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Title by CaptureGenerallyCASE: Pierson v. PostPlaintiff hunting a fox with his dogs when defendant came along and killed the fox. Plaintiff claimed possession by virtue of the chase and defendant suedRuling for defendant: theory that ferae naturae may be conferred onto a person by actual possessionJohn Locke’s Labor Theory: you gain possession when you mix a good with laborCASE: Keeble v. HinkeringillPlaintiff owned a decoy pond to catch ducks; defendant shot his gun near the pond and scared off the ducks. Plaintiff suedRuling for plaintiff: a property owner has a right to employ land for his pleasure and profit and any act hindering that pleasure/profitable is actionableNeither party had a possessory interest in the ducks – case only dealt with interference with business enterpriseCASE: Popov v. HayashiBoth intended to catch a valuable baseball. Plaintiff had it in his glove when he was rushed by the crowd; defendant picked it up off the groundBoth the plaintiff and the defendant had an interest in the ball, as plaintiff had pre-possessory interest and defendant had actual possessory interest. The ball was sold, and the profits were splitDoctrine of AccessionIf A takes B’s property and transforms it into a new product, A is typically only responsible for damages from initial takingDoctrine of IncreaseOffspring of animal belonging to A will belong to A, no matter who the father isFugitive ResourcesOil and GasFugitive resources as they move from place to place undergroundCapture rule: whoever gets it can have itWaterSurface WaterRiparianism: every landowner has a right to use the water that abuts their property, subject to the rights of other landownersPrior Appropriation: first person to capture water and put it to beneficial use has the rightsGroundwaterEnglish Rule: first to capture without regard to othersAmerican Rule: first to capture, but wasteful/non-beneficial applications are unlawfulWhen is Creation not Property?Commons: previously unowned landLimited-Access: limits access and use of resources to select groupsOpen-Access: no single group has a right to excludeLeads to tragedy of the commons: need for government intervention to protect resourcesMove to private ownership to internalize externalities and maximize efficiencyConstituting OwnershipOwnership = bundle of rightsThe right to exclude, etc.CASE: Jacque v. Steenberg Homes, Inc.Defendant wished to deliver a mobile home across plaintiff’s land. When plaintiff refused, defendant did it anywaysCourt ruled for plaintiff, citing that the right to exclude is a necessary right to ownership of propertyIntellectual PropertyTypes of IPCopyrights: exclusive rights to literary works and artistic goodsPatents: inventions that are novel, useful, and non-obviousTrademarks: words or symbols that identify sources of goods or servicesDistinguishing Between Intellectual Property and Real PropertyNon-excludable: once a resource has been created, people cannot be prevented from gaining access to itNon-rivalrous: the resource may be used by one person without preventing simultaneous use by others MisappropriationCASE: Int’l News Serv. v. APThe AP published news, INS took the news and published it as its ownPatentsSupported by the constitution “to promote the progress of science and the useful arts”Grants limited monopoly to patentee assuming he will use as incentive to engage in socially useful enterprise for the 20-year patent termRequirements: patentable, novel, useful, non-obvious, enableableCASE: Diamond v. ChakrabartyRespondent created a new type of micro-organism to aid in cleaning up oil spills and was issued a patent; petitioner challenged the issuanceRuling for respondent: you are able to get a patent for living organisms if that organism is not found in natureCopyrightsHolder has right to protect others from reproduction, distribution, etc.Requirements: originality, work of authorship, fixationCASE: Feist Publications, Inc. v. Rural Telephone Serv. Co.Respondent published a white pages for its subscribers, and petitioner took the information from the white pages for their own, general purpose white pagesCourt found for petitioner under Sweat of the Brow theory: the second white pages was sufficiently creative and original Copyright action if: (1) plaintiff holds a valid copyright, (2) defendant copied the work, and (3) copying was “improper appropriation”CASE: Eldred v. AshcroftPetitioners built a business through which they published copyrightable material that had entered the public domainCongress passed an Act that established copyrights were valid for a term of life plus 70 years, which retroactively applied to various copyrightsCourt found that the Act did not violate the “Limited Times” portion of the Copyright ClauseFair UseExploitation of some copyrighted work without permissionTrademarksDoes not depend upon “work of the brain,” but simply something that identifies goodsPrevent consumer confusion, encourages trademark owners to invest in quality, and prevents freeridingRequirements: distinctiveness, non-functionality, first useCASE: In re Cordua Restaurants, Inc.Cordua opened a restaurant called “Churrascos” and applied for a trademarkTrademark was denied and the Court upheld the denial, holding that the name was too generic as it simply referred to a type of restaurant/type of foodTitle and Possession of FindersChain of TitleQ -> R ->Lost/misplaced – questionable titleStolen – no title to finderAbandoned – title to finderDepends on R’s mindset at the timeCASE: Armory v. DelamiriePlaintiff found a jewel in a chimney while cleaning it; he gave it to a third-party actor to have it cleaned and the third party took the stonesCourt found for the plaintiff, held that “the finder of a jewel . . . has such a property as will enable him to keep it against all but the rightful owner”True owner has best possessory interest, then subsequent possessors in order of possessionTrover: monetary damages for conversionBailmentsRightful transfer of good without transfer of titleBailor transfers the good, bailee gets the good (delivery and acceptance)Voluntary or involuntaryThe standard of care that a bailee owes to a bailor depends on who benefits from the bailmente.g. if bailor is the sole beneficiary, the bailee must only refrain from damage due to gross negligence, etc.CASE: Hannah v. PeelDefendant owned property that was requisitioned for quartering during the war. Plaintiff, while there, found a brooch which he turned over to the police. The police could not find the original owner, so they turned it over to the defendant who sold itCourt finds for the plaintiff for return of the value of the chattel, because the defendant was not in possession of the property at the time the brooch was foundLost/Mislaid/Abandoned Property. (p. 130)Mislaid: owner intentionally placed it in some location and then forgot to retrieve itTrue owner typically will winLost: owner inadvertently loses possession of itFinder typically will winAbandoned: owner intentionally relinquishes all legal rights to it with no intent to confer rights on any particular personFinder will winTreasure Trove: gold, silver, bullion, or money that has been concealed in a private placeCL: treasure to the KingModern US: treat it lost/mislaid, give ownership to the owner of the landGiftsThree Requirements:Intent: donor must intend to make a present transferObjective view of subjective intentDelivery: donor must actually hand over the propertyActual, constructive, or symbolicAcceptance: donee must actually accept the giftTypes of giftsInter vivos: immediate transfer of a title “between living”Irrevocable if three requirements are metCausa mortis: transfer chattel/property upon impending deathRevocable upon donor’s recoveryGenerallyNo revocation of gifts: upon delivery and acceptance, title transfers immediatelyAttempt to transfer a gift in the future is invalidCASE: Newman v. BostPlaintiff was housekeeper of the decedent. On his death bed, decedent gave plaintiff a bunch of keys and stated that she could have anything in the house (included insurance policy and furniture)Court found mostly against plaintiff because the insurance policy could be manually delivered and the goods in the house could have been symbolically delivered. Plaintiff granted whatever goods that the keys opened, as they were constructively deliveredCASE: Gruen v. GruenPlaintiff claimed title to a Klimt that he stated his father gifted to him, but his stepmother did not deliver. The father retained possession but sent the plaintiff a letter gifting the painting to him after his deathCourt found for the plaintiff, stating that the father had the right to retain the painting until his death and made a valid inter vivos gift – the letter was a valid constructive delivery“As long as the evidence establishes an intent to make a present and irrevocable transfer of title or the right of ownership, there is a present transfer of some interest and the gift is effective immediately.”Adverse PossessionCan assert through action to quiet title or action for ejectment by landownerThe Theoretical PoliciesAvoidance of Stale ClaimsQuiet Titles/Correct Title ErrorsProtection of Personal AttachmentsBasis: statute of limitations has run for property owner to bring action for trespassMI: 15 yearsElements: (1) actual entry, (2) exclusive possession, (3) open and notorious, (4) hostile and adverse, (5) continuous and uninterruptedThree theories: objective standard, good faith standard, and aggressive trespass standardCASE: Fulkerson v. Van BurenAppellant owned a plot of land where appellee’s church met from 1985 until 1994. In 1994 appellant asked them to leave; the church refused so he filed this actionCourt found for appellant, stating that “a possessor of land does not possess adversely if he recognizes the ownership right of the title holder in the land”The Open and Notorious RequirementA operates a business in cave under B’s land. B was unaware that the cave was under his land and to find that out would have had to enter A’s land (where the entrance was located). Statute of limitations does not begin to run until B is aware of A’s wrong (Discovery Rule)Ad Coleum Doctrine: he whomsoever owns the soil also owns to the sky and the depthsColor of Title: claim founded on a written instrument or ruling that is for some reason defectiveThose with color of title have advantage over those who do notConstructive Possession: actual possession under color of title of only part of land covered by the defective writing is constructive possession of all that the writing describesBoundary DisputesCASE: Hollander v. World Mission Church of Wash., DCAppellant owned land next to a church. She had mistakenly been tending to land that belonged to the church, but which she thought was hers, for 15 yearsCourt ruled for appellant, who showed actual, hostile, exclusive, visible, and continuous possession for 15 yearsCASE: Howard v. KuntoKuntos purchased property from the Millers, which was owned by the McCalls before that; the land was actually owned by the Myers according to the original deed but the Myers had never tried to exert possession before thisKuntos able to establish adverse possession on two grounds:Just because it was a summer residence does not mean they could not show “continuous and uninterrupted” possessionTacking: privity exists between the Kuntos and the Millers/McCalls, so the Kuntos were able to “tack” their time as adverse possessors to their ownAdverse Possession of ChattelsCASE: O’Keeffe v. SnyderPlaintiff had an art gallery from which paintings were stolen; defendant claimed that he purchased them and claimed adverse possession because the statute of limitations for replevin had runThe Court held that the statute of limitations should begin to run upon discovery of the stolen chattel in someone else’s possessionThree Rules When Statute of Limitation Begins to RunDiscovery Rule: diligent pursuit of the stolen goods may prevent the statute of limitations from runningConversion Rule: SOL begins as soon as the property is convertedDemand Rule: SOL begins as soon as the true owner demands the propertySystem of EstatesHistorical Duties Owed to LandsServicesMilitary: required tenants to quarter/provide soldiers for the crownEconomic: intended to provide subsistence and maintenance to overlordsReligious: customary to bestow land onto the churchIncidentsEscheats: if tenant died without heirs, land would be returned to the lordAvoidance of IncidentsSubstitution: leaving the land and appointing a new tenantSubinfeudation: often done without lord’s consentStatute Quia EmptoresBanned infeudation in fee simple, largely ended feudal systemEstablished free alienation of land and gave more land to the crownThe Fee SimplePotentially infinite duration (due to inheritability and alienability)CreationJust say “from O to A”; no need to say “to his heirs”Chain of succession (intestate): spouse, issue, ancestors, collaterals, escheatThe Fee Tail“From O to A and the heirs of his body”Once A and all his lineal descendants are dead, the land goes back to the grantor or his descendantsAll fee tails have reversion and remainder clausesIf a will seems to create a fee tail but they are abolished in that state:A fee simple is created in A, orIf A’s death leaves no supervising issue, then a fee simple is created in B as a divesting executory interestLife EstatesA can transfer life interest to B, but it still will end at A’s death and revert back to OFollowed by reversion, remainder, or bothCASE: White v. BrownLide owned a house which she willed to White with the caveat that it was not to be sold. White wished for a construction of the will holding that she had a fee simpleCourt found a fee simple, stated that a will silent as to the condition of the estate to be transferred with the caveat that it was not to be sold was a fee simple, and so the caveat could not be enforcedRestraints on AlienationDisabling: withholds from the grantee the power to transferForfeiture: if grantee attempts to transfer interest, it will be forfeited to anotherCASE: Baker v. WeedonWeedon was married three times; his will stated that upon death his land would go to his third wife and if she died without children then it would go to his grandchildren. The grandchildren worked with the third wife and contracted to sell some of the land to the MS highway dept; later, third wife brought this suit to recover landCourt found that the third wife was not able to sell the land as she only had a life estateDefeasible Estates (p. 202)Estate that may terminate prior to its natural end pointFee Simple Determinable (automatic termination)Ends automatically when a stated event occursDurational language: “so long as,” “during,” “while”Possibility of Reverter: a future interest retained by the transferor of a determinable feeFee Simple Subject to Condition Subsequent (termination at election of transferor)Does not automatically terminate, but may be divested at the transferor’s election when a stated condition happensFuture interest in O is called O’s right of entry/terminationRight of Entry: future interest retained by transferor to divest the FSFee Simple Subject to Executory Limitation (automatic termination)Similar to Condition Subsequent, but O creates a future interest in a third party rather than themselvesExecutory Interest: future interest created in the third partyGenerallyCASE: Mahrenholz v. County Board of School TrusteesHuttons conveyed a fee simple to the school district and stated “this land to be used for school purposes only, otherwise to revert to grantors.” The school closed and the remaining property went to the Js, who transferred the title to the plaintiffs. Harry, the Huttons’ heir, transferred his interest to the plaintiffs as wellCourt found that the deed did not transfer a fee simple subject to a condition and that Harry did not properly transfer his interest to the plaintiffsNotes on MahrenholzPossibility of reverter and right of entry given to heirs, cannot be transferred during lifeCASE: Mountain Brow Lodge v. ToscanoRULE: The distinction between a covenant which restrains the alienation of a fee simple absolute and a condition which restricts land use and creates a defeasible estate was long recognized at common law and is recognized in California. Thus, conditions restricting land use may be upheld by the California courts even though they hamper, and often completely impede, alienation.Reversions and RemaindersFuture Interests Retained by TransferorReversionInterest left in an owner when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires“The remnant of an estate that has not entirely passed away from the transferor”Transferable during life and descendible/devisable at deathPossibility of ReverterOccurs when an owner carves out of his estate a determinable estate of the same levelRight vested in the transferor of a fee simple determinableRight of EntryWhen an owner transfers an estate subject to a condition subsequent and retaining the power to cut short or terminate the estateFuture Interests in Transferees (decision tree p. 219)RemainderA future interest in a transferee which is capable of (not required to) becoming possessory at the natural termination of the preceding estate and does not divest any one estate except the transferorVested(1) given to an ascertained person and (2) not subject to a condition precedentVested subject to open: if one member of a class is ascertained (e.g. children) and there is no condition precedent (i.e. later-born children entitled to share in what was vested to the first-born child)Contingent(1) given to an unascertained person and (2) made contingent upon some event occurring other than natural termination of preceding estatesA remainder is contingent unless it meets the requirements to be vestedExecutory InterestDivest the preceding interestShortcut Rules (p. 223)LE + FI1 + FI2, and FI1 = CR (in FS), then FI2 = CRLE + FI1 + FI2, and FI1 = VR (in FS), then FI2 = EILE + CR (in FS) + CR (in FS), then REV (in FS)Executory Interest and TrustExecutory InterestsA future interest in a transferee that must, in order to become possessory,Divest or cut short some interest in another transferee (“shifting”), orDivest the transferor in the future (“springing”)Statute of UsesPermitted the creation of a FS subject to executory limitation:A FS that, upon happening of an event, is automatically divested by an executory interest in a transferee Table of Future Interests on page 229The TrustTrustee holds legal title in the trust propertyHas power to sell assets and reinvestment proceedsNet income paid to beneficiaries; upon termination the property is transferred to the designated beneficiaries Subject to duties, such as loyalty to the beneficiariesRules Furthering Marketability by Destroying Contingent Future InterestsDestructibility of Contingent RemaindersLegal remainder in land is destroyed if not vested at or before the termination of the preceding freehold estateCan also be destroyed through forfeiture or mergerIf the LE and next vested estate in FS come into the hands of the same person the lesser estate is merged into the otherThe Rule in Shelley’s CaseIf (1) one instrument (2) created a life estate in land in A and (3) purports to create a remainder in persons described as A’s heirs and (4) the life estate and remainder are both legal or both equitable, then the remainder becomes a remainder in fee simple in A.The Doctrine of Worthier TitleInter vivos conveyance of land with a limitation over the grantor’s own heirs either by way of remainder or executory interest, no future interest in the heirs is created; rather, a reversion is created in the grantorThe Rule Against Perpetuities INCLUDEPICTURE "" \* MERGEFORMATINET INCLUDEPICTURE "" \* MERGEFORMATINET Creation and Termination of Joint InterestTenancy in CommonTenants have separate but undivided interest in property; interest in each is descendible and passed by deed or willJoint TenancyRight of survivorshipFour essential unities:Time: interest must be acquired or vested at the same timeTitle: must acquire title by same instrument or joint APInterest: separate but undivided shares and identical interestsPossession: each must have a right to possession of the wholeTenancy by the EntiretyCreated only in married couplesLike that of JT (4 unities plus marriage), survivorship rights, and the parties are considered to hold as one person under CLAvoidance of ProbateProbate: judicial supervision of the administration of the decedent’s propertyJoint tenancy avoids probateGenerallyCASE: Harms v. SpraguePlaintiff entered into a JT with brother; brother entered into an agreement with the defendant whereby brother used his JT interest to get a mortgage on the outstanding balance that defendant owed to a third party. Brother then diedUpon death of brother, plaintiff had sole ownership of the JT (right of survivorship). Once the brother died, the lien of the JT ceased to exist and the plaintiff was not responsible for the mortgage.Partition: when parties terminate a cotenancy but cannot come to a voluntary agreementCASE: Delfino v. VealencisPlaintiff had 99/144 interest and defendant had 45/144 interest in common. They decided to terminate the cotenancy; plaintiff wanted a sale and defendant wanted an in-kind partitionCourt ruled for an in-kind partition because it was the fairest way to split up the land. A sale would weigh the plaintiff’s interests unfairly above the defendantSharing the Benefits and Burdens of CoownershipCASE: Spiller v. MackarethSpiller and Mackareth were cotenants of a building where their tenant vacated. Spiller then used the building as a warehouse to store his stuff; Mackareth sent him a letter demanding that he vacate half the premises or pay her portion of the rentCourt found for Spiller, held that in absence of an agreement to pay rent, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. To be liable in AL, the cotenant must have denied his cotenants the right to enter (basically, does not have to pay unless there is an ouster)TenanciesLeasehold EstatesTerm of Years Estate that lasts for a fixed period timePeriodic TenancyLease for fixed period of time that continues for succeeding period until either the landlord or tenant gives notice of terminationTenancy at WillNo fixed period of tenancy, endures as long as the landlord and tenant desireCL: end whenever you want; modern statutes typically require a termination periodTenancy at Sufferance: HoldoversTenant remains in possession after termination of the tenancyLandlord can evict or consent to creation of a new tenancyCASE: Kajo Church Square, Inc. v. WalkerWalkers owned plot of land which they gave to Grace Church, Grace leased it back to the Walkers. Grace sold the land to Kajo and Kajo signed paperwork acknowledging a “leasehold for life” in the Walkers, but Kajo terminated the leaseCourt found for Kajo because a leasehold for life is not a thing and the lease would have been at will, so Kajo was right in terminationSelection of TenantsCivil Rights Act/Fair Housing Act created basis for civil suits for housing discriminationNeed not prove discriminatory intent, just discriminatory effectAssignments and SubleasesAssignments v. SubleasesCASE: Ernst v. CondittAppellants leased a tract of land to Rogers, who built a Go-Kart track. Appellee approached Rogers to buy the business; they both approached appellants and amended the lease to extend its duration and stated that appellee was a sublessor. The lease expressly stated that Rogers was still the lessee and was responsible for damages. Appellee did not pay the rentCourt held that the appellee was an assignee, not a sublessee. In CL, the party would always be a sublessee, but in modern law the court will look at the intent of the partiesTwo tests to distinguish between the sublease and assignmentFormalistic: if the lessee transfers anything less than his entire interest, it’s a subleaseIntention: look at what the parties wantedCASE: Kendall v. Ernest Pestana, Inc.City leased space to Perlitches, who assigned their interest to Pestana. Prior to assignment, Perlitches had subleased to Bixler, who sold his airplane service business to Kendall. Lease stated that written consent of the lessor was required to assign interest; thus Bixler needed the consent of Pestana, but they refusedCourt found for Kendall, stated that Pestana needed to provide a legitimate business justification for refusal of Bixler’s request to sublease to Kendall (minority rule)PrivitySublease: no privity of estate between sublessee and landlord, original lessee still responsible for obligations under KAssignment: substantial rights transferred from lessee to sublessee to create privity between assignee and landlordNovation: express release from liability from a landlordDuties and Rights of a LandlordThe Tenant in PossessionCASE: Berg v. WileyWiley leased land to Phillip Berg, the leased stated that Phillip would pay for costs of remodeling and make no changes to the building’s structure and that Wiley retained the right of re-entry if the lease was violated. Phillip assigned lease to Kathleen Berg, whose restaurant received numerous health code violations; when Kathleen failed to fix problems after two weeks, Wiley re-entered and changed the locksCourt held for Berg, ruled that a landlord cannot use “self-help” to retake possession. Self-help was allowed under the common law, but the Court adopts a modern approach stating that landlords can only retake through judicial meansThe Abandoning TenantCASE: Sommer v. KridelDefendant signed a two-year lease and paid first month’s rent and security deposit, but never moved in and told plaintiff he was vacating because he was unable to pay the rent. Plaintiff let damages accrue and did not attempt to relet, then sued for damagesCourt ruled for Kridel, found that a landlord has an obligation to take steps to mitigate losses as a result of an abandoning tenant. Landlord should have put out ads/not denied another person from moving inTraditional options for abandoning tenant:Terminate the leaseLeave premises abandoned, recover accrued rentMitigate damages, recover any differenceDuty to Deliver PossessionAmerican Rule: tenant’s responsibility to oust holdoversEnglish Rule: landlord’s responsibility to oust holdoversNegotiable part of the leaseCovenant of Quiet EnjoymentAbility to enjoy your premisesLandlord must have a right to legal possession and the premises must be in physically good condition“Leaving the Relationship”GenerallyCASE: Village Commons, LLC v. MCPOMCPO leased space from Village Commons; contract stated that the landlord would be responsible for all equipment used in common and maintain leased space in good repair. The space began to leak and they found mold and a part of the leased space was unavailable; the landlord did a poor job in cleaning/fixing leaks, so MCPO vacated and the landlord sued for breachCourt found for MCPO, held that actual eviction occurred when the landlord told MCPO to refrain from using flooded areas; constructive eviction occurred due to repeated water intrusions. Due to these, MCPO was able to elect to vacateConstructive Eviction: (1) condition of leased premises amounts to a breach of the covenant of quiet enjoyment, (2) breach so substantial as to justify the tenant leaving, (3) tenant vacates in a timely fashionThe Implied Warranty of HabitabilityReally only in residential leasesCASE: Hilder v. St. PeterPlaintiff moved into a new apartment that had a bunch of problems that she fixed at her own expense. She paid all rent on time and paid a security deposit, which she never got backCourt ruled for plaintiff, found that a landlord is responsible for the habitability of the leased property, must make sure that the property is “safe, clean, and fit for human habitation.”Possible remedies for tenant:Remain in possession and bring an action for damagesRescind lease, permitting the tenant to vacate the premises with no further obligation to payRemain in possession and withhold all or part of rentRepair the defects and deduct the costs of the repairs from rentPurchase of Real EstateReal estate Ks almost always executory – title does not pass immediatelyImplied warranty of marketabilityThe Contract of SaleSoF: (1) signed by party to be charged, (2) describe real estate, (3) indicate priceExceptions: part performance and estoppelCASE: Hickey v. GreenHickeys orally agreed to buy Green’s property, giving Greens deposit check. Hickeys agreed to sell their house to a third party – Hickeys made clear to Greens that they intended to sell their own property in reliance of the sale of Greens’ lot. Greens backed outCourt ruled for Hickeys, held that specific performance may be granted in favor of a non-breaching party when that party reasonably and detrimentally relied upon an oral agreement that did not satisfy the SoF (R(3)K § 129)Contracts and DeedsContractsImplied Condition of Marketable TitleA title not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable personCASE: Lohmeyer v. BowerBowers agreed to sell land to Lohmeyer, showing him an abstract showing good title. Lohmeyer agreed, but afterwards discovered that the property was in violation of a local ordinance; Lohmeyer sought rescissionCourt ruled for Lohmeyer, found that the encumbrances on the property are enough to expose him to the hazard of litigation and make such title doubtful and unmarketableEven though the deed contained a clause that “protected” the sellers from restrictions from easements and encumbrances, the implied condition or marketability still comes into playDoctrine of Equitable ConversionIf there is a specifically enforceable contract for the sale of land, equity regards “as done which ought to be done” – specific performanceThe Duty to Disclose DefectsCASE: Stambovsky v. AckleyPlaintiff bought a house which was well-known as a haunted house; defendant did not disclose any of this information to the plaintiffCourt ruled for plaintiff, held that caveat emptor did not apply to this case. In NY, caveat emptor generally applies unless there is:A confidential/fiduciary relationship between partiesActive concealment/affirmative misrepresentationCASE: Johnson v. DavisDavis bought a house from Johnsons. Johnsons knew that the roof leaked, but did not discloseCourt ruled for Davis to rescind, found that sellers are under a duty to disclose latent defects when those defects materially affect the value of the propertyMateriality Test: Objective test of whether a reasonable person would attach importance to it in deciding to buy, orSubjective test of whether the defect affects value/desirability in the eyes of the buyerImplied Warranty of Quality/Skillful ConstructionExists in lieu of caveat emptorDoes not impose strict liabilityMortgagesBuyer provides (1) a promissory note and (2) a mortgage to the bank to secure a home loanAlternative Security Device: Installment Land Sale ContractBuyer takes possession of land immediately but seller contracts to deliver title only after the buyer has paid purchase price plus interestTitle v Lien TheoryTitle: mortgagee takes legal title and mortgagor has equity of redemptionLien: mortgagor retains legal title and mortgagee has lien on propertyChanges in the Mortgage MarketCASE: Murphy v. Fin. Dev. Corp.Plaintiffs had a mortgage with defendant and were seven months behind. After attempting to work out a new plan, defendants foreclosed. At the auction, defendants were the only ones to bid and bought the house for very cheap and flipped itCourt awarded damages to plaintiffs after finding that the defendants did not act in good faith and did not exercise due diligence when conducting the foreclosure sale because they did not advertise the sale and a reasonable man would have adjourned the saleTwo standards for invalidating foreclosure sale: (1) must be such a price that shocks the conscience of the court and (2) price must be “grossly inadequate”Acceleration Clause: enables mortgagee, upon transfer of mortgagor’s equity, to declare balance due and foreclose if not paidThe Mortgage Crisis!CASE: Commonwealth v. Fremont Invest. And LoanFremont issued thousands of loans to subprime lenders with little or no down payment and ARM payments, and then 2008 happenedCourt held that these mortgages are “unfair” under MA statute because:They were ARM loans with intro period of three years or lessInitial rate at least 3% below fully indexed rateDebtors’ DTI exceeded 50% when evaluated on fully indexed rateSubstantial prepayment penaltyCASE: US Bank Nat’l Assoc. v. IbanezMortgage-backed security issues, US Bank presented themselves as the present holders when they had not been assigned the mortgages, and foreclosed upon Ibanez’s homeRecording Acts and Deed DescriptionsTitle AssuranceEstablished through title search, title assurance, title covenantThe Recording SystemTypes of Recording ActsRace: the first purchaser for value who records first, prevailsNotice: a subsequent purchaser for value who takes without notice of third-party interests in the land prevails, regardless of whether he recordsRace-Notice: a subsequent purchaser for value who takes without notice of third-party interests in the land prevails only if he records before the prior instrument is recordedMI is a race-notice jurisdictionPurposeEstablishes a system of public recordationProtects bona fide purchasers against prior unrecorded interestsIndexesGrantee-Grantor Index: separate indexesTrust IndexIndexed by parcel ID number assigned for tractMust go back 40 years in MIGolden Search Rule: Search the grantor index for each person in the chain of title, under his/her name, from the date of delivery of the deed to the person [date in] until the date of recording of the first conveyance from that person, of all of his/her interests, [date out]CASE: Luthi v. EvansOwens conveyed interests in oil and gas rights to T. The lease specified seven specific tracts, but also contained a Mother Hubbard Clause that included all interests in Coffey County not specified. There was an eighth interest in the county that Owens had assigned to BurrisCourt held that the Mother Hubbard Clause was invalid, found that in Kansas interests had to be specifically laid out in the written document for constructive notice to be givenTypes of Recording ActsCASE: Messersmith v. SmithCaroline Messersmith assigned her interest in land to a bunch of people and then diedAs a general rule the recording of an instrument affecting the title to real estate which does not meet the statutory requirements of the recording laws affords no constructive notice.CASE: Board of Educ. of Minn. v. HughesDefendant bought lot from Hoerger on May 17, 1906, recorded Dec 16, 1910. Duryea bought same lot on April 27, 1909, recorded Dec 21, 1910. Duryea conveyed interest to plaintiff on Nov 19, 1909, recorded conveyance Jan 27, 1910.Court found for defendant, held that the deed from Hoerger to Hughes became operative, although Hughes left his name off, when Hughes put his name in the blank space. Hughes is a BFP because at the time of conveyance/recording there was no record showing any other interest in the Hoerger’s lot and Hughes recorded firstPersons Protected by the Recording SystemGenerally does not protect devisees and donees (courts need more than a peppercorn)CASE: Lewis v. Superior CourtLewises contracted to buy a house from Shipley. A lis pendas was filed against Shipley on Feb 24, recorded on Feb 29. Lewises paid down payment Feb 25, closed Feb 28 and paid remaining balance in MarchCourt ruled in favor of Lewises:Party can still be hurt even if they have not paid anythingConstructive notice not required before payment of every installment, just prior to passing of titleProtects Lewises, punishes ShipleyCASE: Harper v. Paradise“A deed in the chain of title, discovered by the investigator, is constructive notice of all other deeds which were referred to in the deed discovered.” If the discovered deed mentions other deeds, the discoverer is on put on inquiry notice of those other deedsInquiry NoticeBased on a purchaser’s duty to investigate relevant circumstancesCASE: Waldorff v. EglinChoctaw built condos and assigned a promissory note/mortgage to Eglin. Waldorff entered into agreement for a unit and kept up with fees. Choctaw owed money to Waldorff; they agreed to waive what Choctaw owed if Choctaw waived fees owed by Waldorff. Eglin foreclosed upon condosCourt ruled for Waldorff, held that a purchaser has unequivocal title over a Bank in a foreclosure action if the purchaser provides constructive notice of occupation. Since Waldorffs had open and notorious occupation of the condo, Eglin was on inquiry notice to check out if they had titleTitle InsuranceDoes not run with the landGenerally covers (1) risk that title is held by someone else, (2) risk of a defect, lien, or encumbrance, (3) risk that title is unmarketable, and (4) risk that insured owner has no right of accessCASE: Lick Mill Creek Apts. v. Chicago Title Insurance Co.Plaintiff bought property where chemical plants once stood, so the soil was contaminated. Plaintiffs had to pay a bunch of money to clean up the soil and sought indemnity from defendants on a basis of unmarketability of titleCourt ruled for defendants, held that the encumbrance did not affect the marketability of title. Even if the land value was affected, they still had good, marketable titleEasementsFour Types of Servitudes:Easement: a right to do something on another’s landProfit: a right to enter someone’s land and remove something attached to that land (e.g. minerals)Real Covenant/Equitable Servitude/Negative Easement: a right to restrict an owner from using their land in a certain wayReal Covenant/Equitable Servitude: a right to compel an owner to perform some act on their own land/a right to compel an owner to pay money to maintain facilitiesEasement CreationAffirmative: give holder the right to do something on another’s landNegative: forbid owner from doing things on their landAppurtenant: easement attaches to the land/gives right because a person owns that landIn gross: no connection to land ownershipCASE: Willard v. First Church of Christ, ScientistMcGuian owned lots 19 and 20 and allowed the church to park on lot 20. She sold lot 19 to Peterson; he later agreed to sell both lots 19 and 20 to Willard. Peterson bought lot 19 on the agreement that the church would have an easement to park during church hours. The easement was not recorded when Willard recorded the deedCourt ruled for the Church, held that McGuian and Peterson both intended there to be an easement for the church, and that McGuian would not have conveyed the land had she known that the easement would not have been upheldDeed Provisions:Reservation: provision in deed creating some new servitude that did not exist before as an independent interestException: provision in deed that excludes from the grant some pre-existing servitudeEasement can be reserved, but not excepted, in favor of a third partyLicensesOral or written permission allowing licensee to do some act that would otherwise be a trespassIrrevocable under rules of estoppelCASE: Kienzle v. MyersVan Duyne and Bauer, with knowledge they would have to join the public sewer line, both agreed that Bauer would run her line to Van Duyne’s property and they would connect to the public line via Van Duyne’s property. New people moved into their houses and the Kienzles brought this action for trespassCourt ruled in favor of Myers, held that Van Duyne and Bauer had created a servitude when the former gave the latter permission to build the sewer line onto her propertyEasements: Scope and TerminationImplied easements: require a previously agreed-to useCASE: Van Sandt v. RoysterBailey owned three properties, and she connected her house at the far end to the public sewage line at the other end, passing under two other lots. She conveyed these lots to others, and eventually Van Sandt purchased a lot. He brought suit for equitable relief claiming no implied easementThe Court found against Van Sandt, held that there was an implied easement from a prior existing use:Initial unity of ownership, followed by severance of titleAn existing, apparent, and continuous use of the servient parcel for the benefit of the dominant parcel at the time of severanceReasonable necessity to continue the prior use at the time of severanceVan Sandt was aware of the appurtenant easement at the time of conveyance, so the implied easement is validIf the dominant and servient parcels come together again, the easement is extinguished and a new analysis will be undertaken to determine an implied easement in the case of re-severanceCASE: Othen v. RosierRequirements for an easement by necessity:Initial unity of ownership, followed by severance of titleStrict necessity to continue the prior use at the time of severanceIf the dominant owner of the easement finds another way to do whatever the easement was doing, then the easement by necessity disappearsRequirements for a prescriptive easement:Adverse and hostile useOpen and notorious useContinuous useUse for the statutory period (usually the same as for AP)Use must not depend upon a like use/right of othersCASE Brown v. VossDefendant’s predecessors in interests gave an easement to the plaintiff’s predecessors in interests for a road through defendant’s property. Plaintiffs bought the plot of land beyond their existing plot and started using the easement for that plot, even though the easement was for the initial plotCourt found that the plaintiffs misused the easement, but that defendants were not entitled to injunctive relief because there was no increase in traffic across the easement and the plaintiffs relied upon the easement in buying the new property and building their houseCourt’s four-step approach to determine if an injunction is needed:Proceeding is equitable and addressed to the sound discretion of the trial court;Trial court is vested with broad discretionary powerActual and substantial injury sustainedEnforceabilityRestatement (Third) of Property § 4.11: an easement may not be used in conjunction with a nondominant estateServient owner can change the location of the easement at his expense without the dominant owner’s consent if the change does not significantly lessen utilityCASE: Presault v. United StatesPlaintiffs’ predecessors in interests had granted easements to the railroad. In 1975 the RR took out all the tracks and the City took over the land for use as a public nature trail under the Rails and Trails ActThe Court ruled for the Presaults, found that the easements, if any, expired when the RR took out the tracks and ceased operations. The easements did not include operation as public nature trails in the first place, and so they were entitled to compensationAbandonment:(1) intentionality and (2) the present act construing intentionalityExpiration: agreed to in documentEnd of necessity: does not apply to express, written easementsMerger: dominant estate merges with servient estate, so easement disappearsEstoppel: servient owner relies upon the statements of the dominant ownerCovenantsFuture Covenants: general warranty, quiet enjoyment, further assurancesPresent Covenants: Real CovenantsEnforceable at lawMust have privity of estate (e.g. landlord-tenant)American courts allowed covenants to run in favor of and against successive owners (diagram on notes, April 1)Horizontal PrivityAllows enforcement of a covenant against successors when the covenant is created in conjunction with the transfer of some other interest in landRequired for the burden to run, but not for the benefitVertical PrivityRequired for both burden and benefit to runBurden: covenant enforceable only against someone who has succeeded to the same estate as that of the original promisorBenefit: enforceable by a person who succeed to the original promisee’s estate or to a lesser interest carved out of itOther RequirementsOriginal constructors must have intended it to pass to successorsMust touch and concern the affected land (no personal issues)Not enforceable against one who does not have notice of the covenantSee requirements chart, April 1 notesRequirements for a benefit or burden to run with the landWriting, notice, intention, touch and concern, privityCASE: Tulk v. MoxhayTulk sold land to Elms, with a covenant that Elms would not change the land and keep it in good condition. Elms sold the land to Moxhay without the covenant (though he knew about the previous covenant), and Moxhay intended to change the landThe Court ruled for Tulk, upholding the injunction against Moxhay. Even though the covenant was not appurtenant to the land, the Cout found that they must uphold the covenant even when the land passes handsCASE: Neponsit v. EmigrantRequirements for a Real Covenant:It must appear that the grantor and grantee intended that the covenant should run with the landIt must appear that the covenant touches and concerns the land with which it runsIt must appear that there is privity of estate between the promisee and promisorTo determine if a covenant touches and concerns the land:Look at the effect of the covenant on the legal rights which otherwise would flow from ownership of landTermination of CovenantsMerger: burden and benefit of the same personRelease: written and recorded by the dominant partyAcquiescence: when the plaintiff has failed to enforce the servitude against other breaches and then seeks to enforce the servitude against the defendantAbandonment: similar to acquiescence, but makes the entire servitude unenforceable rather than just on the one plaintiffUnclean Hands: court will refuse to enjoin a violation of a servitude that the plaintiff previously violatedLaches: unreasonable delay by plaintiff to enforce a servitude against defendant causing prejudice to the defendantEstoppel: if the defendant has relied upon the plaintiff’s conduct, making it inequitable to allow the plaintiff to enforce the servitudeCASE: River Heights Associates L.P. v. BattenLand was transferred in 1959 for use as a residential subdivision subject to a restrictive covenant that no commercial enterprises shall be build and operated on the land. A few transfers later, Woods wished to open a commercial business on the land and the neighbors filed for an injunctionThe Court granted the injunction, held that the lots were still subject to the covenant despite “changed conditions” because the neighborhood/subdivision remained the same even if the surrounding area was commercialized over that period of timeRestatement allows a court to modify the existing servitudes to better fit within the bounds of the newly changed conditionsCASE: Shelley v. KramerA neighborhood in St. Louis created covenants on all property to deny ownership to all people of color. Shelleys, a black family, purchased property and the neighbors filed for injunctive reliefThe Court denied injunctive relief, held that the covenants were themselves constitutional, but that judicial action to enforce them violated the petitioners’ right to due process and equal protection.CASE: Nahrstedt v. Lakeside Village Condo Assoc., Inc.Petitioner wanted to keep her cats in her condo in violation of CC&Rs established for the condo communityCourt rules in favor of the condo association, held that there are two types of CC&Rs: (1) those that existed with the master deed and (2) those that were incorporated into the community later by the Board. The former deserve more deference than the latterCASE: Rick v. West“Restrictive covenants in respect of land will be enforced by preventative remedies while the violation is still in prospect, unless the attitude of the complaining owner in standing on his covenant is unconscionable or oppressive. Relief is not withheld because the money damage is unsubstantial or even none at all”There lacked a substantial change to rule the covenant unenforceableLand Use and ZoningPublic way of controlling private land use as a result of degrading conditions due to Industrial RevolutionCASE: Euclid v. Ambler Realty Co.Euclid passed zoning ordinances that grouped land into categories based on approved usage from U-1 (residential) to U-6 (industrial). Ambler had a plot of land that included a bunch of different categories, and claimed that the ordinances deprived them of liberty and property without due processCourt finds ordinances constitutional because they work to prevent the evils that came about with the Industrial Rev’s effects on housing. They work to prevent the monopolization of air and space by industry at the expense of residential areasZoning must not be arbitrary – must accomplish some kind of goalBasis on police power:Does the regulation concern public safety/welfare?Are provisions rationally related to the stated goals?Does it violate a person’s constitutional rights?Using ZoningCASE: PA NW Dists., Inc. v. Zoning Hearing Bd.Plaintiff opened an adult bookstore and four days later the zoning board passed an ordinance prohibiting adult entertainment facilities in that area, setting a 90-day amortization period for the plaintiff to move the store or change operationsCourt found for plaintiff, held that the ordinance in question violated the US and PA constitutions because a property owner is allowed to use their property in any lawful way that is not a nuisance, including running a porn shopCASE: Anderson v. City of IssaquahAnderson wished to open a retail space in the City. Upon four lengthy review sessions and various new proposals, the Development Commission denied his application because the design did not give the same “feeling” as the surrounding area as per the zoning ordinance. Anderson brought suit, claiming the ordinance was unconstitutionally vagueCourt found for Anderson, held that the ordinance does not give effective or meaningful guidance to applicants, as the words used are not technical/commonly understood. A community must give clear guidance as to the standards they wish to promote, rather than relying upon a subjective analysis of the aestheticsAchieving Flexibility on ZoningVariancesSet up to avoid undue hardships as a result of zoning ordinancesRequirements: (1) variance necessary to avoid undue hardship on the owner of the land and (2) the grant of the variance must not substantially impinge upon the public good and the intent and purpose of the zoning plan/ordinanceRuns with the landSpecial ExceptionsA use permitted by the ordinance in a district where it is not necessarily incompatible, but may cause harm if not watchedCommunity ControlControls on Household CompositionCASE: Moore v. City of East ClevelandMoore lived in a house with her son and two grandsons; one of the grandsons was the child of Moore’s deceased child. The City filed a criminal action, claiming that the grandson was an illegal resident in violation of the housing ordinanceCourt found for Moore, held that when a city ordinance attempts to influence family dynamics, it needs to be scrutinized. Belle Terre allowed for cohabitation of those related by blood, adoption, or marriage, so this falls in line with thatCASE: City of Edmonds v. Oxford House, Inc.Defendant operated a group home for recovering addicts in a single-family zoned area, City brought action because the ordinance defined a family as “persons, without regard to number, related by genetics, marriage, adoption . . .” Defendant claims protection under the disability exception of the Fair Housing ActCourt found for the City, held that the FHA exception only applies in cases where the ordinance caps the number of individuals in a home, while this ordinance applies to family compositionCASE: Village of Belle Terre v. BoraasA group of six University students, unrelated by blood, adoption, or marriage, moved into a residential area and the City tried to kick them out for violation of a zoning ordinanceThe Court found for the City, held that the zoning ordinance was permissible as it attempted to remedy the issues that boarding houses and urbanization can inflict on residential areas, such as increased traffic and noise. The “family” definition did not place a limit on number, but on compositionEminent DomainTakings Clause, US Const. amend. VPrivate property shall not be taken for public use without just compensationCASE: Kelo v. City of New LondonThe City was facing dire economic straits, so they authorized a plan whereby a private organization/corporation would be funded to create a new park and new office space in hopes of attracting business by using the City’s right of eminent domainCourt held that the City’s use of eminent domain for land to be used as office buildings for private corporations qualified as a “public use” under the Takings Clause because economic development is a primary function of government, and the taking of private lands for this purpose would ultimately benefit the public as a whole, not just the corporationsDissent – Three categories of takings that satisfy public use requirements:Transfers of private property to public ownershipTransfers to private parties who make property available for public use (e.g. railroads)Transfers to private parties as part of a larger program to serve a public purposeCASE: Loretto v. Teleprompter Manhattan CATV Corp.NY enacted legislation whereby landlords were required to allow CATV companies to install on their property, setting one-time payment of $1 as “just compensation.” Plaintiff claims this is a taking authorized by the government without just compensationCourt ruled for the plaintiff, held that any physical occupation of property authorized by government is a taking. Installation interferes with property rights in three ways: (1) owner has no right to exclude others, (2) owner cannot make nonpossessory use of the property, and (3) destroys property valueCASE: Penn. Coal Co. v. MahonMahon’s predecessor in interest had been sold the surface rights to a plot of land; the coal company retained mining rights. State passed a law that outlawed mining that would lead to subsidence of homes like the Mahons’Court rules for coal company, held that the Kohler Act amounted to a taking of the coal company’s rights and did not incorporate just compensation. Holmes Test: government regulation of a use that is not a nuisance cannot go forward without just compensation. Focuses on diminution of value for just the coal company (property owner)Dissent: restriction imposed to protect public health and safety against nuisances (like in this case) do not amount to 5th Amendment takings. Must measure diminution of value to the whole of society, not just the coal companyCASE: Penn. Central Trans. Co v. City of N.Y.The City enacted the Landmark Protection Act, which gave the owners of Grand Central (1) the obligation to keep the building in good repair, (2) have their design changes/additions approved by a commission. Owners wished to add office buildings to the top of Grand Central; the City rejected the development proposalsThe Court found for the City, held that historical protection acts are similar to zoning ordinances. The Act did not interfere with the present economic use of Grand Central and was substantially related to the promotion of public welfareThree-part ad hoc review of regulatory schemes:Diminution of valuePrevention of harm to the general public“Average reciprocity of advantage”CASE: Palazzolo v. Rhode IslandPetitioner held about 20 acres of wetlands he wished to develop into a subdivision. His applications were all denied. The State passed a law declaring the wetlands protected areas and significantly restricted their development. Petitioner brought suit, claiming that the regulations deprived him of all economically beneficial use and thus amounted to a taking, to which he demanded compensation under the 5th AmendmentThe Court found for petitioner and remanded, held that the claims could not be extinguished because he received title of the land after the regulations were promulgated as his corporation had the land prior to that. The Court remanded, finding that the petitioner did not have just “a few crumbs left” as the upland portion of his ;and holdings still held significant valueGovernment ExtractionsLocal government measures that require developers to provide goods and services/pay fees to get projects approvedCASE: Nollan v. Cal. Coastal Comm’nNollans wished to purchase a property and demolish the existing structures to build a larger house, but to get the permit the board required that they grant the City an easement so that the public could get from the beach (at the front of the property) to another public area (behind the house)Court ruled for Nollans, held that a City cannot impose an easement upon a landowner for a permit to be approved. Court held that land use regulation is not a taking if it substantially advances legitimate state interests and does not interfere with the economic viability of the property. The easement interferes with the right to exclude, so this is a takingNexus/Rational Relation Test: must describe the nexus between the condition at bar and the original purpose of the standardCASE: Dolan v. City of TigardCity had a zoning code that required (1) 15% open green space, (2) new development save land for pedestrian paths, and (3) drainage to Fanno Creek Basin. Dolan applied for a permit and the City said they wouldn’t approve unless she conformed with the codeCourt remanded, stating that the City did not show consideration of the “rough proportionality” of the exaction with the proposed benefits to the public. City must fully explain the connection between the code and the public benefit. Plus, the “easement” violated her right to excludeCASE: Koontz v. St. Johns River Water Mgmt. Dist.Koontz bought property that had a drainage ditch running along it. FL passed a statute requiring any development that would substantially affect the public interests to get a permit. Koontz applied for a dev permit for 3.7 acres and offered to donate the remaining 11 acres; the management district countered with 2 options: (1) develop only 1 acre and donate the rest, or (2) build as planned but hire contractors for a Commission-led project elsewhereCourt ruled for Koontz, held that the onus placed on him by the district was excessive. The district tried to circumvent the nexus and rough proportionality requirements outlined in Nollan and Dolan, but just because the district denied the permit and it was a monetary exaction/“choice” doesn’t mean they don’t still have to justify it ................
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