Property Outline - Santa Clara Law



Property Outline

I. Perspectives on Property Law

A. Ancient Law

I. Occupancy- natural mode of acquiring property

a. Definition: advisedly taking possession of that which at the moment is the property of no man, with the view of acquiring property in it for yourself (p. 4).

b. Objects are thing that have never had an owner (res nullius):

i. Wild animals, fish, wild fowl, jewels and newly discovered land.

c. Objects that don’t have an owner:

i. Moveables which have been abandoned, lands which have been deserted, and the property of an enemy.

*full rights of dominion were acquired by the occupants who first took possession of them with the intention of keeping them as their own.

d. Occupancy was the process by which the “no man’s goods” of the primitive world became the private property of individuals in the world of history (the origin of private property)

II. Ancient Law of Society

a. Knows nothing of individuals, it is concerned with families

b. It is not concerned with single human beings, but with groups

c. The life of each citizen is not seen as limited by birth and death, instead it is a continuing existence of his forefathers, and continues to the existence of his descendants.

*Joint ownership, not separate ownership, is the really old institution, dealing with the rights of families and of groups of kindred (p. 5).

B. Natural Law--Thomas Aquinas

Aristotle- says the possession of external things is natural to man.

External things- property

-use being subject to man who has a natural dominion over things

-hierarchy of living things

2 Components:

1. man has the power to use and dispense things—possess property

2. people have their own property to keep the world peaceful, keep everyone happy (there are less quarrels when there is a division of property)

*man ought to possess external things, should keep them and be willing to share them

C. John Locke

-each man’s body and the work of his hands is his own property

-whatever he has removed from nature, is with his labor

-if a man improves, plants, or cultivates land—it is his own

-ex. if you collect acorns, they are yours

* this theory goes against the theory of abandonment

D. Jeremy Bentham’s Theory: Theory of Legislation

*utilitarianism- the rightness of every action depends solely on its consequences.

-We look for the greatest good out of every action

- Utilitarianism- benefits society by making the most use out of something for everyone

1. Only law creates property, not God or nature. (No Such Things as Natural Property)

a. Property is a basis to expect benefits from a thing. Security lies in stable and predictable expectations.

b. Only law can establish this expectation. Property and law arise and fall together. If we take away law, property ceases.

1. A critique of the natural law theory of property.

a. A savage owns the deer he kills, but only as long as he can defend it. This is a feeble and momentary expectation.

b. But a strong and permanent expectation can arise from law. Any agreement among savages to respect each other’s possessions is the introduction of the law.

*Bentham wants the greatest good

E. Adam Smith: Economic Theory

1. Smith believed in a natural right to property rooted in the labor theory of value..

2. Man’s labor is the source of nation’s wealth

-specialization of labor promotes the expansion of wealth

3. He does not support laissez faire—“hands off” theory

4. Man neither intends to promote the public interest nor knows how much he is promoting; he simply thinks he is pursuing his own interest by laboring.

a. Invisible Hand- people who pursue their own self-interest unconsciously promote the public interest

5. Smith believed protecting the fruits of one’s labor as property stabilizes society by creating incentives for work, and advancing the formation of capital.

6. trickle down theory- instead of giving money to the poor, let the rich spend more and it will trickle down to the poor.

**VERY POSSIBLE EXAM QUESTION: Describe two of the four theories of property we learned at the beginning of class.

Attributes of Property:

1. the right of possession, enjoyment and use

a. right to exclude- if that right is interfered with by the gov, then the owner of the property has the right to just compensation, by the 5th and 14th amendment.

-it is considered trespassing and they can be arrested

-can ask for an injunction telling the person not to come on if there is repeated trespassing

-also means others cannot take your natural resources on the land (trees, water, etc.)

2. ability to sell the land or transfer it in other ways

3. unrestricted right of disposition

-Right of disposition- right to sell

Total Bundle of Property Rights

- right to possess

- right to use

- right to manage

- right to the income

- right to consume

- right to destroy

- right to modify

- right to alienate (transfer)

Right of Publicity

-defendable to heirs (right is protected through heirs)

-don’t have publicity rights when you are dead, so your heirs protect

-separate family members

-can’t just take someone’s likeness

-ex. of Bette Midler case- court held she had the right to exclude others from using impersonations of her voice

II. Personal Property

A. Distinction Between Real and Personal Property

Real Property- essentially property in land

Personal Property- movable (chattels or goods) or intangible (patents and copyrights)—not associated with land.

Right to Exclude:

-implies that a court will give you a remedy (specific relief or damages) if someone interferes with your right

B. Finders

Lost Property—finder has superior title against everyone but the true owner (intentionally lost)

-between the finder of lost property and owner of real property on which it is found, the finder wins

Mislaid property- intentionally misplaced by the true owner, with the intention of retrieving it

-the owner forgets to retrieve it.

-still considered to be in the constructive possession of the loser (true owner)

-right of possession is in the owner or occupant of the land, except to the true owner

-finder gets constructive possession- when property is not possessed by anyone it is constructively possessed by the person who has title.

*in both cases, the true owner has priority

*LOST PROPERTY GOES TO FINDER, MISLAID GOES TO OWNER OF THE PREMISES

Treasure trove- something that is not of the land, basically hidden

-not lost or mislaid, b/c the owner’s intent was to put it in a safe place

-ex. gold coins buried in the ground

-General “common law” rule- Title of treasure trove belongs to the finder against all of the world except the true owner

-put in ground for safe-keeping long enough to not belong to the true owner anymore (assume owner is dead or unknown)

- if trespasser finds it, he has right to possession

Abandoned- finder has superior rights to anyone except the true owner

-new finder can take possession because it is seen as if the true owner did not want it anymore

*objects are often in both categories--if you see that it can be two types of finders, write them both

Law of Salvage- original owner still retains ownership, but the finder gets a reward from the owner.

ex. Columbus America case—finders (Columbus discovery group) got a salvage award of 90% for the all of the effort they put into finding it.

Joint Finders- if several people participate in a finding, they all have equal rights in the property found.

ex. Keron v. Cashman case- five boys found money in a stocking and they were all given an equal share.

Rule of Capture- the first person to take possession of an un-owned object becomes its owner.

-property is awarded to the hunter who kills or mortally wounds an animal, or who captures that animal by depriving it of its liberty

-ex. “occupancy of res nullius” (2 Categories)

1. things that never had an owner (such as wild animals)

2. things that once had an owner (such as abandoned property)

Conversion- the wrongful exercise of dominion over the personal property of another

-there must be actual interference with the other’s domain.

-if a person entitled to possession of personal property demands its return, the unjustified refusal to give the property back is conversion

-the act must be intentionally done (but the person doing it does not have to know that the property belongs to another or that he intends to take it from that person)

-can only exist if the property rightfully belongs to the person it is taken from.

*can only sue for conversion if you have title or right to possession

ex. Popov v. Hayashi- the court held that the ball became abandoned property when it was hit, and recognizes that Popov had a pre-possessory interest (b/c he took incomplete steps to secure possession) so can establish conversion, but Hayashi has some rights too.

-equitable division- when more than one party has a valid claim to a single piece of property, the court will recognize an undivided interest in the property in proportion to the strength of the claim.

Trespass to Chattels- forcible carrying away of, or injury to, plaintiff’s chattels

C. Bailment

Bailment-delivery of personal property from one person to another, with a specific purpose, transfers possession (person with first possession may make a claim to it)

*created when possession and control over an object pass from bailor to bailee

-bailee is the person holding the property (must assume actual physical control with intent to possess)

*bailee has limited property rights.

-bailor is the person who owns the property

Two Types of Bailment:

-gratuitous bailment- sole benefit of the owner

-standard of care: gross negligence

-for hire bailment- mutual benefit for both of the parties (bailee takes property under his care for compensation)

-standard of care: ordinary care

ex. First American Bank, N.A. v. District of Columbia- where the city tows the bank truck, and bags of money are lost.

-Court said there was no conversion (wrongful taking of possession) because the city was not unlawful in moving car from being illegally parked

-there is a “quasi bailment for hire” b/c there was no explicit agreement between the bank and the city.

*duty of care generally lies with whoever gets the benefit from the bailment

1st step: figure out who is getting the benefit

2nd step: decide duty of care (extraordinary care, slight care, or ordinary care)

D. Bonafide Purchaser

General Rule

-when property is transferred, the new owner receives the bundle of rights previously held by the transferor (no more, no less)

- a person cannot convey better title than she has

-if you don’t own it, you can’t sell it

Bonafide Purchaser- one who does not know of the seller’s wrongful possession but has a good faith belief that the seller has title

-this person gets a better title than the seller had

-this protects “good faith purchases”

-void title- stolen title (received through fraudulent means)—original owner never loses title, bonafide purchaser’s loss

-voidable title- one where the owner intends to pass title, but he can choose to void the transaction b/c of fraud, misrepresentation, or duress

(BF would get title over O, b/c O could have stopped transfer of title, but BF had nothing to do with it)

III. Protecting Possession

A. Trespass and the Right to Exclude

Ownership- the right to exclude others from your property

-right to include—owner can decide who may enter and who may not.

-ex. Jacque v. Steenberg Homes, Inc.

-Steenberg Company used Jacque’s property without permission to move a mobile home to a nearby neighbor’s house

-the court found this was in violation of their right to exclude (trespass)

-nuisance- an interference with the right of use and enjoyment

B. Adverse Possession

Statute of Limitations- adverse possession determines when the S of L has run out, barring the true owner from filing an action

-Owner can no longer bring a cause of action to recover possession of the property or eject the adverse possessor.

Quality of Possession- Possessor must prove that nature of possession satisfies legal requirements

-paying taxes does this because tax records indicate when taxes are paid on a parcel

*Running of the Statute of Limitations vests new title in the adverse possessor that relates back to the event triggering the running of the S of L (adverse possessor is considered to have owned the property from the beginning of his time there)—if AECHO requirements are met.

-AP would owe no “back rent” for his time there

-if O ejects AP off of his property before the S of L is done, AP owes “back rent” for however long he was there

To prove adverse possession, you must prove all elements of AECHO:

ACTUAL, EXCLUSIVE, CONTINUOUS, HOSTILE, OPEN & NOTORIOUS

1. Actual (all, or sometimes, some of the land) Possession is the actual small part of the land that you are on. (The way you do “actual use” is by making improvements, enclosures, etc.)—it is this actual entry that starts the statute of limitations running.

2. Open and notorious—not hidden, acts that are visible and obvious to put a reasonable owner on notice of adverse use

a. Must be acts appropriate to that specific type of land (ex. undeveloped land- build a cabin for hunting and fishing)

3. Exclusive (two prongs)

a. exclude the true owner—cannot share possession with the owner

b. exclude the general public—cannot share possession with the general public

4. Continuous (use as similar owner)

-not necessarily all of the time, but use as a similar owner would

-even consistent use during the summer and winter works

5. Hostile/Adverse to T.O.’s interest—without the owner’s consent/permission.

*if true owner of the property is a minor, is insane, or is incarcerated at the time of initial entry of the adverse possession, the statute of limitations is “tolled.”

Bad Faith Possessor- someone who intentionally tries to “dis-seize” the true owner of his land (intentional trespasser)

Good Faith Possessor- someone who believes the land he is on is his own, and would not be there otherwise.

Tacking—when a person buys land, he buys it “as is,” so if someone is adversely possessing, the statute of limitations does not start over, it continues “as is” with the new owner

*S of L does not start over when a new owner buys the land

-Howard v. Kunto case

-tacking- is adding on the years of AP from previous owner to the amount of AP for the next owner to satisfy the Statute of Limitations

-disability of true owner can change this

*this must be a voluntary transfer of land (privity of estate)

Relation Back Theory:

*once you (the adverse possessor) gain ownership, all the years you spent on the land, you are considered to be the owner (“relation back theory”—you don’t owe rent or anything for all of those years because it’s as if you were the owner for the whole period of time)

Disability of True Owner

-if the true owner is disabled (insanity, infancy, incarcerated) at the time the adverse possession begins, he gets extra time to eject adverse possessor

Color of Title

Definition- a claim founded on a written form or judgment which, unknown to the claimant, is defective and invalid.

-someone takes possession under color of title when they are unaware that the deed they have is defective and invalid.

-consists of a deed or other instrument that purports to transfer title to the adverse possessor.

-it is not real title—if the claimant had real title, he wouldn’t need to resort to adverse possession law

color of title: faulty owner with a faulty deed, if true owner came up and showed proof of real deed, then you do not have possession, unless you adversely possess the land

-in some states it lowers the statute of limitations

-sometimes people are adverse possessing and doesn’t even know it—they sometimes believe that because they have the deed, they have a right to be there

Example:

-when someone is buying land, and gets title is not real, it is defective.

-the buyer has the title, but does not have actual possession

-the true owner has possession but no deed

*true owner beats defective deed

Constructive adverse possession- if the claimant is in actual possession of only part of the land described in the colorable title, the claimant also gains title to the unoccupied portion.

-this is an exception to the normal rule that the adverse possessor can claim title only to portions of the true owner’s land that he actually possesses.

-constructive possession under the false deed, which is competing with constructive possession coming from the true deed

-if they are both claiming the right to the land, the true owner will prevail

*most states require a subjective belief that the colorable title is valid

[see class notes 9/15 for answers to color of title handout]

Boundary Disputes (Mistaken Belief):

Majority View:

-If the true owner has failed to assert his right to the land within the statute of limitations, the mistaken belief of ownership is sufficient to establish title by adverse possession if the possession has been open and notorious.

C. Jus Tertii Defense

-when one raises a defense by pointing out that neither he nor the other person has ownership, but a third party, and only the true owner can bring suit

D. Mistaken Improvers

Definition- when a person adds value to a chattel without the owner’s consent.

-law of equity says that the true owner is able to retain the value b/c they don’t want to reward wrongdoing

ex. Wetherbee v. Green

-the court found that the hoops ($700) made by Wetherbee out of Green’s timber belonged to Wetherbee, b/c he had acted in good faith, but that Green could sue him for the cost of the actual timber ($25 each)

-Green can also sue for trespass, regardless of whether the improver acted in good faith

-true owner is always able to retain the original value of the materials—the question is whether or not they get the added value

-theft of property is conversion

ex. Hardy v. Burroughs- -constructive of house on property that does not belong to the builder

-court finds that the improver should be able to sue for the value of the improvements

-until this ruling, the improver could not recover for value of improvements he made

IV. Intellectual Property

A. Introduction

-laws of patents, copyrights, trademarks, trade secrets, and the right of publicity.

Public Policy: society wants to nurture creativity and reward labor without limiting the creativity of others.

Patents- granted by the U.S. Patent office to any inventor that applies

-gives 20 years of exclusive rights, starting from the date of application

-only the federal government can issues patents, the states cannot

Copyrights- when works of authorship are captured in permanent form (no paperwork is required)

-copyright lasts for the life of the author plus 70 years

-idea is not copyrightable b/c public policy

-expression of an idea is copyrightable (originality is rewarded)

-facts are not copyrightable

-ex. telephone book

ex. Baker v. Selden- shows that copyright protection is limited to the protection of the expression of the idea, and doesn’t extend to the idea itself.

Trademarks- it identifies the origin or owner of the article to which it is affixed.

-it protects consumers from being deceived as to the origin of goods bearing the marks.

-regulated by both state and federal law

-courts will give relief on the ground that a party has a valuable interest in the good of his trade or business, and in the trade-marks adopted to maintain or extend it

Right of Publicity- a person may not use a celebrity’s name, likeness, voice or signature for profit without the celebrity’s consent.

-this is to protect the celebrity’s labor in creating a persona of value

-ex. White v. Samsung Electronics- the company used a robot resembling Vanna next to a Wheel of Fortune game board.

-the court held that even though there is no intent to deceive, the use of imitation (not a likeness) of a celebrity for commercial profit infringes on her right of publicity.

**1st amendment protects parody, parody is not an appropriation

V. Property in Living Things

A. Animals and Other Organisms

Domestic v. Wild Animals:

-domestic animals are the property of the person that purchases them

-state owns wild animals, but is not liable for potential damage that they may cause to private property (if a wild animal damaged property of an individual the state has no liability)

-when introducing wild animal to new area, you acquire the value of the animal and its pelt from the hunter (ex. of Silver Fox from Canada in Georgia)

-domesticated animals—bull reproduces with cow, both have separate owners

-who owns the offspring?

*Rule: the owner of the mother animal is the owner of the offspring

-owner of cow is paying more (eating for two, etc).

-no profit from wrongdoing (trespassing, violating the cow)

RULE OF CAPTURE:

Capture of Wild Animals

-If wild animals are captured, they belong to the captor. But capture is required, merely chasing the animal is not enough.

ex. Pierson v. Post- where Post is chasing the fox, but Pierson steps in and kills the fox, Pierson is entitled to the fox.

Wounded or Trapped Animals

If an animal has been mortally wounded or trapped so that capture is almost certain, the animal is treated as captured. But if the animal is only in the process of being entrapped, and the door has not snapped shut, it has not been captured.

*trespassers have no right to keep the animals they kill or capture.

Escaped Wild Animals

1. Wild Animals with Habit of Return:

-are still the property of the captor when they roam at large and cannot be captured by another

2. Wild Animals that Escape:

-the captor loses possession and the animal can be captured by anyone else

*exception: if the animal is not native to the area and is unusual, the hunter may be notified that the animal has escaped and someone else has prior possession, therefore he cannot capture the animal for himself.

Wild Animals as Pets

ex. Bilida v. McCleod- the Bilida family had the “Mia” the raccoon for 7 years as a pet without a license, and the environmental dept. killed her. The court found that Bilida could not have any property interest in something that was being possessed illegally, and therefore her rights were not being violated when the dept. took Mia away. The court could not create constitutional protection (4th amendment is for property rights) for something that the state had declared illegal to possess.

*you cannot take something from the wild without a permit to possess it.

Domesticated Animals as Pets

Dogs:

-dog owners give up their property rights when they allow their dogs to run around unleashed and unsupervised—they become a public nuisance

Offspring:

-owners of pets have property rights to their offspring too

B. Human Life

ex. Moore v. Regents of University of California- the court held that once Moore’s spleen was out of his body, he no longer held a property right to it and the doctor’s then had complete ownership and were justified in using it to make a patented cell line.

LANDLORD TENANT AGREEMENTS

General Overview

Bundle of Rights

-when the bundle is all together we call them “fee simple absolute” (if you have all of the strands in the bundle)

-if you own the bundle, you have the right to take one strand out and give up your right of possession to that strand

-but one day the owner will get that possession back

-landlord has a reversionary interest (ex. if you have a year long lease, then you have an interest in that property for a year and you have the right of possession, but at the end of that year, that strand goes back into the bundle, and you no longer have possession)

*essence of LL/T relationship if the transfer of rights from LL to T

A. Nature and Types of Leasehold Estates:

Definition- leasehold is both a transfer of property interest and a contract-- LL is retaining this reversionary interest

Four Types of Leasehold Estates:

1. Term of Years

-Fixed term with beginning and ending dates

-ex. “this is a year long lease” or it will give the date

-could be a time that you do not know the exact date of yet—ex. the date you graduate law school, etc.

Notice

*no notice is required—automatically expires when term is up

-if term expires and T has not vacated, the landlord could file an unlawful detainer action if the jurisdiction does not allow self help

*cannot be terminated before the end unless there is a breach

2. Periodic Tenancy

-period to period until notice of termination is given

-week to week, month to month, semester to semester

Termination/Renewal

-they renew automatically, until they are terminated by notice (no set ending date)

-termination is determined by length of period

-ex. month to month tenancy: 30 day notice

*this could go on forever, if both parties are happy

Notice

-Must give full term notice (six month rule)

-if you have a year to year, you have a six month notice to terminate it

-CA Statute: 60 days if tenant has lived in unit for more than a year (only landlord has to give notice)—if you give a six months notice, when it is less than six months, the notice isn’t effective to stop the renewal of the next period.

3. Tenancy at will

-No stated duration, continues until LL or T desires an end

-less formal, at the will of either party, sometimes it will arise by default

ex. Prescott v. Smits case—tenant never signed the lease, no signed lease that complied with the statute of frauds—court looked to frequency of payment and decided it formed a periodic tenancy

Oral Lease

Entry and occupation under an invalid oral lease creates a tenancy which is either from year to year, from month to month, or strictly at will, depending on the circumstances of the case

Notice

-as long as you agree, no notice needed unless there is a statute

-Statutory requirements for notice go by the rent payments

-if you pay weekly, you get a weekly notice, etc.)

4. Tenancy by Sufferance

-Holdover tenancy (after the fixed term expires, you can continue on a periodic basis)

-tenant is not a trespasser b/c tenant came in with a permissive agreement with the landlord, so he can’t just be kicked out

Notice

-notice has already expired/tenancy has terminated (so you don’t get any further notice)

-last indefinitely until T is evicted or gives up possession

*if a tenant holds over, it does not automatically violate the lease, esp when it is a good faith effort

ex. Commonwealth Building Corp. v. Hirschfield- when family took a few extra hours into the next day to move out, court found they were not liable for an extra term of rent, b/c it was in good faith

Lease v. License

License- agreement entitling one party to use property subject to control of another party

-instrument which gives to another the right to “use premises for a specific purpose, the owner of the premises retaining the possession and control of the premises, confers no interest in the land and is not a lease but a mere license”

-an agreement which merely entitles one party to use property subject to the management and control of the other party

Lease- exclusive possession by the lessee

ex. Cook v. University Plaza—shows whether it was a lease or a license

-court found there was not a lease b/c students could be moved at the will of the LL

-so tenant was not guaranteed to have possession of a specific area

-so it was not complete transfer of possession—the basis of the LL/T relationship

B. Delivery of Possession

American v. English Rule

American Rule:

-LL has to simply transfer the right of possession to T, then LL has fulfilled the duties—AMERICAN RULE (the evil rule)—minority rule

-LL has no obligation to evict the previous tenant

English Rule:

-LL has the duty to provide empty premises—ENGLISH RULE

-T deals with losses when another tenant is still occupying the premises

-remedy is that contract is breached and can be rescinded—tenant has the option to say “I am getting out of here” and no longer wants possession, he can get damages for losing the benefit of the bargain (hotel fees, storage fees) from the LL

-tenant needs to mitigate the damages, even if it means getting a new apt that is more expensive, as opposed to getting a hotel (LL could say that T did not minimize his damages)

Remedies

1. Tenant can terminate the lease and recover damages for all expenses sustained by having to obtain living quarters elsewhere.

-you can possibly recover for the difference in rent between the new place and the original one you were supposed to have (lost your “benefit of the bargain”)

2. Tenant can affirm the lease, but sue for damages (costs of storage, cost of evicting other tenant, etc.)

-need to show that you have additional moving expenses as a result of this problem (ex. storage, rent of the other place you have to find—hotel, etc.)

C. Quiet Enjoyment

Definition- not only does the landlord have to deliver the right of possession, he also has a duty not to interfere with the tenant’s quiet enjoyment of the property

-implied in most jurisdictions, but some will say that you have to expressly say “tenant may quietly enjoy the premises”

*primary duty of LL is not to interfere with possession

-if a landlord came onto the tenant’s property during the lease, that is interfering with possession (breach of lease)—called an eviction

-you can have a total eviction or a partial eviction (these are both actual evictions)

Actual Eviction

Definition: Physical eviction from entire premises by LL

- relieves the T of the obligation of paying rent

Partial Actual Eviction- eviction from any portion of the leased premises by the LL

-T does not have obligation to pay rent until premises are restored (traditional common law rule)

-ex. LL moves car into your garage

Constructive Eviction

Definition- when there is a substantial interference with T’s enjoyment of the premises, T can terminate the lease, vacate the premises, and be excused from further rent liability

-seen as an early attempt to give T some relief from situation where T is unable to use the property due to conditions under LL’s control.

-ex. the apt above yours is leaking into your apt

-requires the T to leave the premises (traditional common law approach)

*constructive eviction is available for both commercial and residential, but implied warranty of habitability is only for residential

-ex. Blackett v. Olanoff- LL owned a bar nearby that was causing disturbance to T’s enjoyment

-when you have this interference that is caused by conditions, but not a physical interference, you have constructive eviction

-quiet enjoyment requires that it be under the landlord’s control

*when a tenant does not pay rent, the tenant can use constructive eviction defense

*tenant can bring a cause of action for constructive eviction to get out of lease

*tenant has the option for getting declaratory relief seeking a declaration from the court that the requirements of constructive eviction have been met

To prove constructive eviction, tenant needs to show:

1. that the condition renders the premises unsuitable for the purposes for which it is being leased

2. that it is for a substantial time/permanent

3. condition is within landlord’s control

4. that landlord has been notified

5. that you waited a reasonable time for landlord to correct (have to carefully weigh what is a reasonable time, because if you wait too long, you may not be able to)

6. VACATE THE PREMISES (main thing you have to do)

*if T knows about interference before taking possession, he has waived the interference

D. Conditions of Premises

Implied Warranty of Habitability

-interferes with quiet enjoyment of the land

*it is LL’s responsibility to make sure that the premises are in good condition

-expectations of the contract

-safe, decent place to live (expectation is backed up by statutes)

-permanent infrastructure of the building

-water, sewage, gas, and heating facilities, as well as electrical wiring

How to Prove Breach of Implied Warranty of Habitability:

-for there to be an implied W of H, there has to be a violation of building codes and housing codes

-you need to prove that there is a condition that is violating your warranty of habitability or conditions that threaten the health and safety of a T

-T needs to alert LL of condition, and if LL fails to do this within a reasonable time, the T has a few options:

1. T can make repairs and deduct expenses from rent

2. T can move out and recover any prepaid rent

3. T can continue lease and withhold rent until problem is eliminated

-if T withholds rent, and LL gives 3 day notice, T may have the defense that the rent is not owed b/c LL has failed to make the premises habitable

*duty to provide habitable premises is related to T’s duty to pay rent

Retaliatory Eviction

General Rule: A landlord may not evict a tenant in retaliation for reporting housing code violations.

ex. Edwards v. Habib- LL evicted T b/c she reported violations of housing codes

- if LL gives eviction notice within a certain period of time of T complaining about a bad -condition (usually six months), LL must prove the eviction was not in retaliation

-burden is shifted to the LL and T has opportunity to show that his complaint is the pretext

ORDER OF PROCESS:

1st Step- condition of housing violates housing or health codes (detrimental to Ts health/safety)

2nd Step- T notifies LL

3rd Step- LL is given reasonable time to repair

-if LL has not made repairs, T has a few options (including Implied W of H)

4th Step- T can get an order from the court, stating that he is not required to pay rent due to LLs breach of W of H. (once repairs are made, you have to pay rent again)

*if the landlord is asking for payment of rent that is not owed b/c implied W of H has been breached, then you have a defense

5th Step- terminate the lease

3 day notice of quit- written notice given by LL to tenant to vacate the leased property, thereby terminating the lease

*Implied W of H—used to get you out of a lease (but it does not require you to move out).

-better remedy than constructive eviction if you don’t want to move out

E. Tenant’s Use

Premises Destroyed During the Leasehold

Common Law Rule: the destruction of premises does not relieve T from the duty to pay rent

-this can come up in a commercial lease where there is not an implied warranty of habitability

-this rule has been replaced in some jurisdictions due to an impossibility of performance by LL – this would take over the common law rule

ex. White v. Molyneux- T did not think he should have to pay rent when house was destroyed by fire

-court held that inevitable accidents do not relieve tenants from rent.

Fixtures:

-personal property that T has affixed to the land, becomes a part of the land and cannot be removed at the end of the tenancy—it becomes the property of the LL

*what constitutes a fixture depends on the intent of the T (did T intend to make the fixture permanent)

Exception:

-trade fixtures- can be removed by the tenant if it is specific to the T’s trade

F. Landlord’s Remedies for Tenant’s Breach

Self Help- if LL tries to physically evict the T by himself, he is liable for any damages to the T and his chattels.

-ex. Berg v. Wiley- LL changing the locks is considered forcible self-help and not allowed

Notice to Quit:

30-day notice to quit—can be used by either tenant or landlord

-once notice expires, you are no longer liable for the rent, as long as you vacate the premises.

-most jurisdictions do not require a reason for the termination (some do require this, called “just cause” termination—and has to be consistent with reasons set forth in the lease)

ex. if there is any suspicion of retaliatory eviction, then the landlord has to prove that this is not the reason for eviction

3-Day Notice to Pay Rent or to Quit

-LL is saying you have to do one or the other within the three days

-LL is saying if you quit the tenancy it is terminated

3-Day Notice to Comply or Quit

-within three days, you must comply with statements set forth in rental agreement and LL will state the provision that is being violated.

ex. if there is “no pets” clause and you are found to have a dog in your apt.

*before the LL can move to the next step in evicting you, LL must file an unlawful detainer complaint

Unlawful Detainer

-landlord can serve an unlawful detainer when 30-day notice has expired (starts the proceeding of eviction of the tenant)

-complaint is issued, T has five business days to answer unlawful detainer complaint

-if LL wins, the eviction has to be executed by the sheriff

In Response, Tenant can File:

-affirmative defenses

-implied warranty of habitability (the duty to pay rent depends on LL maintaining the property)

-some other type of problem with the LL

*many times, T won’t show up, and court will grant a “default judgment” for the LL

Abandoned Property

If T has abandoned, L can:

1. terminate the lease

a. but then he is not entitled to future rent/damages

2. let the premises lie idle and sue the T for rent

Mitigating Damages

-at common law, the LL has no obligation to mitigate damages

-now when T has abandoned property, LL has to show diligence in trying to re-let an apt (ex. advertise, has to show the apt as being empty, etc.)

ex. Sommer v. Kridel

-T will have to pay rent until it is rented out

3. retake possession and attempt to relet the premises

G. Transfers by Landlord and Tenant

Assignment v. Sublease

Assignment- the T transfers the entire remaining term of his leasehold

-new T (T2) pays LL

-privity of estate- the T2 steps into T1’s shoes and has privity of estate with LL

-means T2 and LL can sue each other (they are liable to each other to hold up each end of the contract—they have a LL/T relationship)

-LL has option of suing T1 or T2 for rent payments—rent falls under both categories (privity of contract and privity of estate)

-privity of contract- LL and T are liable to each other as parties to the contract

-T2 and LL do not have privity of contract

-if T2 breaches some part of lease (ex. a noise violation), then LL can sue T1 and T1 can in turn sue T2

-privity of contract b/t T2 and T1-- but there is no privity of contract b/t LL and T2 (so T2 is not bound by all provisions of original lease, unless T1 makes a promise with him)

Sublease- when T transfers less than the remaining term of his leasehold

-T becomes LL of sublessee

-T2 pays T1, and T1 pays LL

Privity of Estate:

-sublessee does not have privity of estate with the LL, and cannot sue or be sued by him

Privity of Contract:

-no privity of contract between LL and sublessee either

-still privity of contract and privity of estate between LL and T1

-there is also privity of contract between T1 and T2

-and privity of estate between T1 and T2 b/c T2 has to give the land back to T1

*if T1 retains a reversion in the property after the transfer, it is a sublease, if T1 has no reversion, it is an assignment

*tenancy at will terminates when interest is transferred to another party

*in commercial leases, the LL cannot say no subleases or assignments, b/c society is trying to make the best use out of land

Right of Reentry by T1

-common law: says if T1 retains a right of reentry it is an assignment b/c there is no reversion for T1

-modern view: says any right of reentry makes it a sublease

-minority view: holds that the intent of parties determines whether it is a sublease or assignment

Leases with Clauses against Transferring

-if a lease contains a clause against transferring, it is valid, but it must expressly say what is not allowed

ex. if a lease says “no subleasing,” it does not prevent the T from “assigning”

*sometimes the LL is required to give a reasonable reason for objecting to the transfer of the lease

ex. Kendall v. Ernest Pestana, Inc.- the SJ airport case—court held the LL must act as a reasonably prudent person if withholding consent to transfer.

POSSESSORY ESTATES

I. Present Estates

*estate in land- an interest in land that is or may become possessory

-measured by some period of time

General Definitions:

Escheated- when property is reverted to the state upon the death of an owner who does not have a will or any heirs

-reverting to the state as the original and ultimate proprietor of real estate, by reason of a failure of persons legally entitled to hold the same.

Real property- land and things that are permanent fixed, and immovable attachments to land (buildings, timber and mineral rights)

Personal Property- everything else

Estate- what a person owns at any given time (all real and personal property)

Estate in property- a person’s rights or interest in a particular parcel of real property (or real estate)

Heirs-determined only at one’s death

-relatives designated by state statute to receive a dead person’s (decedent’s) property in the event that he dies without a will (intestate).

-in all states, this is the wife and children

-if no wife or children, heirs may include parents, siblings (and their descendents), uncles and aunts (or their descendents).—this depends on the individual state’s laws

Conveyance- transfer property by sale or gift at any time before death.

-done by a written deed

-assigns- anyone to whom the property is conveyed

Devisable- the right to leave property by will

Inheritable- the right to have one’s heirs take one’s property absent a will.

Valid Will- designates who or what entities would receive his estate after death

-those receiving real property in the will are called devisees

-those receiving personal property in the will are called legatees

*most people die intestate (without a valid will)

Issue- lineal descendants (children, grandchildren, etc)

*first to inherit if someone dies intestate

Ancestors- a person’s lineal forebears (parents, grandparents, etc.)

*second to inherit if someone dies intestate

Collaterals- all other relatives (aunts, uncles, siblings)

Purchase- means the acquisition of real estate by any means other than inheritance

Quitclaim- it is a release that conveys the grantor’s entire title, interest, or claim in the property to the grantee, but without warranting that such title is valid.

Defeasible Estates- where you can limit the use of the land that you are giving up to specific uses

A. Four Basic Types of Property:

Freehold:

1. Fee Simple

a. Fee simple absolute

b. Fee simple subject to condition subsequent

c. Fee simple determinable

d. Fee simple subject to executory termination

2. Fee Tail (not really used anymore)

3. Life Estate

Non-Freehold:

4. Leasehold

a. Term of Years

b. Periodic Tenancy

c. Tenancy at Will

1. Fee Simple

Definition: has the potential of enduring forever—absolute ownership

Created: O grants "to A and his heirs"

-"and his heirs"-- are the words of limitation that are necessary to create a fee simple absolute

Characteristics:

-greatest rights, fewest limits

-no conditions on possession, inheritance, or survivorship

-ownership is absolute (continues forever, never expires):

-owner can kept it, convey it by sale or gift, or devise it by will

-if not conveyed or devised, it goes to owner’s heirs

2. Fee Tail

Definition: has the potential of enduring forever, but will cease when the lineal descendents die out (upon death, only owner’s children can inherit, then only their children, etc.)

Created: O to “A and the heirs of his body”

Characteristics:

*not freely alienable- owner can alienate his right to possession only until his death, then the property passes back to that owner’s direct lineal heritage

*inheritable in modified way

*not devisable

-owner or heirs who inherit can only transfer right to possession until death

Reversion:

-when direct lineal heritage dies out, no one owns property (it expires and reverts back to owner)

*main difference between fee simple and fee tail is that the fee simple owner controls disposition, but the fee tail owner does not—it passes to children regardless of the parent’s desires.

3. Life Estate

Definition: an estate that will end at the death of a person.

Created: O to “A for life”

Characteristics:

*alienable- it can be sold, but whoever purchases it gets a life estate that is measured by seller's life

*not inheritable

*not devisable

-owner’s heirs have no right to inheritance

Reversion:

-after owner dies every life estate is paired with a reversion (interest reverting back to owner) or a remainder (interest shifts to a designated successor grantee)

-owner can only transfer right to possession during life, but after grantee dies, the property automatically reverts back to the grantor, or his heirs

B. Fee Simple

1. Fee Simple Absolute (A and his heirs)

-gives owner the maximum rights—ABSOLUTE OWNERSHIP

Heirs:

-the heirs have no present interest (A could give the interest away, and the heirs would have no interest at all)

2. Defeasible Fees

-the owner can lose the property interest if some event does not happen

-they have the potential of infinite duration, but not the certainty of it

a. Fee Simple Determinable

Definition: will automatically end when some specified event happens

Words of Limitation: such as: “so long as” “while” and “until”

Characteristics:

*alienable

*devisable

*inheritable

-but whoever holds it still has to abide by the same limitations

Future Interest: possibility of reverter- the interest automatically reverts back to the grantor when a specified event occurs

*mere expression that property is to be used for a specific purpose is not sufficient to turn a fee simple into a fee determinable.

b. Fee simple subject to condition subsequent

Definition- subject to a condition that if broken, allows the grantor to enter the land and reclaim it

-this right to enter and reclaim is passed from the grantor to his heirs, and the original grantor does not have to be alive when the condition is broken

-therefore, grantors would have the right of re-entry—the owner has to demand possession back to get it (has to actively get the land)

Characteristics:

-can last indefinitely, like a fee simple absolute

-the condition may involve the performance of a particular act, or the occurrence of a future event

Court’s Holdings:

-courts generally do not favor a fee simple determinable because it is too limiting to land transfers—they prefer fee simple subject to condition subsequent b/c forfeiture is not automatic

-they will usually only impose this if the intent of the grantor to have this is clearly expressed in the deed

*courts always try to find the intent of parties

c. Fee Simple Subject to Executory Limitation

Definition: when the stated event happens, it is automatically divested in favor of a third person (not the grantor)

C. Life Estates

*life estates in trust are very common today

Types of Life Estates:

1. For Life of Grantee

-usually life estates are measured by the grantee’s life

2. Pur Autre Vie

-where the estate is measured by the life of someone other than the owner of the life estate

-comes to an end when the measuring life ends

ex. if A conveys her life estate to B, B has a life estate pur autre vie, and A is the measuring life

3. In a Class of People

-can be given to two or more people

-when one dies, his share goes to the surviving life tenants, and the remainder does not become possessory until they all die

4. Defeasible Life Estates

-can be conditional or terminable on a certain event

ex. “to A for life so long as A remains unmarried”

FUTURE ESTATES

Five Types of Future Interests of Owner:

reversion, remainder, possibility of reverter, right of entry, and executory interest

A. Future Interests in the Grantor

1. Reversion

Definition: a future interest left in the grantor after the grantor conveys a vested estate of a lesser quantity than he has.

ex. if O has a fee simple, and conveys a life estate to A, it will revert back to O b/c a life estate is of lesser value than a fee simple

2. Possibility of Reverter

Definition: when a grantor takes out of her estate a determinable estate of the same value

-always follows a fee simple determinable

ex. O gives A land to be used only for a specific purpose, if it is not used, the land reverts back to O

-not a reversion, b/c all fee simples are of the same value

3. Right of Entry

Definition: when the grantor creates an estate subject to condition subsequent and retains the power to cut short the estate

B. Future Interests in the Grantee

1. Remainder

Definition: a future interest in the grantee that:

a. has the capacity of becoming possessory at the expiration of prior estates; AND

b. cannot divest the prior estates (will not take away the rights of the prior possessor)

2. Executory Interest

Definition: a future interest in a grantee that, in order to become possessory, must divest or cut short the prior estate or spring out of the grantor at a future date.

a. shifting executory interest

ex. O to “A and his heirs, but if B graduates from law school, to B and her heirs”

-B’s interest can become possessory only by divesting A of the fee simple

b. springing executory interest

ex. from O to “my daughter A when she marries B”—springs out of O in the future, when A marries B

*difference between remainder and executory interest- remainder never divests and an executory interest almost always does.

*until 1536, you could not have a future interest that cut off a vested interest (3rd party’s interest in a fee, or that prematurely cut off a life estate)

**EXAM TIP: first decide who has the interest (grantor or grantee)—then look at the present estate to help decide what type of interest follows. Last (for a grantee) decide whether the interest cuts short a previous estate or naturally follows it.

C. Reversion

1. Reversions are vested interests

-some will become possessory and some will not

Vested interests are:

-alienable (transferable)

-they become possessory upon the termination of the preceding estate

-not subject to the Rule Against Perpetuities

D. Possibility of Reverter

-whenever there is a fee simple determinable, the grantor has a possibility of reverter, unless the interest is transferred to a third party upon the occurrence of the specified event.

-at common law, it was not transferable in life (b/c it is only seen as something that might happen), but it can be transferable at death to one’s heirs

-modern view- it is freely alienable during life or by will

*when government is about to take the property by eminent domain, it will usually give the value to the person with the fee simple determinable, instead of the person with the possibility of reverter

Release- it can be released to the owner of the fee simple determinable

Termination:

-can endure indefinitely—the grantor’s heirs could hold the possibility of reverter hundreds of years after the grantor’s death (not subject to the Rule of Perpetuities)

E. Right of Entry

-power of termination

-occurs in grantor when fee subject to condition subsequent is breached

Release- it can be released to the owner of the fee simple condition subsequent

-inheritable by the grantor’s heirs

Termination:

-can endure indefinitely—the grantor’s heirs could exercise the right of entry hundreds of years after the grantor’s death (not subject to the Rule of Perpetuities)

-some states limit this by statute, to 30 years

F. Remainder

Definition- interest created in a grantee that can become a present possessory estate when the prior possessory estate expires.

-the land “remains away” instead of reverting to the grantor.

*remainders never divest (cut short) the prior estate, it always waits patiently for the preceding estate to expire

1. Must have preceding estate

-can only be created by express grant in the same instrument in which the preceding possessory estate is created.

2. Must follow a fee tail, life estate or term of years (not a fee simple)

*REMAINDERS CANNOT FOLLOW A FEE SIMPLE

3. Must be capable of becoming possessory on natural termination of preceding estate.

-cannot divest a preceding estate prior to its normal expiration

-if it is a divesting interest it is an executory interest, not a remainder

Two Types of Remainders:

Vested Remainder:

a. created in an ascertained person (the person is born and known)

b. not subject to any condition precedent

-there is no condition other than the expiration of the preceding estate that has to be met before the person’s interest comes into possession.

Characteristics:

-becomes possessory upon the natural termination of the preceding estate.

*these are inheritable and devisable

ex. a deed from “O to A for life, then to B and her heirs”

Contingent Remainder:

a. created in an unascertained person (the person is unborn or unknown)

b. subject to a condition precedent

-there is a condition that must be satisfied before the person comes into possession

ex. a deed from “O to A for life, then to B if B marries C”

*contingent remainders can fail, so owners often write in “alternative contingent remainders”

*whether a remainder is vested or contingent depends on information not in the grant

EXAM TIP: take each interest in order, and break it apart

*UNDER MODERN PRACTICE, ALL 5 TYPES OF FUTURE INTERESTS ARE FREELY TRANSFERABLE BY SALE, GIFT, WILL AND INHERITANCE

Three Types of Vested Remainders:

1. Indefeasibly vested- the holder of the remainder is certain to acquire a possessory estate at some time in the future, and is also certain to be entitled to retain permanently thereafter the possessory estate so acquired.

2. Vested Remainder Subject to Open- vested in a class of persons, at least one who is qualified to take possession, but the shares of the class members are not yet fixed because more persons can subsequently become members of the class. (ex. more children can be born)

3. Vested Remainder Subject to Divestment- it is either subject to being divested by the operation of a condition subsequent or vested subject to divestment by an inherent limitation of the estate in remainder.

*vested remainders are alienable in life and devisable by will

G. Executory Interests

1. Springing Executory Interest- a future interest in a grantee that springs out of the grantor at a date after the granting of the interest, divesting the grantor

ex. “to A and her heirs if A quits smoking”

2. Shifting Executory Interest- a future interest in a grantee that divests a preceding estate in another grantee prior to its natural termination—divests the grantee.

ex. “to A and his heirs, but if B returns home, to B and his heirs”

H. Rule in Shelley’s Case

If a freehold interest in land is created in A and purports to create a remainder in A’s heirs (or in the heirs of A’s body, then the remainder becomes a remainder in fee simple for A.

-converts the remainder in A’s heirs to a remainder in fee simple in A

-then the doctrine of merger merges A’s life estate and vested remainder, giving A a fee simple in possession

I. Doctrine of Worthier Title

-rule against a remainder in the grantor’s heirs

-if an interest is created when the grantor is still alive giving his heirs a remainder, this doctrine takes that away and gives the grantor a reversion

J. Rule Against Perpetuities

“No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.”

*applies to contingent remainders and executory interests

-does not apply to vested remainders or to future interests in the grantor (reversions, possibilities of reverter, rights of entry)

-there cannot be any possibility that the gift will not vest within those 21 years, or it is void.

Measuring Life- any life in being at the time the interest is created who can affect vesting.

Class Gift- does not vest until all members of the class are identified and all conditions precedent have been satisfied for every member of the class.

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