Shepard Property Outline

Chapter 1: Property, Possession & Ownership
Concept of Property
• Efficiency argument: if we have a certain property system then we utilize more & will in turn have
more wealth/happiness/utility/resource allocation, etc.
○ Never defend why they picked X as the goal
• Justice argument: how do you choose what to maximize? Seeks to explain the more just outcome by
certain system
○ Actually pick goal X but don't establish whether the property structure actually reaches that
goal
• Must know where you want to go & how you are going to get there
• 5 theories to justify private property:

1) Occupation Theory - the occupation or possession of a thing justifies legal protection of the
occupier's or possessor's claim to the thing (you physically have it so you have legal rights)
2) Labor Theory - a person has a moral right to the ownership & control of things she
produces/acquires through her labor
3) Contract Theory - private property is the result of a contract between individuals & the
community
4) Natural Rights Theory - the "natural law" dictates the recognition of private property
5) Social Utility Theory - the law should promote the maximum fulfillment of human needs &
aspirations, & that legal protection of private property promotes these goals
• Bundle of Rights approach:

○ Property consists of a bundle of rights or expectations in a tangible or intangible thing that are
enforceable against third parties, including government
○ May consist of some or all of the following rights:
The right to possess
The right to use
The right to exclude
The right to alienate (transfer)
○ The more of these rights one possesses, the more significant one's ownership interest is
• Real property
○ Land & things attached such as buildings; immovable
• Personal property
○ Chattels - tangible or physical moveable things
○ Intangibles - claims represented by bank accounts, promissory notes, bonds, stock, etc.
• 3 ways property could be distributed:

1) Private - individuals own & can trade with one another
2) Government - can let public use in certain circumstances
3) Communal - everybody & therefore nobody owns it
Possession & Ownership

A. Judicial Remedies for Protection of Property (all abolished now)
• Ejectment - recovery of possession of & title to land
• Trespass - direct & immediate injury of another; money damages
• Trespass of the case - indirect & consequential injury to another's person, chattel or land from
wrongful act
• Trover - remedy where chattel has been converted Monetary value
• Replevin/detinue - recover possession of chattels historically (now it is money damages)
Property Outline Page 1

• Replevin/detinue - recover possession of chattels historically (now it is money damages)
○ In specie - recover the property itself
• Also equitable remedies: injunction against interference with interest, rescission of property
transactions, reformation of instruments, removal of clouds on title
○ Injunction - order to stop doing something (negative) or start doing something (positive)
○ Rescission - placing parties in same position as they were before
B. Property Rights Based on Possession

• Possession v. ownership
○ Possession
Requires a) physical control & b) intent to reduce the property to ones possession
(concurrent)
One can take significant but incomplete steps to achieve possession of abandoned
property & if that effort is interrupted by the unlawful acts of others, the actor has a
legally recognizable pre-possessory interest in the property
Can blossom into ownership with abandoned/unowned property
• 4 types of found property:

1) Abandoned property
○ Owner voluntarily relinquishes all right, title & interest; proof that owner intends to
abandon
○ Belongs to the finder of the property against all others including former owner
○ Gray's Rule - must retain control to possess after the incident; intent to control &
possessor stops the forward momentum (similar to completed pass in NFL; Popov v.
Hitachi & baseball)
2) Lost property
○ Owner unintentionally & involuntarily parts with possession & doesn't know where it is
○ Belongs to the finder once statutory procedures are followed & owner hasn't made claim
within 12 months (finder has no rights/ownership until then - holds as "bailee" for true
owner)
○ However, things found on the property owners' land usually belong to him
○ Stolen property found by someone who didn't participate in theft is considered lost
i. Ganter v. Kapiloff (stamps in dresser)
3) Mislaid property
○ Owner voluntarily & intentionally places the chattel in a specific location & forgets where
it was placed
○ Finder acquires no rights to the property
○ Belongs to the owner of the premises upon which it is found against all others except
true owner
i. Benjamin v. Linder ($ in airplane wing)
4) Treasure trove
○ Money or currency deliberately hidden or concealed by the owner for such a long time
(antiquity) that the original owner is not discoverable or probably dead
○ Belongs to the finder against all others but the true owner
Type How Parted How Intent to Possession to…

With? Parted Reclaim
With?
Abandoned Intentionally Voluntarily No intent To 1st finder to
(doesn't want reduce it to
anymore) possession

anymore) possession
Lost Unintentionally Involuntaril No intent Finder as long as
y finder is not a
wrongdoer
Mislaid (forgot) Intentionally Voluntary Intent To owner of the
premises
(may return if
remembers)
Treasure Trove: Intentionally Voluntary Intent Finder as long as
(intent to hide so as to finder is not a
come back and wrongdoer
reclaim. PASSAGE OF
TIME)
• Underlying property owner typically has the best claim, then the ones who initiated the effort, then
the actual finder
• Employees who finds property while engaged in an act that their employer directs them to perform
are not entitled to the property. The employer gains ownership
• Equitable remedy of division - if 2 people have an equal & undivided interest that is superior over all
others
• Forfeiture statutes - if you claim property in an illegal way, the government has the right to forfeit &
seize it
• Embedded property goes to the underlying land owner
• A thief has no ownership interest in a stolen item, but he does have possessory interest to keep
against all those except who has a better title.
• Law of Finds:
○ Finder actually obtains possession & ownership of property
○ Finder takes title to property free & clear of all other claims
○ Often employed with discovered ships
○ Finder must demonstrate intent to acquire property, possession & high degree of control over
property
• Law of Salvage:
○ Salvor obtains a right to possess but not the right of ownership
○ Salvor holds the saved property for the benefit of the rightful owner
○ Salvor must demonstrate intention & capacity to save the property, but no intention to acquire
it
○ This encourages a less competitive & secretive form of conduct than Finds
C. Duties of Possessors: A Look at Bailment

• Bailment:
○ Clear delivery of personal property by one person (bailor/true owner) to another
(bailee/physical possessor) in trust for a specific purpose with an …
○ Express or implied contract that the property will be returned or accounted for when the
specific purpose has been accomplished or when bailor reclaims property
○ Mutual assent & thus knowledge it the item is required
May be expressed by conduct, words or both
If presence or identity of article is concealed from bailee, he cannot assent to assume
position & obligation

position & obligation
Sometimes agreement is created by operation of law - when one comes into lawful
possession, he becomes constructive bailee when justice so requires
• Overall, must be:
○ a) clear delivery (actual or constructive);
○ b) acceptance of possession (actual or constructive);
○ c) control;
○ d) exercise of dominion
• A lease is NOT a bailment, & a bailment is NOT a trust
• Mutual mistake - neither an items true character nor value were known to either buyer or seller
○ P typically cannot recover
• Traditional Theory of Bailment: 3 types...

1) Benefit of Bailee (borrowing something)
○ Bailee is liable for loss or damage if caused even by slight negligence
○ Bailee should exercise extreme duty of care
2) Benefit of Bailor (gratuitous - I take care of your dog so you are bailor)
○ Bailee is liable for loss or damage only if result of his gross negligence
○ Bailee should exercise little care
○ Finder is considered gratuitous bailee
3) Mutual Benefit
○ Bailee is liable for loss or damage only if caused by ordinary negligence
○ Bailee should exercise ordinary care
Standard of care required Liable for what type of negligence

Benefit to Bailee Highest / extreme care Even slight negligence
Benefit to Bailor Slight / minimal care Only gross negligence
(gratuitous)
Mutual Benefit Ordinary care Ordinary negligence
• Modern Theory of Bailment:

○ Bailee required to always use ordinary care & not be negligent
○ Bailee has the burden of proof when any disputes arise
○ Concept of bailment is applied very broadly (common/private carriers, warehouses, car leases)
• 2 types of liability for bailees:

1) Negligence
○ Bailee is liable for bailed chattels that are stolen by third parties, lost, damaged or
destroyed only if bailee has been negligent
○ Liability imposed only if actions fall below standard of a reasonable bailee
2) Strict (liable even if no negligence)
○ If bailee sells chattel or delivers to another without bailor's consent (conversion)
○ If bailee violates specific purpose of bailment
• Exculpatory Agreements:
○ Allow bailee to avoid liability & not be held responsible for damage
Courts will often invalidate especially for "professional" bailees who make it their business &

○ Courts will often invalidate especially for "professional" bailees who make it their business &
no bargain power
D. Adverse Possession
• The non-permissive occupation of another's land, which possession, if continued for the period of
the statute of limitations on actions to recover land, will give the occupier the estate owned by the
person then legally entitled to possession
• 2 main aspects of Adverse Possession:

1) Statute of limitations
a. Must have been there for the required period of time and meet the elements…
b. Does not begin to run if true owner was under some disability when the cause of action
first accrued
i. Only disability of the owner existing at the time the cause of action arose is
considered
c. Does not run against a holder of future interest until that future interest becomes
possessory
i. Does not begin to run until the right is asserted by the grantor because, until that
time, grantee's continued possession of the land is proper
2) Judicial doctrine elements:
a. Actual Possession
i. Must physically use land as property owner would, in accordance with type of
property & location, etc.
b. Open & Notorious
i. Element is met if legal owner has knowledge/notice
ii. Others are made aware that claimant is possessing land
iii. A reasonable person would assume he is actually the owner
iv. Occupation must be sufficiently apparent to put true owner on notice that trespass
is occurring
v. Can be achieved through boundary fencing, gates, signs, crops, buildings, etc. that a
diligent owner would be expected to know about
c. Hostile
i. Intent to claim property as one's own
ii. Claimant acts towards the land as if he owned it
iii. No "good faith" or "bad faith" distinction (see below)
iv. Ouster required for co-tenants
v. Consent from legal owner to let adverse possessor use the land can eliminate
hostility
i) A grantor who stays in possession after a conveyance is presumed to be there
with permission & thus no hostility - permitted possession can never turn into
adverse possesion
ii) A holdover tenant is presumed to have permission by landlord & thus no
hostility
d. Exclusive
i. Exclude others from it most of the time; no communal use
ii. Guests/visitors are ok as a normal owner would
e. Continuous
i. As continuous as an owner would make use of such land (seasonal; situational)
ii. See Tacking below
• Before adverse possessor gains title, he can sue anyone except the true owner to regain possession
or for damages

or for damages
○ For an adverse possessor to actually record title, he must first need judgment to quiet title
against the true owner
• Possession of the surface does not effect the mineral rights that have already been severed
○ Adverse possessor will get the same title that original owner had & no more
• Coincides with constructive abandonment - after a certain time the land is considered abandoned
○ Puts a minimum amount of attention that people should give to land
○ Assures maximization of land, encourages rejection of stale claims & quieting titles
• Majority & Minority view on hostility:

○ Majority - good or bad faith possession doesn't matter; simply entry is enough (Connecticut
Doctrine)
○ Minority - there must be bad faith to be considered hostile (Maine Doctrine)
• Disseisor - the person who is adversely possessing another's land

• Disseisee - the displaced owner
• Tacking process:
○ Adding together the years of adverse possession to establish a continuous possession for the
requisite period
○ Inchoate title - before Statute of Limitations runs, adverse possessor has the right of
possession, good against all others except true owner; non-written title
○ To transfer this inchoate title, adverse possessor needs to turn over possession/transfer
interest to a successor
○ Does NOT occur if some third party with no interest & no voluntary passing (no privity of
interest) enters
• Color of Title:
○ The appearance of having title to personal or real property by some evidence, but in reality
there is either no title or a vital defect in title
○ This can allow the adverse possessor to sue another for ejectment
○ The actual property must be described in a deed
Mistaken encroachment onto neighbor's land that is not described in your deed will
result in NO color of title
○ This is necessary to demonstrate Constructive Adverse Possession
Allows one who only uses a small part of parcel to still claim title to the entire parcel
Color of Title is required for oral permission to create a privity of interest (only way for
oral permission)
• Adverse Possession of Chattels:

○ Discovery Rule - public visibility is required so the owner has knowledge - otherwise Statute of
Limitations will never begin running
○ Due diligence - owner of a lost chattel who is diligent in searching for it, but can't find it, may
suspend the running of the statute of limitations on an action to recover it
• Ouster:
○ The wrongful dispossession or exclusion of someone (cotenant) from property - claiming
exclusive possession
○ For adverse possession (goes to element of hostility), must show either:
Ouster has occurred; or

Ouster has occurred; or
Possessor retains exclusive possession after demand; or
Possessor gives cotenant express notice (notorious) of adverse possession through either
Actual express notice through either "bringing home" notice to the other cotenant;
or
By an unequivocal acts that are open & public & make possession visible & hostile
that ownership is presumed
○ Ousted co-tenant is entitled to receive her fair share of fair rental value at time of ouster

Chapter 2: Some Further Dimensions of Property in Land
Right of Reasonable Use: Nuisance

• As a general rule, an owner is at liberty to use his property as he sees fit, without objection or
interference from his neighbor, provided such use does not violate an ordinance or statute
• An owner will not be permitted to make an unreasonable use of premises on the material annoyance
of his neighbor if the latter's enjoyment of life or property is materially lessened thereby
○ Whether the use constitutes a nuisance or not depends on whether such use is reasonable
under all surrounding circumstances - an ordinarily reasonable person of ordinary habits &
sensibilities
• P must be expected to endure some inconvenience rather than curtail D's freedom of action
• The utility of D's conduct depends on the social value which courts attach to its ultimate purpose
○ If little or no social value, or is result of pure malice or spite, D may be liable for nuisance though
harm is slight
• Nuisance:
○ Interfering with the enjoyment of another's property without physical invasion
○ Damages are generally NOT per se - damage must be shown & generally must have a physical
result
○ If the costs to the nuisance creator (D) of stopping the nuisance would greatly outweigh the
benefits to the nuisanced party (P) then money damages will just be required & no injunction
• Trespass:
○ Physical invasion of another's property
○ Damages are per se - even if there is no physical damage, you can still recover
• 5 factors that must be assessed to determine nuisance:

1) Location of the claimed nuisance
2) Character of the neighborhood
3) Nature of the thing complained of
4) Frequency of the intrusion
5) Effect upon plaintiff's enjoyment of life, health and property
• Private Nuisance:
○ The interest of a landowner, tenant, or other possessor of land in freedom from any
unreasonable (objective standard) nontrespassory interference with his use & enjoyment of the
land or his use of the land of another which is subject to an easement or other servitude in his
favor
○ An unreasonable activity/condition on D's land that substantially or unreasonably interferes
with P's enjoyment of use of his land
An activity which reduces the value of P's land is generally not a nuisance unless it
physically affects P's health, comfort or convenience
○ If there is an interference with the physical condition of the land itself, there will often, though
not always, be an interference with the health, comfort or convenience of the occupant.
○ If there is no interference with the physical condition of the land, the interference with the
health, comfort, or convenience of the occupant must normally affect his "physical" senses, not
merely his mental state.
○ Remedies can include 1) an award of monetary damages, or 2) equitable relief by way of
injunction (stop it)
• Public Nuisance:
The public interest in freedom from activity which endangers the health or safety or property of

○ The public interest in freedom from activity which endangers the health or safety or property of
a considerable number of persons, offends public morals, or interferes with the comfort or
convenience of a considerable number of people
○ Aggregation of small private nuisances when there is a barrier to entry of any private P suing
• Coming to the Nuisance doctrine:

○ If one moves to a location where the nuisance already is, it can significantly bar their suit
• 4 options in ruling a nuisance case:

○ No nuisance - no injunction & no damages
○ Nuisance - no injunction & party creating must pay damages
○ Nuisance - injunction (stop) & no damages
○ No nuisance - injunction (stop) & damages from complaining party to party that is creating
supposed "nuisance"
• Externalities may sometimes be created if an injunction is granted. There is a cost to something but
the company will avoid it by passing it on to neighbors & those surrounding the area whether they
like it or not
• Servitude on land:
○ An encumbrance consisting in the right to a limited use of a piece of land or other immovable
property without the possession of it
• Easement:
○ Right to use land for special purpose, but not continually possess or enjoy the land
• Negative Easement / Restrictive Covenant:
○ Owner can sell portion of property to another with guidelines/restrictions on how to build on it
(no 2 story buildings to obstruct view)
• Proper measure of "permanent damages" in a nuisance case was the difference between the market
value of the property before & after the nuisance
○ Only where the balance tilts very strongly against the P will an injunction be denied
Rights Above & Below Surface

• Owners of land ordinarily own not just the surface, but also the minerals under the ground
○ Ownership of minerals are severable from ownership of land in various ways
• Adverse Possession with regards to surface rights (severable):

○ If A owns both surface & mineral rights & D adversely possesses only surface, he will get same
title as A (both surface & mineral)
○ If B owns surface & C owns mineral rights & D adversely possesses only surface, he will get only
what B had (surface) & not C's since there is separate ownership
• Oil & Gas Mineral Reservation Majority Rule:

○ Reservation - vehicle by which a grantor creates and reserves to the grantee some right or
interest in the estate conveyed, which interest had no previous existence
This severs it from the surface estate & creates multiple estates in the land
○ When a mineral reservation is inserted into a deed to the first grantee, subsequent grantees in
the "chain of title" from that grantee forever take title subject to it
○ Generally "minerals" includes oil & gas unless there is a demonstrated intention on the contrary
• Inverse condemnation:

• Inverse condemnation:
○ When a government entity has committed a taking but has not brought an eminent domain
action (didn't realize there was a taking) & has failed to justly compensate
• Airspace Rights
○ Flights over private land are not a taking, unless they are so low & so frequent as to be a direct
& immediate interference with the enjoyment & use of the land
○ The landowner owns at least as much of the space above ground as he can occupy or use in
connection with the land
○ Need permission or easement/servitude/right of way to avoid trespass
○ Possible remedies:
Trespass
Land is invaded by a tangible physical object that interferes with the right of
exclusive possession
Per se damages
Private Nuisance
If land is invaded by intangibles that substantially & unreasonable interfere with
individual's use or enjoyment of property
Not per se damages
Continuing Trespass
If land is repeatedly invaded by trespasses
Law or Equity
When you want to force the invader to stop the invasion of the property, remedy is
equity
Ejectment - remedy at common law to remove trespasser from property
Unlawful detainer - force tenant to vacate the premises
Water Rights
A. Common Law Rights as to Watercourses (streams, rivers, lakes, underground watershed)
• Riparian Land:
○ Continuous tract of land
○ Under one ownership
○ That touches upon watercourse or lake, and
○ Is within the watershed
• Watershed:
○ All of the land that drains into a water body; determined by where the water flows; mountain
peak will run rain & other water downwards
○ Land is only riparian to its watershed
• Riparian Rights:
○ Proprietors (those who live on boundary of or are traversed by steam, lake, pond) have equal
rights in respect to the use of the water & none can use to the extent of depriving others of an
equal opportunity to use
○ Source of Title Doctrine - riparian land is only that which has been held as a single tract during
its chain of title
○ Unity of Title Doctrine - allows one who owns land bounding upon a body of water to enlarge
his riparian land by acquiring contiguous tracts back from the water as long as they lie within
the same watershed
Unity of Ownership Rule - if A buys B's property then he gains those riparian rights

a) Natural Flow Theory:
○ May not substantially or materially diminish its quantity, quality or velocity
○ Cannot take so much water that it affects the use of others
○ Cannot change the flow in any way - (this hinders development)
b) Reasonable Use Doctrine:

○ Allows full use of the watercourse in any way that is beneficial to the riparian owner provided
only it does not unreasonable interfere with the beneficial use of others.
○ American law favors this approach on the basis it is entirely utilitarian & promotes fullest
beneficial use of water resources
○ A variant of this is "fair participation" between riparian owners.
• Prior Appropriation System:

○ First to find has first rights & claim on water as long as they continue to make use of it
○ A landowner, who may or may not be a riparian owner, may obtain a permit from a state
agency to use a prescribed quantity of water for stated purposes
○ Colorado doctrine - neither natural flow nor reasonable use doctrine since weather is so arid
○ California doctrine - dual systems; both common law riparian & statutory appropriation rights
B. Common Law Rights as to Surface Water (rain that falls on surface)
• Common Enemy Rule:

○ Landowners had an unlimited privilege to deal with the surface water on their land as they
pleased without regard to the harm which may be caused to others (treat rain as an enemy)
○ +: Free improvement of property
○ N: Potential of contests in which the winner was whoever most effectively turned excess water
upon neighbor's land
○ N: Companies waste time & money trying to figure out ways to deter the water
○ N: Creates externalities (making your expenses your neighbor's problems)
• Civil Law Rule - strict liability

○ Higher elevation tracts had an easement or servitude over lower tracts for all surface water that
naturally flowed downhill. Anyone who increased or interfered with the natural flow of surface
waters so as to cause invasion of another's interests was subject to liability to the other.
○ N: Acted as impediment to improvement of land
○ Can treat as a trespass rule (v. nuisance) which may stop all development; show that water flow
is different from what it once was; since trespass is a per se violation - even if no damage there
is still fault; using minimal change in water flows as an excuse to stop any development
○ Or can treat as a nuisance rule & only apply it when there are actual damages; no per se
judgment; must show actual harm & diminimus (minimal) changes in water flow do not count
○ The nuisance creator now has to account for that cost & they can just internalize that cost
• Prior Appropriation System - first come, first serve

○ Senior water right - the first person to claim water; above everybody else
○ A came first, B was second & C was third but takes more water than is needed for A & B - will
set up a dam, etc. to limit the amount of water flowed
○ When water is lower than usual, A will get full & rest is passed to B, then C until it is all out
○ You can lose your right if you don't use it
○ You can sell water rights without selling the land on which it sits/flows
+: Certainty (A is guaranteed his water, barring some complete disaster)

○ +: Certainty (A is guaranteed his water, barring some complete disaster)
C. Underground Water (percolates & forms water table below) - generally, take what you want
• English / Common Law Rule:

○ Absolute Ownership Doctrine - everyone can take and use all of which they could get
○ Underground water was too mysterious & unpredictable to establish rules
• Reasonable Use Rule:

○ Limits the right of a landowner to percolating water in his land to such an amount of water as
may be necessary for some useful or beneficial purpose in connection with the land from which
it is taken, not restricting his right to use the water for any purpose on his own land, & not
restricting his right to use it elsewhere in the absence of proof of injury to adjoining landowners
• Correlative Rights:
○ The rights of all landowners over a common underground water are coequal or correlative to
the amount of land you own over the water, & one cannot extract more than his share of the
water, even for use on his own land, where others' rights are injured thereby
○ Own 90% of land so you get 90% of water
Lateral Support
• Landowner owes absolute duty (strictly liable) of lateral support only to adjoining land in its natural
state & only to the extent that the support is naturally necessary
○ This duty does not apply to artificial/improved or altered land that requires additional lateral
support due to the alterations
○ For land not in its natural condition, duty only to maintain such an amount of support as would
support it without those objects - negligence theory
• May remove artificial additions on land subject to a duty of reasonable care to avoid unnecessary &
foreseeable damage to the adjoining land
○ If remove naturally necessary support of adjoining land, must replace it & liable to maintain
artificial support & will be strictly liable for any damage
• If plaintiff can win on a negligence theory, defendant is liable without question for damage to both
soil & building
• For land itself:

○ One who alters his land by removing lateral support from neighbor's land is strictly liable for any
resulting damage to neighbor's land
Doesn't matter how careful he was in altering, if lateral support is removed, strictly liable
Same principle applies to artificial supports, like retaining walls
If an artificial support is substituted for natural support, landowner & successors are
obligated to keep artificial support in place & effective
• For structures:
○ Landowner is liable for damage to structures from withdrawal of lateral support if either:
Landowner was negligent & collapse would not have occurred but for the added weight of
the structures
Collapse would have occurred whether or not structures were there

Chapter 3: Methods of Transferring Property: An Overview
Inter Vivos Transfer (still alive thru deed)

○ Occurs while the owner is still alive
○ Most common method is through deed - writing by which the transferor (grantor)
describes the land in question & states it is being transferred to a recipient (grantee)
Grantor must sign the deed (show intent) & is effective only when delivered to
grantee
Most deeds are recorded
Deed is a conveyance - not a contract; its purpose is to transfer ownership
○ Some inter vivos transfers may be involuntary where the transfer is forced
Examples: specific performance to quite title on disputed land; foreclosures; tax
deeds; eminent domain, etc.
Adverse possession - doesn't transfer title, but the old owner's title is terminated & a
brand new title arises
Intestate Succession (when there is no will)

○ A transfer under state statutes dictating how property will pass in the absence of a will
○ Some characteristics of how it can pass:
Primogeniture - eldest male inherited to exclusion of others
Collateral relative - related to but not directly (cousins, aunts, etc.) as opposed to
direct (parents, siblings, spouse, etc.)
Illegitimacy - children born when parents were not married; used to be complete bar
but not anymore
Escheat to the state - turned over to government
• Statute of Distribution:
○ Per stirpes / Right of Representation
First split among surviving heirs, if one is dead it gets divided among his kids
(placeholder for dead)
A B C survive, but B is dead & has kids d & e --> A & C get 1/3 each while d & e get
1/6 each
A (1/3) B - DIED C (1/3)
Kid f (nothing) Kids d & e (1/6) each No kids
○ Per capita
Divide equally among those that are still alive
A (1/4) B - DIED C (1/4)
Kid f (nothing) Kids d & e (1/4) each No kids
• U.S. Uniform Probate Code:

○ No distinction between personal & real property
○ Descendants (direct stem below), no matter how remote, take to the exclusion of all
ancestors (direct stem above) & collaterals (all other indirect)
○ Most favors the surviving spouse first
○ When a child dies, parents will inherit first, then siblings
• Heirs - those who take property through intestate succession - you cannot have heirs until you
are actually dead!

Testamentary Disposition (thru will)
○ Transfer at or after the owner's death by a will
○ Will - person's declaration of what is to be done with his property after his death
Wills are 1) revocable during lifetime & 2) applicable to the situation which exists at
death
Devised property is real estate that is left by will
Statute of Frauds requires a devise of land to be in writing & signed by party devising
the property or other, by his express direction & shall be attested & subscribed in
presence of devisor by 3 or 4 credible witnesses
• Uniform Probate Code:

○ May allow substantial compliance - treat document as valid if there is clear & convincing
evidence that decedent intended it
○ Law of the state - where real property is located will govern the validity of will insofar as it
disposes of realty
○ Law of the domicile - domicile of testator at time of his death will be controlling with
regard to validity of the will insofar as it disposes of personalty
• Revocation of Wills:
○ Through operation of law in certain cases (marriage, birth, death)
○ Through subsequent instrument executed with formalities required for a will
○ Will may be partly revoked by a duly executed codicil which makes a different disposition
of part of testator's property
○ Through the physical act of burning, tearing, etc.
• Will Substitutes:
○ Joint tenancy or tenancy be entireties have right of survivorship so when one tenant dies,
the survivors who are co-tenants own the whole property
○ Trust - created whenever legal ownership of property is transferred to or retained by one
person (the trustee) to be held for the benefit of another (the beneficiary)
Typically the beneficial interest is divided into present & future estates
Self-declared trust - donor may create a trust without any transfer of the legal title to
property

Chapter 4: Estates
Present & Future Estates

A. The Theory of Estates
• Estate:
○ An interest in land which a) is or may become possessory; and b) ownership is measured in
terms of duration
○ (Should be distinguished from nonpossessory interests such as easements, profits, covenants
& servitudes)
B. The Present Estates

• Freehold Estates (6 types) - give possession under some legal title or right to hold
1. Fee Simple Absolute: (No Future Estate)
a. Complete rights - no restrictions or conditions
b. Future Estate - none
c. Duration - unlimited
▫ Unless owner dies intestate (no will) & without heirs - will escheat to the state
d. Language - "to A & heirs/assigns...to A"
▫ Heirs = intestate takers (no will)
▫ Assigns = listed grantees (will)
e. Transferability - by deed, will or intestacy
• Fee Simple Defeasible - 3 types… (means it can be terminated)

○ Since courts dislike restrictions on land, courts will avoid finding a defeasible fee unless
clear language is used
2. Fee Simple Determinable: Possibility of Reverter (automatic)
a. Rights until some event occurs, then auto back to grantor
b. Future Estate - Possibility of Reverter remaining in grantor
▫ If the event occurs, interest will automatically revert back to grantor as fee simple
absolute

absolute
▫ If reverted, grantee will then automatically begin adversely possessing &
trespassing
3. Fee Simple on Condition Subsequent: Right of Entry/Power of Termination (optional)

a. Rights until a condition occurs, then grantor may take back
b. Future Estate - Right of Entry/Power of Termination remaining in grantor
▫ If condition occurs, grantor has option to enter & retake, but no obligation to do
so
▫ Estate of grantee continues until grantor exercises his power of termination
▫ Not automatic, so no trigger of adverse possession until grantor chooses & is back
in his possession
▫ Grantor must carve out the right to reenter
4. Fee Simple Subject to Executory Limitation: Executory Interest: Reverter or Right of Entry
a. Rights until a condition occurs, then it goes automatically to a third party (not the
grantor)
b. Future Estate - Reverter or Right of Entry in a third party
▫ Just like fee simple determinable, but goes to third party instead of grantor
Defeasible Future Interest Duration Transfer Language

Fees - 3 types
2. Fee Simple Possibility of Potentially infinite, By deed, "So long
Determinable Reverter so long as will as…while...during
(Automatic back event does not or ...until"
FSDPOR to occur intestacy,
grantor if but Must limit
condition always duration
occurs) subject to
the stated
condition
3. Fee Simple Right of Entry or Potentially infinite, By deed, "Upon condition
on Condition Power of so long as will that…provided
Subsequent Termination the condition is not or that…but if...if it
breached intestacy, happens that..."
Bobby (Optional by and, thereafter, but
Brown - my Grantor) until the holder always "...grantor
prerogative No obligation to of the right of entry subject to reserves right to
reenter timely the stated reenter & retake"
exercises the power condition
of termination
4. Fee Simple Executory (3rd Potentially infinite, By deed, "To A so long as
Subject to Party) Interest: so long as will used for pub,
Executory Reverter (auto) OR stated contingency or then to B"
Limitation Right of Entry does not occur intestacy
(optional) "To A, but if X
event occurs,
then to B"

• "For the purposes of…" or "To be used for …" is only precatory language & states the purpose
or motive but offers no actual condition for the land
○ Words of mere desire, hope, expectation, or intention are insufficient to create a
defeasible fee
• Courts disfavor restrictions on the free use of land
○ Courts will avoid finding a defeasible fee unless clear durational language is used
○ Drafters need to carve out clear durational language
5. Life Estates: Reversion or Remainder

a. Estate for a fixed term - measured by explicit life or lives (not by years)
i. "To A for life, then to B" or "To A for the life of B"
b. Future Estate - Reversion in grantor or Remainder in 3rd Party
6. Fee Tail & The Fee Simple Conditional:

a. Passes land to oldest male of family, making property inalienable
b. Inheritability is limited to lineal heirs
c. Abolished in most jurisdictions - attempt to create results in fee simple absolute
• One cannot transfer more property interest than what you have!
• Non-Freehold Estates: (4 types) - give mere possession

1. Leasehold Estates: - See more detail below
a. Term of Years (fixed term)
b. Periodic (month to month)
c. At Will (tenancy has arisen but haven't established terms yet)
d. At Sufferance (when holdover & landlord decides whether to keep lease fixed or
period)
C. The Future Estates

• One owns interest now, but doesn't get possession of the land until a future time
○ Condemnation - if government condemns land before one's interest becomes possessory,
they will have to pay partial compensation
○ Transfer - one can transfer interest now, even though he doesn't have possession
1. Possibility of Reverter:
a. Always created in grantor
b. Arises in a grantor who conveys a fee simple determinable - FSDPOR
c. Transferable, descendible and devisable
d. States have statutes that limit the time the estate is determinable - then this is
extinguished & possessory fee simple estate becomes indefeasible
2. Right of Entry (Power of Termination):

b. Right or power in a grantor to take certain action which will terminate a possessory
estate which grantor has previously conveyed
c. Must be expressly reserved
d. May be exercised by bringing action for recovery of possession, right by notice to
grantee, or by physical entry on land
e. Devisable in most states, descendible in all, & statutes make them transferable inter

e. Devisable in most states, descendible in all, & statutes make them transferable inter
vivos
3. Reversion:
b. All reversionary interests are vested (as opposed to contingent)
c. Grantor retains future interest & will be entitled to possession when A's life estate
terminates
d. One can have a reversion even though it isn't certain to ever become possessory
e. Arises by operation of law
f. Freely transferable by deed, will & intestate succession
4. Remainders:
a. Always created in someone other than grantor
b. A future interest created in someone which will become a present estate (if ever)
immediately upon & no sooner than the expiration of all prior estates created
simultaneously with it
c. Arises at the natural termination of the present estate
i. Can never follow a defeasible fee
ii. Typically after a life estate
d. 4 rules that remainders must meet: (if it fails to comply with any, then it must be an
executory interest)
i. Must be created at the same time as, and by the same instrument that creates the
prior estate
ii. May never follow a fee simple defeasible estate
iii. Must not have the capacity to cut short the prior estate; rather, it must take in
possession only upon natural termination of the prior estate (patient)
iv. Must be no "built-in time gap" between termination of prior estate & remainder's
taking of possession
e. 2 types of remainders:
i. Vested Remainder
i) Certain to become possessory whenever & however the prior estate
terminates
a) Created in ascertained person
ii) Not subject to any condition precedent
iii) Not destructible
iv) Fully alienable
v) Not subject to the Rule Against Perpetuities (see below)
vi) 3 types of vested remainders:

a) Indefeasibly Vested Remainders (no strings attached - nsync)
i) Created in an existing & ascertained person & not subject to
condition precedent
ii) Absolutely assured of receiving the land when A dies; no risk that
B's share will be reduced fractionally or lost totally
iii) Example: "To A for life, remainder to B"
b) Vested Remainder subject to Complete Defeasance (Total

Divestment)
i) Created in a class of persons (children) that is certain to become

i) Created in a class of persons (children) that is certain to become
possessory, but subject to diminution (by birth of additional
persons who will share in the remainder)
ii) Subject to a condition subsequent (no prerequisites, but may be
taken away)
iii) Takers will get the share but it might all be taken away (to A for
life, then to B, but if B gets loaded, then to C); ascertained taker
is B, BUT IF he springs the condition, then he loses his interest;
he could lose the interest before he even gets it; if something
happens the interest can be taken away (already come to rest)
iv) Example: O grants "To A for life, remainder to B, provided
however that if B dies under age of 25, to C"
a. If A is alive & B is only 20:
A has a life estate
B has vested remainder subject to complete
defeasance (because of condition subsequent)
C has shifting executory interest
b. If B is under 25 at the time of A's death, B must live to 25
for estate to be entitled otherwise B's heirs lose it all & C
or C's heirs will take
O has reversion because it is possible that neither C
nor C's heirs may not exist when the condition is
breached
c) Vested Remainder subject to Open (or subject to Partial Defeasance

or a Class Gift)
i) Subject to a condition subsequent
ii) Remainder is vested in a group of takers, at least one of whom is
already qualified to take possession
iii) Each class member is subject to partial diminution because
additional takers not yet ascertained can still qualify as a class
member
iv) Example: "To A for life, then to B's children"
a. A is still alive & B has two children, C & D
b. C & D have a vested remainder subject to open since B can
still have another kid
v) Example: "To A for life, then to B's children as they turn 18"
a. B has three kids, X is 10, Y is 15, and Z is 20
b. Z has vested remainder subject to open because her
interest will be shared when x & y become vested (i.e. turn
18)
vi) Rule of Convenience (Default/Majority View) - when it's time
for a gift to become possessory, you count up the heirs & hand it
out; only the heirs who were alive within the time of the grant
will get something
a. Creates a closed class & prevents the share from
continuing to be divided as more kids are born
b. Closed class - when one of the qualified members can
demand possession
c. Exception: Womb Rule - the child of B in the womb at time
of A's death will share with C & D

ii. Contingent Remainder
i) Not certain to become possessory
ii) Created in unborn or unascertained persons
a) "To A's kids" … but A is young & doesn't have kids yet
iii) May be subject to condition precedent (prerequisite)
iv) Destructible (& detested) at common law
v) May not be alienable inter vivos
vi) Subject to the Rule Against Perpetuities (see below)
a) Why we have the Rule:
i) alienability problem - there would be a cloud on title for
centuries & eventually people would forget about it;
ii) dead hand problem - can't predict the that the contingencies will
continue to make sense - the dead still have control over this
land for centuries later
b) These are solved by placing an estate in trust, which generally gives
the trustee the power to transfer or sell the land; may also be solved
by covenant
• Tips/Hints for Vested v. Contingent:

○ If condition literally comes after naming the interest - "____ then, but if (condition
subsequent)" it is likely vested remainder
Reversionary are always vested
○ If condition literally comes first in the sentence - "if (condition precedent) then _____"
it is likely contingent remainder
Executory are always contingent
5. Executory Interests:
a. Always created in someone other than grantor
b. May follow a defeasible estate (if it does - it must be executory because a remainder
cannot)
c. All executory interests are contingent (as opposed to vested)
d. Takes effect by "springing" into possession or by "shifting" from one person to another
D. 2 Rules Relating to Remainders

1. Rule in Shelley's Case:
a. If the same instrument created a life estate in A & gave remainder only to A's heirs, the
remainder was not recognized & A took the life estate & the remainder
b. Typical language - "To A for life, then to heirs of A"
c. Small minority follow in U.S.
d. An absolute rule of property; not rebuttable
e. "Heirs" must be used in technical sense
f. Real property only
g. Convey through deed or will
2. Doctrine of Worthier Title:
a. A remainder in the grantor's heirs is invalid & becomes a reversion in the grantor
b. Typical language - "To A for life, then to the heirs of the grantor"
c. The majority view in the U.S.
d. A rebuttable rule of construction
e. "Heirs" must be used in technical sense
f. For both real & personal property
g. Convey through deed only

g. Convey through deed only
E. The Rule Against Perpetuities

• Traditionally: no interest is valid unless it will vest, if at all, within some life in being plus 21
years after the effective creation of the interest - no states have this left
○ Applies only to contingent remainders, executory interests, & certain vested remainders
subjected to open
• Alternatively: 90 Year "Wait & See" Rule to determine which are contingent & which are
vested
○ If a future interest would be valid under common law version, nothing more need be
done
○ An otherwise invalid interest is valid if it does in fact vest within 90 years of its creation
• Other states have made the year requirement 500+
• Cy Pres Doctrine - change the grant according to what they believe the grantor intended
F. Direct Restraints on Alienation (Transferability)

• Direct restraint: Limited direct restraints have a chance at survival- the more limited the better the chance
○ To A so long as A & her heirs do not transfer/sell said property
• Indirect restraint:
○ To A so long as the property is not used for the sale of liquor
The restriction has lessened the scope of potential buyers on that prop
• 3 Types of Direct Restraints:

1) Disabling:
a. One that purports to make transfer of the land literally impossible
b. Always void
c. Disregard the restriction & A will have fee simple absolute
d. "Neither A nor any of her children shall have the right to transfer the land or any
interest therein"
2) Forfeiture:
a. Grantor seeks to create an estate in the grantee which either automatically terminates
upon an attempt to alienate or which is subject to a power of termination held by the
grantor in such event
b. An attempted transfer results in a forfeiture of the interest
c. If limited, can prevail & courts will ignore (depends on state)
i. Usually void in fee estates but valid on life & leasehold estates
d. "If A shall attempt to transfer the land or any interest therein during her lifetime, her
estate shall cease, & title therein shall vest in B"
A cov to recover and retake is a forfeiture In leases always upheld, but interpereted narrowly
3) Promissory:
a. Grantor seeks to create a contractual promise by a grantee not to convey an interest in
land which the grantee is receiving
b. An attempted transfer breaches a covenant
c. The more limited the restraint is, the more likely it will succeed & court will uphold it
i. Void on fee estates but valid on life & leasehold estates
d. "A hereby covenants that she will not transfer the land or any interest therein without
prior written consent"
G. Protection of Future Interests

• Life tenant is entitled to all ordinary uses & profits from the land & life tenant must not commit
waste

• Law of Waste:
Operates to restrict a possessor in her use if her possessory estate is limited (i.e. less than fee
simple absolute)
Determines the extent to which the holder of a future estate may protect the value of that
estate by limiting the diminution in value which the owner of the possessory freehold (i.e. life
estate, defeasible fee) may cause
Waste - unreasonable use of the property by the owner of the possessory estate which
reduces the value of a future estate
○ This is the only tool that a future interest holder has available to use
○ Can sue for damages and/or to enjoin such acts
• Voluntary / Active / Affirmative Waste: (Destruction)

Per se action - damages will be awarded & measured in some way
Can't tear anything down & can't take anything off the property
May not consume or exploit natural resources
○ Exceptions to per se waste:
Reasonable amounts where necessary for repair & maintenance of land
When life tenant is expressly given the right to exploit such resources
Where land is suitable only for such exploitation
Open Mines Doctrine
□ If mining has already gone on, life estate holder can continue to take as
much that has been taken so far
Doctrine of Estovers
□ You can use things that grow on the property, but only for use on the
property
Doctrine of Emblements
□ Former tenants have the right to enter land to cultivate & remove crops that
were planted before they terminated their interest in the land
□ Tenancy must have been for an undetermined period of time or have been a
life estate; and
□ Tenancy must have been terminated under conditions other than the
tenant's fault
□ If there is an annual/seasonal use for the property, life estate owner can
reasonably use land the same way; if you plant crop in April but then die,
successors can go take the harvest
As long as doing the thing doesn't take anything away (dissipate) from
the total value of the estate
• Ameliorative Waste Exception:

A change that benefits the property economically
Occurs when the use of property is substantially changed, but the change increases the value
Life tenant must not engage in acts that will enhance property's value unless all future
interest holders are known & consent to it
Cotenant will never have to contribute for any ameliorative waste
• Permissive Waste: (Neglect)

Occurs when a life tenant fails to protect or preserve the land
Asks only that the life tenant maintain the premises
○ Not responsible to replace & entire defect, just occasionally patch up
Obligation to Repair:

Obligation to Repair:
○ Maintain/preserve land & structures in a reasonable state of repair
○ There is no obligation to make permanent improvements on land
Obligation to Pay Interest on Encumbrances:
○ Pay interest to the extent of the income or profits from the land
○ Present interest holder pays annual taxes (pays towards the interest whereas the future
interest holder pays towards principal)
Obligation to Pay Taxes:
○ Pay all ordinary taxes on the land to extent of the income or profits from the land
Catastrophic event - permissive waste - normal wear & tear
○ Not liable for diminution in value from ordinary wear & tear except to extent that
failure of maintenance will result in greater deterioration than one would expect from
reasonable use
• Remedies for Waste:

○ Indefeasibly vested (take effect in possession at some date in future) - entitled to damages for
injuries sustained & multiple damages
○ Contingent or vested but subject to defeasance - should be able to enjoin threatened waste,
unless the probability of the future estate ever vesting in possession is extremely remote
H. Unproductive Property
• Life tenant is restricted in his exploitation of the property by the law of waste, but at the same
time, he is obligated to pay real estate taxes & other carrying charges to the extent these payments
do not exceed income derived from the property or the fair rental value if the life tenant occupies
the property himself
• Common Law Rule Regarding Partition:

○ Partition applies only to concurrent interests & divides up property owned by co-tenants
○ A present life estate cannot be partitioned from a future remainder interest because the
holders of the 2 possess the property successively (one after another), rather than
concurrently (at same time)
○ The purpose of partition is to sever unity of possession
• Court may sometimes force sale of property if necessary for preservation of all interests therein
• If court does order partition, it may require that proceeds be paid into a judicially created trust &
investment income is paid over the former life tenant during balance of his life. When he dies, the
principal is distributed to the former owners of future interest
• Can distribute the sale proceeds to the life estate & future interest holder immediately - must know
the "time value" of money P 337
○ Time value - right to receive a sum of money in the future is not worth as much as the right to
receive the same amount today (there will be inflation in future & lost interest you could be
accruing) - would rather have $5 now than a year from now
○ Nominal interest rate = real interest rate + inflation rate
Concurrent Estates
I. Common Law Concurrent Estates
• Division of ownership between people, though the right to possession is to be enjoyed
concurrently; a shared undivided interest
• Fiduciary Duty exists - heightened duty of care to co-tenants to pay taxes on property & generally
maintain the premises
McCready Rule - all cotenants owe a duty to pay taxes & one cotenant should not be allowed

○ McCready Rule - all cotenants owe a duty to pay taxes & one cotenant should not be allowed
to gain an advantage over the others be neglecting this duty
Exclusion to this when property is on foreclosure
○ When cotenants acquire their interest at different times through different instruments & no
relationship of trust & confidence exists between them, then there is NO fiduciary duty
• 3 Types of Concurrent Estates:
1) Joint Tenancy
○ Right of survivorship
Upon death of one of the joint tenants, the number of co-tenants is reduced by
one & the ownership of those survivors is increased proportionately
Last survivor ceases to be a concurrent owner, so he then owns the whole fee
simple absolute unless joint tenancy was created with a limited duration
Takes precedent over any will/devise made
Right of survivorship must be explicitly stated, or will result in tenancy in common
○ At common law there were 4 unities:
Time - interests of the tenants must arise at same time
Title - present only if the interests are acquired by the same instrument
Interest - tenants acquired identical interests
Possession - common right of possession & enjoyment
The court now simply looks for intent
○ Possessory rights are undivided & equal - each has equal shares & "whole run of the
place" interest to possess/occupy the whole
If the interests are divided through partition (physical division), it ends the joint
tenancy
The right to partition is not absolute
• Severance of Joint Tenancy:
○ Destroys the joint tenancy & creates tenant in common with that third party
ABC joint tenants & C sells to D, then AB are still joint tenants & D is tenant in
common with AB
○ The joint tenancy & right of survivorship still exists between whoever the original joint
tenants may be
○ The one who conveys does NOT need approval/permission/consent/notice of the other
2 to sever
○ Applies to both voluntary (both agree) & involuntary & secret (only one) conveyances
Inter vivos (can sell or transfer interest while still alive) conveyance:
□ Freely alienable (can contract to sell/lease created by one cotenant)
□ May not occur where one joint tenant does not transfer her entire interest
(see straw man)
Partition
Divorce
Murder
Mortgage but ONLY under title theory (does not sever under lien theory)
○ NO severance with the execution of an earnest money agreement
○ NO severance when a will is created
Interest cannot be devised by will or passed by descent, for the right of
survivorship operates immediately on the decedent's death
○ A sole owner cannot convey to himself & another as joint tenants or convey an
undivided half interest so as to make himself & grantee joint tenants - this resulted in
tenancy in common
Must utilize a third party grantee called a "straw man"

Must utilize a third party grantee called a "straw man"
A conveys all interest to X, then X conveys back to A+B as joint tenants with right
of survivorship
○ If one cotenant rents land so the others cannot use it (ouster), others are entitled to
rent shares
If other cotenants are not excluded from its use, they are not owed anything
○ No right of contribution for improvements, but can recover for improvements if there is
a partition
○ Can create an unseverable joint tenancy - "To A & B jointly, for their lives, then to
survivor"
2) Tenancy by Entirety
○ Same as joint tenants (right of survivorship) but can only exist between husband & wife
○ Not severable within marriage It is not a 1/2
interest it is a
Only options to sever are: unitary title
□ Death
□ Divorce
□ Mutual agreement
□ Execution by a joint creditor of both
○ Both members must sign to convey or encumber property (deed/mortgage by one
spouse is ineffective)
• Minority View / Massachusetts Rule regarding Mortgages:

○ If H & W are tenants by entirety & H encumbers house without wife assenting or having
notice, bank must wait until one party dies
○ If W dies first & husband survives, she dies with a valid mortgage on the whole marital
property 406 Coraccio
changed from
○ If H dies first & wife survives, it is as though the mortgage never existed common law to
equalize rights of
women
3) Tenancy in Common
○ No right of survivorship
○ Freely alienable inter vivos & if not conveyed in lifetime, will pass at death to devisees
(will) or heirs (no will)
○ Only unity required is unity of possession
Equal shares presumed but not required
None has a right to exclusive possession of any part
□ Tenants can hold different interest in the property but each is entitled to
possession of the whole
□ I may only own 1/3 interest & you own 2/3, but we can both move freely
over all of the property
○ Can be partitioned, either voluntarily by appropriate conveyance or by judicial
proceeding for partition
Just one tenant in common cannot partition land - either all partition or nobody
does
○ Presumed by modern statute unless explicitly stated that it is joint tenancy
• Rent & Profits:

• Co-tenant generally not required to pay rent to the other co-tenants for the value of her own
use of the property, even when the other co-tenants do not make use of the property
• Co-tenant generally not required to share business profits earned from the use of the
property, such as from business conducted on property

property, such as from business conducted on property
• Ouster:
• When co-tenant refuses to allow another to access/use the property, the ousted co-tenant
may bring action to gain access & recover value of use of property for time during which he
was denied access
• Natural Resources:
• Co-tenant is entitled to land's natural resources in portion to her share
• Third-Party Rent:
• Co-tenant must account to other co-tenants for rent received from third parties, but he can
deduct operating expenses
• Operating Expenses:
• Co-tenant can collect contribution for paying more than his portion of necessary or
beneficially spent operating expenses, unless he is the only one in physical possession of
property & his use of it is equal to or outweighs overpayment
• Owner in sole possession can collect only for amount that exceeds the rental value of
property
• 3 actions that co-tenants can take against one another:

1) Accounting
○ Sought by "out" tenants who don't live on property
○ Can be accounted for net rental from third parties
○ No accounting if land is used by one cotenant for business purposes or personal
occupation unless there is an ouster
○ "You made money, give me a piece"
2) Contribution
○ Sought by "in" tenant who does live on property for ordinary repairs
○ "I spent money, so reimburse me"
Wants the out tenant to pay half mortgage or taxes, fees, expenses, etc.
○ Must contribute towards property taxes, mortgage payments, general/necessary repair
& maintenance
○ Do not have to contribute for improvements
○ The increment of value will stay with the one who made the improvements
3) Partition
○ The division of the land held in cotenancy with the cotenant's respective fractional
shares
For joint tenancy, no consent needed
For tenants in common, all consent or nothing
○ Includes a final accounting & final contribution
○ Partition in Kind:
Ark Land v. Harper P
398
Physically divide the property into cotenants' fractional shares so they each
Economic value is a become fee simple owners
consideration, but not
exclusive test; Law prefers this type
Also
considerLongstandin ○ Partition by Sale:
g ownership &
sentiment
Sell the property as a whole then divide proceeds into each fractional share
Party that requests this must demonstrate:
□ That the property cannot be conveniently partitioned in kind

P405
□ That the property cannot be conveniently partitioned in kind
Allotment □ Interests of one or more will be promoted by sale
instead of part. sale.
court order RE □ That the interests of other parties won't be prejudiced by the sale P405
conveyed to cotenant
on the condition they ○ Partition by Allotment: Part. Kind. Difficult to
divide land physically
pay the other a
judicially determined
Cotenants buy out the other cotenants that are equal in value
so one can get more
$ ○ Owlty - adjust the land in such a way that all cotenants get the same value valuable peice of land
4 methods the favored cotenant
P 418 TIC to deal with must pay compensation
slayer- 1/2 to • Slayer Statute: Lakatos P414 slayer stat
P 416
(Owelty)
dead’s heirs;
when killer dies ○ No person who is convicted of feloniously killing another shall take or acquire any property or
passes to As if murderer is dead
slain’s heirs or interest from the killed, either by descent or will or otherwise and died before
devisees murdered; P417
So who would have
• Effect of Mortgages on Co-Tenancy: taken it? Wife then to
her heirs (if she wasnt
○ Depends on when title passes i.e. when severance occurs: killed
○ Title Theory
A mortgage given by a joint tenant on her own interest severs the joint tenancy
Mortgage has same effect as conveyance
Lender holds title until mortgage is satisfied or foreclosure
When mortgage is granted, title is passed to bank & severance results at time of
mortgage
○ Intermediate Theory
Mortgagor retains both legal & equitable title until mortgage goes into default
What constitutes default will be established in the actual mortgage document
○ Lien Theory (Majority)

Mortgage against one tenant's interest does not sever joint tenancy
Title remains in debtor & lender holds only a security interest (right to take title)
Title doesn't pass until foreclosure
Lien - recognition of security interest that the bank has on the property
• Sale of real property involves:

○ Execution of contract - equitable conversion: buyers hold equitable title & seller holds legal
title
○ Closing - buyer gets the legal title
• Joint Bank Accounts:

○ Can have one account with equal uses; or
○ Payable on death account - B sets up a bank account that upon his death will pay to C; C
cannot use until then
This is a will substitute
○ Convenience account - B sets up a bank account & C has withdrawal privileges but only at B's
instruction
Marital Estates P 339

• States have abandoned dower and curtesy & property can now pass either through will, intestacy
or an elective share
• Elective / Forced Share - right of surviving spouse to elect to take as though she were an heir under
the state's intestacy statute or under a provision in the elective share statute - or to take under
deceased spouse's will - to "take against the will" and become a "forced heir"
○ Simple Forced Share
Surviving spouse would get half of assets

Surviving spouse would get half of assets
Can be avoided by placing assets in a substitute for will (trust, life insurance policy, joint
tenancy)
○ Augmented Forced Share
Surviving spouse has right to one-third the value of the augmented estate
~Usually required owners have a family
~In respect to exemption from creditors claims homestead rights are usually limited to a stated value, area, or both
• Homestead Rights - designed to protect certain property from claims of creditors & from alienation
P346
by owner without consent of spouse

○ Typically homestead consists of dwelling & land upon which its situated
Purpose is to assure a home for the family both during the lifetime of the owner and for the lifetime of the surviving spouse
• Community Property - All property other than separate property; any income generated during
marriage
• Separate Property - All property acquired by either spouse before marriage or after by gift, devise,
inheritance
○ Tracing - trying to figure out whether property is community or separate
○ Transmutation - spousal conversion of property from one form to another (usually separate
to community)
Prenuptial agreement can alter these default rules

Chapter 5: Landlord & Tenant
Nature & Creation of Leaseholds

A. Leaseholds Distinguished from Other Relationships
• Leasehold:
○ Creates an estate
○ Lessee (tenant) has exclusive right of possession for some period & exclusive occupancy
(landlord cannot enter)
○ Landlord is not liable for injuries caused by defective conditions in areas that are within the
exclusive possession & control of tenant
○ Tenant takes property for better or worse
○ No need for leasehold to be supported by consideration
○ Unless parties expressly agree that no rent shall be owing or unless circumstances clearly
indicate no rent was intended, a court will find an implied obligation to pay rent in amount of
fair rental value of the land
Rent may be a value other than money EX Farm lease rent paid with crop shares
○ Leasehold does not arise on proper execution of a lease, but only when the tenant actually
takes possession P439
Until then his interest is called an interesse termini
• License:
○ No estate is created
○ No exclusive possession for licensee
○ More of a permission or contract to use the land but not possess it
○ License is the authority to do a particular act(s) upon another's land without possessing an
estate therein
○ Duty of reasonable care by defendants to prevent injuries to business invitees, including
guests
• Servitude:
○ No estates
○ No exclusive possession
○ More of a permission
B. The Several Tenancies

1. Term for Years (Fixed-Term Tenancy): P439
a. Duration: fixed time in units (1 year lease)
T’s interest is a term of years
L’s interest is a reversion +
i. Term may be subject to a possibility or reverter, right of entry, or executory
right of reentry to secure limitation
payment etc.
b. Creation: by agreement (oral or written lease subject to Statute of Frauds if 1 year or
longer)
i. Landlord's ownership subject to the outstanding term for years is reversion
ii. As security for payment landlord may retain right of entry through termination
clause
c. Termination: P440
i. By expiration of the stated period of time
ii. By happening of a stated contingency
iii. By surrender of unexpired portion of the term (conveyance by tenant back to
landlord)
iv. By release (conveyance by landlord to tenant of landlord's interest)
v. By condemnation (expiration of landlord's estate by government who uses right
of eminent domain)

of eminent domain)
vi. Most say if covenants are breached (tenant's payment of rent, landlord's quiet
enjoyment & habitability)
vii. No notice to terminate is necessary
2. Periodic Tenancy: P440

Big Diff. between fixed
a. Duration: term is indefinite & seamless (month to month) and periodic is fixed
terminates on expiration
b. Creation: periodic until given
notice
i. By agreement
ii. By implication (landlord giving possession for indefinite period of time with
agreement that rent will be paid periodically)
iii. By holdover (tenant's remaining in possession with consent of landlord
subsequent to termination of prior tenancy)
Time period
c. Termination: by notice given to landlord Notice given by landlord or tenant to the other
to give notice i. Must give at least one period notice before terminating
usually 30
days to 2, 3, ii. Landlord's interest is called a reversion or ownership subject to an outstanding
or 6 months
periodic tenancy
d. Must know how much the rent is for any given period & what the given period is
(periodicity) E. periodic tenancies where period is less
than one year notice required is a full period
prior to the end of the current period
3. Tenancy at Will: 441
a. Duration: only so long as both landlord & tenant refrain from taking any action
inconsistent with its continuation; neither fixed nor successive periods
i. Landlord has reversionary interest or ownership subject to the terminable
possessory right of the tenant
b. Creation:
i. By agreement
ii. Taking of possession with consent of owner
iii. Entry into possession under a void lease prior to making periodic rental payments
c. Termination: by either party without formal notice of termination Terminable at will
i. Demands for possession is sufficient to end tenant's right to possession, but in
such a case tenant does have a reasonable time within which to vacate
ii. Can be terminated by operation of law if: Its “at will” you need will to have it; no will if you are dead
□ either party dies
□ tenant commits waste
□ tenant attempts to assign his tenancy
□ landlord transfers interest in property or executes term lease to 3rd party
d. Presumed in the absence of an agreement & presumed that some rent is due
4. Tenancy at Sufferance: 441-442

a. Duration: until demand for possession by landlord or until landlord elects to have a
tenancy other than tenancy at sufferance
b. Creation: Stayed on property without the consent of landlord
i. By holdover (tenant who entered possession rightfully but retained possession
wrongfully)
c. Termination: none since there is no formal relationship to terminate
d. Exists to fill the space to determine whether the landlord wants to accept the holdover
tenant & can treat as a periodic tenant or treat tenant as trespasser
If landlord elects to treat the holdover tenant as a trespasser, he may maintain an
action for immediate possession & tenant need not be given advance notice to
quit (as would be necessary to terminate a periodic tenancy)
If landlord elects to treat the holdover tenant as a continuing tenant, in general

If landlord elects to treat the holdover tenant as a continuing tenant, in general
the provisions of the original lease carry over, except as to length of term &
provisions inconsistent with the new periodic tenancy
The Statute of Frauds: 442

○ Requires a lease to be in writing if it can last a year or longer
The Uniform Residential Landlord & Tenant Act (URLTA): 443

○ Unless the rental agreement fixes a definite term, the tenancy is week-to-week in case of a
roomer who pays a weekly rent & in all other cases month-to-month
Some Fundamentals of the Landlord/Tenant Relationship

C. Landlord's Covenants & Warranties of Title & Possession
• Warranty - guarantee that a certain state of affairs will exist when promised
• Covenant - promise to do or refrain from doing something
• Landlord's Duties:
• Implied Covenant of Quiet Enjoyment
• Implied Covenant to Give Actual Possession
• Implied Warranty of Habitability
○ Duty to Repair
Landlord's Implied Covenant of Quiet Enjoyment: P456

• Nearly all courts hold that this covenant is implied in every leasing - both residential &
commercial
○ Tenant's obligation to pay rent is dependent on this covenant
○ Tenant may also terminate lease & recover damages if breached (breach = tenant is
evicted)
• Can be violated in 2 main ways:

i. By claims of "paramount title" P456
Basically, promise that no third person who has a better right of possession
(paramount title) than the tenant will disturb the tenant's possession
Assuming tenant has taken possession, he may not terminate the lease (or refuse
to pay rent) simply because a third party holds paramount title
□ T is estopped to deny L's title to the leased property
P452
case at If a third party asserts his paramount title in such a way that tenant is evicted,
456
tenant may terminate lease & recover damages
But can seek special damages □ Damages generally include the difference between the actual or fair rental
EX Lost profits, deterioration of
merchandise… MUST BE value of the premises & the rent agreed to in the lease, for the period
PROVEN TO ALLOW
during which the tenant is deprived of possession
There is no breach when a third person (stranger) wrongfully trespasses upon the
tenant or otherwise interferes with tenant's possession
ii. By acts of landlord, or persons claiming under him, which interfere with tenant's
possession or use of premises
Basically, promise that landlord will not personally or by an agent wrongfully
interfere with the tenant's sole right of possession
Landlord's liability for conduct of other tenants:
□ Traditional View: L is not responsible for other tenants, only for common
areas
□ Modern Trend: L is responsible for other tenants when their acts are in
violation of the lease & L could have prevented the conduct by eviction or

violation of the lease & L could have prevented the conduct by eviction or
otherwise
• No warrant for placing upon the lessee the burden of ousting the tenant wrongfully holding
over, or the trespasser in possession of the premises without color or right at the
commencement of the term
• Any actions by landlord that breach this covenant amount to actual or constructive eviction
of tenant...
Eviction:
• There must be a wrongful act by the landlord which deprives the tenant of the beneficial
enjoyment or actual possession of the demised premises P485 Constructive or actual
• Tenant must have been deprived of something to which he was entitled under or by virtue of
lease
• Landlord must have violated some duty
Lessee must Actual Eviction: 465-486

show that he was
evicted from a • Occurs only when the landlord wrongfully ousts the tenant from physical possession of the
material part of
the leased
leased premises
premisis or that • Must be a physical expulsion or exclusion
the eviction was a
material breach • Where the tenant is ousted from a portion of the demised premises, the eviction is actual,
of the lessor’s
implied covenant even if only partial
of quiet
enjoyment 488
○ Tenant can terminate the lease & refuse to pay further rent
In the case of actual eviction, even where the tenant is only partially evicted liability for all rent is suspended although the tenant
remains in possession of the portion of the premises from which he was not evicted P486
486
Constructive Eviction: (Tenant can raise this defense when landlord breaches) (exception to the
rule of caveat lessee)
Lease has covenant
• Exists where, although there has been no physical expulsion or exclusion of the tenant, the
imposing on the lessee landlord's wrongful acts substantially & materially deprive the tenant of the beneficial use &
duty to make repairs..
lessee left and claimed enjoyment of the premises
constructive eviction
Court found covenant ○ May also result from interference from common areas or from nuisance by other
did not obligate him to
make repairs ordered
tenants, which will be attributable to the landlord
by a gov’t authority
(inspector told him)
• Tenant must actually abandon possession in order to claim that there was constructive
P489 eviction
○ Tenant may terminate the lease & vacate
○ Tenant is entitled to damages, including difference between rent paid & reasonable
rental value, cost of seeking other rental, lost profits, etc.
○ Policy Implication: this may be difficult for poor tenants who cannot afford to move
elsewhere
Government may also condemn the land that tenant is occupying: (See more in Eminent Domain)
Condemnation: if government uses its right of eminent domain
• Total taking: if entire premises are taken, lease terminates & no duty to pay rent
• Partial taking: if only portion of premises are taken
○ Common law: lease is not terminated & T must continue paying rent
○ Modern trend: let T terminate lease if condemnation significantly interferes with his
use, or reduction in rent if small interference
If tenant uses property for illegal purposes & landlord knows, lease is unenforceable
Landlord's Covenant of Actual Possession: Businesses P 452 and damages

• The English (Majority) Rule:

Measure of damages • The English (Majority) Rule: Much better- intentions of parties
for breach of
undertaking ○ Covenant implied "to give" possession or to "have the premises open for possession at
possession: the
difference between
the commencement of the term"
the actual rental ○ Before tenant has legal right to take possession, he has no interest in that property at
value and the rent
reserved for the all, so it does not make sense that the tenant should have to oust anyone
period of the
P454 He who lets agrees to give possession, and not merely to give a chance of lawsuitRule adheres to the intentions of the parties
deprivation of
possession • The American (Minority) Rule: P 454
○ No implied covenant "to give" possession
○ Landlord must only deliver legal possession, not actual possession
○ Tenant has the interest so it is his responsibility & landlord is not held responsible
Tenant's Implied Covenant to Occupy: P464

• As a default rule in a "best efforts contract" if there is nominal or no consideration then there
would be an implied duty to actually occupy
○ The obligation must arise from the presumed intention of the parties as gathered from
the language used in the written instrument itself or it must appear from the contract
as a whole that the obligation is indispensable in order to give effect to the intent of the
parties; and
○ It must have been so clearly within the contemplation of the parties that they deemed
it unnecessary to express it
in cases where there
• Traditionally, in the absence of a contractual promise to do so, tenant has neither the duty to
is $0 or minimal fixed occupy the premises nor to use the premises for any particular activity But tenant still has a duty to perform the
tenant’s covenants
minimum rent then a
percentage rental ○ In "percentage-rental" leases, all or a significant portion of the tenant's rent is a
clause will be implied
percentage of gross or net income from sales made on the premises That is why the landlord would care
Duties Respecting Fitness & Repair of Leased Premises

D. The Common Law/Traditional Legal Doctrine: (Residential)
• Basically no obligations, except to deliver legal possession (see covenant of actual possession
above)
• Tenant takes premises "as is"
• Caveat emptor = "buyer beware" P473
○ A grantee who acquires title or a tenant who leases a leasehold, must watch out for
herself as to the condition of the land
○ Tenant must keep up to date with all of the codes, etc.
○ Lease was viewed as a conveyance of real property
• No covenant or implied warranty that the premises shall be tenantable, fit, or suitable for the P482
lessee's use when leased for any purpose, whether it be habitation, business, or cultivation
• Tenant had the duty to make repairs & landlord had no duty to make repairs
○ Tenant is still responsible to not commit permissive waste (See Waste in Chapter 4)
○ This allowed premises to deteriorate through "ordinary wear & tear"
• Tenant's obligation to pay rent existed independently of landlord's duty to deliver possession,
so that as long as possession remained in the tenant, the tenant remained liable for payment
of rent
○ Even if L promised to repair or warrants premises are habitable but then breaches this
promise, T must still pay rent
• Tenant can raise defense of constructive eviction (See above)
P 474 • A lessor of commercial property may not be held liable for the condition of the premises
Lessee must not
have been able to leased concerning which the lessee has the same opportunities for observation & 471
reasonably dicover
the defenct before
examination prior to entering the lease.
the lease was ○ However, lessor may be held liable for latent (not obvious) defects known to the lessor
executed
& unknown to lessee if the lessor by artifice, fraud, or reckless misrepresentations &

Parties to a lease are presumed to
contract with reference to presently
existing statutes, ordinances and
regulations… by implication the & unknown to lessee if the lessor by artifice, fraud, or reckless misrepresentations &
provisions of these become part of the
K… the parties should have equal omissions prevents the lessee from discovering the defect or knowingly fails to advise
knowledge of these ordinances etc. but
this rule does not cover knowledge of
the lessee of those defects of which the lessee would not reasonably discover by the
existing latent conditions which cause exercise of due care prior to execution of the lease Fraudulant concealment P 472
a violation of these ordinances… GAS
STATION CASE
E. The New Duties of Residential Landlords: P493

• The modern view states that a lease is essentially a contract between landlord & tenant where
landlord promises to deliver & maintain demised premises in habitable condition & tenant
promises to pay rent for such habitable premises
• Tenant's obligation to pay rent is dependent on landlord's obligation to deliver & maintain
the premises in habitable condition
1. Housing Code Approach P489

• Landlords were made liable to provide residential tenants with decent, safe & sanitary
~ Codes Enforced by
public officials
accommodations, especially in multi-family housing regardless of what the lease says or
~Still in place today unless the lease explicitly says otherwise
• Generally establish minimum standards for four different features:
○ Structural elements, such as walls, roofs, floors, windows & stairways
○ Facilities, such as toilets, sinks, bathtubs, stoves, electrical outlets, door & window locks
○ Services, such as heat, water, electricity, sewerage, garbage disposal, elevators &
repairs
○ Occupancy limits Big problem… no c/a for tenant who is the one that actually wants to enforce
Chicago has a
• Ineffective, however: if complain to Housing Board, there would be Housing Code Inspectors
housing code, and who would check on the issue, the landlord would correct it for the time being
Warranty of
habitability
2. Implied Warranties of Habitability (Modern View): 494
○ In the rental of any residential dwelling unit an implied warranty exists in the lease,
Vermont Rule vs. Missouri Rule:
~Vermont is not implied it is whether oral or written, that the landlord will deliver over & maintain, throughout the
imputed and cannot be waived
~Missouri takes into account the period of the tenancy, premises that are safe, clean, & fit for human habitation
condition before renting out,
allows a waiver,
Not implied in commercial leases Rental buildings like horizon have more resources
Safety Sanitation & Health
○ Covers all latent & patent defects in essential facilities of the residential unit
Essential facilities are facilities vital to the use of the premises for residential
VA landlord not liable
for defects caused by purposes
the tenant 495 ○ If tenant knows of a defect before he moves in, he has waived the defect & warranty
does not apply to that Not in VA- cant be said to assume the risk and no waiver of implied warranty
○ Court typically render any liability waiver clause as ineffective
492 Old view: Caveat
Lessee- tenant took
possession of demised
premisis irrespective of their ○ Implications:
state of disrepair; exception
to this rule is the doctrine of
This renders all "as is" contracts useless
constructive eviction Results in increases in rent for tenants since they are not technically covering the
cost
Rental stock will decrease since landlords will not be able to cover that cost - nicer
rental stock but more costly
495-496
• Tenant seeking to state cause of action for breach of warranty of habitability must allege
facts satisfying the following elements:
i. Entry into a lease for residential property
ii. The subsequent development of dangerous or unsanitary conditions on the premises
materially affecting the life, health & safety of the tenant - renders it uninhabitable
iii. Reasonable notice of the defects to the landlord May deduct expense of T’s own repairs from future rent
Typically must first notify landlord of the problem & give him reasonable
opportunity to correct

opportunity to correct
iv. Subsequent failure to restore the premises to habitability
• Remedies available for breach of judicially implied warranty:

496 ○ Rent Withholding - deny rent to landlord by refusing to pay it, or paying into an escrow
VA K remedies… measure of
damages are difference account
between value of dwelling as
warranted and the value of the
Offset rent withholding - tenant who believes the premises are in breach of the
dewlling as it exists in its
defective condition… fair rental
implied warranty will refuse to pay all or part of rent; when landlord attempts to
value is determined by looking oust him in action based upon nonpayment of rent, tenant will seek to offset
at agreed upon rent as
evidence 495 against the unpaid rent a claim for damages for breach of warranty
495-6○ Damages, measured by at least 3 different formulas, for annoyance & discomfort
○ Repair/remedy the defect & deduct/offset the cost against rent

Recovery of amount spent on repair
○ Termination - allows tenant to terminate the tenancy
VA rescission, Punitive damages When a landlord after receiving notice of a defect fails to repair the facility that is essential to the
health and safety of his or her tenant an award of punitive damages is proper to punish conduct
reformation, damages
(because this is a K) P
○ Contract remedies that is morally culpable P497
495 ○ Attorney's fees
• In an action for ejectment (brought by landlord against tenant) for nonpayment of rent,
tenant must show that:
1) Landlord had notice of the previously unknown defect & failed within a reasonable time
to repair it; and
Tenant is under obligation to give landlord notice of deficiency or defect not
known to landlord & allow reasonable time for correction
2) The defect, affecting habitability, existed during the time for which rent was withheld
3. Statutory Warranties of Habitability

• Can be waived by the tenant (common law warranty cannot be waived)
• Landlord obligations:
○ Put & keep premises in a fit & habitable condition
○ Keep common areas safe & lean
○ Maintain plumbing, electrical, heating, ventilating etc. facilities
○ Arrange for trash & garbage removal
○ Supply hot & cold water except where premises not required by law to have it
• Tenant remedies:
○ Force landlord to make repairs
○ Make landlord pay damages
○ If landlord fails to cure breach within 14 days, leasehold will terminate
○ Obtain injunctive relief
○ Attorneys' fees
○ Repair & deduct
• Tenant's Duties:
Pay rent
• If landlord materially breaches implied or express obligation, T is temporarily relieved
from continuing to pay rent
Keep premises in reasonably good repair
• Must not commit waste
Removal of fixtures is voluntary waste

Removal of fixtures is voluntary waste
Duty to repair at common law
• Landlord's Remedies:
Security deposit
Rent acceleration clause
Eviction
Damages
Abandonment
F. The Retaliatory Eviction Doctrine

• Landlord may not evict a residential tenant for failure to pay rent as retaliation for tenant's
reporting a housing code violation to appropriate authorities
• 5 Elements for Retaliatory Eviction:

1. Protective housing statute embodying a public purpose to insure proper conditions of
housing
2. Landlord is in business of renting residential property
3. Tenant is not materially in default performance of his obligations under the lease at the time
landlord acts
4. Tenant is not materially in default performance of his obligations under the lease at time
landlord acts
5. Tenant complaint was made in good faith & with reasonable cause
• Policy Reasons:
The intent of Acts would be frustrated because tenants would be reluctant to report
violations of health department regulations or to assert their rights under the Act
Fear of reprisal by landlords must be eliminated
Because of unequal bargaining power, low-income tenants must already accept substandard
housing
• The issue of how long retaliatory action can last then (would tenant have rent control the rest of
his life?)
Landlord needs to prove that acts are not isolated toward that one tenant, but rather he
increased rent for all, for example
Therefore, this doctrine is easier to apply to multi-unit landlords as opposed to one that only
rents one property
• URLTA - Retaliatory Conduct Prohibited

Landlord may not retaliate by increasing rent or decreasing services or by bringing or
threatening to bring an action for possession after tenant has complained
G. Regulation of Security Deposits

Security Deposits:
Deposit at the commencement of the leasehold to be applied at the end if the tenant leaves
the premises in damaged or dirty condition or has unpaid rent
Usually only in residential tenancies
Owner shall provide resident with an itemized written list of deductions from the deposit &
balance within 30 days of termination of tenancy
If owner fails to provide this, the owner:

If owner fails to provide this, the owner:
○ Shall forfeit to withhold any portion of the deposit
○ Shall forfeit the right to assert any counterclaim in any action brought to recover that
deposit
○ Shall be liable to the resident for court costs & reasonable attorneys' fees
○ Shall forfeit the right to assert an independent action against the resident for damages
to the rental property
Policy Implications:
○ Some landlords may not rent anymore because the damages will exceed one month's
rent (a typical security deposit) or may segregate the market
○ To fix this, can make a nonrefundable fee to cover any potential additional costs
Landlord's Tort Liability

In general, no landlord tort liability
Tenant has exclusive possession & therefore exclusive responsibility
Traditionally (Common Law) the law has placed upon the lessee & not the landlord as the person in
possession of the land the burden of maintaining the premises in a reasonably safe condition to
protect persons who come upon the land
The tenant as possessor had the burden of maintaining the premises in good repair
Landlord was not liable for personal injury to tenants or others caused by dangerous
conditions, even if negligent
Modern Trend is that reasonable care by landlord is required in maintaining premises as safe
There are some exceptions however where landlord will be liable:

i. Undisclosed/concealed (latent) dangerous conditions known/should be known to landlord &
unknown to tenant
○ Involves some unreasonable risk of harm
○ Landlord is liable if he conceals or fails to disclose a dangerous defect of which he was
aware
Landlord can limit liability by informing tenant & making the defect patent &
known
Landlord can also limit liability if tenant had reasonable time to find out about it &
should have known about it
○ Landlord has no duty of inspection to try & discover latent defects
ii. Conditions dangerous to persons outside of the premises
○ By definition the landlord has exclusive possession of that area & not the tenant
iii. Premises leased for admission of the public
○ Patent defect that may harm the general public who does not have an obligation to
check for defects as the tenant does
○ Landlord responsible for any condition that existed at the time leasehold was created
○ Tenant has obligation to inform landlord of any obvious defect otherwise he will be
held liable too
iv. Part of land retained in landlord's control which tenant is entitled to use
○ Landlord liable to use reasonable care to keep common areas safe
○ Individual tenants have no incentive or duty to keep common areas clean, safe, etc.
v. Where landlord contracts to repair
○ Breach of contractual duty
○ Liable if fails to use reasonable care & T or third person is injured
vi. Negligence by tenant in making repairs

vi. Negligence by tenant in making repairs
○ If L attempts to repair, he will be liable if repair is done negligently
Majority Rule:
• Liability based upon ordinary negligence - landlord is liable to the tenant or to others for
injuries on or about the premises if the landlord failed to exercise reasonable care in all the
circumstances
3 Views: Why then should not a landlord be liable on some basis if injuries are caused by his breach
of a judicially or statutorily imposed duty to repair?
1) Landlords should not be liable in tort for injuries caused by breaches of implied or statutory
warranties
2) Landlord is strictly liable for such injuries caused by a defect at the time the leasehold
commenced
3) Landlord is liable for injuries:
a. Caused by breach of an implied or statutory warranty if she negligently or unreasonably
fails to make the required repairs
b. Restatement: if landlord breaches an implied warranty or statutory duty to repair, if this
is the cause of the injury, if he has failed to exercise reasonable care to repair the
condition - negligent per se
Exculpatory Clauses:
○ Designed to relieve landlord of liability he would otherwise have for personal injuries or
property damage caused by tenants by defective conditions on the premises or on common
areas
Is a hold-harmless clause = waiver of liability
○ Typically very narrowly interpreted
Void in residential leases but still enforceable in commercial leases
○ Factors influencing the court’s enforcement of exculpatory clauses:
Disparity of bargaining power
Standardized preprinted contract
No actual negotiation over the clause
No opportunity for tenant to purchase greater protection at a higher price
Varies too greatly from the standard duty
Landlord's Liability for Criminal Acts:

○ Courts typically look to foreseeability - history of criminal activity that points to the
probability of its occurring where it occurred, on the leased premises or associated common
areas
Prior crimes must be of kinds that involve violence or the threat of violence
○ No court has made landlords strictly liable to tenants for criminal acts - they are not insurers
of tenant's safety
○ Dominant theory of liability is the torts doctrine of negligence
This implies landlord's duty to tenant to maintain the place
○ This varies a lot depending on the state Assignment Sublease
Assignment & Subletting

Assignment:
• Transfer for the whole balance of the unexpired term, with respect to all of the originally
leased premises & on exactly the same terms as those under which the main lessee held
• Creates a "privity of contract" between assignor (old tenant) & assignee (new tenant) - they
have estates that adjoin each other in time

have estates that adjoin each other in time
• Original Tenant (Assignor) Rights & Liabilities
○ No longer in "privity of estate" with landlord because that terminates upon successful
assignment
○ Still in "privity of contract" with landlord
So still liable for covenants in lease, even after successful assignment
□ Unless landlord agrees to a novation releasing original tenant from
contractual promises & substitutes in assignee
○ Secondary obligation to landlord, behind the assignee
Becomes a surety, so original tenant is liable if assignee fails
If landlord sues original tenant for rent, original tenant can then sue new tenant
for that rent
• Assignee's (New Tenant) Rights & Liabilities
○ "Privity of estate" is created with landlord upon assignment, so both can sue each other
Assignee becomes liable to perform those covenants of the lease that run with
the land
Landlord also becomes liable to perform his covenants that run with the land
○ No "privity of contract" exists between assignee & landlord
○ New tenant has "primary" obligation to original landlord & the original tenant/assignor
has "secondary" obligation
○ If new tenant (T2) then reassigns to a third tenant (T3), this second tenant is no longer
in privity with landlord & is not liable because the third tenant is now in privity with
landlord
T2 liable only for period when he is in actual possession
• If T2 assumes the lease, he expressly promises T1 that he will obey all terms of original lease
○ T2 is then liable to both L & T1 for all of T1's obligations, including those accruing after
T2 reassigns to T3
Sublease:
• Transfer for a period shorter than the unexpired balance of the term & relates to a physical
part only of the originally leased premises & is on terms materially different from those
stipulated in the main lease
• If A leases to B (sublessor) who then leases to C (sublessee):
○ Privity of contract & privity of estate remain between A & B
B still liable to A for all covenants in original lease
○ Privity of contract & privity of estate are created between B & C
• No "privity of estate" or "privity of contract" between C (sublessee) & landlord (A)
○ C not liable to landlord for rent or covenants running with land
Sublessee (C)cannot sue or be sued by landlord (A) because no "privity of
contract" or "privity of estate"
○ C liable to B for all covenants contained in sublease
Sublessee (C) simply "carves out" a portion of the original leasehold from B
Privity of contract - two parties have agreed between themselves to do or not do something; they
have a contract
Privity of estate - means of binding someone to an agreement he did not personally make
Majority Position - tenant's retention of a power of termination does not qualify a transfer as a
sublease; power of termination is too insubstantial an interest to amount to the tenant's retention
of an estate

of an estate
Minority Position - a right of reentry is a reversionary interest sufficient to qualify a transfer of
rights as a sublease rather than assignment
Approval Clauses: landlord may state he must give consent for an assignment or sublease
• Majority view - even if the lease says landlord has an unconditional right to refuse consent,
the consent may not be withheld for unreasonable reasons - can only withhold consent for a
commercially reasonable objection
• Minority view - consent may be withheld unreasonably & for any reason at all
If lease is silent as to a standard for approving, majority - landlord may withhold permission only on
commercially reasonable ground
3 justifications for the Majority Rule:

1. Lease is a conveyance of an interest & the landlord personally selects the tenant & is under
no obligation to look to anyone but the tenant for rent
2. An approval clause is an unambiguous reservation of absolute discretion in the landlord over
assignments of the lease
○ Law shouldn't rewrite the contract
3. Stare decisis
○ Courts shouldn't depart from common law majority rule
• 2 forces driving a change away from Majority Rule:

1. It is becoming more necessary to permit reasonable alienation of commercial space
○ The rule is not absolute in application - only forbids unreasonable restraints
2. A lease is viewed as a contract
○ There is a duty to act in good faith & fair dealing
○ An unreasonable refusal to consent destroys the basic of the contract
• Things landlords want to do regarding assignment/sublease:

Landlords should be sure to include a "right of entry" in their contract
Since restraints on alienation are narrowly construed - landlord must address both
assignments & sublets
Use "including but not limited to" provisions for as to why they can refuse to consent
To ensure the tenant will not charge more than what you charge for rent, include a profit-
sharing clause or recapture clause that entitles landlord to some of that money
Include a clause that indexes rent to inflation rate or to surrounding property values
General repair clause:

• Either landlord or tenant agrees to make all repairs 482
Redelivery clause:
• Tenant agrees to redeliver the premises in a certain condition 483
Casualty-loss exception:
As well as
repairs for
• Except the tenant from liability for repairs of casualty loss not the fault of the tenant
wear and • Without it, the tenant is responsible to repair, not only damage to the premises from
tear
casualty loss(fire, storm, etc.) but completely rebuild the premises if they are destroyed
by casualty
• Destruction due to a casualty that was not the landlord's fault means tenant must still
pay rent
Termination of Leaseholds
H. Termination by Notice

H. Termination by Notice
• Periodic tenancy continues until one of the parties terminates it by advance notice to the other
The advanced time may vary but is typically one rental period prior to termination date
This may result in an unlawful detainer - remaining in possession after validly terminating a
month-to-month tenancy
• Unlawful Detainer:
When any person shall willfully & without force hold over any lands, tenements or other
possessions, after the termination of the time for which they were demised or let to him, or
the person under whom he claims
• 2 ways in which the "one additional period" could be interpreted:

One additional period from the date that notice was actually give
One additional period from that next starting date of the next period
○ Restatement - "if the date stated in the notice is not the end of a period or is too short a
time before the end of a period, the notice will be effective to terminate the least at the
earliest possible date after the date stated"
• A notice to terminate should contain:

A statement that the party giving it, landlord or tenant, elects to terminate the tenancy
A description of the premises, adequate to meet any requirements for description of state
law
Reference to the time of termination, either to a specific date or to the end of the next period
of the leasehold that is the statutorily required time from the date of service
The date of the notice
A signature by the landlord or her designed agent or by the tenant, as the case may be
I. Summary Eviction Statutes - if L is entitled to terminate the lease & regain possession (holdover
tenant) P592
1. Forcible Repossession
• Historically a landlord was entitled to take back property could enter & use any necessary
force to evict tenant
○ Forcible entry to take possession was then made a crime
• US had Forcible Entry & Detainer (FED) statutes which made it a criminal offense to forcibly
oust another & gave remedy; also gave landlords a summary judicial proceeding
○ Protects tenant's interest in maintaining possession by ensuring him an opportunity to
challenge landlord's legal grounds for eviction while at the same time enabling landlord
to more quickly evict
• Majority/American Rule:
○ Mandatory Judicial Proceeding: forbids landlord from using any form of self-help &
requires landlord to resort to judicial remedy to evict a tenant
○ 5 days & it goes to court; tenant must show; tenant can ask for 2 additional days;
tenant has burden of proof
• Minority/English Rule:
○ 'Peaceful' Self-Help: allow landlords to use some degree of self-help when seeking to
regain possession of residential property
2. Summary Actions for the Recovery of Possession

• ISSUE: Whether the FED is unconstitutional?
• Appellant attacks 3 aspects of the statute:
i. Requirement of a trial no later than 6 days after service of complaint

i. Requirement of a trial no later than 6 days after service of complaint
ii. Limitation on triable issues in an FED suit to tenant's default & to preclude
consideration of defenses based on landlord's breach of a duty to maintain premises
iii. Requirement of posting bond on appeal from an adverse decision in twice the amount
of rent expected to accrue
• Denied due process because rental payments are not suspended while the wrongdoings of
landlord are litigated.
• Court reasoning: It is not an unduly short time for trial prep & both tenant & landlord are
barred from certain claims.
• HOLDING: All issues except #3 are constitutional. Bad public policy to require the poor to pay
more rent.
J. Abandonment & Surrender

• Abandonment:
Tenant leaves the premises & stops paying rent
Lease does not cease due to abandonment
○ Landlord may choose to treat abandonment as a surrender
• Surrender:
Landlord or tenant may terminate a leasehold before the end of its normal term by
agreement
Must be sure to do this with the proper formalities
• Surrender by Operation of Law a.k.a. Abandonment & Surrender:

First, tenant quits the premises before the end of the term without the intent to return -
abandonment
○ This is viewed as an offer to the landlord to terminate
Landlord has 3 options then:
1) Ignore & Collect
Do nothing and therefore not accept the offered surrender
2) Mitigation*
Re-enter & attempt to mitigate by re-letting the premises "for the tenant's
account"
□ Tenant owes the missing rent (T paid $1000 but new tenant only pays $800 -
T responsible for additional $200 plus any costs like advertising etc. to get a
new tenant)
□ Even if no new tenant is found, original tenant will still be liable for rent
□ Landlord may attempt to mitigate but the court can interpret that he has re-
entered & released (#3) instead
3) Re-enter & Release tenant from obligations
To accept the offered surrender by taking back the premises "for the landlord's
own account"
One potential solution would be to keep only option #2 & require landlord to attempt to
mitigate
• Anticipatory repudiation - (anticipatory breach of the lease) uses contracts theories

• Acceleration clause - landlord can bring an anticipatory repudiation; at that moment, the
breaching party is liable for all benefits that were to accrue to the non-breaching party under
this contract; if you get 90 days behind paying, going to accelerate your obligation to pay
• If none he must go to court to collect the rent every month

• Landlord has a duty to make reasonable efforts to mitigate damages
Lease possesses elements of both a contract & conveyance - lease is not a complete
conveyance to the tenant for a specified term such that the landlord's duties are fulfilled
upon deliverance of the property to the tenant; a promise to pay in a lease is the same as any
other contract, & a breach of that promise does not necessarily end the landlord's ongoing
duties
Majority: L does have a duty to mitigate & if he does not, tenant is off the hook
○ Traditional: L has no duty to mitigate
Policy Reasons:
○ Requiring mitigation discourages economic waste & encourages productive use of
property
○ Helps prevent destruction of or damage to the leased property
○ Consistent with the trend disfavoring contract penalties
• Issues with this include:
What level of conduct by landlord will satisfy the duty to mitigate - objectively reasonable
efforts to fill premises with a suitable tenant under the circumstances
Tenant bears burden of proof to demonstrate that landlord has mitigated or failed to mitigate
damages & amount by which landlord reduced damages
Which types of actions by the landlord the duty will apply - 4 causes of action against tenant
for breach of lease & abandonment:
○ Landlord can maintain lease, suing for rent as it becomes due
○ Landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the
present value of future rentals reduced by the reasonable cash market value of the
property for the remainder of the lease term
○ Landlord can treat the breach as anticipatory, repossess, release the property, & sue
tenant for the difference between contractual rent & amount received from the new
tenant
○ Landlord can declare the lease forfeited & relieve tenant of liability for future rent
• Tenant's Fixtures:
Chattels that are more or less affixed to land that, by annexation & accession, lose their
identity as chattels & become part of the real property; passes with conveyance of the land
Criteria to determine whether a chattel has become a fixture:
○ Actual annexation to the realty, or something appurtenant thereto
○ Appropriation to the use or purpose of that part of the realty with which it is connected
○ Objective intention of the party making the annexation to make the article a permanent
accession to the freehold - inferred from the nature of the article affixed, the relation &
situation of the party making the annexation, the structure & mode of annexation, &
the purpose or use of which the annexation has been made
○ Normally physically annexation to the land is required, but close relation may suffice
Residential side:
○ If the physical structure of the underlying structure is altered, then that chattel
becomes a fixture
Commercial side:
○ Modified by the doctrine of trade fixtures - commercial leases are much more
specialized than residential leases
○ Tenants can do whatever they want generally as long as, when they leave, everything is
put back the way it was found
• Governmental Activities in The Housing Market

• Governmental Activities in The Housing Market
1. Rent Control
• Imposing a price ceiling on how much landlords can charge tenants for rent
○ This creates a public good of affordable housing, the cost of which is borne by the
landlords who are losing on that profit
○ This is a taking if a reasonable rate of return if not met - if landlords have to charge
anything less that allows them break even (government is taking away that rent that
landlords would have been making)
• Not unconstitutional per se
2. Regulations Against Discrimination in Housing

• Fair Housing Act of 1968:
○ Makes it unlawful for any person, on account of race, color, religion, sex, national
origin, age, familial status, or handicap to discriminate in any way
○ There is an exception for the sale/rental of a single-family house sold/rented by owner
under certain circumstances
○ There are "zoning" districts however that permit only certain kind of uses

Implied Covenant of Quiet Enjoyment: always runs
Common Law: Modern Trend:
Implied in both residential & commercial Implied in both residential & commercial leases
leases
Landlord not responsible for other tenants, Landlord is responsible when other tenants violate the lease &
only the common area landlord could have prevented it
Implied Covenant of Possession:

American/Minority View: English/Majority View:
Landlord must only give legal possession Landlord is implied to give actual possession
Covenant to Occupy by Tenant:

Traditional: Default:
No duty to occupy Implied duty to occupy, especially in "best efforts contract"
Implied Warranty of Habitability: always runs

Common Law: Modern:
"Buyer beware" & landlord under no obligation to Implied Warranty of Habitability exists in all residential
deliver habitable premises leases & is unwaivable
- Tenant has duty to repair & not commit - Landlord has duty to repair & maintain for both
voluntary waste latent & patent defects
- Tenant has to pay rent as long as he occupies - Tenant's duty to pay rent is dependent on landlord's
the premises, regardless of landlord's breach obligation to deliver & maintain habitable conditions

Chapter 6: Covenants Running With Interests in Land
Covenants:
Original covenants were covenants under seal
Covenants deal with nonpossessory rights & interest that grow out of promises made by
landowners & attached to a property interest
○ Covenant - promise to do or not do something that "runs" to some other property interest
In a covenant, landowner says "I hereby promise you that my use of my land will be
restricted as follows..."
Standard contract remedies of damages & injunctions (equity) are available, but no
forfeiture remedy (eviction)
○ Condition - implies that a breach may result in termination of the breaching party's interest
in the land
Has a forfeiture remedy - can evict the tenant
○ Easement - grant a right to use land or do something for a specific purpose on somebody
else's property (cut through yard to access beach)
Can attach to property
In an easement, landowner says "I hereby grant to you the right to use my land as
follows…"
A negative reciprocal easement is the same as a restrictive covenant - give their holder
a right to prevent some particular use there
○ Both easements & covenants are called servitudes
○ Both are subject to Statute of Frauds & both have equitable remedies available
Every covenant has both a benefit (held by promisee) & a burden (binding the promisor)
Steps for analysis:
Identify which parcel or interest in the land is benefitted & which is burdened by the covenant in
question
Determine whether either or both of those parcels or interests have been transferred
Decide whether we need to determine whether either the benefit or burden (or both) runs
Types of Covenants:
Negative Covenant:
○ Prohibit one of the parties from doing some act
Affirmative Covenant:
○ Require one of the parties to perform some act
Restrictive Covenant:
○ Prohibit one of the parties from using the property in a particular manner
○ Typically disfavored, but required to be enforced when the restrictions are unambiguous &
don't violate public policy
○ A covenant that did not originally violate public policy can begin to violate it if the
surrounding area changes in ways that are so radical in nature that the original purpose of
the covenant has been defeated
Personal Covenant:
Creates a personal obligation or right enforceable at law only between the original covenanting
parties

parties
Real Covenant that Runs with the Land:

Creates a servitude upon the land subject to the covenant (the servient estate) for the benefit of
another parcel of land (the dominant estate)
May be enforced at law or in equity by the owner of the dominant estate against the owner of the
servient estate, whether the owners are the original covenanting parties or successors in interest
○ One who is not the promisee is allowed to enforce a contract respecting the land, or is not
the promisor but is still bound by it
Covenant to pay rent always runs with the land
See Assignment 32 Handout
Elements of Running Covenant:

1) Touch & concern
○ Covenant must relate to the direct use or enjoyment of the land
○ If it states "on the premises" then it will automatically touch & concern because it cannot be
done anywhere else
2) Intent
○ The original covenanting parties intended the benefits & burdens of the covenant to run with
the land
3) Privity
○ There is privity of estate between the party enforcing the covenant & the party against
whom the covenant is being enforced
a. Horizontal
The original parties to the covenant: relation between the covenant's promisor &
promisee
Always present in landlord-tenant covenant cases
b. Vertical
Succession of interest in land from grantor (original tenant) to grantee (new tenant
thru leasehold)
Exists on the tenant's side only if the full estate or interest of the original party to the
covenant is transferred to his successor - i.e. if the transfer is an assignment & not a
sublease
□ If T1 passes the whole interest in property (assignment) there is vertical privity
□ If T1 passes less than the whole interest in property (sublease) there is no vertical
privity
Landlord 1 ------horizontal privity------Tenant 1 (assignor) who then assigns to
Tenant 2 (assignee) which creates vertical privity
• If the covenant runs, Landlord 1 can sue Tenant 2

• If the covenant does not run, Landlord 1 must sue only Tenant 1
"Privity of estate" exists with assignee (new tenant) & landlord - both can sue each other
○ Assignee becomes liable to perform those covenants of the lease that run with the land
○ The new tenant/assignee has "primary" obligation to original landlord & the original
tenant/assignor has "secondary" obligation
This is a suretyship relationship so assignor is liable if assignee fails

This is a suretyship relationship so assignor is liable if assignee fails
There still exists a "privity of contract" between original landlord & original tenant (now assignor)
○ Unless landlord agrees to a novation releasing original tenant from his contractual promises &
substituted in the assignee
○ No "privity of contract" between assignee & landlord
Covenants Between Landlord & Tenant

When a person other than lessee is in possession of leased premises paying rent to lessor, there is a
presumption that the lease has been assigned to the person in possession
• This implied assignment is regarded as effective to form the basis for the running of covenants in
the lease so as to burden or benefit the assignee
• A person in possession who holds himself out to landlord as assignee & behaves as assignee is
estopped from denying the assignment or objecting that the assignment was not in writing - makes
no different whether the assignment is express or implied
2 tests for "touch & concern" in leasehold estate

• The Bigelow Test: if the legal relations in respect to the land are changed at all, the benefit/burden
of the covenant touches or concerns the land
• Clark/Practical Test: if an average person accepting assignment of the lease would regard the
covenant as intimately bound up with the land, then it should be fulfilled
See handout on ecommons
In an assignment:
• Original tenant remains liable to landlord for all covenants of original lease, because still in privity
of contract
• New tenant is liable to landlord for covenants that only run with the land
• Landlord is liable to new tenant for covenants that run with the land
• A new landlord will still be bound by an obligation to repair & implied warranty of habitability
In a sublease:
• Original tenant remains liable to landlord for all covenants of original lease
• New tenant is liable to old tenant for covenants in the sublease & has no obligation to landlord
• Landlord and new tenant cannot sue each other
The original tenant who assigns the leasehold does not escape liability on the lease covenants upon
assignment
• Original tenant remains in "privity of contract" but no longer "privity of estate" - still has
contractual duty
• The new tenant becomes the principal obligor for payment of rent & future performance of
covenants, & original tenant assumes position of surety toward landlord
○ T1 is secondarily liable & T2 is primarily liable
• In a sublease, subtenant cannot get damages for breaches of covenants made by the landlord in
the master lease
• Landlord cannot recover damages against the subtenant for breaches of the covenants made
by the original tenant in the master lease
• May be released of liability in 2 ways:

○ Novation - express release of liability by landlord
○ Modify the lease terms by the landlord & assignee (new tenant) without original tenant's
consent after assignment has taken place

consent after assignment has taken place
Uniformly held that implied covenants (quiet enjoyment & warranty of habitability) are no longer
binding on a landlord who has transferred the premises, unless the breaches somehow resulted from his
conduct
Assignee (new tenant) will be able to enforce landlord's obligations even though she never dealt directly
with him
• The original tenant typically cannot enforce covenants against landlord - only able to during the
time he held the benefitted property interest
A covenant by tenant to insure premises for landlord's benefit is "personal" & does not touch & concern
the tenant's estate, unless there is also some obligation to use the insurance proceeds to repair physical
damage
• Tenant's covenant to pay money will touch & concern only if money must be used on the land
itself
• Covenant not to compete does touch & concern the land
Restatement entirely abandons the touch & concern requirement
Courts are torn on what happens between Landlord 1 & Landlord 2:

i. Some say that L1 must remain a surety for L2 just as T1 remains a surety for T2
ii. Some say L1 is liable to the extent that the obligation still concerns L1 & there is still something he
can do
iii. Some completely let L1 off the hook & hold the surety relationship exists only on tenants side but
not landlords
Suppose a lease provides that landlord's consent must be obtained for any & all assignments
• Say T1 assigns to T2 with landlord's consent although T2 does not assume T1's lease covenants
• Then assume T2 assigns to T3 without obtaining consent
○ T2 Is still released from further liability, on the ground that even an unconsented assignment
is still an effective assignment
After T1 assigns, T2 becomes primarily liable & T1 is treated as a surety

For breaches that occur after the assignment, landlord is entitled to bring action against T1, T2, or both
of them at his discretion
• However, T2 is liable only for covenants which touch & concern & for those that T2 has expressly
assumed
• If landlord recovers delinquent rent or damages from T1, since T2 is primarily liable, T1 can then
bring action against T2 for reimbursement
• If landlord recovers from T2, T2 has no corresponding right to reimbursement from T1
○ Obligation to reimburse runs in only one direction, from principal (T2) to surety (T1)
Assumption:
• A promise by T2 to become personally liable on the lease covenant
• Not automatically part of every assignment but must be specifically agreed to by T2
• Gets rid of T1's estate & liability for the burdens of covenants that run with estate
○ T2 will continue to be bound by the contractual liability that arises out of the assumption
agreement
○ Landlord is beneficiary to the assumption agreement & therefore can enforce it
• Broader than a running covenant doctrine because it can include any provisions you want
• Can assume personal covenants that don't run with the land (an assignment carries with it the
assumption of real covenants but not personal covenants)

assumption of real covenants but not personal covenants)
• If the original or "master" lease is terminated, any assignment or sublease deriving from the
master lease is terminated as well
• From landlord's view, assumption agreements are better than running covenants for 2 reasons:
○ They can apply to all of the tenant's covenants in the lease, not just those that touch &
concern the land
○ An assumption agreement survives a reassignment by the assignee, while running covenants
do not
• In a sublease neither the benefits nor burdens associated with T1's estate will run "at law" to T2
○ Subtenant cannot get damages for breaches of covenants made by landlord in master lease
Covenants Between Owners in Fee

The use of land generates externalities - economic benefits & detriments that fall upon other nearby
land owners whether they like it or not
Why covenants should be able to run with the land:
○ If a landowner who generates negative externalities & the nearby landowners who are
impacted by those externalities are able to negotiate freely with each other, they may be
able to enter into a contract which will produce an "efficient" result in the sense that all of
the landowners as a group will be better off
○ The law ought to enforce these covenants that run with the land since it has the potential for
economic efficiency
○ Otherwise, the contract becomes a worthless nullity & there is no incentive for negotiations
Why covenants should not be able to run with the land:

○ Courts worry that covenants which restrict the use of land, particularly indefinitely, may put
real estate in a "strait jacket" preventing its use in the future for highly desirable purposes
○ Public policy favors the free use of land & restrictive covenants are strictly construed
Example to illustrate why covenants should run with the land:

If one neighbor does something that changes the character of the neighborhood, causing:
○ Other neighbors to lose value to their house - individual house worth before v. after
○ Lost value of the whole community - all houses together worth before v. after
Entire neighborhood would be better off if there was no change & everyone agrees to certain
things
○ Economically they can pay off the one neighbor so everyone is better off
○ Helps to not create externalities
○ No free riders are created when wanting to pay off the one neighbor
○ Since land is fixed we want to protect it as it is
With covenants between fee simple owners, an owner is no longer liable for breaches that occur after
divesting himself of the property
Remember the steps for analysis:

Identify which parcel or interest in the land is benefitted and which is burdened by the covenant in
question
Determine whether either or both of those parcels or interest have been transferred
Decide whether we need to determine whether either the benefit or the burden (or both) runs
A. Running Covenants at Law

Runyon v. Paley Case

Runyon v. Paley Case
Runyons cannot sue Paleys because Runyons are merely a third party beneficiary
No matter how well defined third party beneficiaries are, they cannot sue
The only interest in land held by Runyons was acquired by them on the 8th prior to the creation of the
covenant on the 9th
Runyons have not shown vertical privity of estate between themselves and Paleys
Runyons were not parties to the covenant & therefore may not enforce the covenant as a real
covenant running with the land
○ Runyons & Williams would have to "add" their property together to become a successful
Plaintiff
If Gaskins conveyed to the Brughs first and then the Runyons second, the Runyons would be able to sue
because there would be horizontal privity
Requirements for Covenants to Run at Law:

○ Touch & Concern:
Covenant must be of a nature as to "inhere in the land" or concern the premises & mode of
occupying them
It is essential that the covenant in some way affect the legal rights of the covenanting parties as
landowners
○ Must be so related to the land as to enhance its value & confer a benefit upon it, or
conversely impose a burden upon it
○ Covenants that affect the physical condition or use of land are nearly always held to touch &
concern
○ Covenants to provide utilities or services to a parcel of land have generally been held to
touch & concern
It is not necessary that the covenant have a physical effect on the land
○ It is sufficient that the covenant have some economic impact on the parties' ownership rights
(either positive or negative)
Where the burdens & benefits created by the covenant are of such a nature that they may exist
independent from the parties' ownership interests in land, the covenant does not touch & concern
A use restriction does not always touch & concern the dominant estate
There is disagreement over a covenant running with the land a) only if it touches & concerns both
the burdened & benefitted land, or b) if either is met, it may still run
○ A covenant "in gross" means there is no benefitted land
○ Privity:
Where a covenant is sought to be enforced by someone not a party to the covenant or against
someone not a party to the covenant, the party seeking to enforce the covenant must show that

someone not a party to the covenant, the party seeking to enforce the covenant must show that
he has a sufficient legal relationship with the party against whom enforcement is sought to be
entitled to enforce the covenant
a. Horizontal privity - privity of estate between the covenantor & covantee at the time the covenant
was created
4 approaches about what relationships constitute horizontal privity:
1) A relationship of tenure
□ Only form traditionally recognized by English courts
□ Landlord-tenant relationship between original parties was necessary; only way
2) Simultaneous interests
□ Horizontal privity exists if the parties have simultaneous interests in the same parcel of
land & the covenant relates to those interests
3) Instantaneous privity
□ Horizontal privity exists if the covenant is placed in or executed as part of same
transaction as a deed conveying one of the affected parcels of land or some interest in
them
4) No horizontal privity required
□ Only vertical privity is required
b. Vertical privity - privity of estate between the original covenanting parties & the current owners of
the dominant & servient estates
The entire physical mass of the estate does not need to pass on the to plaintiff, but the legal depth
of the estate has to be passed on to the plaintiff
The full estates of the original parties to the covenant must pass to the individuals by & against
whom enforcement of the covenant is sought
○ Remember: there is vertical privity in assignments only, not in subleases
If both the benefitted & burdened parcels have been transferred after covenant's formation,
vertical privity on both must be shown
Problematic: 3 situations in which its absence may prevent enforcement of covenant:
1) Transfer of less than the predecessor's full estate
2) Adverse possessors
3) Third party beneficiaries (Runyon)
○ Intent:
If it can reasonably be inferred from the language of the instrument
Intent must be ascertained from the deed or other instrument creating the restriction
When the language used in the instrument is ambiguous, in determining parties' intention, court
looks to:
○ Language of the instrument
○ Nature of the restriction
○ Situation of the parties
○ Circumstances surrounding their transaction
Restrictions in a deed will be regarded as for the personal benefit of the grantor unless a contrary
intention appears & the burden of showing that they constitute covenants running with the land is
upon the party claiming the benefit of the restriction
○ Writing
Covenants to Pay Money:

You would want a covenant to pay money to run with the law & not at equity
○ At equity, you would not be able to recover that lost money, can only recover with an
injunction or declaratory action

injunction or declaratory action
Elements for covenants to pay money to run:
○ Burdened properties must have a property interest (not merely a license) in the benefitted
property
○ The co-owners of the burdened property have to have control of the management of the
benefitted property
Affirmative covenants to pay money, other than rent, usually did not run at the common law
Forms of Common-Interest Communities: (Also see Handout Assignment 35)

1) Planned Unit Development (PUD) - Homeowner's Association
○ Each owner holds title to his dwelling unit
○ Title to common areas is held by the owner's association
○ Easement of use of common areas is granted to benefit each dwelling unit
2) Condominium
○ Each owner holds title to his dwelling unit
○ Each owner holds an undivided fractional share of the common areas as tenants in common
○ Owner's association has maintenance responsibility for the common areas, but does not own
any interest in them
3) Cooperative Apartment
○ Owner's association holds title to the entire project, including all dwelling units & common
areas
○ Each individual dwelling unit owner holds a share of stock in the association along with an
inseparable "proprietary lease" that represents the right of possession of the dwelling unit
○ Association is responsible for maintenance of the entire project except interiors of individual
units
B. Equitable Servitudes = Covenants Running at Equity

Covenant at Law Elements Covenant at Equity Elements
Touch & concern Touch & concern
Intent Intent
Both Vertical & Horizontal Privity: therefore, no third party Real or Constructive Notice: therefore
beneficiaries third party beneficiaries are ok, as
long as they are explicitly clear
Remedy: can only get money damages Remedy: can get injunction or
declaratory relief
There can Covenant Running at Equity: Disadvantage: No $; Advantage: no privities (back fence agreement can be undertaken)
SOMETIMES BE 3rd
part beneficiaries • A covenant can be enforced against a successor of burdened land who acquired the land with
3rd party must be:
plausible and
notice of the servitude
identifiable & limited ○ 3 ways to get notice:
1) Actual knowledge, as when seller of land informs the buyer before the closing that
there is a covenant restricting its use
2) May be apparent from the appearance of the property & everyone who buys land is
deemed to look at it first
3) Constructive notice, when it may be documented in the chain of title which is deemed
to be notice to anyone acquiring the land
□ Through abstract - compiled summary of all of the publicly-recorded documents
affecting the land in question
• Question is not whether the covenant runs with the land, but whether a party shall be permitted
to use the land in a manner inconsistent with the contract entered into by his vendor & with notice

to use the land in a manner inconsistent with the contract entered into by his vendor & with notice
of which he purchased
• Clearly defined third party beneficiaries are acceptable as enforcers of equitable servitudes
Back Fence Agreement:

• Agreements between people with whom you have no business relation with
○ This cannot be done for a covenant running at law because it involves no sale or exchange of
interests & therefore no privity of any kind
○ Can technically create privity by utilizing a straw man - sell to him & have him sell back, with
that transaction involving a covenant, therefore creating privity
• Third party beneficiaries can sue in covenants at equity
C. Enforcement in Subdivision & the "Common Plan"

In subdivisions, it is usually desirable to impose the same restrictive use covenants upon every lot
Common plan consists of:
Group of lots or parcels that are
Clustered nearby one another, and
Most or all of them are burdened by similar or identical covenants
If there is no express statement in the covenant as to what land is benefitted by it, courts tend to
assume that whatever land O retained in the vicinity is the benefitted land, provided that it actually gains
some practical benefit from the covenant
The extent of the common plan is usually taken as the outer limit of the benefitted land; hence if there is
a common plan, land that is outside of it is usually held not to be benefitted by the covenants
People can be put on constructive notice of a covenant through an abstract - a compiled summary of all
of the publicly-recorded documents affecting the land in question
Four distinct uses of the common plan:

1) Defines the extent of the benefitted land; land outside the common plan isn't benefitted
2) Allows courts to include, as part of the benefitted land, lots that had already been transferred by
the developer to other owners at the time the covenant was imposed on the burdened lot in
question
3) Allows courts to "imply" a covenant on a lot which had no express covenant imposed upon it by
the developer
4) As carried out by actual & visible construction of houses or other improvements, gives notice of
implied covenants to persons who buys lots burdened by such covenants
Without a common plan, covenants on subdivision lots are simply unenforceable as between the lot
purchasers
Declaration - statement of the covenants, but has only one party, the developer
A good way to impose covenants because it eliminates the problems of omission & variation of
language
Covenants, Conditions & Restrictions (CC&R) - the "private constitution" of homeowner's associations
Restrictions are usually read more narrowly than broadly
• Negative Reciprocal Easement = Implied Covenant

Might run in equity
Court makes up covenants that no body has agreed to at all & then make them run - very
dangerous
One should have been on notice that there was a covenant attached
○ Under formal analysis - this is crazy; they would never imply a covenant
Some courts hold that if the first lot does not contain the restriction, none of the other lots can
All courts will never apply the easement backward to lots that have been sold out of the

All courts will never apply the easement backward to lots that have been sold out of the
neighborhood before the reciprocal easement appears
○ If 1 was sold out of the common development without the restrictive covenant, then 2-8
were sold within the common plan with the restrictive covenant, they cannot "rope back in"
lot 1
○ Say 1 & 6 don't have it, some courts may find that lot 6 is bound (he was put on constructive
notice), but 1 is not
○ A lot that is sold later can sue an earlier lot, but a lot that is sold first cannot sue a later lot
D. Interpretation, Amendment, & Termination of Covenants

Grandfathering:
If one owner won't agree to the covenant, or already had what it was meant to restrict, they agree
to "grandfather" them into the covenants & allow them to keep what they had
Courts narrowly construe the covenant; unless something is explicitly restricted, then it is allowed
Only if the intent of the covenant is clear & unambiguous will it be given effect P741
Where the language is ambiguous, its construction will not be extended by implication or include
anything not plainly prohibited & all doubts & ambiguities must be resolved against the party
seeking enforcement
Things that careful drafters need to address: 742-745

Difference between "erecting and/or placing" & merely "parking" something
Difference between limiting the "construction" of a particular building & limiting the "use" of it
○ Can construct a residential house but use it commercially
Definition of "family" & homes for daycare purposes or disabled people
By what standard are these restrictions to be judged? - we know they are interpreted narrowly
Reasonableness Review: 751 Traditional Rule
○ If a rule is reasonable the association can adopt it; if not, it cannot
○ Court does its own de novo review to decide if the restriction is reasonable
○ Minority (fading) Rule It is the subjective reasonable of the judge that is the test
Business Judgment Rule:
○ Works on the presumption that the judge cannot decide on whether a rule is reasonable or
not when individuals have voluntarily agreed to it
○ As long as there is no evidence of fraud or bad faith in establishing the rule (it is procedurally
fair) & the party who is bound knew either actually or constructively & not absurd on its face,
it is ok
○ Majority Rule
A covenant restriction should be upheld, unless the objector proves that it is arbitrary, that it is
substantially more burdensome than beneficial to the affected properties, or that it violates a
fundamental public policy
Court will do more review of a regulation that is made later/after as opposed to something that has
been in the CC&R from the beginning
Since the CC&R are "constitutional" & include almost everything necessary & are construed strictly
& narrowly, you want to include rules for amendment revision when things you did not anticipate
arise Need to pay attention to the developers being self
interested if they still have a majority of the property
interests
3 Equitable Defenses when other party is seeking equitable relief (trying to enforce a restrictive
covenant):
1) Waiver

1) Waiver 760
○ The numerous other violations of the restrictive covenant demonstrated a change in the
character of the neighborhood, indicating that the restrictive covenant had been abandoned
○ The whole neighborhood has waived this covenant & therefore it applies to nobody
2) Estoppel 757 & 762

○ By violating the restrictive covenant herself, P waived equitable right to enforce the
restrictive covenant
○ "doctrine of unclean hands" - a person seeking equitable relief must come to the court with
clean hands
3) Laches Equitable version of a SOL P761

○ Failure for an unreasonable time to assert a known equitable right
Waited too long under the circumstances (similar to SOL) & therefore cannot sue
Applies to architectural structures & architectural review committees that provide no
structure may be build without its approval - cannot wait until building is already
complete to say that it violates the rule
□ However, if they cannot see the thing being build, laches may not apply
○ These doctrines do not destroy the homeowner's association CC&R completely, but may
require them to amend it
Changed Conditions Doctrine:

If conditions in the area affected by the covenant have so changed that enforcement of the
covenant can no longer achieve its purpose (usually maintaining residential neighborhood),
enforcement will be denied
○ Doesn't matter that the conditions outside the community have drastically changed, CC&R
still stands
The fundamental character of the residential neighborhood must have already been lost
Example: If there is a situation where some neighbors want to get out of the CC&R & sell, but a
majority do not want to sell
○ One may want to sue to try & force the others to sell also
It is not sufficient to show that the land could be more profitably used without the covenants, or
that they impose a financial hardship
It is not sufficient to show that the zoning has changed or conflicts with the covenants, though it
may be some evidence
Other theories for opposing enforcement of covenants:

Express waiver or release
Merger - if the same person acquires ownership of all of the benefitted & burdened land, covenant
is extinguished
Expiration - covenant may have a limited duration
Taking in eminent domain - cases are in conflict
○ One concern that landowners might enter into covenants in anticipation of an expected
taking by the government, thus "bootstrapping" themselves into greater overall
compensation
Tax sales - if a landowner does not pay the ad valorem property taxes, the local taxing officials will
foreclose the tax lien & conduct a public sale of the land to the highest bidder; states may have
statutes that preserve the covenants despite a tax sale
Rules & Amendments to Covenants:

Sometimes changes are needed to accommodate conditions the developer did not anticipate

Sometimes changes are needed to accommodate conditions the developer did not anticipate
The most direct method of accomplishing changes is to amend the covenants
○ In a common plan subdivision every lot owner must agree to changes
○ A covenant can expressly reserve the rule-making power to less than all owners
Courts will put some restrictions on amendments though - generally, they must affect all of the lots
uniformly

Chapter 7: Easements
Easements:
Rights or interests in land to use someone else's property
Do not give the holder a right of possession, but a right to use or to take something from land
(non-possessory)
Limited right to improve & allowed to make repairs
The right to exclude others extends only so far as to prevent their interference with the
servitude's particular purpose
Exists for a determinate time or "perpetually" - the interest in the land is for some definite period
Usually applies only to a designated area
Substantial consideration was paid for it
Subject to Statute of Frauds
Profits:
Usually to take or remove from the soil substances like minerals, gravel & timber
No right to possess the land
The right to exclude others extends only so far as to prevent their interference with the
servitude's particular purpose
Basically, easements allow some use to be made of the burdened land, while profits allow some
substance to be severed & removed
To determine the true character of an interest, a court must examine the nature of the right rather
than the name given to it by the parties
The mere labeling of an interest as an easement does not necessarily make it an easement; it
may be a license
A license does not imply an interest in land, but is a mere personal privilege to commit some act or
series of acts on the land of another without possessing any estate therein
No legal possession or control over the property for the licensee
License is terminable at the will of the creator landowner
License is a "privilege" whereas easements & profits are "rights"
May be granted orally
Unassignable & ended by the death of either party
Nature & Types of Easements (& Profits)

Easement Appurtenant:
Involves at least two parcels of land
If it has a dominant tenement, it is appurtenant
○ The easement runs for the benefit of the dominant land
○ The servient property is the one that has been burdened
The easement interest will convey automatically if the property is sold
○ It sinks into the property interest & runs to the new owners automatically
Typically the value of the dominant tenement will increase & the value of the servient tenement
will decline
○ Both lands are typically better off than when they started, otherwise easements would
never be made
Easements are assumed to be appurtenant if it does not specify
○ Examples of easements appurtenant: walkways, driveways, utility lines
Examples of profits appurtenant: rights to take timber or substance from soil of servient
○ Examples of profits appurtenant: rights to take timber or substance from soil of servient
tenement, to be used for some purpose on dominant tenement
Easement In Gross:
Involves only one parcel of land
Not connected to any dominant tenement
○ Benefits serve the holder only personally, not in connection with his ownership or use of
any specific parcel of land
Right to an individual/company to do something, rather than to whoever is on the estate (sink)
May have either a commercial easement or personal easement (this is just a legal conclusion)
○ Commercial easement - can be transferred/sold or passed from person to person or
corporation to corporation
○ Personal easement - cannot be transferred/sold or passed; dies with the person it was
given to
○ This DOES NOT MEAN that if it goes to a business it is transferable & if it goes to an
individual it is not transferable
○ Simply look at whether the parties intended it to be transferrable & then label it from there
Profits are presumed to be in gross if it does not specify - then must decide if it is commercial or
personal
○ Examples of easements in gross: easements for utilities held by utility companies, street &
railroad easements
○ Examples of profits in gross: rights to remove timber or substances from soil when the
holder of the right is not limited to using the several items on specific land
Negative Easements (Essentially a Covenant):

Gives it holder a right to require the owner of the burdened land to do or not do specific things
with respect to that land but not to go upon or use it
○ Compare with an affirmative easement that allows its holder to go upon & make specific
uses of the burdened land
Would prefer to create a negative easement to avoid the issue of privity with covenants
○ Can only be created expressly in a signed writing
Example: easement of right to receive light, air, support & unobstructed view from home by
limiting any structure
Scenic/Conservation Easements:
Scenic Easement - a restriction imposed upon the use of the property of the grantor for the
purposes of preserving the natural state of scenic & historical attractiveness of adjacent lands of
the grantee, usually the city, county, state or federal government
Conservation Easement - nonpossessory interest of a holder in real property imposing limitations
or affirmative obligations the purposes of which include retaining or protecting natural, scenic, or
open-space values of real property, assuring its availability for agricultural, forest, recreational, or
open-space use, protecting natural resources, maintaining or enhancing air or water quality, or
preserving the historical, architectural, archaeological, or cultural aspects of real property
Methods of Creation of Easements

A. Easements by Grant & The Effect of Informal Grant or License:
Most easements are created expressly by an instrument in writing called a grant, which were
typically sealed
○ An unsealed written instrument used to be effective to create an easement in equity
Requirement of a written instrument remains & required for:
Creation of an interest in land (except short-term leasehold interests, usually for terms of

○ Creation of an interest in land (except short-term leasehold interests, usually for terms of
one year or less)
○ Creation of a contract to convey any interest in land (with similar exceptions)
May be created by a deed which simply grants an easement in the land of a grantor
○ Can also operate to convey certain land to which the easement is appurtenant, or is
reserved by a grantor in a deed which conveys land intended as the servient estate
A grantor of land could not by his deed reserve an easement in favor of a "stranger to the deed"
aka a third party
B. Easements by Implication:
Easements may be created in connection with a written conveyance even though there is no
express language to that effect
○ Arises from the facts & circumstances
• 3 types of easements created by implication:

1) Easement implied from Necessity (way of necessity)
○ Elements:
1) Unity of title
2) Severance of title
3) Necessity of easement (true/absolute necessity) - must show more than just
convenience
○ Based upon the presumption that the grantor intended the grantee of a landlocked parcel
to have access to his property, a right recognized as essential to the enjoyment of the land
○ Easement by necessity can only be given if one purchased the land from the other - not
some other random land
○ Terminates once reasonable access becomes available & the necessity is lifted
2) Easement implied from Prior Use (quasi-easement)

○ Elements:
1) Unity of Title
□ The dominant & servient tracts of land originated from a common grantor
□ Cannot exist where neither the party claiming it, nor the owner of the land over
which it is claimed, nor anyone under whom they or either of them claim, was
ever seised of both tracts of land
2) Severance of the Title
□ The use was in existence at the time the original grantor severed the tracts
3) The use was apparent, continuous, & necessary for enjoyment of the dominant tract
□ Apparent
Obvious, not necessarily by actual visibility, but rather susceptibility of
ascertainment on reasonable inspection by persons ordinarily conversant
with the subject
□ Continuous
□ Necessary
Reasonable necessity, not true/absolute
○ Occurs when two adjacent parcels of land were previously held in common title & an
interest can be ascertained from the circumstances surrounding the lands previous use &
the conveyance that the holder of one parcel is to have a right to pass through the other
parcel, or to make some other such limited use of it
Aka: where, during the unity of title, an apparently permanent & obvious servitude is
imposed on one part of an estate in favor of another part, which servitude is in use at
the time of severance & is necessary for the reasonable enjoyment of the severed
part

part
No other reasonable mode of enjoying the dominant tenement without this
easement
○ Once established, becomes permanent
3) Easement implied from a Plat

○ A purchaser who acquires a lot in a platted subdivision will, to an extent that varies state to
state, acquire implied private easements to use streets & alleys & perhaps parks &
playgrounds shown on the plat
○ 3 general positions or rules as to the extent to which the lot owner has easements over the
access ways:
1. Broad or Unity Rule
□ Owner has a private easement over all parts of all ways shown on the plat
2. Intermediate or Beneficial or Full Enjoyment Rule
□ Owner has private access easements over such platted ways as are reasonably
beneficial to the use of his lot
3. Narrow or Necessary Rule
□ Owner has private easements over only his abutting street & such connecting
streets as are necessary to give access to the system of public streets & roads
• Where the owner of a single area of land conveys away part of it, the circumstances attending the
conveyance may themselves, without language in the deed, & sometimes in spite of such language,
cause an easement to arise as between the two parcels thus created either:
• Implied grant - grantor retains the servient estate
• Implied reservation - grantor conveys land but reserves an easement right & thus the dominant
estate for himself
• What degree of necessity is required to imply the retention of an easement?

Majority rule - no distinction between the degree of necessity in the granting or retaining of an
implied easement; in either circumstances the degree of necessity is answered "if necessary to
the reasonable enjoyment of the property"
Minority rule - easement is implied by reservation only where there is strict necessity
○ Strict necessity when an easement is reversed & reasonable necessity when an easement is
first granted
• Courts will sometimes force one to "purchase" an easement at fair market price
Private taking situations? Make them pay compensation but transfer the property interest for a
private purpose
• General rule that a bona fide purchaser does not take subject to an easement unless he has actual or
constructive knowledge of its existence (reasonably prudent person would have inquired)
C. Easements by Prescription (aka Adverse Possession): Can do this inversely, like owner of servient
could build a pool on the road which blocks
Elements - same as adverse possession: the easement without dominant using
land… and then dominant sells, buyer sees
a) Open & notorious there is an easement and wants to use
b) Over a uniform route road, but SL has already run—>
prescription in reverse
c) Continuous & uninterrupted for 10 years
Standard is lessened drastically - only must be continuous as to what you'll be able to
claim
d) Adverse to the owner of the land sought to be subjected; and
NOT adverse if it is permissive
Vacant Lands Doctrine - in cases of vacant land, there is a presumption that use was

Vacant Lands Doctrine - in cases of vacant land, there is a presumption that use was
permissive
Reasonable inference of permissive use when the use was permitted by neighborly
sufferance or acquiescence (knowing stand by without raising any objection)
e) Hostility - with the knowledge of such owner at a time when he was able in law to assert &
enforce his rights
Hostility is the presumption in easement cases in general
Exclusivity is not an element because by definition, an easement is a right to use another's land &
therefore won't be exclusive
Mere use under a naked license, however long continued, cannot ripen into a prescriptive right
○ If the use of this way was commenced & continued by license or permission had from the P,
then no right by prescription could be acquired, however, long such use was continued
○ A mere license, whether by deed or by parol, is revocable at pleasure
2 exceptions:
□ Not revocable where the license is executed & where by reason of the
expenditures by the licensee on the strength of the license - it would be
inequitable to permit the licensor to effect a revocation
This created an implied equitable easement
□ Not revocable after the other party makes improvements because of it
○ Though an oral permission is invalid as a grant, it operates by way of equitable estoppel if
the grantee makes expenditures on the assumption that he acquired the easement
thereby, though as a matter of fact he actually acquired merely a license
These only run as long as justice is required - for him to find some other workaround
○ An oral permission to use land, notwithstanding the Statute of Frauds, is characterized &
enforced by the court as an "irrevocable implied equitable easement"
Public Prescriptive Easement: pretty much a taking

Public must show that the use & enjoyment of the land was:
○ Exclusive
○ Adverse
○ Continuous
○ Uninterrupted
○ Open & notorious; and
○ Under a claim of right for the full prescriptive period
Once obtained the prescriptive easement belongs to the public at large, not an individual
This is difficult for the landowner because then how does he enjoin the whole public?
○ Also, who would landowner sue if a member of the public gets hurt while using his land on
public prescriptive easement
○ Can try to avoid this by suing for surcharge, to which the court may order an injunction
○ Can try to require one to be a trustee for the public & therefore will be liable for anything
Implied Common Law Dedication:

One who invites or simply permits the public to use her land for a long period may be deemed to
have made an offer of an implied dedication - usually in roadway context
The owner is estopped to deny permanent public access
Public Trust Doctrine:

The ownership, dominion & sovereignty over land flowed by tidal waters, which extends to the
mean high water mark, is vested in the state in trust for the people

Scope of Easements
As a general rule, an easement appurtenant to one parcel of land (dominant tenement) may not be
extended by the owner of the dominant estate to other parcels (non-dominant tenements) also owned
by him
Normally it is a per se surcharge or misuse of an easement to add a parcel to the dominant estate &
then attempt to extend the benefit of the easement to the additional parcel
If the dominant estate were then subdivided, generally it does not per se prevent the easement
If the easement says only for single-family home & the dominant estate builds a condo, it will be
a per se surchage; however, if the easement does not specify that, it is not per se surcharge,
though the court may still find that
Easements are presumed to be nonexclusive - owner of the servient estate can still use the easement
portion reasonable so that it doesn't interfere with the easement
Courts are very wary to find exclusive easements because that is essentially a transfer of fee
simple absolute for that right-of-way but without explicitly stating so "in fee"
Restricted versus General Easements

Courts presume a general easement when there is any question
○ Courts will then fill in the terms for the general easement as to what is allowed
Must expressly & explicitly state the restrictions for it to be a restricted easement
The extent of an easement obtained by prescription is fixed by the use through which it was created.
Yet, the use made during the prescriptive period does not fix the scope of the easement eternally. It
may change over time & uses satisfying the new needs are permissible. But the variations in use
cannot be substantial, they must be consistent with the general pattern formed by the adverse use.
Easements in gross are assignable for the most part - but are the divisible?
Divisibility - original holder of the easement grants only a portion of his rights to another while
retaining the remainder of his original rights for his own use (whereas when you assign you
transfer the easement in gross as a whole)
Divisibility cannot arise as an issue unless courts first recognize transferability
Courts first look to the creating instrument to determine divisibility
○ Must discern whether the original grant of the easement in gross was exclusive or
nonexclusive
○ Exclusive - gives the easement holder complete control of the easement interest, even to
the exclusion of the owner of the underlying land
Needed for divisibility because the landowner has granted away all of his rights to the
easement area, he cannot object to grantee's division if the total use remains within
the extent of the original grant
○ Nonexclusive - retains for the owner of the underlying land a right to use the easement
interest simultaneously with the easement holder
Cannot divide if nonexclusive because that right remains with the owner of the
underlying land
Creates senior right holders & junior right holders
Courts next must determine whether there is "one stock" meaning the exercise of the divided
easement complies with the terms of the original grant
○ Rule is to prevent the imposition of a "surcharge" on the servient tenement - occurs when
the holder's use of the easement exceeds the terms of the original grant & interferes
unreasonably with the fee owner's rightful use of his land

unreasonably with the fee owner's rightful use of his land
○ This rule has been replaced by the original burden - the burden that the division places on
the servient owner must not exceed the burden that the parties contemplated in the
original grant
Expansible Easements:
Gives the holder the right to expand the burden on the servient tenement by paying additional
consideration to the fee owner
Should the owner of a servient estate be allowed to change the location of an easement without the
easement holder's consent?
The minority rule from the Restatement:
○ Unless expressly denied by the terms of an easement, the owner of the servient estate is
entitled to make reasonable changes in the location or dimensions of an easement, at the
servient owner's expense, to permit normal use or development of the servient estate, but
only if the changes do not a) significantly lessen the utility of the easement, b) increase the
burdens on the owner of the easement in its use & enjoyment, or c) frustrate the purpose
for which the easement was created
○ This applies only in the absence of an express prohibition against relocation in the
instrument creating the easement & only to changes made by the servient, not the
dominant estate owner
Minority Rule - Court can override explicit terms of an easement grant if it is equitable to do so
Majority Rule - Court will do a reasonable evaluation & supply reasonable terms if they have to in
the absence of an explicit term regarding something in particular
Easement always sinks into the servient tenement; runs with the dominant tenement if the easement
is appurtenant
Extinguishment of Easements
1) By Release
Dominant tenement holder releases servient tenement from easement
2) By Natural Termination
Easement will terminate by its own terms after the stated period
If the grantor's estate ends then the easement ends as well
□ Example: if property is foreclosed where the owner first got a mortgage then gave the
easement - the easement is junior to the mortgage so once the bank gains control of
the land they no longer have to uphold that easement
□ Example: if property is foreclosed where the owner easement is established first &
then the property is mortgaged - the easement is senior to the mortgage so once
bank gains control of the land the easement remains
3) By Estoppel
Arises if the servient owner takes action to make the easement unusable in reliance on
some action by the dominant tenement owner
Reasonable reliance does not need to be express
□ Example: if dominant tenement does something that makes it seem as though the
easement is extinguished so the servient tenement can assume it is extinguished
Opposite of an implied easement
4) By Prescription
Can extinguish somebody else's easement by acting as though you own it

Can extinguish somebody else's easement by acting as though you own it
5) By Condemnation
Government comes in & takes the interest
6) By Abandonment
Party can abandon the easement
7) By Merger
If A buys both the servient & dominant tenement, the easement by lot A merges back into
lot A
□ Can't have an easement in your own property
□ This will last forever - if A then sells one part to new owners, they do not get a right of
way on A's property

Eminent Domain
The compensated, involuntary taking of property by a government or a government-sanctioned
private entity for some government-approved purpose
5th Amendment provides a takings clause which states "private property may not be taken for public
use, without just compensation"
General Principle: one individual should not have to pay for a public good that all will benefit from
Government should "make whole" so the person whose land was taken should be in the exact same
financial situation as before
4 components:
1) Private Property
○ Property includes the entire group of rights including the right to possess, use and
dispose, and exclude others from use
2) Taking
○ The Takings Clause bars government from forcing some people to bear public burdens,
which should be borne by the public as a whole
There are some/special public burdens that should be borne by the public as a
whole
○ Physical Takings
Arise when government takes permanent or recurring physical possession of an
attribute of private property
Always compensation for physical takings
○ Regulatory Takings
Under Mahon - compensation quite likely; under Penn Central - very hard to get
compensation
Arise when government restricts or destroys the attributes of property ownership
not by physical occupation, but rather by ordering the property owner to conform
her uses of the property to the government's wishes
Mahon - some regulations will have effects on value & we cannot worry about
compensating all of those
□ But the commonwealth can't take a property right & refuse to pay for it
simply because the public really wants it
□ Significant diminution in property values must be compensated
□ If all agree to it then there does not need to be compensation since
everybody is restricted - "reciprocity of burden/value"
Penn Central - set out new factors to determine a taking:
a) The extent to which the regulation interfered with the property owner's
"distinct investment-backed expectations:
b) How closely the result of the regulations resembled a physical invasion
c) Whether the government had declared the regulation to be protective of "the
health, safety, morals or general welfare" of the public
d) Whether the action could be characterized as acquisition of resources to
permit or facilitate uniquely public functions
Lucas - When a regulation is so restrictive that no productive or economically
beneficial use of a piece of property will be permitted under the regulation, that
regulation will be considered to work a per se regulatory taking
If a regulation merely requires a property owner to do or refrain from some act that
would have been required or prohibited under the common law of nuisance, then
the obligation is considered to "inhere in the title itself" & may be imposed even if
it forbids all productive & economically beneficial use
Issues that arise from the division between physical & regulatory takings:

○ Issues that arise from the division between physical & regulatory takings:
1. Government can often avoid takings-compensation liability by ordering property
owners to provide public goods rather than providing those goods itself
i) If government takes land to create a wildlife preserve, it bears those costs. If
it merely sets out regulations which basically orders the owner to maintain
the wildlife preserve, the individual bears those costs
2. "Parcel as a whole" rule - how much value diminution may be permitted must be
judged on the basis of the whole parcel of property involved
□ If government takes the whole value of say, half of the property - how much
should they compensate &
3. If increased government regulation during a period of ownership decreases the
owner's reasonable expectations with regard to his ability to develop & use his
property, does that constitute a taking?
3) Public Use
○ Government ownership & use, as with government buildings, post offices, & military
installations would constitute public use
○ Also deemed public uses, however, would be "common carriers" which the whole public
uses (railroads, canals, etc.)
○ After the Great Depression, towns were declared "blight" which consisted of the
government taking private property & giving it to private developers for the "benefit" of
the public
○ Issue of how long the government has to hold the property before it can sell it to a
private individual
4) Just Compensation
○ Market-value test is used - what a willing buyer would pay in cash to a willing seller
Excludes "consequential" damages such as moving expenses, attorneys fees, etc.
Excludes "subjective" value that the owner has from the special adaptability to his
own use
□ Business goodwill - business may be lost as a result of forced relocation

• Richard Posner's Economic Analysis of Law
○ Dynamic analysis: timeline of changes; without property rights there is no incentive to incur costs because
there is no assured reward; legal protection of property rights creates incentives to use resources effectively
○ Static analysis: all adjustments occur simultaneously; someone must own property so there must be
exclusive rights & those rights must be transferable
○ Basically, through exclusivity & alienability, value is maximized & transaction costs reduced
• Margaret Jane Radin's Market Inalienability

○ Sometimes having inalienability is a good thing - rights to life, liberty & property
○ Universal commodification: everything is marketable
○ Universal noncommodification: nothing is marketable - risk of error, injures personhood, alienate ourselves
○ Personhood has increased because we can't commodify our bodies - but that would decrease personhood
• Cass R. Sunstein's On Property & Constitutionalism

○ The type of constitution plans an important role in economic development
○ Private property brings about economic prosperity by
Creates & takes advantage of inclination to bring goods & services; with no private property there is no
incentive
Performs a crucial coordinating function; devote productive activity to what is most valued
Gives incentive to use private property to full advantage & protect from exploitation
○ Property that is unowned creates an incentive to exploit & is wasteful
○ Without private property, citizens are completely dependent on government & have no security
○ Property rights create wealth & welfare which are necessary
○ Without constitutional protection, there would be constant pressure to adjust distribution of property - must
be judicially enforceable
• Robert C. Ellickson's The Untenable Case for an Unconditional Right to Shelter

○ We need a society that maintains incentive to work
○ 3 approaches to welfare:
No-welfare: no abuse of the system, but does nothing to help the inevitably mentally/physically unable
to work
Conditional-welfare: benefits restricted to certain groups who must prove their need
Unconditional-welfare: gives all members certain minimum comforts but weakens incentives so
everyone is worse off

Practice Essay
Monday, December 19, 2011
10:13 AM
• Run through all plausible options - Majority & Minority Rule
• Extra Points for clever digressions, but may take away points if you stray too much & just put in random filler crap.
• "Icing on the cake" if you can reference cases
• Can "read in" facts for the essay & go into hypotheticals (if it were a latent defect...this would happen)
○ But you should analyze for both
○ This or that...but in conclusion it really should be this way
• Residential v. Commercial Structure

○ One result if residential, one result if commercial.
Or
• Historical Structure
○ One result if common law, one result if modern law
• Commercial Lease:
○ Buyer Beware if commercial lease
No promises that roof wouldn't leak
May be an exception to this for latent defects
○ Doctrine of Waste (permissive waste) - tenant is the one with underlying responsibility & obligation to fix it
Waste is occurring unless he fixes it
How much roof fixing is necessary?
○ Constructive Eviction
Landlord has to have some duty to maintain, & unless he agrees there is typically none in commercial lease
Tenant has to actually leave (would not work in this case but can raise the issue as to why it would not work)
• Residential Lease:
○ Originally used to be the Housing Code Approach
Require landlords to establish minimum standards of structural elements (roof)
Make a complaint, inspector will get sent out & issue an order
○ Warranty of Habitability
In some states, warranty can be waived (majority v. minority)
Implied in nearly all residential property, but not commercial.
Court will typically read an implied warranty as a default rule if the contract does not state one way or the other.
Will these leaks rise to the level that will make it inhabitable?
Possible courts will say it won't, but continue analyze assuming it is
Must give reasonable notice of defects to the landlord & opportunity to repair
Possible remedies for tenant if warranty is breached
Rent withholding is different in different states (may not be best option)
Constructive Eviction Doctrine
Partial constructive eviction (don't use the top floor)
• Question 1b: what advice?

○ Put in some explicit clauses regarding repairs
○ Lease was too short & basically useless
Only proposition was that landlord maintains water
○ How do you want to treat this lease - as residential or commercial?
○ If all of these are spelled out - rent will likely go up since T has fewer duties, L has more duties
What are the "policy" implications that would result if he had followed this advice to begin with
• 1 master essay with 4 sub-parts

○ Basic facts apply to all 4, then additional facts for part a, different facts for part b, etc.
• 32 multiple choice questions
• Basically 50/50 between MC & essay points

• Basically 50/50 between MC & essay points

Review Session
Monday, December 19, 2011
11:55 AM
Per se waste
Court will find that the tenant is committing waste if tenant takes things off the property (mining coal, cuts down
forest, drains spring) UNLESS:
The mines were already being mined
With covenant, property worth 1 million

Without covenant, property only worth 500k
If government takes half of the property, should pay $1 million to the property they actually took, & the $500k to the
others who land wasn't actually taken, but value decreased
Government can pay $1 million to property they actually took, and nothing to the others since they did not physically
take their land
At most 2 future interest questions in MC

May be able to mention it in essay
Set up privity first
Implied Covenants:
Possession
Quiet enjoyment
Habitability
Assignment
Privity of contract between Lisa & Charles
Privity of contract between Lisa & Tom
Privity of contract between Tom and Alice
Implied Covenants - none
Covenants that Run at Law
Running covenant analysis on non-competition agreement (just for Alice)

• Intent: parties intended that the covenant run with the land since they stated "as a dance studio & for no other
purpose"
• Privity:
○ Horizontal:
○ Vertical:
No analysis required for Tom
Only covenants that run at law can be enforced
Tom is liable to Lisa for all covenants of original lease (privity of contract)

Tom is liable to Lisa for all covenants of original lease (privity of contract)
No implied covenants in commercial leases
Bigelow:
Lessens value for landlord
Assignor's value increases because no more competition

Lisa can sue both Tom and Alice because of the assignment relationship
Tom (assignor) can sue Alice (assignee) because of priity of contract/suretyship
o No assumption of all covenants in the assignment from Tom to Alice, so
covenant must run with the land for Alice to be Bound
Privity of estate between Lisa and Alice,
But no privity of estate between Lisa and Charles, but they have privity of
contract
Privity of contract between Lisa and Tom,
Also privity of contract between Tom and Alice,
But not Lisa and Alice because she didn’t assume, but there is privity of
estate between them assignment
o No assumption of all covenants in the assignment from Tom to Alice, so
covenant must run with the land for Alice to be bound, or it has to be an implied
one. (no personal would run to Alice unless it was assumed)
Implied Covenants
Caveat Emptor in Commercial
o Landlord is not liable, tenant takes as
Only liable for a known or should’ve latent defects exceptions that landlord
knew would affect the way the tenant used the property
Service Oil: duty to disclose that might be relevant if landlord
knew or should have known (T also has some duty to figure this
out as well, but only through due diligence)
Argue that each way, whether they knew or should’ve
known about the patent defect affecting the way the
Landlord would use the property determines whether they
had to disclose
o Maybe they didn’t have a duty to disclose because it
was up to building code standards
o Maybe they did because it was not up to standards
that the Landlord knew the premises had been
covenanted on
If they had no duty to disclose and there are no applicable
implied covenants, only covenants that run at law would be
enforced.
o Quiet Enjoyment
Constructive eviction, she did abandon, she could claim from that.
Cn argue unsuitable floorboards and lease amount to
constructive eviction. Coupled with an express covenant to use
the premises only for a dance studio, the refusal to replace an
unsuitable floor could amount to a constructive eviction.
Allows tenant to either sue for damages or abandon
premises within a reasonable time and terminate the lease.
Here, Alice’s six month delay probably could not be
considered reasonable, and thus waiving her right to do so
and leaving her with a suit for damages is her only
remedy.
o Habitability
Wont apply because commercial lease
Express Covenants
Covenant to pay rent always runs with the land, thus, both Alice and Tom are liable
under this covenant.
One who remains in privity of contract with landlord is still liable for all personal,
express and implied covenants
o Tom (Assignor) is in privity of contract with Lisa (landlord) because all landlord

o Tom (Assignor) is in privity of contract with Lisa (landlord) because all landlord
tenant relationships create privity of contract
Language
As long as happened at same time no worries.
Covenant to pay rent always touches and concerns, even though this is not
necessarily .
o Whether this covenant is personal, express/runs at law or implied Lisa can sue
Tom
One who does not remain in privity of contract with landlord, but where privity of
estate has risen are liable for all covenants that run at law. Whether the covenant of
noncompetition runs at law will determine if Lisa can sue Alice on privity of estate
grounds.
Running covenant analysis between Alice and Lisa (Noncompeting agreement)
o Paying rent is an express covenant
Intent
Language “as a dance studio and for no other purpose” Alice is
also running a dance studio, so obvious future intent…
Privity
Horizontal: Intent, established at the time, leases between
landlords and tenants always constitute horizontal privity.
Vertical: Need to show Vertical privity to enforce covenants
running at law between non-initially agreeing parties. Vertical
privity is established between Alice and Lisa because it arose as
a matter of law at the time of assignment (from Tom)
Touch and Concern
Effect on value test
Does Touch and concern
o L’s value goes down because they are limiting their
space to a certain class of renters.
o Assignee’s value will go up because there wont be
anyone in the building to compete with their business
Unrelated/Related/Inextricably Bound?
Does touch and concern
o On both side of the promise, they are talking about
this particular land, on the specific floor. You cant
“not operate a dance studio on the 5th floor” from
anywhere else.
Bigelow Test
If the promisee’s legal relations in respect to that land are
increased – his legal interest as owner rendered more
valuable by the promise – the benefit of the covenant
touches and concerns that land.
o Promisee’s relation to the land is increased, they are
allowed to not have competition within the building,
making the space/land more valuable to them.
If the promisor’s legal relations in respect to the land in
question are lessened – his legal interest as owner is
rendered less valuable by the promise – the burden of the
covenant touches and concerns the land.
o L’s legal relations in respect to the land are lessened
because he cant rent to as many people, clearly
lessens his interest as an owner of the land.
Does touch and concern the land
o Noncompetition covenant does run with the land because it satisfies the three

o Noncompetition covenant does run with the land because it satisfies the three
elements of a covenant that runs at law, which means that Alice can recover
either/and/or an injunction or damages from Lisa.
Remedies
In the event a covenant that runs at law has been breached, and the Tenant surrenders
the majority rule is that the landlord has three options.
o Can ignore tenants surrender and enforce rent (minority)
o Landlord can re-enter and at least try to mitigate by value of new rental.
T will still owe difference for rent and owes L cost for refilling property.
o Landlord can re-enter property and release tenant of responsibility.
If L attempts to mitigate and is unsuccessful he goes to court and asks for
full value of rent.
Slight modern trend: recognizes only re-enter and mitigate as
the default duty of the landlord, if they don’t attempt to mitigate,
then landlord is disabled fro claiming rent.
Here, landlord clearly attempted to mitigate
o If she has found a tenant she can collect the difference
o If she hasn’t then she can go the rent repudiation route.
It is likely she can get this because the fact pattern indicates she has tried
diligently to mitigate.
If there is no acceleration clause then all they can do is go to court every
month to collect rent.

Shepard Property Outline

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Chapter 1: Property, Possession & Ownership

• 5 theories to justify private property:

• Bundle of Rights approach:

• 3 ways property could be distributed:

Possession & Ownership

Property Outline Page 1

B. Property Rights Based on Possession

• 4 types of found property:

Type How Parted How Intent to Possession to…

Property Outline Page 2

C. Duties of Possessors: A Look at Bailment

Property Outline Page 3

• Traditional Theory of Bailment: 3 types...

Standard of care required Liable for what type of negligence

• Modern Theory of Bailment:

• 2 types of liability for bailees:

Property Outline Page 4

• 2 main aspects of Adverse Possession:

Property Outline Page 5

• Majority & Minority view on hostility:

• Disseisor - the person who is adversely possessing another's land

• Adverse Possession of Chattels:

Property Outline Page 6

Property Outline Page 7

Right of Reasonable Use: Nuisance

• 5 factors that must be assessed to determine nuisance:

Property Outline Page 8

• Coming to the Nuisance doctrine:

• 4 options in ruling a nuisance case:

Rights Above & Below Surface

• Adverse Possession with regards to surface rights (severable):

• Oil & Gas Mineral Reservation Majority Rule:

Property Outline Page 9

Property Outline Page 10

b) Reasonable Use Doctrine:

• Prior Appropriation System:

B. Common Law Rights as to Surface Water (rain that falls on surface)

• Common Enemy Rule:

• Civil Law Rule - strict liability

• Prior Appropriation System - first come, first serve

Property Outline Page 11

• English / Common Law Rule:

• Reasonable Use Rule:

• For land itself:

Property Outline Page 12

Inter Vivos Transfer (still alive thru deed)

Intestate Succession (when there is no will)

• U.S. Uniform Probate Code:

Property Outline Page 13

• Uniform Probate Code:

Property Outline Page 14

Present & Future Estates

B. The Present Estates

• Fee Simple Defeasible - 3 types… (means it can be terminated)

Property Outline Page 15

3. Fee Simple on Condition Subsequent: Right of Entry/Power of Termination (optional)

Defeasible Future Interest Duration Transfer Language

Property Outline Page 16

5. Life Estates: Reversion or Remainder

6. Fee Tail & The Fee Simple Conditional:

• Non-Freehold Estates: (4 types) - give mere possession

C. The Future Estates