are on the basis of conduct not status and can therefore be upheld. Sexual Orientation: State v. City of Madison: The plaintiffs appealed from a decision which found that they refused to rent housing to Sprague as their housemate because of her sexual orientation, in violation of Madison law, which requires the practice of providing “equal opportunities in housing without regard to…sexual orientation.” The court affirmed the decision. Discrimination Against Persons with Disabilities: Poff v. Caro: A landlord refused to rent to homosexuals, fearing that they might later acquire the disease known as AIDS. The New Jersey law Against Discrimination act protects the physically handicapped against discrimination based on their handicap or perception of a handicap. The court determined that AIDS counts as a physical handicap, and the landlord was precluded from discriminating on that basis. Economic Discrimination: Dillido: This case sought to answer the question of whether a landlord’s refusal to lease to a tenant based on provisions required by their state assistance plan constituted discrimination within the meaning of the Massachusetts statute prohibiting landlords from refusing to rent an apartment because of participation in a subsidy program due to a perception of economic disadvantage. The court rejected the landlord’s contention that he had a right to reject the tenant to avoid economic hardship, finding the requirements of the subsidy as central to the subsidy and thus equivalent to discriminating on the basis of the receipt of the subsidy. Discrimination Based on Income: Harris: a landlord refused to rent to women who were female heads of low-income families. The women sued under California law, claiming that the income requirement constituted discriminatory treatment on the basis of income and created an unjustified disparate impact on women. The court rejected those claims, classifying income as an economic rather than personal characteristic, meaning that it was outside the scope of protection of the law. Racially Discriminatory Zoning Practices: Huntington Branch NAACP v. Huntington: NAACP alleged that the town violated the FHA by limiting private construction of multi-family housing to a narrow urban renewal area and refusing to rezone to allow developers to build multifamily homes outside the area. They claimed that such zoning had a negative disparate impact on minorities. The court found that failure to rezone had a substantial adverse impact on minorities and rejected the claim that the zoning ordinance was designed to encourage private developers to build in an area they would otherwise ignore, finding that such a goal could be met in other, non-discriminatory ways. The plaintiff would have had a heavier burden if they were attempting to compel the city to build versus requesting that an existing developer be allowed to build. Sex Discrimination: Doe v. City of Butler: Plaintiffs were battered women filing suit against the city once it refused the application for the building of a temporary shelter for abused women and children, alleging that the ordinance under which they rejected the application (ordinance limits transitional dwellings to six residents) had a disparate impact on women and violate the familial status provision of the FHA. The court dismissed the claim because the plaintiffs were unable to show that the restriction was premised on sex discrimination or familial status and because the plaintiffs were also unable to show its disparate treatment on women. Exclusionary ZoningBoras: Six students who were living together were held in violation of a statute restricting land use to one-family dwellings, with family defined as “one or more persons, related by blood, adoption or marriage, living and coking together…” The statute prohibited more than two people living and cooking together who were not related by blood, adoption, or marriage. The students claimed that the ordinance violated their rights to equal protection because it interfered with their right to travel, the right to migrate and settle within a state, etc. The court, applying a reasonableness standard, rejected these claims, finding that a group living together was not a “fundamental” right guaranteed by the Constitution and ruled the ordinance valid because it furthered the state’s interest/police power in limiting trash and noise, a quiet lifestyle, etc. Justice Marshall dissented, stating that the right to establish a home was a fundamental right, and that the ordinance discriminated on the basis of personal lifestyle. Dinolfo: The Dinolfos, along with other families, lived in a townhouse. The Charter Township sent them violation notices for having more than one unrelated individual living in their homes, in violation of the plaintiff’s zoning ordinance. Defendants filed an application for a variance from the family definition, which was denied, and argued that the enforcement of the ordinance was exclusionary and interfered with their chosen lifestyle and religious needs (they were living in accordance to their Christian ideals). The court, finding that the objectives the plaintiffs claimed to be the basis of the ordinance were insufficient, since the family definition didn’t actually support those goals, rejected the ordinance as arbitrary and capricious and in violation of the Due Process clause of the Michigan Constitution. A.R.P.E.: case dealt with whether the refusal to grant a special permit for the operation of an AIDS hospice violated the FHA’s prohibition on discrimination on the basis of handicap. The agency justified the refusal because the area was limited to agricultural use. The court rejected the agency’s justification, finding that the denial was based on the desire to appease the discriminatory viewpoints of private citizens, and found the stated reason for denying the permit to be a pretext. Familystyle of St. Paul: Familystyle sued the city of St. Paul, claiming that the city ordinance requiring the licensing of group homes providing services for the mentally ill and retarded and also the placement of those homes in a community at large (no isolated group home community) as discriminatory because they limit the housing choices of the mentally handicapped. St. Paul responded that the licensing scheme was used to place the mentally ill in the least restrictive environment possible to allow them the benefits of normal residential surroundings. The court agreed, finding that Familystyle’s plan, if allowed to go through, would contribute to the segregation of the mentally ill from the mainstream of society. Mount Laurel: This case attacked the system of land use regulated (the majority of the land was zoned for commercial use, but in fact was unused) by the defendant Township of Mount Laurel on the ground that low and moderate income families were unlawfully excluded from the municipality by means of the ordinance. Parts of town included “planned unit developments” (PUD) in which the type, density and placement of land uses and buildings was determined by contract rather than advance legislation. These were used to provide more single-family homes for medium and upper income residents. The court was thus considering whether Mount Laurel, through its zoning ordinances, enacted economic discrimination, depriving the poor of adequate housing and the opportunity to secure it, instead focusing resources completely on medium and upper-income families. The city claimed this conduct was based on the need to keep down local taxes on property. The plaintiffs (NAACP) drew the court’s attention especially to the fact that employees who worked in the town could not afford to live there. (Did Mount Laurel’s ordinance exclude people from living within its confines because of their limited income and resources?). The court held that no NJ municipality can exclude or limit categories of housing on the basis of achieving a local financial goal. As such, Mount Laurel must, by its land use regulations, make realistically possible the opportunity for an appropriate variety and choice of housing for all categories of people who desire to live there (which may include a re-evaluation of the amount of land allocated to industrial and commercial purposes to ensure that it is reasonably related to the need for residential use). Note: this doctrine is a minority rule. Few states have explicitly interpreted their state constitutions to limit exclusionary zoning. ZONING The Supreme Court upheld the power of states to enable zoning laws that limit development rights in Village of Euclid v. Ambler Realty (“Euclid”). The presumed goal behind such ordinances was the prevention of nuisances before they began. The court held that such ordinances were within the municipalities’ police power and that legislative judgments on the appropriate use of land should be upheld to prevent possible conflicts over land uses. Many states delegate zoning power to individual municipalities through zoning enabling acts. Such acts generally authorize two types of zoning: 1) Use zoning is zoning that divides the municipality into districts and regulates the kinds of uses allowed within each district. 2) Area zoning regulates the size of the lots, the height of the buildings, and requirements to set back structures a certain distance from property borders. Zoning enabling acts also generally require the municipal government to establish a comprehensive plan for the municipality, separate from the zoning ordinance, to show the policies and standards used to guide real estate development within the jurisdiction. Use and area districts are established in accordance with this scheme. The legislative branch of the government has the power to adopt the local law governing land use in the municipality, called the zoning ordinance. Typically, a planning commission prepares the comprehensive plan and zoning ordinance before its adoption. Developers who wish to construct projects inconsistent with the zoning requirements can approach the board and ask that the parcel be rezoned in a way that will authorize the project. Such a process is called contract or conditional zoning and is often challenged. (Versus PUDs in which the zoning board works to establish density requirements and then works directly with developers to construct a rational scheme that mixes commercial and residential uses in a desirable way, which is then approved by the zoning board.)There are protections from the retroactive application of zoning laws when those laws unfairly surprise owners who invested in reliance on preexisting laws by denying them the ability to use the property in a manner that was permitted before the zoning law was instituted or changed. Such retroactive application may at times be considered a taking. Recognition of prior nonconforming use and variance, allowing the use of land in a way that is prohibited by zonings to avoid undue hardship, are ways to protect citizens from overly burdensome zoning. Special Exceptions describes a conditional use permitted by the zoning law (zoning uses permitted when legislatively established conditions are met). There is a presumption that the owner can engage in the permitted use so long as the established conditions are met. Contract Zoning: Durand: The court was dealing with the issue of whether a town meeting vote to rezone a parcel of land so that a company, who was also offering the town $8 million if the rezoning was approved, was valid. The court, in applying the standard that a court will defer to a zoning bylaw unless there is evidence that the regulation is arbitrary and unreasonable or substantially unrelated to the public health, safety, or general welfare, allowed the vote to stand, and also held that payments deemed incidental to zoning were fine. Prior Nonconforming Use: Parillo’s: The issue was whether a restaurant owner, who was allowed to stay in a zone that was changed from commercial to residential due to his prior use of the land, could make significant changes to the property. The court determined that the NJ statutory guarantee that land use in a way that was previously consistent with the statute cannot be terminated has limits, including restrictions against the enlargement of nonconforming structures, and as a result, the rights of property allowed to remain due to prior use must be narrowly construed. Variance: Variances are generally granted to relax lot and building restrictions, not use restrictions, and some states expressly prohibit use variances. Many states allow zoning boards to grant variances only when “exceptional and undue hardship” would occur otherwise. In Cochran, the Virginia court held that a variance should not be granted unless it can be shown that the effect of the ordinance, as applied to the piece of property under consideration would, in absence of the variance, interfere with all reasonable beneficial use of the property taken as a whole. Notably, in practice variances are granted all the time, for a variety of reasons, few of which is actual necessity consistent with that standard.Vested Rights: In Stone v. City of Wilton, the Iowa court dealt with the issue of whether a plaintiff who invests in a property that is changed by zoning restrictions, e.g. no longer allowed to build multi-family home, has to be compensated for the reduction of the land (under the allegation that such rezoning would constitute a taking). There is no bright line rule in regard to this issue. The court held that a city’s comprehensive plan is always subject to reasonable revisions and that if new ordinances are valid exercises of police power, as they were in this case, the fact that it deprives the property of its most beneficial use (the plaintiff proving that they had a vested interest in the property) does not render it an unconstitutional taking. Typically, unless zoning removes all beneficial use of a property, it is upheld as reasonable.Constitutional Rights and Zoning: Olech: Olech and her late husband requested an easement to access to the municipal water supply. The Village at first conditioned the connection on the Olechs granting it an 30 foot easement. The Olechs rejected the proposal, since only a 15-foot easement was necessary and eventually the Village agreed. Olech sued the Village claiming that the demand of the additional easement violated the Equal Protection Clause since the demand was arbitrary and capricious. The Supreme Court upheld a ruling that a plaintiff can allege an equal protection by asserting that state action was motivated solely by spiteful effort wholly unrelated to a legitimate state interest. Ethical Issues in Real Estate Development “SLAPP” suits: “strategic lawsuits against public participation” are cases in which a developer attempts to bring a defamation lawsuit against community groups who oppose their commercial development near their homes. This device is used as a strategic intimidation tool, and most courts dismiss them to protect community groups from frivolous lawsuits. Some groups use “slapback” cases, suing the developer for damages for malicious prosecution and frivolous lawsuits. Waste/Hazardous Materials: Liability of property owners for cleanup of hazardous waste: CERCLA impose liability on persons who formerly either owned or operated a facility when hazardous substances were released, and on some present owners and operators of such facilities and on facilities found to endanger the public health or welfare or the environment by their hazardous substances/waste. This liability is strict, joint, and several, meaning that a single company may be required to pay the entire cost of the cleanup regardless of how many companies contributed to and are liable for the damage. Parties are not responsible for acts of God, acts of war, and acts of omissions of third parties with whom the defendant had no contractual relationship, if the defendant shows that it exercised due care and took all reasonable precautions against foreseeable actions of the third party. There is a defense for “innocent owners” who made good faith efforts to determine whether the land was polluted but did not discover any preexisting pollution damage before purchasing their property. An owner who has knowledge of such contamination may not transfer the property without disclosing the fact to the purchaser; failure to disclose causes the seller to be liable for the cleanup even if he did not cause the contamination. Acme Laundry: Acme filed a suit alleging that the Department of Environmental Quality Engineering acted wrongfully by placing a lien on their property based on a Massachusetts statute allowing such liens in the event that hazardous waste was found. TAKINGSThe Fifth Amendment prohibits the federal government from taking private property for public use without just compensation. (The Fourteenth Amendment applied this limitation on governmental power to state governments as well, depriving states from depriving persons of property without due process of law.) The police power of states encompasses the original power of state governments to pass legislation regulating private conduct to protect the public health, welfare, and safety. When the state acts within the legitimate sphere of the police power, infringement on private property interests has no legal redress. The eminent domain power of the states is the power to take or condemn private property, expropriating it, paying just compensation to the owner, and transferring the property to some use designed to further the public welfare. (Typical example is the state taking private property in order to build a highway). In situations where the state exercises this power, it must use eminent domain proceedings to obtain a court judgment transferring ownership of the property from the private owner to the state in return for just compensation. The problem of regulatory takings arises because state actions intended to regulate private conduct to promote the public welfare sometimes have disproportionately negative effects on some property holders. The takings clause thus tries to remedy the problem by requiring that the taking be for public use and that the former property owner be justly compensated. The government has taken the “public use” requirement to mean that the taking must effectuate a legitimate public purpose. Thus, the takings clause is designed not to prevent governmental interference with property rights, but to secure compensation in the event of that interference. a) What takings count as public use?Kelo v. City of New London: New London, acting under a state legislative grant of police power, approved a development plan projected to create jobs and revitalize the economically distressed city. The development plan required the taking and rezoning of a significant amount of property to make way for Pfizer to build its plant, with the expectation that such building would lead other industries to follow. The question presented was whether such economic development qualified as “public use” within the meaning of the 5th Amendment. The petitioners alleged that it did not. The court clarified that taking private property for the sole purpose of transferring to another private property is not allowed. In this case, the city was not planning to open the condemned land for use by the general public and the court decides to determine whether such taking would qualify as a public purpose. (The court considers the Berman standard, which allowed takings for the purpose of redevelopment in a blighted area for the purpose of transforming it into a “well balanced community” and established that the challenges of individual owners must be considered in light of the entire plan; the Midkiff standard, in which the court in Hawaii allowed the taking of title from lessors to lessees to reduce the concentration of land ownership, finding that a taking should be upheld as long as it is “rationally related to a reasonably conceivable purpose.”. Both cases focus on the “purpose rather than the mechanics” of the taking.) The court specifically declined to adopt the rule that economic development does not qualify as public use. The court also rejected the contention that using eminent domain for economic development blurs the line between public and private takings, finding that a government’s pursuit of a public purpose will often benefit individual private parties and cannot be prohibited on that sole basis. The court set the standard of deferring to the municipality’s legislative body for determining what lands it needs to acquire to effectuate necessary development, also rejecting the suggestion that it adopt a requirement of “reasonable certainty” that public benefits will actually accrue. In his concurrence, Kennedy suggested that a court, applying a rational-basis review, should strike down a taking that, by clear showing, is intended to favor a particular private party with only incidental or pretextual public benefits. The dissent believes that the finding that incidental public benefits resulting from the subsequent ordinary use of private property render development takings as “public” use as hugely problematic, and O’Connor goes so far as to suggest that Berman should only be applied to cases in which the taking is used to prevent public harm. Thomas suggests the overruling of Berman.State Response: In response to Kelo, almost all states have passed legislation or constitutional amendments that limit the power of municipalities to take property for economic development purposes. State legislatures have used statutes, and state courts have used common law, to hold that economic development is not a sufficient purpose to justify condemnation of private lands for transfer to another private property. In Michigan, a court held that the use of eminent domain power to transfer property from one private owner to another satisfies the public use test only when 1) public necessity of the extreme sort requires collective action, and 2) the property will be subject to public oversight after transfer to a private entity. Additionally, the property must be selected because of facts of independent public significance (like the need for redevelopment), and with no knowledge of which private entity to whom the property will be transferred. Many states have also read the “public use” requirement much more stringently than did the Kelo court, with some states requiring that the public benefits of the intended use substantially predominate over the private nature of that use. Others prohibit takings in the absence of a showing that the property is harmful. b) What is just compensation? The Supreme Court has held that the just compensation prong of the takings clause requires payment of the fair market value of the property prior to the taking, which generally means the amount the property would likely sell for on the open market. Just compensation is measured by the damage suffered to the owner, not the benefit attained by the government, thus any increase in value of the property caused by the taking is not owed to the owner. Fair market value is likely to undercompensate the owner. The Supreme Court has refused to grant compensation for either goodwill (business has established a neighborhood customer base they are unlikely to be able to replicate) or going concern (the advantages of acquiring an operating business as compared to starting a new business) value, with the exception of temporary takings, in which the business owner may be entitled to compensation for the loss of goodwill. When property is taken from a leaseholder, the Supreme Court has held just compensation to be measured by the market value of the lease such that the owner is put back in the position he would have occupied monetarily had the property not been taken. In the event of partial takings, an owner is often granted only severance damages, the amount the value of his remaining land is reduced due to the loss of the taken land.c) What constitutes a taking?Loretto v. Teleprompter Manhattan Catv. Corp.: this case dealt with the question of whether a minor but permanent physical occupation of an owner’s property authorized by government authorizes a “taking” of property for which just compensation is due. New York law requires a landlord to permit a cable company to install facilities to install on his property. The landlord sued following the passing of the law, alleging that the requirement that a cable installed on the property prior to the conveyance without his knowledge be allowed to stay under the law constituted a taking. The court determined that when the character of a government action is a permanent physical occupation of the property, just compensation is required regardless of whether the action achieves an important public benefit or has only minimal economic impact on the owner. Lucas: The plaintiff paid for two residential beachfront lots, on which he intended to build single-family homes. Subsequently the SC legislature enacted an ordinance barring the erection of any permanent habitable structures, rendering Lucas’ parcels valueless. Issue: Whether the Act’s effect on the economic value of Lucas’s lots accomplished a taking. Regulatory action is automatically compensable when: 1) The regulations compel the property owner to suffer a physical invasion of his property, no matter how minute the intrusion and no matter how weighty the pubic purpose behind it; 2) Where the regulation denies all economically beneficial or productive use of the land. Notably, land use regulations are not considered takings when they advance legitimate state interests. Where a State seeks to sustain regulations depriving land of all beneficial use, the only time it can avoid compensating for that land is if the proscribed use interests were not part of the owner’s original title. The “total-taking” test: Inquiry of whether a regulation acts as a total taking requires analysis of the degree of harm to public lands and resource or adjacent private property posed by the claimant’s proposed activities, the social value of the claimant’s activities and their suitability to the locality in question and the relative ease with which the alleged harm can be avoided through measures taken by the claim and the government (or adjacent private landowners) alike. Thus, to sustain a confiscatory taking over a claim that a taking removes all beneficial economic use, a state must identify background principles of nuisance and property law that prohibit the uses the claimant intends in the circumstances in which the property is presently found. (The nuisance must have existed at the time the land was purchased/leased.)For determining when justice and fairness require that economic injuries caused by public action be compensated by the government, the court engages in ad hoc, factual inquiries focusing on: 1) the character of the government action; 2) the protection of reasonable, investment-backed expectations; and 3) the economic impact of the regulation on the particular owner. These factors necessitate the weighing of private and public interests. A regulatory taking is not automatically found just because a law does not substantially advance legitimate state interests. ................
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