Property II Outline

Tuesday, January 11, 2011 3:16 PM

Landlord and Tenant

1. Landlord's Rights and Remedies/Tenant Defaulting a. The Tenant in Possession i. Eviction Tenant may be evicted if he breaches lease covenants or holds over beyond the lease term 2 types a) Self-help At CL landlord could use this to evict tenant (changing locks) Fallen into disfavor Modern trend holds landlord liable for damages Authorized by lease Typically courts uphold contractual provisions permitting landlord to use self-help Minority hold such provisions void as offending public policy b) Judicial process Most common process is by statutorily prescribed summary proceeding "unlawful detainer" or "forcible entry and detainer" Involves serving a tenant a notice to quit If tenant does not leave, landlord files unlawful detainer action If judge finds tenant in breach of lease, signs order authorizing sheriff to evict tenant Under these proceedings, landlord cannot do anything more that obtain possession of the premises Cannot get back rent Landlord can also file suit in ejectment, but seldom used Damages for wrongful eviction Berg v. Wiley At common law, the landlord was legally entitled to retake possession if: The landlord is legally entitled possession (such as where there is a reentry clause in the lease), and The landlord's means of reentry is peaceable Public policy discourages landlords from taking the law into their own hands, especially when the self-help may result in breaches of the peace Today, summary legal proceedings are available that can get the landlord possession in 3-10 days. This is a quick, easy, and safe way to retake a leased premises. Actual violence is not required fro there to be forceful retaking. Changing the locks in P's absence is not peaceable. The modern trend to require landlords to use legal process, rather than self-help, is in direct contradiction to the common law The only lawful means to dispossess a tenant who has not abandoned or voluntarily surrendered, but who claims possession adversely to a landlord's claim of breach of a written lease, is by resort to judicial process. There is no place and no need for self-help. ii. Examples A tenant is squatting in a property and has stopped paying rent Options? Landlord can sit back and sue them for rent--but will not be contesting
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 Landlord can sit back and sue them for rent--but will not be contesting right to possession Terminate the lease--how to get them out? Judgment that they are no longer entitled to possession due to breach--then will allow sheriff (or someone) to kick them out b. Tenant Who Has Abandoned Possession i. Landlord options: may leave premises vacant and sue tenant for rent In most jurisdictions, landlord need not mitigate by seeking new tenant May retake premises and try to lease again Courts are in conflict as to whether this effects a surrender of the premises (in such an event tenant would only be liable for rent to day of termination) ii. Example When tenant has abandoned property: Sit back and do nothing--sue them as rent comes due Accept their abandonment and retake possession, freeing them from future rent (but need to assure that they have truly abandoned property) Common law option: Re-let for their account (re-leasing property)--expectation that you will apply towards what old tenant owes If incoming tenant defaults, landlord has 2 claims, one for each tenant Complications if incoming tenant is paying more or less iii. Duty to mitigate damages Sommer v. Kridel a landlord seeking damages from a defaulting tenant is under a duty to mitigate those damages by making a reasonable effort to re -let the premises The minority view, which is based on antitrust law, is that a landlord does have an obligation to make a reasonable effort to mitigate damages where a tenant has surrendered and abandoned the premises prior to expiration of the lease The majority rule, which is based on property law, is that a landlord is under no duty to mitigate damages caused by a defaulting tenant This court finds the majority view antiquated and will follow minority view Landlord has power to just sit back and let damages accrue --this was the law Court changes rule--looking at it as more of a contract There is now duty to mitigate Must treat of all his vacant units as potentially available--cannot give preference Rationale for this? Court says each one is unique How do you satisfy? No standard--case by case basis What steps did you take to lease the apartment in the first place? Can you put new lease obligations on the new tenant (ones that weren't in the original lease)? Aka, rents vary from day to day May have to take steps to ensure you are re-letting for fair market value Burden of proof is on the landlord How do they prove it? Paper trail Landlord will probably be able to recover additional costs used in the mitigation In some sense it imposes mandatory duty to re -let? What happens when landlord does not mitigate? What are remedies available to tenant? Landlord lost ability to collect anything from tenant--tenant is actually in better position than he would be if landlord had mitigated This is almost punitive Limiting landlord's recovery to what he could have gotten had he
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 Limiting landlord's recovery to what he could have gotten had he mitigated Landlord cannot recover any consequential damages Other things landlords can do: Security deposits--but problems Abuse by landlords, even though they are not entitled to it Rent acceleration clause--can sue for full amount of remainder, do not have to sit back and wait Usually upheld, sometimes even if he re-lets apt Stipulated penalty in event of breach (such as additional month's rent) --keeps it even if there are damages Allowed if at the time they're made it would be difficult to prove what actual damages are and they are reasonable 2. Tenant's Rights and Remedies a. Generally Lease Any implied obligations? Ex: you are paying rent and get evicted by third party--is landlord liable? At common law, if he transferred right of possession and you physically took possession, you are responsible for protecting yourself But, may be tort obligations, statutory obligations Landlord has obligation to protect you when someone (else) is possession at commencement of the term--he has to take steps to provide you with physical possession/evict the other party If landlord evicts you early, is it a breach? Only if he has convent of quiet enjoyment--implied obligation Also applies to someone with paramount title--implied that no one else has better title of possession than tenant If landlord leases apartment twice--common law rule is that first tenant has better title than second--covenant of quiet enjoyment ensures first tenant that nobody else has better title than he does Landlord does not make any representations about preserving conditions of the premises (no duty to repair)--have to make sure it's in the lease CL implied only 1 obligation of landlord--to transfer possession and not to interfere Anything else had to be expressly written More and more exceptions began developing Duty not to misrepresent condition of premises Duty to disclose material/latent defects in premises Duty to deal with physical condition of premises--in context of short-term lease of furnished apts Most urban areas have housing codes To that extent, landlords had duty to satisfy these codes However, government is only person who can enforce codes, so no real remedy for tenants b. Quiet Enjoyment and Constructive Eviction i. Quiet Enjoyment Tenant has right to "quietly enjoy" premises Landlord cannot interfere with tenant's use of and enjoyment of the premises -implied in every lease Can be breached by either actual eviction or constructive eviction ii. Actual Eviction If landlord evicts tenant from entire leasehold, tenant may treat lease as breached and terminate it No longer has to pay rent If tenant only evicted from portion of leasehold, he may stay on the premises and
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No longer has to pay rent If tenant only evicted from portion of leasehold, he may stay on the premises and refuse to pay rent until landlord restores the entire premises to the tenant iii. Constructive Eviction If, through landlord's fault, tenant's quiet enjoyment of premises is substantially interfered with, tenant may treat lease as terminated and vacate premises No longer liable for rent Theory is that landlord has so interfered with tenant's right of possession that he might as well have evicted tenant Necessary elements: a) Substantial interference Tenant's use and enjoyment of the premises must be substantially interfered with If tenant knows of the interference when he signed the lease, court may hold that he waived interference b) Notice to the landlord Tenant must give notice to the landlord of the defect and give the landlord a reasonable time to cure the problem c) Tenant must vacate Tenant cannot stay on and refuse to pay rent; he must vacate within reasonable time d) Fault Interference to tenant's enjoyment and use of the premises must be fault of landlord She must act, or fail to act, to the tenant's damage iv. Damages After vacating, tenant can recover damages for being wrongfully evicted Includes damages for the additional cost of substitute premises, lost profits, increased expenses proximately caused by the eviction, etc v. Measuring substantial interference Reste Realty Corp v. Cooper Landlord sued tenant for failure to pay rent For her to be able to terminate her obligations to pay rent, it has to be material element/dependent covenant Constructive eviction--where does this come from? Covenant of quiet enjoyment--in this case, there was an express provision Common law it was usually implied anyways Generally means that you can't live there or use it for purposes intended when you lease the property What do they need to show? That they notified the landlord? When does the breach occur? When it rains? When landlord fails to repair? It has to be permanent They didn't stay unreasonably long Whose actions causing the conditions will constitute the breach? Aka, who commits the constructive eviction? Landlord, someone with superior title, their agent--has to be their fault So what about noisy neighbors? Other tenants are causing the conditions? Many cases hold that it depends on landlord's legal ability to address the problem Remedies? In this case, tenant wants to get out of lease Court allows this--finds that breach of covenant of quiet enjoyment
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 Court allows this--finds that breach of covenant of quiet enjoyment = breach of material element of lease--gives rise to right of termination of lease Can you get damages? Court does not discuss this Contract principles of damages would probably apply What about specific performance? (required fixing) vi. Partial Constructive Eviction Some courts have gone so far as to allow a tenant to recover for partial constructive eviction Developed in light of judicial consideration for the situation of the modern city dweller c. Illegal Lease Agreements i. Generally Some local housing codes prohibit rental of premises in violation of the code In such circumstances, tenant cannot be forced to pay rent ii. Limitations For the tenant to be able to defend against the landlord's action for rent, the illegal condition must have existed at the time the lease was signed Although tenant need not pay rent, he is still liable for the reasonable rental value of premises Usually, if illegal condition is substantial (renders premises unfit for human occupation) this will not be very much money d. Implied Warranty of Habitability i. Traditional Approach At CL, landlord had no duty to keep premises in repair once tenant moved in However, Landlord and tenant could agree that landlord would keep premises in repair This covenant, like contractual covenants, was independent Even if landlord failed to keep the premises in repair, tenant still had to pay rent, but could sue for breach of contract or specific performance ii. Now Most courts will now imply, in every noncommercial lease, a covenant that the premises be delivered to the tenant in fit and habitable shape Courts have further held that the landlord's fulfillment of this covenant is an antecedent condition to paying of rent While exact application of this doctrine varies, typically tenant can avoid the lease, or make the repairs and withhold the amount of the repairs from the rent Several states have enacted statutes codifying doctrine Commercial leases Some courts have extended this implied covenant to commercial leases Standards applied Differs; some use housing code standards, others follow "fit for human habitation" Some courts also require that landlord be given notice of unfit condition and time to make repairs Waiver Implied covenant cannot be waived by tenant Any waiver of it is held to violate public policy Usually implied, but can tenant waive it? Court will never find implied waiver--warranty applies both to latent defects and patent defects Even if tenant enters lease knowing about certain defects, it is not basis for finding that tenant and waived warranty Express waiver in lease Not legal
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 Not legal Why would court take away power from parties ability to freely negotiate having a warranty? Unequal bargaining power Establish minimum levels of habitation When is there a breach? Prerequisite: tenant has to inform landlord of defect and must be given reasonable opportunity to cure defect The defect is not what causes breach, it is the landlord's failure to cure it within reasonable time (depends on nature of defect) Remedies? a) Damages for breach (Hilder) Measured by difference between value of dwelling as warranted and value in defective condition Rent can be used as evidence of value as warranted (rent reserved) Value in defective condition is very hard to calculate (zero in this case) Warranty extends to patent defects, so would this sometimes equal rent reserved? This can potentially result in wavier of warranty--no remedy at all Other jurisdictions use different formulas, none are wholly satisfying b) Withhold rent Valid according to Hilder Dangers: If you don't pay, landlord will likely evict you through summary proceedings Your claims will have to wait You can assert defense if warranty of habitability is material element (duty to pay rent is dependant on landlord's duty under warranty) Tenant runs risk that courts finds conditions do not warrant breach You might still owe something, which you have not paid, so you may not be entitled to possession Sometimes requirement that if you withhold, you need to put that money in escrow c) Fix defect and take cost of repair out of rent Limitations Most jurisdictions require tenant to use professional and document cost How much/how often? Most jurisdictions place limit on dollar amount, sometimes also on frequency d) Hilder has additional, unusual remedies: i) Pain and suffering--not typical ii) Punitive damages Tenant did not actually recover them in Hilder b/c they didn't appeal it e) Termination f) Specific performance g) Doctrine of retaliatory eviction--restricts ability of landlord to evict tenant based on problems with warranty of habitability--pg. 503 Generally forbidden Rebuttable presumption of retaliatory purpose if within a given period--burden on landlord After the period, also usually prohibited, but tenant then bears
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 After the period, also usually prohibited, but tenant then bears burden of proof Texas--legislature has adopted the warranty Preempts CL remedies What is the purpose of expanding CL to help protect tenants? Posner's concurrence in Hilder iii. Tenant need not abandon premises Hilder v. St. Peter Here, tenant sued landlord for all rent paid What did landlord have to do, contractually, that he didnt do? Maintain implied warranty of habitability She stayed on premises so she couldn't use constructive eviction Rationale? What you're bargaining for is change Lack of availability--puts bargaining power in landlord's hands If lease is treated as contract, makes it easier for court to put principles as basis for finding liability Why does it matter what logic court uses to identify warranty of habitability Help identify where to apply it If jurisdiction has not addressed the questions, have to think about these rationales/ implications What's the standard that will constitute breach? Safe, clean, fit for human habitation Both latent and patent defects Not just fixing defects that occur once you enter, but also ones that were already existing Breach of housing code--evidence What about jurisdictions that don't have any? What about conditions that aren't covered by code? How does court decide? Negative impact on safety or health of tenant Essentially leaves it up to court Cracked walls? There may be some implied duties Scope here limited to residential tenancies e. Tort Liability i. Conditions existing at time of lease General CL rule caveat lessee Landlord was liable neither to lesee nor his guest unless she failed to disclose a known, latent, dangerous condition or defect (one which lessee probably could not discover) Once latent defect was disclosed to lessee, landlord was no longer liable If latent, dangerous defect was discovered by the landlord after tenant entered into possession, landlord had duty to disclose (but not repair) Modern rule Most courts now hold landlords liable if they fail to disclose dangerous defects Extends to defects that landlord should have discovered, even if she had no actual knowledge Publicly used portions of the premises Landlord is liable for injuries occurring to the public on these portions of the premises if she knows, or should know, of the defect, has reason to think that the tenant will not fix the defect, and fails to use reasonable care to fix the condition Landlord is not liable for tenant's injuries If landlord does not know that that portion of the premises was going to be used
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Landlord is not liable for tenant's injuries If landlord does not know that that portion of the premises was going to be used by public, he is not liable Landlord may be liable even if the tenant promises to make the repairs IF the landlord has reason to know that tenant will not make the repairs before admitting public to that portion of premises ii. Conditions arising after execution of lease General rule is no liability; becomes tenant's job to keep premises safe Liability for voluntary repairs Even if landlord is under no duty to make repairs, if he does so he must use reasonable care; he is liable if repairs are made negligently Contractually obligated repairs Treated same as liability for voluntary repairs iii. Common Areas If landlord is in control of common areas, he is liable for those injuries resulting from those defects of which he knew or reasonably could have discovered iv. Legal Duty to Repair In some locations, statutes or ordinances impose liability on landlords to make repairs; sometimes liability is imposed by enforcing implied covenant of habitability 3. Tenant's Duties and Obligations a. Duty to Repair At CL tenant has duty to keep the premises in as good a condition as when he leases it Does not need to make substantial repairs--landlord is in better position to maintain property b. Duty Not to Commit Waste Tenant is liable for waste Types 1) Ameliorating waste If tenant improves premises he commits ameliorating waste At CL he was liable for this Modern cases do not hold tenants liable for this as long as value of premises is not lessened 2) Damaging waste If tenant substantially damages the premises, he is liable Injury must be one that extends beyond the end of the lease term In certain conditions, landlord may get injunction to stop the damage Tenant is not liable for ordinary wear and tear 3) Involuntary waste Also known as permissive waste, this occurs when the premises are allowed to fall into disrepair c. Duty to Pay Rent Traditionally tenant had obligation to pay rent called for in the lease whether or not the landlord performed her part of the lease If value of rent is not specified, presumed that tenant must pay a reasonable rental value If lease is illegal, tenant must pay reasonable rental value; need not pay the price called for in the lease At CL, tenant was liable for rent even if premises burned to ground Today, most jurisdictions excuse further performance from both parties in cases of accidental destruction 4. Problem of Affordable Housing/Government Intervention a. Selection of Tenants Traditionally, landlord could lease or not lease to whomever he please for whatever reason Civil Rights Act of 1866 Prohibited racial discrimination in leasing and selling of real and personal property Aggrieved party could sue landlord or seller for an injunction or damages
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 Aggrieved party could sue landlord or seller for an injunction or damages Fair Housing Act of 1968 Prohibits discrimination in selling or renting based on race, color, religion, or national origin Later amended to include sex Exceptions In single-family dwellings, sellor or lessor can discriminate if he owns fewer than 4 such dwellings, does not use broker, and does not advertise in manner that indicates his intent to discriminate "Mrs. Murphy's" exception permits a resident owner of a building with 4 or fewer rooms or apts to discriminate Remedies Only US Attorney General, HUD, or aggrieved party may sue Prima facie case and burden of proof Once aggrieved party makes out prima facie case, burden of proof shifts to landlord or seller b. Rent Control Because of serious impact of escalation in rent on public, many jurisdictions adopted rent control regulations Courts generally uphold these regulations so long as interests of landlords are fairly considered Chicago Board of Realtors, Inc. v. City of Chicago the ordinance is sufficiently specific and, giving due deference to the legislative judgment, sufficiently reasonable in light of its stated purpose to promote public health, safety, and welfare Judge's opinion does not make the strongest case that can be made for the reasonableness of the ordinance Stated purpose of the ordinance is to promote the public health, safety, and welfare and the quality of housing in Chicago This is neither its real purpose nor its likely effect Forbidding landlords to charge interest at market rates on large rent payments does not meet the purpose or improve the quality of the housing stock Its effect will be to reduce landlord's resources and resources they devote to improving housing Provisions requiring that interest be paid on security deposits and kept in Illinois banks are equally remote from the stated purpose Only apparent rationale is to transfer wealth from landlords and out-of-state banks to tenants and local banks--making this an example of class legislation and economic protectionism rolled into one Ordinance is not in interest of poor people Puts no cap on rents Beneficiaries will be middle class people who buy housing b/c supply will be increased as landlords convert rental to owner housing, people willing to pay higher rent, and more affluent tenants (less likely to be late with rent, etc) Landlords, out-of-state banks, and poor tenants will be losers Market for rental housing behaves as economic theory predicts If price is depressed artificially, or if landlords' costs are increased artificially, supply falls and poor and new tenants are hurt c. Government Subsidized Housing i. Legislation Fed government became involved in housing in 1930s US Housing Act lets local public housing authority sell tax -exempt government bonds to raise revenue, which is used to construct local low -income housing ii. Regulations Building sites must be approved by local government in accordance with federal
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ii. Regulations Building sites must be approved by local government in accordance with federal guidelines Must be located outside areas of high minority concentration, but PHAs are more eager to locate them there Aid of federal courts has been invoked to force local compliance w/ regulations iii. Local Approval State's constitutional requirement that low-rent housing project can be developed only after approval by a majority of local residents has been upheld Court held that constitutional requirement was neutral on its face and not in fact aimed at racial minorities Economic, but not racial, discrimination is permissible iv. Admission to public housing PHA is free to decide its own admission requirements w/ exception that preference is to be given veterans and persons displaces by urban renewal Some courts have held that person is entitled to an informal hearing on his eligibility v. Rent increases in public housing Tenant's right to low-rent housing is property right that is subject to due process Courts have held tenants are entitled to exercise certain rights prior to rent increases vi. Eviction Tenants may be evicted for destroying property or for being loud and unruly, etc May not be evicted for belonging to a tenants' organization or for exercising their constitutional rights

Conveyancing
5. Contract of Sale a. Generally Sale of land generally involves 2 steps 1) Contract to sell/purchase real property is signed Also specifies date for closing 2) Closing--seller giver buyer a deed to property and buyer gives seller the agreed -upon consideration How to effectively transfer title to property 2 components Execution of deed which satisfies statute of frauds Writing with description of property; granting language (intention to convey property--in TX "I hereby grant"; type of estate (maybe); signature of grantor Usually included but not necessary: Statement of consideration Does help establish purchaser status Acknowledgement (signature by notary) Delivery of deed Satisfied by act coupled with present intent to deliver Physically handing over deed in person (not typical) Usually done by escrow agent Works b/c it's irrevocable once grantor hands it to agent (as long as it's in instructions) Problems Where instructions involve transfer upon grantor's death Starts to look like will (requirements will be different, may not be effective if deemed testamentary) Sweeney Conditional deliveries can only be done through 3rd party Rosengrant
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 Rosengrant Can't just be third party Need intent and irrevocability No longer have to pass clods of dirt (delivery of seisin) Steps 1) Contract for sale Typically covers sale price, contingencies associated with money, physical conditions Covenants/obligations on part of seller regarding nature of legal title, physical condition of property May address issues related to damages/breach No one suitable form Defines relationship between buyer and seller up to when title is transferred Issues associate with risk of loss (equitable conversion), insurance 2) Executory interval Investigations (title search, property inspection) Preparation of documents Preparation of funds/financing Creation of escrow Neither party wants to act before the other Independent 3rd party to mediate the transaction Files the documents in escrow until transaction takes place Doctrine of equitable conversion Courts will treat buyer as equitable owner of property--risk of loss has shifted to buyer Pg. 552 3) Closing Mostly signing/transferring documents Deed Physical transfer from seller to buyer Financial documents Promissory note--promise to pay back lender Mortgage/Deed of Trust--Gives lender security interest in property itself Title Insurance policy--deals with issues of title From third party Typically obtained b/c lender wants the buyer to get it, naming lender as beneficiary Buyer can also get their own Closing statement--full financial accounting of transaction Notice that recording of the instrument is not required (but SHOULD always happen) After sale Rights as new owner as against former owner Contractual obligations that seller put in deed itself Can contain specific warranties on part of seller (differentiates between general deed, specific deed, quitclaim deed) Can sue for breach of marketable title? Yes--under doctrine of merger, promises seller made in contract are merged into deed, those are only promises you can sue on Contains warranties of titles and maybe other specific warranties Include in contract for sale a survivability clause (all promises must survive through closing) Promises seller makes in deeds: General warranty deed, pg. 590 6 separate warranties
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General warranty deed, pg. 590 6 separate warranties Present covenants--breached or not at time of delivery Covenant of seisin--represents seller has legal title to property Right to convey--has legal authority to execute deed Covenant against encumbrances--no mortgages, liens, etc Future covenants Covenant of general warranty Covenant of quiet enjoyment--will not be interrupted by someone with superior title Covenant of further assurances Special warranty deed Similar representations but only with regards to actions taken by grantor (limits representation to things they had control over) Usually used by trustee Quitclaim deed No warranties at all Things to figure out What's the breach? When does the breach occur? (when does statute of limitations start running?) Who can sue? Can successive purchasers? What damages for breach? b. Statute of Frauds Provides that no interest in real property can be conveyed, encumbered, etc, without a writing signed by the party to be charged "party to be charged" is party against whom it is asserted there is a contract Writing can consist of several documents that when taken together as a whole, evidence an agreement affecting real property Formal contracts are not required 2 principal exceptions Part performance Allows specific enforcement of oral agreements when particular acts have been performed by one of the parties to the agreement If the acts of the parties substantially satisfy the evidentiary requirements of statute of frauds; or A doctrine used to prevent injurious reliance on the contract--plaintiff must show that he would suffer irreparable injury if contract not enforced Estoppel Unconscionable injury would result from denying enforcement of the oral contract after one party has been induced by the other seriously to change his position in reliance on the contract c. Essential Terms Writing must contain all the essential terms for the agreement "essential terms" are words of art meaning the following terms: Description of the property sufficient to make clear what property the parties have in mind Price (some courts imply "reasonable price" or "market price") The parties Other terms and conditions pertinent to the transaction (manner of payment, etc) d. Specific Performance Since all real property is unique, courts will use their equity powers to compel a buyer or seller to go through with a deal, rather than award damages
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seller to go through with a deal, rather than award damages Aggrieved party must ask for specific performance Hickey v. Green a contract for transfer of an interest in land may be specifically enforced if there was no compliance with statute of frauds if party seeking enforcement reasonably relied on contract and changed her position, so that injustice can be avoided only by specific performance Rule set forth in Rest 2nd of Contracts, 129 In present case, D knew Ps were planning to sell their house and they did so rapidly w/out obtaining any adequate memorandum of terms of what appears to have been quick sale P relied on D's oral promise P bound themselves so that to avoid transfer of their home they might have to engage in costly litigation D does not deny oral contract In equity, D's conduct cannot be condoned Neither party showed expectation of written agreement No public interest will be violated if D is held to her bargain by principles of equitable estoppel subject to following: Ps have already conveyed or are still obligated to convey their property, and Case is remanded for trial judge to require D to convey the property only upon payment to her in cash of balance of original purchase price If Ps no longer have obligation to sell their house, trial judge may require full restitution of Ps of all reasonable costs in respect to this transaction rather than specific performance Conveyance did not satisfy statute of frauds b/c the check did not count In order to satisfy you need: Adequate property description Amount Signatures of both parties (at least the party being brought into court) Hickey had sold his own house--why did court assume he has enforceable obligation? (all he had was check as well) He had endorsed the check Certain exceptions in which court will accept oral contracts Equity--when it would be unfair not to enforce it Excessions? Change of possession at a minimum (most jurisdictions) Could not be remedied just by money In this case, the court uses equity Did not require possession b/c parties did not deny existence of oral contract If there had been a dispute, more may have been required But it was also foreseeable (another element that court adds) e. Oral revocation Most states hold that statute of frauds applies only to the making of a contract affecting an interest in land and will thus allow subsequent oral modification or revocation of the contract f. Time of Performance Unless contract specifies that time is of the essence, if contract is not performed on the date called for in the agreement, each party has "reasonable" time in which to complete its performance 6. Marketable Title a. Generally absent an express provision to the contrary, it is implied in every contract for the sale of land that the seller will furnish the buyer "marketable title" to the property at closing Title must be reasonably free from doubts; one that a prudent person would be willing to
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b.

c.

d.

e.

Title must be reasonably free from doubts; one that a prudent person would be willing to buy Does not mean perfect title, just one that is good enough for title insurance company to be willing to insure in regular course of business Seller has to deliver title that is free from the likelihood of litigation Ensures against any encumbrances (covenants, etc) Bases for breach Private contractual covenant that existed on the title (had to have 2 stories) Did this constitute breach? NO b/c parties has expressly waived it Zoning ordinance (3 feet from line) The mere existence of this ordinance does not constitute breach What is the difference between the two? Private covenants are easily searched for by title search (must be recorded) Zoning restrictions are harder to discover When is marketable title breach? When does it get delivered? Must jurisdiction, seller is given reasonable amount of time to correct it How do they insure closing date? Seller also promised to ensure Buyer may have put him into position not to deliver marketable title in the future --wants it as strict at possible Doctrine of merger--all obligations merge into deed at closing You cannot sue on promises made on title? What about title by adverse possession? Is it marketable? Seller needs to undertake quiet title action and show that he satisfied all elements of adverse possession Risk of litigation falls on buyer? How could you avoid it? Put it in the contract--seller has to provide marketable title of record Piece of property with sewer line owned by private 3rd party They have to have legal right to run this line --easement (non-possessory right of use of property by somebody else) What if buyer knows about it? You've waived the defect Good Record Title Less frequently contracts will call for seller to furnish this Means that seller must furnish good title based on the documents in the chain of title Precludes title by adverse possession Defects in Title Numerous possible defects Defect in one of the instruments in chain of title Private encumbrances Unrecorded easements Covenants Restrictions on use of property Curing Title Defects Normally, seller has until closing to cure any defects Minor defects (unrecorded release of lien) may be remedied by seller setting aside from the purchase price sufficient funds to cover the lien until he procures the release Seller must deliver property unencumbered (no outstanding mortgages or liens) If seller is willing and able to discharge mortgage at closing, then mortgage does not render title unmarketable If an easement benefits the property, also does not make it unmarketable Neither do zoning restrictions Violation of public and private restrictions
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e. Violation of public and private restrictions Lohmeyer v. Bower This case was not about mere existences but about the violations of them --breaches of private covenants can constitute breach of marketable title violation of private and public restrictions renders title unmarketable Case requires determination of a) Whether the encumbrances to which property was subject made the title unmarketable; and b) If so, did they fall within an exception provided for by the contract? P does not base his suit upon the fact that there existed both a private restrictive covenant and public zoning restriction, but upon the violation of the restrictions 2 general rules applicable are a) Existence of municipal restrictions is not ground for buyer to rescind contract, and b) Private covenants may constitute encumbrances rendering title unmarketable "marketable" title is one that is free from reasonable doubt, and a title is doubtful and unmarketable if it exposed the party holding it to the possibility of litigation Defects in title must be substantial, not minor Immaterial defects do not diminish the value of the property and are no grounds for buyer to rescind 2 violations here exposed P to litigation, thus D could not convey marketable title While contract provided that conveyance was to be made subject to all restrictions, that provision referred to the existence of the restrictions Did not permit the violation of the existing restrictions 7. Risk of Loss a. Generally b/c property is subject to being damaged or destroyed between the time the contract is entered and the transaction is closed, allocation of the risk of loss is an important matter to be resolved b. Equitable Conversion If there is a specifically enforceable contract for the sale of land, equity regards as done that which ought to be done 2 step method of conveying can cause problems This doctrine often applied by courts to solve these Between date of contract to sell and closing, this doctrine steps in and treats the buyer as having title to property Treats buyer as equitable owner of the land with the seller as the legal owner Seller's interest is deemed security for the debt owed him by the buyer Buyer still does not have right of possession until closing c. Alternative Approaches Majority rule is that once buyer acquires equitable title, the risk of loss passes to him Minority rule is directly opposed Risk of loss remains with the seller until closing If damages are slight, the buyer must still go through with the sale but he is entitled to have the purchase price abated by the value of the damages 8. Duty to Disclose Defects Obligation of seller regarding physical condition of premises Common to have warranties made by seller representing wide array of conditions, or "as is" clause CL rule was caveat emptor--seller has no duty to disclose anything about premises Exceptions Seller made an active/affirmative/material misrepresentation Seller took steps to conceal defect This is changing--statutory changes Sellers are required to make affirmative representations regarding their
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This is changing--statutory changes Sellers are required to make affirmative representations regarding their knowledge of premises/defects Stambovsky--affirmative duty on seller to disclose Comprehensive Environmental Response, Compensation, and Liability Act Imposes strict liability for cleanup costs of hazardous waste upon any current owner or operator, any prior owner at the time it was contaminated, any generator of hazardous waste, and transporters Amended to establish "bona fide prospective purchaser" defense Generally, an "as is" clause will be upheld if defects are reasonably discoverable and there is no fraud Stambovsky v. Ackley the remedy of rescission may be properly applied to the doctrine of caveat emptor where a condition that has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by prudent purchaser exercising due care with respect to the transaction Doctrine of caveat emptor imposes no duty on vendor to disclose any info concerning premises unless there is a confidential or fiduciary relationship between the parties or some conduct on the part of the seller that constitutes "active concealment" Requires buyer to act prudently and operates to bar purchaser who fails to exercise due care from seeking rescission D is estopped to deny the existence of the apparitions and, as a matter of law, the house is haunted Reputation of the house goes to the very essence of bargain, greatly impairing both the value of the property and its potential for resale Extent of impairment represents issue of fact for resolution at trial Most meticulous inspection would not reveal the presence of ghosts or unearth the property's ghoulish reputation No sound policy reason to deny P relief for failing to discover a state of affairs that the most prudent purchaser would not be expected to even contemplate D's contention that merger or "as is" clause bars P's recovery is unavailing Even an express disclaimer will not be given effect with the facts are peculiarly within the knowledge of the party invoking it Here, merger clause expressly disclaims only representations made with respect to the physical condition of the premises If the language of contract was construed as broadly as D urges to encompass presence of ghosts, it cannot be said that she has delivered the premises "vacant" in accordance with her obligations Dissent: Existence of ghosts is not binding on D or on this court 9. Material Defect Known to Seller In jurisdictions requiring disclosure, defect must be material to be actionable i. Objective test Whether a reasonable person would attach importance to it in deciding to buy ii. Subjective test Whether the defect "affects the value or desirability of the property to the buyer" Johnson v. Davis seller of a home who fails to tell the buyer of a material defect known to the seller may be liable for damages caused by the fraudulent concealment Under CL, there was no liability for nonfeasance--D's failure to tell P of latent defect would not be actionable But, it is not always easy to make distinction between misfeasance and nonfeasance, active conduct and passive conduct Failure to disclose a material fact when it is intended to induce a false belief is close to an affirmative representation In such situations, both misfeasance and nonfeasance arise from the same
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an affirmative representation In such situations, both misfeasance and nonfeasance arise from the same motives and have the same effect Modern notions of justice, equity, and fair dealing require that doctrine of caveat emptor be restricted Other jurisdictions have held a home seller liable for failing to disclose material defects of which he was aware--this is better approach and should be applied in Florida We hold where the seller of a home knows of facts that materially effect the value of the home but are not readily observable and are unknown to the buyer, the seller has a duty to disclose them to the buyer D's failure to tell P of the roof problems constitutes fraudulent concealment P is entitled to return of deposit and should be awarded costs and fees Seller made affirmative representation--this would have been enough Rejects caveat emptor b/c seller has actual knowledge of condition, condition is material, and is not readily observable by buyer (latent defect) Is seller in a better position if she had blinded herself to the conditions? 10. Remedies for Breach of Contract a. Available Remedies Remedies when other party breaches contract for sale Mirror remedies for breaching any other contract 1) Damages 2) Specific performance 3) Rescission Seller's Remedies Rescission--just let it go Damages--Jones v. Lee Usually loss of benefit of the bargain, measured by difference between what they had agreed to sell the house for, and the fair market value at time of breach Some courts say contract price minus price you eventually sold it ford Hard to prove FMV When was the breach Both buyer and seller may seek certain remedies if contract for sale of real estate is breached Non-defaulting party may select from: 1) Damages 2) Retention of the deposit (sellers) or restitution of the deposit (buyers) 3) Specific performance of the contract If buyer breaches Money damages Benefit of the bargain Jones v. Lee What about liquidated damages? If contract specifies, court will enforce it, subject to some limitations Have to have reasonable relationship to damages that arise Can't be a penalty What is reasonable? 10% of sale price is rule of thumb Usually done with security deposit if specified in contract Is contract exclusive? Seller may be limited in options--may have to accept liquidated damages? If not specified in contract, can seller keep security deposit? Kutzin Specific performance--possible? Certainly if contract specifies If not in contract, most courts would say yes Caveat: seller can be made whole by payment of money Some jurisdictions only performance if the above can't happen
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Caveat: seller can be made whole by payment of money Some jurisdictions only performance if the above can't happen If seller breaches Buyer's ability to recover may depend on reason for seller's breach If seller decides to sell to someone else, buyer should be able to recover benefit of bargain If seller breaches in good faith b/c of inability to obtain marketable title, buyer's recovery may be limited to money paid Specific performance Always--all property is unique b. Measure and type of damages determined Jones v. Lee Court may award compensatory, special, and punitive damages to a seller of real estate if purchaser defaults on the contract P elected to sue for damages as remedy for D's default P's burden is to provide evidence to support the claim so they may receive just compensation commensurate with their loss This state follows the "loss of the bargain" rule: the measure of damages being the difference between the purchase price in the breached contract and the market value of the property at the time of breach Parties stipulated that property was valued at $610,000 when D presented proposed termination agreement, and D contends P's property was valued at contract price at time of breach If true, sellers are limited to recovery of only nominal damages or forfeiture of earnest money Here, no determination of the date of the breach or property's market value at that time Case must be remanded for express findings on these matters and to determine what effect to give the stipulation Special damages may be awarded if shown to have resulted as natural and probable consequence of breach and if, at time contract was formed, breaching party reasonably knew or should have anticipated that such damages would be incurred Court's awards for inspection of solar heating system and heating warranty were not in error These were reasonably foreseeable requirements that future purchaser might impose, and payment for warranty was specifically provided for in sales agreement Mortgage interest payments awarded here were reasonably foreseeable In attempting to persuade P to terminate contract, D frightened her and misrepresented their financial circumstances D's failure to consummate the contract was wanton, reckless, in utter disregard of their obligations, and sufficient to warrant the imposition of punitive damages Problem in figuring out time of breach Special damages (incidental damages) Recovery of interest payments and taxes In a down market, how long does the breaching buyer remain liable? Have to wait for eventual sale (if it ever comes)? Buyer able to take time in finding new buyer? Probably a duty to mitigate Court offset award by money that seller saved by breach (credited buyer by value of occupation of seller) Solar inspection--buyer able to recover cost of the inspection Why? Would any seller require him to pay for inspection? Wouldn't it have been reflected in purchase price? Is it already calculated, therefore giving him double recovery? Punitive damages
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 Punitive damages Not typical from breach of contract, but this court allowed it b/c breaching buyer "was a jerk"? It was a bad faith breach c. Buyers entitled to restitution of deposit money in excess of damages Kutzin v. Pirnie If real estate sales contract does not contain a forfeiture or liquidated damages clause, and buyer breaches the sales contract, seller may NOT retain buyer's entire deposit if buyer shows that deposit exceeds amount of actual damages resulting from breach In absence of forfeiture clause in sales contract, we have looked to CL, which provides that defaulting buyer may no recover her deposit whether there is a forfeiture provision or not There is growing recognition of injustice that results from this rule Rest 2d Contracts 374(1) and courts in several jurisdictions have moved away from CL rule to permit a defaulting buyer who can show that a deposit exceeds the amount of actual damages resulting from breach to recover the excess We overrule our state cases adhering to CL rule and adopt modern approach To allow retention of entire deposit would unjustly enrich the seller and would penalize buyer, but a buyer who argues unjust enrichment has the burden of proving it When breaching buyer proves his deposit exceeds seller's actual damages, buyer may recover difference Here we do not consider the validity or enforceability of a liquidated damages clause Judgment of appellate court is modified to reinstate trial court's damage award D is entitled to restitution of their deposit in excess of the loss caused by breach We accept trial court's finding that P suffered $17,325 in damages b/c not challenged here D entitled to recover $18,675 This court reject majority view, requires seller establish damages Don't want a windfall Dispute over whether seller can keep deposit Majority rule is that when buyer breaches a contract to purchase land, seller may elect to retain the down payment b/c of "difficulty of estimating actual damages" even if sales contract has no liquidated damages provision 11. Deeds a. Requirements i. Generally The grantor, and only the grantor must sign the instrument Very good idea to have the grantor notarize his signature so deed will comply with recording acts Often signature of spouse is required Avoids problems caused by spouse's right to community property, etc. Any words evidencing an intent to make a transfer will suffice Must name an ascertainable grantee Property to be conveyed must be described ii. Consideration A deed does not require consideration to support it Grantor may give the property away iii. Failures in the Description of the Property Can be described by metes and bounds, recorded plat, the name of the property, and the street address Extrinsic evidence is normally admissible to clear up any ambiguity in description CL classified ambiguities as latent or patent Latent--one not on the face of the deed; can always be resolved by turning to
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 Latent--one not on the face of the deed; can always be resolved by turning to extrinsic evidence Patent--one on the face of the deed; cannot be resolved by extrinsic evidence Modern trend admits extrinsic evidence to resolve both types iv. Forgery and Fraud Forged deed is void Grantor whose signature is forged to a deed prevails over all other persons, including subsequent bona fide purchasers Deed procured by fraud is voidable by the grantor in an action against the grantee BUT, a subsequent bona fide purchaser from the grantee who is unaware of the fraud prevails over the grantor b. Warranties of Title i. Types of Deeds Warranting Title 1) Warranty Deed Usual type of deed; contains usual covenants; warrants title 2) Special Warranty Deed Contains usual covenants but warrants title only from defects arising during the time the grantor has held the land (general warranty deed has no such limitation) 3) Quitclaim Deed Does not warrant anything; only transfers whatever interest the grantor has, r ay have, in the property ii. Usual Covenants Present Covenants--generally state that "I, the grantor, warrant that as of the date of this deed, I have not breached this particular covenant"; these are breached, if at all, when conveyance is made; SOL begins to run at date of conveyance; generally do not run with the land--are "personal" a) Covenant of Seisin--seller covenants he owns the property conveyed b) Covenant of right to convey--warrants that he has the right to convey the property c) Covenant against encumbrance--promises there are no easements, covenants, morgages, or liens on the property; almost all property is subject to some encumbrance, so usually will be stated "except as enumerated herein" Future Covenants--continuing covenants that may be breached at the moment of conveyance or anytime thereafter; SOL does not run until there is actual breach; generally run with the land d) Covenant of quiet enjoyment--warrants that the buyer will not be disturbed in her possession of the property by the lawful claim of a 3rd party e) Covenant of warranty--title to property is good and that grantor will defend at his own cost any suit from a party claiming paramount title f) Covenant of further assurances--seller promises to perform whatever acts are necessary to perfect the buyer's title to the property; rare in US Merger Sometimes there is discrepancy between what is promised in the contract for sale and the deed General rule is that, absent provisions in the deed to the contrary, the contract of sale and the deed merge, leaving only those covenants that are contained in the deed Modern trend is to hold that acceptance of the deed does not bar a suit on the contractual promises iii. Breach of Covenants 1) Generally Present covenants Broken at the time deed is delivered Future covenants
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 Future covenants Breached when grantee or successor is evicted, buys up paramount claim, or is otherwise damaged Breach of covenant of seisin Return of all or a portion of the purchase price Breach of covenant against encumbrances If encumbrance is easily removable (mortgage), measure of damages is cost of removal If not easily removable (restrictive covenant or easement), measure is difference in value between land with the encumbrance and without it Damages always limited by total price received by warrantor 2) Present vs. future covenants Brown v. Lober warranty of quiet enjoyment does NOT constitute a warranty that the grantor is the owner of the entire estate as conveyed Question is whether P has alleged facts sufficient to constitute a constructive eviction P contends that when a covenantee fails in his efforts to sell an interest in land b/c he does not own what his warranty deed purported to convey, he has suffered a constructive eviction This is not true Covenant of quiet enjoyment only guarantees the covenantee (buyer) that his peaceable possession of the land will not be taken from him Does not guarantee to the buyer that there is no one with a paramount title Thus, if the buyer never attempts to occupy the land, his possession can never be other than peaceful To possess a mineral estate, one must undertake the actual removal of the minerals from the ground Possession of the surface does not carry possession of the minerals Since no one has undertaken to remove the minerals, the mineral estate is "vacant" Until such time as one holding paramount title interferes with P's right of possession (begins mining coal) there can be no constructive eviction, and no breach of the covenant of quiet enjoyment Protection of covenant of quiet enjoyment should not be extended to an area governed by another covenant (that of seisin) Here, the fact that the Bosts had only a 1/3 interest in the mineral rights was of public record, yet P failed to bring suit w/in 10 years following delivery of the deed 3) Latent land use violation Frimberger v. Anzellotti a latent violation of a restrictive land use statute or ordinance, that exists at the time the fee is conveyed, does NOT constitute a breach of the warranty deed covenant against encumbrances Encumbrance is "every right to or interest in the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance Three types First. Pecuniary charge against the premises (mortgages, tax liens) Second. Estates or interests in the property less than the fee (leases, life estates) Third. Easements or servitudes on the land (restrictive covenants, rights of way) Cannot be breached unless encumbrance existed at time of the
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rights of way) Cannot be breached unless encumbrance existed at time of the conveyance Latent violations of state or municipal land use regulations that do not appear on the land records, that are unknown to the seller of the property, as to which the agency charged with enforcement has taken no official action to compel compliance at the time the deed was executed, and that have not ripened into an interest that can be recorded on the land records do not constitute an encumbrance for the purpose of the deed warranty Such a conceptual enlargement of the covenant against encumbrances would create uncertainty and confusion in the law of conveyancing and title insurance b/c neither a title search nor a physical examination of the premises would disclose the violation P never filed an application; thus any damages P may have suffered were speculative Proper way to deal with violation of governmental regulations is by contract provisions or language in the deed b/c we have held that a warranty of a covenant against encumbrances was not violated, no misrepresentation was made 4) Remote Grantees Rockafellor v. Gray covenant of seisin runs to a remote grantee even if the original grantor never had actual possession of the land Have previously adopted the minority rule (English Rule) and held that warranty of seisin runs with the land to remote grantees and is broken the instant a defective conveyance is delivered (majority rule is American Rule) Because on the day Connelly conveyed land to Dixon he had no title and no possession of the premises, the covenant of seisin was breached Covenant ran with the land to H & G, Dixon's successors H & G filed their cross-petition within the 10 year SOL Orginal covenantee, Connelly, is bound even if he does not have title or actual possession at the time of his conveyance This still leaves issues of whether the covenant of seisin runs with the land since the original covenantee, Connelly, was never in possession Some courts hold that possession (seisin) itself is what causes the covenant of seisin to run with the land We reject this hypertechnical theory As to the amount of judgment: Proof of actual consideration would be admissible only in a suit between the grantor (Connelly) and the original grantee (Dixon) In all other cases the consideration recited in the deed is a conclusive admission by a defendant of the land's value Connelly contended that although the deed recited consideration of $4000, the real consideration was nominal He had parol evidence to support this Damages are limited to the amount paid by the orginal grantee to the original grantor plus interest H & G cannot recover the amount it paid to Dixon ($7000) c. Delivery i. Generally One of the requirements of a deed is that it must be delivered by the grantor, otherwise ineffective 2 requirements: a) Grantor, by words or conduct, must manifest an intent to make the deed effective; and b) The grantor must immediately give it to the grantee (some modern cases have
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b) The grantor must immediately give it to the grantee (some modern cases have relaxed manual delivery requirement where it is clear grantor meant for grantee to receive the property) Evidence of intent--extrinsic evidence is admissible to prove delivery or nondelivery Delivery cannot be canceled--to get property back, it must be deeded back to grantor Estoppel--even if there is no delivery grantor may be estopped from denying delivery if a subsequent good faith purchaser for value is involved ii. Types of Delivery 1) Grantor-grantee Delivery When the grantor has possession of the deed, a rebuttable presumption arises that there was no delivery Presumed that if the grantee has the deed, there was delivery If deed is recorded or grantor has acknowledged his signature, presumed there was valid delivery Once delivery is shown, it is presumed to have taken place on date of grantor's signature 2) Delivery subject to a condition (this deed to take effect only upon my death) If condition is expressed in the deed, usually held that there has been valid delivery of a future interest (grantor retaining life estate) If condition is that the grantee survive the grantor, delivery is valid CL is to the contrary Modern trend is to give effect to deeds that reserve in the grantor the power to revoke the deed prior to the date it passes legal title to the grantee Oral conditions attached to a deed on its face are invalid iii. Unsuccessful conditional delivery Sweeney v. Sweeney delivery of a deed is NOT deemed conditional when it is made to the grantee Maurice, for only a short time, physically possessed the unrecorded deed that reconveyed the property to himself Physical possession is not conclusive proof that it was legally delivered however To be effective, the delivery must have been made with the intent to pass title Parties executed the attestation clauses on the deeds, which constitutes prima facie proof that the deed was delivered to Maurice No facts rebut this presumption Very purpose of reconveyance was to protect Maurice if D predeceased him This purpose would have been frustrated if no present interest to deliver had existed, b/c in that case the reconveyance would have been ineffective Present delivery must have been intended by D D claims any delivery was only conditional on D's predeceasing Maurice However, delivery to the grantee cannot be conditional Delivery to a grantee vests absolute title in the grantee Conditional deliveries can only be affected through the agency of a third person, who then delivers the deed to the grantee upon the occurrence of the condition Conditional deliveries can only be done through third parties How could they have accomplished their goal (John getting property if Maurice dies first)? Put it in trust with instructions Joint tenancy with right of survivorship Probably would have to convey to lawyer first Maurice keeps life estate and John has contingent remainder
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 Maurice keeps life estate and John has contingent remainder iv. No intent to part with the power to retake Rosengrant v. Rosengrant Writing on the envelope indicates the deed was retrievable at any time prior to his death by Harold Harold continued to farm the land, pay taxes, claim it as his homestead, and otherwise control the land Harold attached a condition to the delivery of the deed that it would become operative only after their deaths He was attempting to use the deed as a will Delivery to D was symbolic Did not carry "all the force and consequence of absolute, outright ownership at the time of delivery" Concurrence: Valid delivery requires actual or constructive delivery of a deed to the grantee or third party and the grantor's intention to divest himself of the interest conveyed Rosengrants' subsequent actions indicate they intended to reserve a de facto life estate or retain the power to revoke the conveyance v. Delivery to 3rd parties (escrow)--occasionally a grantor may want to make the transfer conditional on the occurrence of some event; requires use of a third party 1) Escrow If grantor delivers the deed to a 3rd party w/ instructions that he deliver it to the grantee on occurrence of certain conditions, this is deemed an effective present delivery so long as the grantor does not retain the right to revoke the delivery Third party is an escrow agent and instructions are contained in an escrow agreement In order to avoid gaps in title, grantee is deemed to have received title when grantor delivered the deed into escrow 2) Reservation of the power to revoke General rule is that by reserving the power to revoke, grantor still has such control of the deed that there is no delivery Modern trend is to recognize the delivery so long as there is no actual revocation Some courts will consider the delivery valid only if the contingency is beyond the grantor's control vi. Estoppel of Grantor Estoppel may operate to prevent the grantor from denying that he delivered the deed to the grantee In cases involving wrongful delivery by the escrow agent, majority rule is that the grantor is not estopped from asserting nondelivery vii. Estoppel by Deed If grantor conveys an estate that he does not own, and later acquires the estate, grantee gets that interest Founded on proposition that by conveying what he does not own, grantor has impliedly promised to immediately convey it to the grantee when he does acquire it 12. Title Assurance/Recording Acts a. Intro Recording does not directly affect the rights of the grantor and grantee vis-a-vis themselves Does affect the right of people who subsequently receive the property from the grantee Purpose of recording is to give notice to the public as to who has what interest in the property Recording furnished constructive ("record") notice to everyone b. Method of Recording--grantee files the deed with the country recorder; deed must be
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b. Method of Recording--grantee files the deed with the country recorder; deed must be "acknowledged" (signed in front of notary) i. Grantor-grantee index Conveyance is filed chronologically, names are listed alphabetically Record of the filing is kept in 2 books, one for grantors, one for grantees First determine year of the conveyance and look up grantee's name, then determine from the book who his grantor was, then look up that name as grantee Process repeated until reaching the initial conveyance of the land ii. Tract Index Each plot of land is given tract, block, and lot number Recorded documents are filed in chronological order under each tract, block, lot Simplifies title searching considerably c. Effect of Failure to Describe the Property with Specificity Luthi v. Evans a general assignment, when recorded, is NOT sufficient to give constructive notice to an innocent purchaser for value A clause in a conveyance describing the property to be conveyed as "all of the grantor's property in a certain county" is commonly referred to a "mother hubbard" clause Although seldom used in Kansas, have been upheld for many years as binding between the parties Here, both D1 and D2 agree the clause was valid as between the parties to that instrument A single instrument may convey separate tracts by specific description and by general description capable of being made specific A subsequent purchaser who has actual notice or knowledge of an instrument takes subject to the rights of the assignee or grantor This is not applicable here since D2 did not have actual notice Kansas recording statutes evince a legislative intent that instruments of conveyance should describe the land conveyed with sufficient specificity to enable the register of deeds: To determine the correctness of the description from the numerical index, and To make it possible to make any necessary changes in address records fro mailing tax statements Purpose of recording statutes is to impart knowledge to subsequent purchasers of the instrument that affects one's title to a specific tract of land The specific land conveyed must be described sufficiently to be identified Since Kufuhl lease was not describe in the instrument, recording the instrument was not sufficient to be constructive notice to D2, who did not have actual notice of Kufuhl lease This does not mean that as between Owens and D1 the conveyance was ineffective, nor does it mean that a properly recorded but improperly indexed instrument is not constructive notice to subsequent purchasers Notice jurisdiction Orr v. Byers an abstract of judgment containing a misspelled name does NOT impart constructive notice of its contents under the doctrine of idem sonans Doctrine of "idem sonans" provides that although a person's name as been inaccurately written, the identity of such person will be presumed from the similarity of sounds between the correct pronunciation and the pronunciation as written Therefore, absolute accuracy in spelling names is not required in legal proceedings and if the pronunciations are practically alike, the rule of idem sonans is applicable Rule is inapplicable where the written name is material, as it is here The rule is viable for purposes of identification but not to give constructive notice to
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Rule is inapplicable where the written name is material, as it is here The rule is viable for purposes of identification but not to give constructive notice to good faith purchasers for value To apply the doctrine here would place undue burden on the transfer of property d. Types of Recording Acts--at CL, the first person to record had priority; all states have recording acts replacing the common law i. Race Statutes--few states have them; first to record has priority, even if the person recording knew of prior unrecorded conveyances 2 competing claims, first one to be recorded is the valid one Doesn't matter what they know (B, even if he knows about A, can still get title as long as he records first) Fairness questions More states have them for other types of interests ii. Notice Statutes--subsequent purchaser for value prevails over a prior grantee who has not recorded unless the BFP has actual or constructive notice of the prior conveyance at the time of the conveyance to him If A records after conveyance to B, then depends on what B knew The last person who took without knowledge has the valid title If B takes without knowledge, then B has valid title But if he did know, then A has it O to A, then O to B, then A records, then O to C A has already recorded, so C has knowledge, cuts off possibility of any future conveyance--A gets it Problem--you want to buy a property, who do you contact? (O to A, O to B, B records) Need to know what B knew Not very efficient--doesn't give subsequent purchaser certainty just by checking records iii. Race-Notice Statutes--in order to cut off a prior grantee, BFP must both record first and have no actual or constructive notice of the prior conveyance Among parties who took without knowledge, it is first to record Viewed as compromise between fairness and efficiency If A immediately records, cuts off possibility of anyone else iv. Improperly acknowledged deed Messersmith v. Smith an improperly acknowledged deed is NOT capable of being recorded Seale claimed title to land under a statute that voided all unrecorded real estate conveyances (such as P's) if there was a subsequent purchaser (such as Seale) who: Bought the land in good faith, and For valuable consideration, and Recorded first Seale cannot prevail since the deed was improperly acknowledged (Caroline did not sign it in front of the notary) and as such was legally incapable of being recorded Thus, Seale does not fall within the protection of the statute Rehearing: Holding has narrow scope Applies to situations involving a prior unrecorded valid deed and a subsequent deed that was improperly acknowledged and thus not worthy of being recorded This situation differs from a prior properly acknowledged deed not entitled to be recorded b/c of a latent defect Many jurisdictions hold direct opposite of this case e. Effect of Recording All subsequent prospective purchasers are put on notice of the existence and contents of the recorded document
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recorded document No subsequent purchaser can be a BFP since to be one you must take the property w/out notice of prior conveyances Recording does not make an invalid deed valid nor does it protect one from interests in the land arising by operation of law Effect of not recording--subsequent BFP can cut off one's interest in the property, leaving one to sue his grantor Statutes pg. 669 Look at who you're getting protection from Against certain types of prior conveyances FL: no conveyance, mortgage, or lease for longer than 1 year CA: every conveyance or lease longer than 1 year Only protect against prior conveyances (not if land gained by adverse possession) Also has to be bonafide purchaser Need consideration Donee may need to use shelter act to get valid title Recording act will not protect against property obtained by fraud (even if B is innocent purchaser) When does B have knowledge of prior conveyance? If B has actual knowledge Inquiry knowledge--should have known (still involves off-record knowledge) Constructive notice B will be said to have notice by operation of law/as matter of law The act of recording sets up this situation Regardless of what B knows or should have known, as long as A's act of recording is discoverable, B has constructive notice, A has cut off any future purchaser's claim Important to know how you can do proper search of records 2 types of recording systems For each property there is card that lists conveyances Not very common, b/c not the historical way things were done May be done by title insurance companies Chronological record, but indexed in 2 ways (they will tell you where in chronological record it can be found): By grantor's name By grantee's name O to A, O to B, B records, B to C, C records, A records Race jurisdiction: C Notice jurisdiction: C Race-notice: C What if B's recording is ineffective?? (not notarized, for ex) Race: C Notice: C Messersmith v. Smith Race-notice: C does not have shelter rule, but is C independently is protected?--not explained very well Zimmer Rule--says your recording is not effective unless it's linked with other effective records--can't link it with B so C cannot independently establish But C would have discovered gap? Would have recorded O to B as well BUT in this case, it was actually physically recorded, so C saw it and couldnt have known it was ineffective Court makes it more dangerous for purchasers Ex. 2 (4?)
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 Ex. 2 (4?) O to A, A to B, B records, O to C, C records, A records Notice: C (saw C's recording, but only that it was A to B, nothing about O) Race-notice: C Board--classic wild title Gap in title--if B had done his hw he would have discovered gap Title insurance companies generally keep their records by tract (each piece of property has it's own history) If you make search, but one of records was forged, you are not protected by recording acts A grants easement across his property to B's property, recorded in the deed A then sells to C If C looked up A's granting--would not see the easement he granted to B Would discover it only if you looked up all of A's grants, not just for the property you want to buy Guillette--you have to search all of the records 13. Chain of Title Problems a. Intro To give notice to subsequent would-be purchasers, an instrument must be recorded in the "chain of title" (refers to the title established by the grantor's predecessors up to the time of the conveyance to the grantee Special problems arise when instruments are improperly recorded O to A, then O to B Putting aside recording property, who owns property? A, b/c CL rule is "first in time, first in right" Can B sue O? what warranties might have been breached? If quit-claim deed, then none Other deeds, he may have breach of covenant of seisin Maximum he recovers would be sale price May have title insurance B may also have action for restitution or unjust enrichment O to A, then O to B, B records without knowledge of prior transaction In every jurisdiction, B gets property over A (contrary to CL) This is due to recording acts Bona fide purchaser for value may have better title than prior conveyance Effect of recording acts: Sets up recording system, public system Changed common law Why? Helps prevent uncertainties, maintains efficient system Provides mechanism by which you can protect yourself recording is not necessary, A can still have title to property But possible that later conveyance will have precedence Recording acts give incentive to follow them O to A, A records, O to B, B records In a race statute--A has title In notice statute--A has title In race-notice statute--A has title O to A, O to B, A records, B records Race--A has title Race-notice--A has title Notice--B has title (assuming he didn't know anything) O to A, O to B, B records, A records Race--B has title Race-notice--B has title Notice--B has title
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 Notice--B has title O to A, O to B, A records, B to C, B records, C records Race--A has title Race-notice--A has title Notice--C has title (because B has title under recording acts) "shelter rule"--if you obtain title from someone who herself was entitled to property under recording, you are sheltered--you claim their protection What is search process of indexes? Look up simultaneously--should be able to find some constructive knowledge For ex: 1930--A to B 1950--B to C 1970--C to D 1975--D grants easement to X 2000--D to E We are Z and want to buy property Dealing with E and want to check state of title Start by looking in Grantee index for E Will give you D's name Then you look up D as grantee, and so on until you get to A Generally go back depending on jurisdiction's rules on scope In this manner, you discovered all the conveyed interests (but not, for ex, X) Then look in grantor's index and go forward This will allow you to discover the easement Still have to figure out if X released the easement b. Prior unrecorded deeds in chain Board of Education of Minneapolis v. Hughes a record of a deed from an apparent stranger to the title is NOT notice to a grantee of a prior unrecorded conveyance by the grantor There is conflict in authority, but better rule is that because the deed was complete in all other respects, the insertion of D's name by him did not invalidate the otherwise valid deed D had authority to fill in his name, which, if not express, could at least be implied from the circumstances For that reason, deed to D as operative once he inserted his name as grantee Because D's deed was only effective when he filled in his name as grantee, D was subsequent purchaser The record of the deed from D & W to P was not notice to D of the prior unrecorded conveyance by Hoerger Was merely the record of a deed from an apparent stranger to the title As subsequent purchaser, D was protected by recording his deed before the prior deed from Hoerger to D & W was recorded Recording statute does not give priority to a prior recorded deed that shows no conveyance from a record owner P's deed would only have priority if the deed to P's grantor had been recorded before D's deed c. Deeds recorded before grantor obtains title If grantor does not have title at the time he conveys but subsequently obtains title, doctrine of estoppel by deed applies Grantor must then convey the property to the grantee Jurisdictions are split as to whether a recorded deed taken from a grantor without title is in the chain of title d. Subdivision restrictions Courts are also split as to whether subdivision restrictions contained in the deeds to the
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d. Subdivision restrictions Courts are also split as to whether subdivision restrictions contained in the deeds to the other lots in the subdivision are outside the chain of title To hold that they are within the chain of title imposes on a would -be buyer the burden of searching all the deeds flowing from a common grantor Restrictions in neighbor's deed Guillette v. Daly Dry Wall, Inc. a grantee is bound by restrictions in deeds to its neighbors from a common grantor when it took without knowledge of the restrictions and under a deed which did not mention them Statute of Frauds prevents enforcement of restrictions hen the common grantor has not bound his land by writing In this case, Gilmore did bind his remaining land by writing, so D as a subsequent purchaser from Gilmore takes title subject to the restrictions in P's deed D claims it was only required to determine whether there were restrictions in prior deeds in its chain of title However, P obtained not only 1 lot, but also an interest in the rest of the land still owned by Gilmore P's deed was properly recorded Even though it may be burdensome for a title examiner to search all deeds given by a grantor in the chain of title while he owned the premises in question, it is not an impossible task As a purchaser of part of restricted land, D took subject to those restrictions that could have been discerned from the records D's deed referred to a recorded subdivision plan even though the restrictions were not mentioned e. Recorded instrument that refers to unrecorded instrument Generally, the buyer must make inquiry into the contents of the unrecorded instrument f. Recorded instrument that is defective Similarly, inquiry must be made g. Knowledge Courts are split on question of constructive notice when a prior deed from an owner is recorded after a later deed from the same owner Woods v. Garnett? Constructive knowledge will consist of searching public records and the scope you need to search (a legal question) Pg. 685 not that important--not on final, just what we talked about Messersmith--your recording will not be valid until you link it up to previous valid title without any gaps (race-notice jurisdiction)

Judicial Control of Land Use

14. Competing Interests Among People who separately own land Looked at to some extent in Kelo 3 different doctrines/legal mechanisms i. Nuisance Involves scope of your property right ii. Contract/private negotiations Covenants/easements iii. Direct government regulations Zoning rules Regulatory takings General questions to keep in mind i. Who makes the decisions about allocations? 1) Nuisance--judges 2) Covenants--parties themselves
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2) Covenants--parties themselves ii. Who enforces the decisions--who can bring an action for violation? iii. Who pays for it? iv. What are the different remedies available? 15. Nuisance a. Generally Interferences with a person's right to quiet enjoyment of her land; must come from an invasion of the land Invasion can be of particles (including gases), noise, vibration, etc Stems from CL principle that one must use her land so as not to injure her neighbors Theme in some jurisdictions that any substantial interference will constitute a nuisance Magnitude of the impact is considered Issues of reasonableness get shifted to issues of remedies Concept of unreasonable in some way involves weighing of harms and benefits --at least something other than how badly the plaintiff is affected "coming to the nuisance"--who was there first Circumstances in which there is an express cost/benefit assessment The act of determining the nuisance affects who has the bargaining power and therefore which way the money will flow Nuisance defines the initial allocation of chips--your property rights/ability to negotiate/etc Helps provide compensation--scope of damage remedies for personal injury and loss of property value Helps decisions on whether to invest in piece of property, but are not quite sure of outcome No pre-existing certainty b. Burdens on Plaintiff Burden of proof--preponderance of the evidence Who pays to bring the action Plaintiff--assessment of cost will affect your decision to go forward (also includes cost of getting info you need to have preponderance of the evidence) c. Types i. Private Nuisances 1) 3 Elements a) Must be a substantial interference with the plaintiff's use and enjoyment of her land caused by the defendant; b) Defendant must act intentionally (meaning intending to cause the action that produces the offense), or unintentionally and negligently (including wantonly, recklessly, etc); and c) Plaintiff must be entitled to the use and enjoyment of the land (must be in possession, but need not be the owner) 2) Weighing the Harm Includes looking at the extent and character of the harm, the burden it will cause the defendant to correct the harm, the social value of the land invaded and the suitability of the invaded land to the locality 3) Nuisances at law One not permitted in the neighborhood in question For ex, storing highly radioactive atomic wastes in barrels in a residential neighborhood is a nuisance per se 4) Nuisances in Fact Nuisance per accidens One that, due to the location or circumstances, is a nuisance A business that may lawfully be conducted at the particular location is never a nuisance per se, only in fact ii. Public Nuisances Adversely affects the public as a whole May be a crime and penal sanctions may be available
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 May be a crime and penal sanctions may be available If the use is permitted by statute or ordinance, it is not a public nuisance Private individuals can bring public nuisance suits only in limited circumstances Plaintiff must show that the nuisance is especially injurious to her and that the harm she suffers is different from the harm to the public generally If she meets this criteria, need not have an interest in adversely affected land iii. Unintentional Act May be a nuisance When an unintentional act is involved, court must take into account not only the gravity of the harm (as in intentional act cases) but also the conduct of the defendant iv. Compared to Trespass Chief distinction is that a nuisance involves interference with the quiet enjoyment of the land and trespass involves interference with the right to possess the land v. Negligence is Not an Element if Act is Intentional Morgan v. High Penn Oil Co. Negligence is NOT a necessary element for a private nuisance a nuisance per se (nuisance at law) is an act, occupation, or structure that is a nuisance at all times and under any circumstances regardless of location or surroundings A nuisance per accidens (nuisance in fact) is that which becomes a nuisance by reason of its location or by reason of the manner in which it is constructed An oil refinery is a lawful business and hence cannot be a nuisance per se However, D errs in contending that an oil refinery cannot be a nuisance per accidens, absent it being constructed or operated in a negligent matter Negligence and nuisance are 2 distinct fields of tort liability While the same act or omission that results in negligence may also result in nuisance liability, such is not always the case Basically a private nuisance is: Any substantial non-trespassory invasion of another's interest in the private use of land Whether intentional or unintentional If the invasion if unintentional, D's conduct must be negligent, reckless, or ultrahazardous If an intentional invasion is involved, then D's conduct must be unreasonable under the circumstances Conduct is "intentional" if D acts with the purpose of causing it or knows that it results from his conduct or knows that it is substantially certain to result from his conduct Anyone who creates or intentionally creates or maintains a private nuisance is liable regardless of the degree of care or skill exercised by him to avoid such injury D intentionally and unreasonably caused noxious gases and odors to escape onto P's land to such a degree as to substantially impair P's use and enjoyment of the land Thus, D is liable in nuisance D also intend to operate the refinery in the future in the same manner Thus, P is entitled to an injunction Usually issue of causation, not so much here No actual statement of why this is unreasonable

Private Contractual Control of Land/Servitudes

16. Generally Burden imposed upon one estate for the benefit of another
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 Burden imposed upon one estate for the benefit of another 17. Easements a. Historical Background/Terminology i. Generally Easement is right afforded a person to make a limited use of another's property Common example if a right-of-way across the land of another May endure for years, for life, or in fee More than a mere covenant or promise; it is a nonpossessory interest in land Although not a profit, 2 are similar Profit is the right to enter onto the land of another (such entry is implied under an easement) and take something off of the land, be it wild animals, timber, or coal Easement is also not a license License is merely the permission to enter upon or do acts upon the land of another Most license may be revoked at will by the landowner ii. Various Types 1) Affirmative Easement What most people think of as an easement The right to go onto the land of another and use it, e.g. a right-of-way 2) Negative Easement The right to make the owner of a servient land (the land subject to the easement) not do something that he would otherwise be entitled to do, such as build a swimming pool w/in 20 feet of the neighbor's yard These are disfavored by the court and, except in the case of easements for light, air, subjacent (and/or lateral) support and flow of an artificial stream , are not recognized Instead courts will construe them to be covenant or servitudes iii. Easements Appurtenant Easement that confers a benefit upon a dominant tenement is appurtenant to the dominant estate Burdened land is called the servient tenement If A has right to cross B's land to get to A's farm, right-of-way is appurtenant to the dominant tenement (A's land) Burdened land (B's land) is the servient tenement iv. Easements in Gross Easements that are personal to their owner (easements that are not appurtenant to a dominant tenement) are easements in gross Servient land is burdened but there is no benefited land Common examples involve utility rights-of-way and billboards on private land Negative easements are always appurtenant to a dominant tenement b. Creation of Easements i. Generally May be created by written instrument or by implication, necessity, or prescription Right-of-way Express Non-consensual ways Estoppel Prescriptions Implied easement (by prior use) Easements by necessity ii. Reservation of an easement Reservation is a provision in a deed creating some new servitude which did not exist before as an independent interest An exception is a provision in a deed that excludes from the grant some
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before as an independent interest An exception is a provision in a deed that excludes from the grant some preexisting servitude on the land Generally easements are created by grant, that is, party A grants party B an easement across A's land What happens when A conveys Blackacre to B and reserves in herself an easement across Blackacre? At CL, this was a nullity; easement could never be reserved Modern law recognizes the reservation of an easement iii. Reservations in favor of 3rd parties Restatement (3d) provides easement can be created in favor of third party Most courts reaffirm CL rule that a grantor CANNOT do this Willard v. First Church of Christ, Scientist a grantor may reserve an easement to the benefit of a stranger to the title At common law a grantor could not, by reservation, vest an interest in land to the benefit of a third party. We reject the common law rule The court's primary objective is to construe conveyances to give effect to the intent of the grantor. Here, it was clearly McGuigan's intent to reserve an easement for D's benefit She even testified that she discounted the price she charged Petersen by 1/3 b/c of the easement P relies upon a CL rule that the courts in other states hold in disdain and have circumvented P claims that the CL rule should be upheld because grantees and title insurers have relied on it. P has produced no evidence to support this contention Further, D was using the land for church parking throughout the period when P was purchasing it and after he acquired title P cannot claim that he was prejudiced by lack of use of the land for an extended period of time Finally, we must balance the injustice that would result from refusing to give effect to a grantor's intent versus the injustice, if any, that might result by failing to giver effect to reliance on the old rule Although other cases may warrant application of the CL rule to presently existing deeds, we find no reason to apply the CL in this case Majority of jurisdictions follow the CL Under the CL, a reservation or exception could not be created in favor of a stranger to a conveyance However, the same result could be achieved indirectly In this case, McGuigan could have deeded land to D who in turn deed it to Petersen, reserving an easement Supreme court has said that where government regulation constitutes permanent physical occupation o f your land, it will be a taking requiring compensation Paid compensation Compelling government to pay--casebook is wrong Lucas Rule iv. Licenses 1) Generally License is oral or written permission given by the occupant of land allowing the licensee to do some act that otherwise would be a trespass License is revocable whereas easement is not Licenses may become irrevocable in certain circumstances One form is a license coupled with an interest For example, if you buy a car and the former owner gives you
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One form is a license coupled with an interest For example, if you buy a car and the former owner gives you permission to pick it up anytime, you may enter upon his property to remove the car Seller cannot revoke the license as long as you have an interest Many states will estop the grantor of a license from revoking it if the licensee has relied upon the license to his detriment Treated as easement in Restatement 3d 2) Licensee's Reliance Holbrook v. Taylor a licensor is estopped from revoking a license to use a roadway if the licensee has expended money in reliance on the license An easement may be established by: One. Express agreement Two. Implication Three. Prescription; or Four. Estoppel Only the last 2 are asserted by P To establish an easement by prescription, one must show that he has openly, peaceably, continuously, and under a claim of adverse right to the owner of the soil, and with his knowledge and acquiescence, used a way over the land Here, P has failed to show his use of the road was either adverse, continuous, or uninterrupted One may acquire a license to use a roadway when, with the knowledge of the licensor, he has, in the exercise of the privilege, spent money in improving the way (or for other purposed connected with its use) on the further strength of the license Here, D acquiesced to P's use of the road P had constructed a $25,000 house, using the road as ingress and egress Thus, there were substantial grounds for the trial court to find that D is not estopped from revoking the license Parties' actions resulted in the creation of an easement by estoppel Evidence showed there was no other location upon which a roadway could reasonably be built to provide an outlet for P v. Creation by Implication 1) Generally Easement may be implied when necessary to carry out the intent of the parties or when required by public policy 2) Types a) Easements by Necessity If, at the time a grantor divides a tract of land and conveys party of it to another (say to B), the only means of ingress and egress is over the remaining land, then an easement will be implied for B's benefit across the remaining land This form of easement terminates when the necessity terminates In TX, strict necessity is required for implied easements in favor of grantor b) Intended Easement Based on Quasi-Easement Assume at the time a tract of land is divided into 2 or more parcels there is an existing quasi-easement reasonably necessary for the enjoyment of the property that the court believes was intended by the parties to continue Court will then hold that there is an implied easement based on a quasieasement For example, suppose A has 2 lots, with #1 adjacent to a public road and # 2 not adjacent to any road; a lane leads across #1 to #2
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2 not adjacent to any road; a lane leads across #1 to #2 If A sells #1, whoever has #2 will have an easement across #1 This is different from an easement by necessity in that the quasieasement already existed at the time of the sale of #2 and, in the case of intended easements based on quasi-easement, the easement need only be reasonably necessary Test for easements by necessity is more strict 3) Prescription Just as by adverse possession one may obtain title to property, so by prescription one may obtain an easement The elements are the same for adverse possession Similarly, if the would-be prescription user has the permission of the owner, he cannot obtain a prescriptive easement See Othen v. Rosier In most states a public prescriptive easement can be obtained by long continuous use by the public under a claim of right Landowner must be put on notice, by the kind and extent of use, that an adverse right is being claimed by general public, not individuals Courts generally place greater burdens on proof 4) Equity Van Sandt v. Royster a court of equity may recognize an easement that exists, if at all, only by virtue of an implied reservation Quasi-easement when a landowner uses a portion of her estate to the benefit of the remainder of her estate, a use in the nature of an easement arises, even though the landowner does not specifically "grant" the use to herself Refers to conditions prior to creation of easement Necessity In circumstances of necessity, such as sewer drainage, a reservation of use may be implied in favor of the prior quasi-dominant estate, even though no reference is made to it in the deed out of a portion of the prior estate (quasi-servient estate) Notice In fairness to the grantee of the quasi-servient estate, the reserved use must be such as to give notice of its existence and necessity In this case these requirements were satisfied by the apparent topography and public record information as to the location of the public sewer line Here, the court finds that the cost to successors of prior users by necessity to replace the existing sewer with an alternative line exceeds the inconvenience to P of occasional flooding There is a difference between an implied grant and an implied reservation In the former, the dominant tenement is the parcel conveyed to the grantee, while in the latter it is the parcel retained by the grantor The requirements for a finding of an implied reservation are the same as those for an implied grant, with the exception that the greater "necessity" is required, even approaching strict necessity The implied reservation doctrine is recognized in only about half of the jurisdictions Express easement was never created There is some type of easement though, so not a trespass Elements of implied easement Has to arise from severance from common owner
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Elements of implied easement Has to arise from severance from common owner At the time of severance, there has to be an existing use Use has to satisfy some level of necessity--this is what court is discussing Differs depending on jurisdiction Found when reasonably necessary for use and enjoyment of estate Problem with this is that there can be interest retained by reservation, in effect transferring less than the deed will describe Implied grant would be opposite--see note above Courts tend to like this better When was implied easement first created? And is it inheritable? Created with the very first conveyance (1904) Court said it was by reservation b/c it was necessary She was the common owner She was "using" the easement, even though it was her own property (and not technically an easement yet) It was a quasi-dominant relationship What would strict necessity be? Depends on city codes/rules Succession question Primary element necessary is notice In this case, there was no document, but parties could know b/c the property already had indoor plumbing These hidden lines are the ones that raise questions Have to find second implied reason that Bailey reserved easement across Murphy's land Most easements based on intentions of parties Implied easements are not based on any statements, but look at factors If court had said that reservation requires strict necessity and it was not met, then order in which lots were sold determines level of necessity 5) Easement of Necessity Othen v. Rosier For there to be an easement of necessity, the necessity for the easement must have existed at the time the original grantor severed the 2 estates (i.e., the servient and the dominant estates) Before an easement of necessity can be implied it must be shown that: One. There was a unity of ownership of the alleged dominant and servient estates Two. The roadway is a necessity, not a mere convenience; and Three. The necessity must have existed at the time of severance of the 2 estates Hill did not part with his title to the 16.3 acres across which P claims an easement until 2 years after he sold the acreage (which P now owns) Thus, no easement can exist as to this land One (Hill) cannot have an easement across land (the 16.3 acres) to which he has the fee simple title As to the 100 acres, P has failed to prove that the necessity to cross the 100 acres existed in 1896 when Hill deeded the land which P later bought Thus, no easement of necessity arises on that land The mere fact that PO's land is completely surrounded by the land of another does not, of itself, give P an easement of necessity over D's land since P and D were not in privity of ownership
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land since P and D were not in privity of ownership P does not have a prescriptive easement across D's land An essential element in acquiring a prescriptive right is the adverse use of the easement Use by express or implied permission, no matter how long continued, cannot ripen into a prescriptive easement Evidence shows that D consented to P's use of the lane, and hence P does not have a prescriptive easement It was shown that D's 100 acres had been fenced in 1906 and P had been permitted to use the gates in entering and leaving the land P insists that by using the lane for 10 years before the fence was erected (in 1906), he acquired prescriptive rights P errs No evidence supports his contention that he used the lane for 10 years, since he moved onto his farm in 1900 Finally, P did not discharge his burden of proving that his predecessor's adverse possession was in the same place and within the definite lines claimed by him Thus, he cannot tack the time his predecessor used the lane to the time he used the lane Easement of necessity can be found if at the time of severance from common owner if strict necessity existed, even if no prior use--just not easement of implication Look to the last transaction to determine necessity 6) Easement by Prescription Unlike adverse possession, an easement by prescription involves the use of land, not its possession Over time, rights may be acquired through use of land The time period for prescriptive easements is set by statutes, which generally require open and notorious, continuous, adverse use under a claim of right c. Assignability of Easements Benefits and burdens of appurtenant easements pass automatically to assignees of the land to which they are appurtenant, if the parties so intend and the burdened party has notice of the easement Where the benefit is in gross, however, the benefit may not be assignable Most recent cases permit any easement in gross to be assignable if parties so intended Generally only ones not assignable are recreational easement--fear of burdening servient land beyond original contemplation of parties Restatement 3d--easements in gross may be divided unless contrary to intent of the parties creating the easement or unless the division unreasonably increases the burden on servient estate Exclusivity or nonexclusivity of easement is still relevant Miller v. Lutheran Conference & Camp Association an easement in gross is divisible into jointly held interests An easement in gross is similar in nature to a profit in gross. Where it is the intent of the parties to allow assignment of the interest, it will be assignable, especially when it is designed for commercial exploitation Thus, Rufus's interest was assignable to D An easement in gross may be divisible, but it must be exercised jointly. If such joint exercise were not required, it would result in a surcharge on the easement Look at combined use and if it creates new and unusual burden P and D are entitled to separate interests but D may not use its interest
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 P and D are entitled to separate interests but D may not use its interest unilaterally D cannot use the lake in a manner inconsistent with P's use of the lake without P's consent How to define this easement? It's to Frank, so must be easement in gross If it was to harvest ice off lake, it might be profit--an easement necessary to exploit a resource on the land in question But this is just recreational, so easement in gross Affirmative as well "Frank, is heirs, and assigns forever"--but only 99 year lease Frank assigns 1/4 of his easement, with potentially broader scope (bathing) They operate it as partnership Rufus dies, apparently his estate were the Lutherans PIC is sold to Frank's wife, she wants to block Rufus' action Did church have right to bathe regardless of assignment? They owned land abutting the water--do they have right to use it?--not in the scope of this course Court concludes no b/c it belongs to subsurface of lake Court says original conveyance did not include bathing, but he did get it by prescription What about easement by estoppel? Partnership that established a business d. Scope of Easements i. Intro The scope of an easement depends on what type of easement is involved Excessive or improper use of an easement normally justifies injunctive relief, as well as provable damages, but does not usually extinguish the easement Location, once fixed by parties, cannot be changed by servient owner w/out permission of dominant owner Rest. 3d--grants servient owner right to change the location, at his expense, if change does not "significantly lessen the utility of the easement, increase the burdens on the owner in its use and enjoyment, or frustrate the purpose for which it was created" ii. Express Easements The scope of use permitted by an express easement depends first on the language used in the easement Reasonable changes in the dominant estate may support changes in the use permitted Subdivision of the dominant estate may give each transferee the right to use the easement as long as the burden is not thereby increased An easement appurtenant to 1 parcel cannot be used for the benefit of a separate parcel iii. Easements by necessity The permitted use of an easement created by necessity depends on the extent of the necessity iv. Other Implied Easements The scope of use of other easements created by implication depends on the quasi easement use, as changed by reasonably foreseeable changes in the use of the dominant estate v. Prescriptive Easements Scope is normally limited to the original use Uses must be consistent with the general kind of use by which the easement was created and with what the servient owner might reasonably expect to lose by failing to interrupt the adverse use vi. Attempt to expand scope of use to nondominant tenant
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interrupt the adverse use vi. Attempt to expand scope of use to nondominant tenant Brown v. Voss a court may grant an injunction against the owner of a servient tenement that allows the owner of the dominant tenement to use the easement for access to a non-dominant tenement Easement was created by express grant and did not give P any rights to access to parcel C Normally, an easement cannot be extended by the owner of a dominant estate to other parcels owned by him Thus, by using the easement for access to land to which the easement is not appurtenant, P misused the easement The fact that P misused the easement does not necessarily entitle D to injunctive relief D did not appeal the damages award When considering equitable relief, the trial court has discretion to act so as to fit the particular facts, circumstances, and equities of the specific case Trial court found that: i) P's misuse of the easement did not increase the volume of use of the easement and did not increase the burden on D's estate ii) P acted reasonably in developing the property iii) D did not act until after P spent $11,000; and iv) D's counterclaim was for leverage D's injunction would have worked a considerable hardship on P, but its denial would not damage D P's injunctive relief was limited to access to a single-family residence Accordingly, trial court did not abuse its discretion Dissent: By extending this easement to non-dominant property, P clearly misused the easement This constitutes a trespass, and if P builds the planned house, P's used of the easement will be a continuing trespass It does not matter that the extension would not increase the burden on D's estate Injunction relief for D is the appropriate remedy P should acquire access to parcel C and could do so by condemning a private way of necessity in accordance with state law 18. Negative Easements An owner of the dominant estate may have a right to prevent the owner of the servient estate to refrain from acts on the servient estate Traditional negative easements are those for: i. Light ii. Air iii. Subjacent or lateral support, and iv. The flow of an artificial stream Hostility to negative easements in England produced the doctrine of equitable servitudes, and US courts generally followed this approach, limiting negative easements to the 4 traditional types 19. Termination of Easements a. Intro Easement may be terminated in several ways 1) If 1 person acquires title to both the dominant and servient tenements, the easement is extinguished Subsequent separation of the tenements does not revive the easement 2) 1 may release an easement by written instrument or an oral agreement accompanied by an act done in reliance on the oral agreement 3) Easement is abandoned if the easement owner indicates clear intent to abandon the
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by an act done in reliance on the oral agreement 3) Easement is abandoned if the easement owner indicates clear intent to abandon the easement and acts in a way that indicates that intent (not using the easement and permitting another to build over it) 4) Easement by necessity terminates when the necessity no longer exists 5) Easement in a structure will terminate if the structure is destroyed Abandonment If B stops using the easement, will that count? If B obtained the easement by necessity, then yes, termination of the necessity will terminate the easement Oral transfer of interest will not be effective Need physical manifestation beyond words Express writing will be effective Defeasible easement--something in the original grant which places time constraint or specifies certain circumstances under which easement will terminate Estoppel--A builds wall so that B can no longer use easement? If done in reliance on B's statement Prescription If A takes an action inconsistent with B's use and it remains there for length of time required by SOL Merger B (or A) buy and own both lots Misuse of the easement If A sells to C without C having notice of easement Depends on jurisdiction--some say notice is a requirement Also depends on recording act B reserves affirmative easement after selling part of property to A B sells to C, A sells to D Can C use the easement? If it was easement in gross (in B personally), then does not travel along with land and there has to be separate assignment If easement in pertinent then it is attached to dominant estate, so sale of dominant estate will carry with it the right to use the easement Does D take subject to the easement? Type of easement doesn't matter Burden will attach to use of land, and so requirement for running of the burden -not much Possible question of notice, but usually courts will find that he should have known b. Commercial to Recreational Use Preseault v. United States the conversion to a public recreational trail, under the act and pursuant to the ICC, of a long unused RR right-of-way constitutes a taking of the property of the owners of the underlying fee simple 1st question to be determined is whether in 1899 the RR acquired only easements or a fee simple interest in Ps' property In Parcels A and B, taken by eminent domain through a commissioner's award that fixed damages, it was determined by the trial court judge that the RR acquired an easement under VT law It is well established VT law that a RR acquiring land for laying track acquires no more than that needed for its purpose, typically an easement, not a fee simple Parcel C was conveyed by warranty deed, but, again pursuant to VT law, the RR took only so much estate therein as was necessary, i.e., and easement 2nd question is the scope of the easements, whether they were sufficiently broad in scope to permit use for a public recreational trial --assuming the easements were still in
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scope to permit use for a public recreational trial --assuming the easements were still in effect in 1986 VT follows CL property principles that recognize that the scope of an easement may be adjusted if the change is consistent with the original grant Parties are presumed to have contemplated such a scope for the created easement as would reasonably serve the purposes of the grant This presumption often allows an expansion of the use of the easement, but does not permit a change in use not reasonably foreseeable at the time of establishment of the easement Here, the use of a public recreational trails is clearly different from the original use The burden on the property as a public trail is greater and is at the whim of the many individuals, in contrast to its former burden of having an occasional train crossing the land Further, the easements in this case are limited by their terms and as a matter of law to RR purposes Even if the original conveyances could permit trail use, the question remains whether the easement were abandoned, and thus extinguished, in 1975, thereby mandating payment of the just compensation required by the constitution Something more than nonuse is needed to extinguish an easement Under VT law, "acts by the owner of the dominant tenement conclusively and unequivocally manifesting neither a present intent to relinquish the easement or a purpose inconsistent with its future existence" must accompany nonuse Here, the RR removed all of its equipment, including switches and tracks, in 1975 and, in the years following the shutting down in 1970 and the removal of equipment in 1975, neither the state nor the RR made any move to reinstate service or replace the equipment necessary to return the line to service RR had effected an abandonment of the easements in 1975 Ps are entitled to recover 5th amendment compensation if the easements were in existence when the public recreational trial was established b/c its establishment could not be justified under the terms and within the scope of the original easements for RR purposes Alternatively, when the easements were abandoned in 1975, Ps held the property unencumbered in fee simple The subsequent taking by Burlington pursuant to federal authorization was a physical taking of the right of exclusive possession that belonged to Ps The fed government put into play a series of events that resulted in a taking of private property through a state agent and requires just compensation to be paid Does it create an easement for a fee? Scope of use of the easement Can be defined by the parties 20. Conservation and Other Novel Easements a. Conservation Easement Preserves scenic and historic areas and open space Owner of land can give public body or private charitable organization (such as land trust) a conservation easement, preventing servient owner from building on the land except as specified in grant Value is deductible Uniform Conservation Easement Act (1981) Perpetual in duration, transferable, and can be in gross Concern about dead-hand control b. Environmental Covenants Uniform Environmental Covenants Act of 2003
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 Uniform Environmental Covenants Act of 2003 Helps remediation and development of brownfields (contaminated by industrial use) Impose activity and use restrictions on contaminated land and permit the land to be developed within the limits imposed by the restrictions Designed to eliminate potential obstacles to enforcement of the covenants under CL doctrines like horizontal privity ad touch and concern requirements c. Faade Preservation Easement Prevents faade of a house registered on National Register of Historic Places from being altered d. Primary Residence Easement Restricts owner from using it as vacation home 21. Problems/Examples B has right of way across A's land What happens when A transfers to X and B to Y? Does X get the easement? Does Y get the benefit? Important to separate benefit from burden Almost always talking about running of affirmative easements, and almost always will go along Look at intent Usually determined by if it's classified as easement, then usually intended to run Otherwise would be license Does X have to have notice of the easement in order to take subject to it? Van Sandt kind of covered this Split of opinion Some jurisdictions simply say notice is not required Some jurisdictions say you are free if there is no notice But is this function of recording acts or common law? If X was bona fide purchaser, then recording act says he's free Problems if easement was not recorded--implication easement, etc So what if X is donee? Does he take subject even if no notice? No one answer Is X buys and has notice, almost certainly takes subject to easement Running of the benefit B sells to Y, does Y get the benefit? Distinguish if easement of pertinent or easement in gross In pertinent--intended to go with land In gross--intended to go with B, it was personal Can B assign his interest in the easement? Miller v. Lutheran Notice is not really an issue What if the easement was easement in pertinent? Goes along with the ride But what if B only sells half of his land to Y? Does the easement go with both portions? Can we increase A's burden? Van Sandt? In most cases if it is physical division, then yes, but only to extent constrained by CL reasonableness of scope of easement--can't be unreasonable burden Reasonably foreseeable use of property when easement was granted Conservation easement (For ex, prevents any commercial use of land) What if you want to transfer it? A negative easement--a restriction, in most CL not an easement at all Non-commercial easement in gross--can't assign it How to get around it? Switch the land around and reverse--A will not want to give up his land Rephrase--easement is for rights to use in undeveloped state, or something to that
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Switch the land around and reverse--A will not want to give up his land Rephrase--easement is for rights to use in undeveloped state, or something to that effect Make it easement in pertinent--sell them a tiny piece in fee--"anchor acres" These are authorized by statute in every state If you have contaminated property and want to sell it, how much do you have to clean it up? Depending on its future use, different levels Part of this is enforceable insurance that it will never be used for something beyond this future use it's been prepared for But can you put restriction on your own land? Not clear Government will take over, and effectively given an easement Uniform Environmental Covenant Act What are limits on increasing burden (by original party)? CL--has to be within scope of reasonable uses If easement by necessity or prescription, will be more limited Brown v. Voss A sells to B, and B promises not to use it for anything other than pleasure garden and to build fence, and to let C use the pleasure garden The promise to not use for anything other than garden--negative covenant Promise to maintain wall--affirmative covenant (in his own land) Agreement to let C use It's a third party, so can't be easement, most likely not enforceable at all B then sells to D, what is D subject to? Never made the promise that B made to A, but is he bound by B's promise? Security of certainty of promises made are very valuable Usually makes both properties more valuable Essentially the same as when assignments of leases are binding on successors Requirements for running of the burden Intent--original promisor had to intend covenant to run Horizontal privity--relationship between original promisor/promisee Had to have had transactional sale of land If not, then no horizontal privity and no running of covenant Has to be transfer of interest of the same duration--aka transfer privity of estate, aka vertical privity "touch and concern"--promise has to be associated with use and enjoyment of land Notice--third party has to know of existence of promise Either by recording act or CL Running of the benefit--fewer barriers Intent--most likely Horizontal privity--probably not Vertical privity--succession to some interest (does not necessarily have to be full transfer, but he most likely cannot be adverse possessor) Touch and concern--probably, at least in some form Notice--no If C takes subject to the covenant and breaches, he is liable for damages and possibly injunction It is a contract promise Tulk For a servitude, running of burden: Intent, probably Notice, yes Touch and concern, probably Horizontal privity--not necessary Do not need it to enforce promise in equity Do need vertical Need to distinguish between covenants and servitudes b/c restatement 3d has not been widely
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 Need to distinguish between covenants and servitudes b/c restatement 3d has not been widely adopted If there is a covenant question: Was one created? Who could initially enforce? Initially eligible to sue for breach Questions of succession--who is bound by virtue of purchase? Running of benefit, burden Has it been breached? Contract question Are there defenses to enforcement? Covenant or servitude? Promise will be the same, but what requirements does it satisfy Can be both, not either/or What other remedy? Covenant/servitude

Covenants and Servitudes

22. Generally 3 ways in which a common scheme may be significant Sanborn If all of the promises are to the same developer None of the rest of the land is burdened The earlier purchasers did not succeed to any land Common scheme says earlier parties are third party beneficiaries of later promises to developer--they did not succeed to the benefit Issues of running For servitudes--need notice, intent, touch and concern In Sanborn, no constructive notice 23. Real Covenants--promises to use or not use land in a specified way; run with the land but they are not an interest in land; can be affirmative or negative a. Benefits and Burdens "benefited" land is comparable to "dominant tenement" and "burdened" land is comparable to "servient tenement" b. Writing Required CL required real covenants to be in writing Can be contained in a deed Grantee is bound even if he does not sign the document containing the covenants c. Enforceability These covenants are enforceable by the parties to them Problems arise when third parties try to enforce them Enforceability depends on whether a party is asserting that it is the benefit the runs with the land (and hence to the third party) or the burden that runs with the land Ability of courts to police the content of promises Construction of promise itself--so say, what does "single family residence" mean? Statutory restrictions--limitations on the types of promises able to be made? (aka, fair housing act) Shelley--constitutional basis/state action Restatement 3d approach--new doctrine on initial enforceability Not enforceable if it's against public policy--lists types that might be covered Restraint on alienation Restraint on trade Arbitrary, spiteful, capricious Unreasonably burdens a fundamentally constitutional right Unconscionable
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 Unconscionable Have to assume that by definition, the original covenants established by developer increased the wealth of somebody, presumably the developer He's making decisions on what is in best economic interests in terms of profits Initial purchaser is subject to those restrictions only if they have knowledge of them Why doesn't market police them? Why is it not sufficient? Possible for rules to change after you've bought in--after the fact by-laws Promises relating to land--reason to treat these differently? What do you do if HOA enacts bad rule? Vote them out, change the by -laws The political process--affected by our view of judicial process Courts are necessary when you have less confidence in policies of HOA? Assume there is a role for courts in policing private covenants Nahrstedt Restatement 3rd--standards of review of initial enforceability Common law basis to assess content of restrictions Nahrstedt Can't be against public policy Whether it's arbitrary--but actually rationally related to health concerns of residents(top of 908) What's the standard for challenging a restriction adopted by HOA? Less deferential, according to Nahrstedt, but not much else info given Standard of reasonableness suggested by restatement--court to weigh benefits? Must not be arbitrary or capricious--Texas Language usually used in administrative law Reviewing substance/content is different from reviewing HOA's discretion The court's rule in policing their judgments? Can say vote it out, but HOA also has a lot of power 2 ways of doing this Good faith implementation and fair procedures--doctrine of constitutional procedures CL issue of constraints on procedures Business judgment rule--deferential standard where someone is exercising business judgment Was decision within scope of authority and was it exercised in good faith? How to supervise conflicts among landlords? Judiciary action of nuisance Private covenants Special efficiency rule when broadly based mutually enforceable restrictions Government interventions: zoning Why can't we rely on nuisance? Transactional costs Expensive, problematic, time-intensive Uncertainty over what is/is not possible Zoning Mandates common participation--minimizes costs, helps with efficiency No voluntary negotiation--involuntarily restrictive Legitimacy of zoning relates to views of legitimacy of government d. Determining whether burdens run with the land i. It is the intent of the contracting parties that it do so; ii. There is privity of estate; and iii. The covenant "touches and concerns" the land In CL was necessary element for running of burden, and probably running of benefit A promises D single family purpose, then sells to C In order for promise to run to C, needs constructive notice and touch and concern
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concern Has to concern the property in question and what sorts of matters would qualify (very vague) Almost without exceptions, negative promises will touch and concern Problems will involve affirmative covenants/easements Sometimes not relatable Require expense of money--obligation to do something, whereas negative covenant is not to do something Potential to be limitless By definition, touch and concern does not address the original promise Other approaches concerning touching Restatement 2d--if it affects the promisor or promisee in the physical use or enjoyment of the property--direct restrictional benefit on physical use Promise to buy water--under this approach will it run? Yes Restatement 3d--"supercedes" touch and concern and does not apply it at all -not adopted in most places Still exists in most jurisdictions--kind of court-made ability to police If assignee of the promisor gave valuable consideration, there is an additional requirement that he have notice of the covenant e. Privity--Copy pg. 850 i. Horizontal Privity of estate between the 2 parties to the promise ii. Vertical Privity of estate between the promisor and his successors in interest (those to whom it is asserted the burden ran) iii. For burden to run, all courts require vertical privity, and some courts also require horizontal privity f. Determining whether benefit runs with the land For the benefit to run: 1) The original parties to the promise must intend that it run with the land; 2) There must be vertical privity of estate; and 3) Covenant must touch and concern the land Another approach--is there vertical privity between original promisee and the successor? There was express assignment, but that is not how court found it --HOA was essentially acting as agent for individuals who had legal interests, or easements in a sense, in those common areas So it was not in gross but were property interests If benefits are held in gross, the burden won't run, so only enforceable between original parties BUT not sure how many jurisdictions actually uphold this Obligation to comply with promise may end when you no longer own the land --unless there is privity of contract However, if it is a covenant situation, then you are free and clear Say you want to get out of burden--don't want to pay HOA fees If you sell, you will no longer have to How else can you get out of it?---aka, can you abandon it? NO--you cannot do this in real property 24. Equitable Servitudes--a covenant enforceable at equity against the assignees of the burdened land; does not matter whether covenant runs with the land a. Writing Most courts feel that an equitable servitude is an interest in land and for that reason require that it be in writing However, some courts will, in spite of the lack of a writing, imply an equitable servitude in cases involving restrictions in subdivisions b. Reciprocal Negative or Restrictive Equitable Servitudes
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cases involving restrictions in subdivisions b. Reciprocal Negative or Restrictive Equitable Servitudes If there is a reciprocal scheme in the neighborhood, a court many enforce it It has to be reciprocal (other property in the neighborhood must have a similar restriction), it must be either negative or restrictive (it cannot be affirmative), and it must be part of the developer's scheme of development Not all courts recognize these types of servitudes in residential subdivisions c. Equitable Servitudes May be Enforced by Third Parties Enforcement is conditioned on the following requirements: 1) There must be an intent that the servitude be binding on assignees; 2) Vertical (not horizontal) privity is required; 3) Covenant must touch and concern the land; and 4) A BFP without notice does not take subject to the covenant Notice can be actual, constructive, or inquiry d. Running of Benefits to Prior Buyers Because of the nature of equitable servitudes, it is possible for the benefit to be enforceable by prior buyers In the case of implied equitable servitudes, the prior buyer can only enforce the building scheme that was in effect at the time he made his own purchase 2 distinct theories used to justify this power of enforcement: 1) Prior purchaser receives an implied reciprocal servitude in the remaining land owned by the common grantor, so that subsequent purchasers take with notice; 2) The prior purchaser may enforce the restrictions as a 3rd party beneficiary e. Enforceability by and against subsequent assignees Tulk v. Moxhay D, not being in privity of estate with P, may NOT disregard a previous covenant restricting use of land even though he had notice of the covenant Generally a covenant that does not run with the land will not be enforced against a subsequent vendee But when a vendee purchases property with notice of a covenant restricting use, it may be enforced against him This was the first case to hold that a written covenant was enforceable against a subsequent purchaser who acquired title to the burdened land with notice of the covenant There was intent, vertical privity, touch and concern, and notice There was no horizontal privity--in England was satisfied only by landlord-tenant relationship Here in US, would be satisfied by the sale of the land 25. Inquiry Notice Sanborn v. McLean lots conveyed by a common grantor, some conveyed with restrictions and some without, will all be impressed with the restrictions If the owner of 2 or more lots, situated in such a way as to bear relation to one another, places restrictions on use of one lot for the benefit of the lot retained, a reciprocal negative easement arises on the lot retained and runs with the land to purchasers with notice D was put on notice of inquiry as all lots were uniform in use, although there were no restrictions in D's chain of title 26. Affirmative Covenant Neponsit Property Owners' Association, Inc. v. Emigrant Industrial Savings Bank subsequent purchasers are bound by an affirmative covenant to pay money for use in connection with, but not upon, the land that is subject to the burden of the covenant A covenant will run with the land if: 1) The parties intend the covenant to run with the land; 2) The covenant "touches" the land it concerns; and 3) There is privity of estate between the party claiming the benefit and the party burdened with the covenant
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burdened with the covenant The test of whether a covenant runs with the land is whether it imposes a burden upon an interest in land that also increases the value of a different interest in the same or related land Because the payment of the maintenance fee is essential to enjoyment of the property, the covenant "touches" the land, and is binding on subsequent purchasers Because P represents all the property owners, the corporate entity is recognized for what it is, a representative form It succeeds to the estate of the owners and privity of estate is established 27. Servitudes in Gross a. Introduction--a benefit may be personal to the covenantee yet the burden may touch and concern the covenantor's land; enforceability of such a servitude in gross depends on which approach is adopted i. English Rule An easement in gross was not binding on assigns of the burdened land Because an equitable servitude was analogous to a negative easement, the burden of a servitude in gross would not run to assignees of the land A servitude would run only if there was both a servant and a dominant tenement ii. American Rule Permits the burden to run with the land for easements in gross One would expect that the burden of a servitude in gross would likewise run with the land, and some courts so hold, but many follow the English rule anyway b. Restatement View Restatement 3d 3.2 looks at a servitude both at its inception and after subsequent events have taken place Moved from the touch and concern requirement to a rule that assumes the validity of a servitude The determination that a servitude is invalid often implies that although a servitude was valid at the time of its inception, subsequent events may indicate that it should no longer be enforced A servitude may not be enforceable at its inception b/c it violate public policy (i.e. the public's interest in maintaining the privacy of the home, protecting the stability of neighborhoods, preventing the wealthy from foreclosing housing opportunities for others) Subsequently, a servitude may become unenforceable b/c it imposes an unreasonable direct or indirect restraint on alienation; imposes an unreasonable restraint on trade, or is unconscionable Eagle Enterprises, Inc. v. Gross?? 28. Judicial Enforcement of Discriminatory Private Agreement Shelley v. Kraemer the 14th Amend Equal Protection Clause prohibits judicial enforcement by state courts of restrictive covenants based on race or color Property rights clearly are among those civil rights protected from discriminatory state action by the 14th amendment Early decisions invalidated any government restrictions on residency based on race Here the restrictions are purely private and, standing alone, are not precluded by the 14th amend Actions of state courts are state actions within the meaning of the 14th amend Judicial enforcement of these private racial restrictions constitutes state discrimination contrary to the 14th amend and denies D equal protection 29. Termination of Covenants a. Introduction There are several methods by which covenants and servitudes terminate 1) Can be abandoned 2) Benefited party can acquiesce to their violation or be estopped from enforcing the covenant
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2) covenant 3) Neighborhood can so change that enforcing the covenant will no longer benefit the neighborhood 4) The hardship on the burdened party may be too great for the court to sanction enforcement of the covenant By it's own express terms Estoppel/proscription Changed circumstances--unique to servitudes Courts have claimed authority to deny equitable relief if it no longer makes sense/circumstances have changed What circumstances will qualify? Western Land b. Merger If the benefited estate and the burdened estate come to be held by 1 owner, the covenant or servitude merges into the estate c. Test for determining if the covenant fulfills its original purpose Western Land Co. v. Truskolaski As long as the original purpose of the restrictive covenant can be accomplished to the benefit of the restricted area, the covenant will be enforced As long as the original purpose of the covenants can still be accomplished and substantial benefit will inure to the restricted area by their enforcement, the covenants will stand even though the subject property has a greater value if used for other purposes There is ample evidence that shows, in spite of the growing commercial area next to the subdivision, that the restriction substantially benefits the residents of the subdivision Thus, the trial court will be affirmed Further, the fact that the Reno city council indicated a willingness to change the zoning for the 3.5-acre parcel is not significant A zoning ordinance cannot override privately placed restrictions Even if this property is more valuable for commercial rather than residential purposes, this does not entitle D to be relieved of the restrictions it created since substantial benefit inures to the restricted area by their enforcement D argues that the restrictive covenants are no longer enforceable due to their abandonment D showed that some people had built houses on lots less than the required 6000 sq. ft. minimum; that someone ran a business out of his home in the late 1940s, etc Even if the alleged occurrences and irregularities could be construed to be violations of the restrictive covenants, they were too distant and sporadic to constitute general consent by the property owners to abandon the restrictive covenants d. Change of Conditions Rick v. West the covenant is enforceable despite a substantial change in the general neighborhood Ps' predecessor elected to promote a residential development and in furtherance of his plan imposed residential restrictions where there were previously none D relied on the restrictions and has a right to continue to do so Our statute provides no basis for awarding pecuniary damage when the restriction is not outmoded, and when it affords real benefit to the person seeking its enforcement, no consideration can and should be given to any award of pecuniary damages to D in lieu of enforcement of the restrictions Restatement 3d 7.10 provides that a court may modify a servitude to permit the purpose to be accomplished when a change since the creation of the servitude has made it impossible to accomplish the purpose for which the servitude was created
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made it impossible to accomplish the purpose for which the servitude was created e. Attempted Abandonment of Fee Simple Pocono Springs Civic Association, Inc. v. MacKenzie the real property owned by Ds was not abandoned Under Pennsylvania law, abandonment applies to property with imperfect title Ds have perfect title to their property They are owners of a fee simple with a recorded deed 30. Homeowners' Associations a. Introduction Members subject themselves to certain restrictions and obligations in return for the protection of knowing that the other homeowners also assume the same obligations Subdivision associations are made up of individual landowners Condos and coops involve some degree of joint ownership b. Condominiums Each individual owner owns in fee simple the living unit, while the land, exterior walls, and common areas are owned by all the unit owners as tenants in common Unit owners join an association, which has authority to manage the common areas and establish and enforce rules and maintenance charges Governed by statute as well Nahrstedt v. Lakeside Village Condominium Association, Inc. enforceability of a pet restriction does NOT depend on proof of interference with the right of quiet enjoyment of other homeowners Because recorded use restrictions are essential to a stable and predictable living environment for common interests residential projects, the legislature has provided a presumption of validity to restrictions The standard applicable to equitable servitudes requires a challenger to demonstrate the unreasonableness of the restriction Restrictions that are arbitrary, against public policy, or that impose a burden on use that greatly outweighs any benefit will not be enforced Enforcement of a restriction does not depend on an individual owner's conduct, but rather its reasonableness This is determined by examining the restriction's effect on the common interest of the entire project Some courts afford greater deference to restrictions contained in a master deed in order to promote stability and predictability and to benefit the majority of owners in their expectations Enforcement also operates to discourage costly legal challenges to restrictions Our "social fabric" is best preserved y uniform and predictable judicial enforcement of written instruments The recorded pet restriction prohibiting cats and dogs, but allowing some other pets, is not arbitrary It is rationally related to health, sanitation, and noise concerns Nor is the burden on P disproportionate to the benefits to the community as a whole Dissent: The majority has narrowly interpreted the statutory presumption of validity so as to contribute to the "fraying of our social fabric" The restriction is arbitrary and places a great burden on P by depriving her of the benefits of pet ownership within the confines of her home What arguments could she make that she's not subject to the restrictions? What was original promise?--presumably original purchaser agreed at the time they bought, or developer made reciprocal promise such that A was buying pre burdened land So who was bound by it? Does it run to N? Remedy they are seeking? Injunction--negative enforcement; but part of
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 Remedy they are seeking? Injunction--negative enforcement; but part of promise involved penalties (affirmative?) Therefore looks like servitude What does it take for servitude to run? Was there intent for servitude to run? Very likely Notice--reasonable person would have looked Recorded--held as matter of law to have notice Touch and concern--common law policing Negative, so very hard to say it does not touch and concern Not incidental Would probably run as covenant as well--horizontal and vertical privity Who can enforce the servitude? Action is not brought by neighbor but by HOA If it was neighbor, we would be back to whether benefit ran by purchasing property If benefits are in gross--no land is benefited, can HOA enforce? Courts could reject any limitation on enforcement Might be specific statute What's the standard for courts?--business judgment rule Same sorts of judgment that business holders can make to justify How to challenge content of restriction itself? Arguments N could make? Constitutional constraints on HOA? She is singled out b/c of her cats--but have to have action by federal government, not state courts General common law principles? Touch and concern--probably not Indirect restraint on alienation Most jurisdictions treat this as permissible Even direct restraints may be enforceable if not brought in scope Also if it's narrowly limited But in the context of leases, others, court s have given more meaning in applying CL restraints on alienation Rationally related to legitimate purpose Presume original covenant is correct, you have burden of proof c. Cooperatives Resident typically has a long-term renewable lease to the living unit, and owns shares in the corporation that actually holds title to the land and improvements Resident is a tenant of the corporation in which he has an ownership interest d. Direct vs. Indirect Restraints--Restatement 3d Direct Prohibitions on transfers without the consent of the association, rights of first refusal, and requirements that transfers be made only to persons meeting certain eligibility requirements Invalid if unreasonable Indirect Most common Restrictions on use and restrictions that might limit sales value of the property but do not directly interfere w/ free functioning of the market in land Invalid only if it lacks rational justification Also distinction between regulations included in deeds or declarations of common interest development and regulations subsequently adopted by associations for community governance Reasonableness standard applied to latter
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 Reasonableness standard applied to latter e. Common Interest Communities i. 40 West 67th Street Corp. v. Pullman Business judgment standard of judicial review is appropriate when evaluating decisions made by residential coop corporations CL doctrine by which courts exercise restraint and defer to good faith decisions made by the board of directors Most deferential of 3 standards Nahrstedt in middle (restrictions enforced unless they are wholly arbitrary, violate fundamental public policy, or impose a burden on affected land that far outweighs benefit) Most intrusive applied in FL courts--no strong presumption of validity, balances utility of restriction's purpose vs. harms resulting from its enforcement Could lead to abuse, but want to avoid impairing purpose of protecting interest of entire community In order to trigger further judicial scrutiny, aggrieved shareholder-tenant must make showing that Board acted: a) Outside scope of its authority b) In a way that did not legitimately further the corporate purpose c) Or in bad faith ii. Mulligan v. Panther Valley Property Owners Assn. Court applies reasonableness test (the most intrusive, balancing test) 31. Problems O to A, O to B, B records Notice statute--depends on what B knows He does not have constructive notice, but may have other notice Possibility A could sue O for unjust enrichment? Zimmer Rule Aspect of race-notice statute O to A, O to B, B to C, C records C's interest is not considered recorded--C would have to connect it so that there is a complete chain of title Wild deed--recording that is not linked anywhere--no constructive notice of prior conveyance Applies in every jurisdiction O to A, A to B, B records, O to C, C records In race-notice jurisdiction: Depends on if C has notice Nothing is recorded with O as grantor from C's perspective B's act of recording has not cut off? B cannot rely on recording act--won't be able to find O to A b/c it was not recorded If he has notice, he can record it himself Wild-deed means subsequent purchasers can't have knowledge Issue would not arise if we used tract index system Mother Hubbard Clause "I convey everything I own in this county" The case we talked about, there was also a specific tract Creation of negative easements Identical to negative covenants, etc Problem comes in for historical purposes, the 4 original types Willard's Church Case Can't reserve easement in 3rd party But if pre-existing easement, you can except out that easement Can then transfer that easement to third party Running of the benefit goes with purchase of the property for an appurtenant easement, but not
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 Running of the benefit goes with purchase of the property for an appurtenant easement, but not necessarily easement in gross Easement appurtenant C buys benefited land, does not really know about the easement or use it (does not abandon it) If C takes an act inconsistent with future use, would that constitute abandonment? Don't know D buys burdened land, and builds fence across the easement Would extinguish the easement, open and notorious be an argument? Restatement 3rd--not adopted anywhere Just know maybe how it treats things, esp touch and concern Lutheran Camp Servitudes are essentially covenants But affirmative covenant CAN be distinguished from affirmative easement

Government Control of Land Use

32. Zoning a. Generally Underlying conception is similar to nuisance Criticism is that it is inflexible Way to make it more flexible Nonconforming use Allowing them is ok b/c they will eventually fade, b/c they cannot be expanded -will eventually be abandoned Flaw in this theory is that you will be different from your neighbors, so probably will continue? How can government force you to stop your current use? Buy your property--eminent domain? Limits on this? Public interest Depends on what they are going to do with it--can't just sell to another property owner Activity must fall within scope of police power? What type of injury would satisfy standard for public nuisance? Probably not just scope of police power Are there certain types of activities prohibited that still raise issue that government can't stop without compensation? Aka ones that are not criminal? 7/11? So if you are doing something legal that is not a public nuisance? What is scope of government's authority to stop you? Amortization--given some period of time to continue activity, after which you must stop Pa Northwestern Why treat investments in stuff different from investments in land? Lose all your value in the property? Difference between existing uses and future uses? Inherent value in the actual development? (vs undeveloped land) Want to promote economic growth--privileged position? Social/economic policy b. History City Beautiful Movement Undemocratic Technology--helped lead to zoning Steel girder construction--development of high-rises Elevators
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c.

d.

e.

f.

Steel girder construction--development of high-rises Elevators Economic self-interest Zoning viewed as technique to maintain property values Racism Standard State Zoning Enabling Act--1926 Form of zoning most cities adopted was Euclidean Zoning Separate districts by use Districts were cumulative--made this type distinct Height, area, use Provided escape mechanisms, flexibility devices Special use permits Non-conforming uses--continue Stages Building Certificate of occupancy Subdivision approval Who's involved? Historically 3 entities City council--legislative acts including zoning acts themselves Planning commission--appointed non-political parties Bureaucratic board of adjustment Subject of lots of criticism, but also almost universal adoption (besides Houston) "cookie-cutter" Cumulative nature--effectiveness Zoning Power Only the state has the power to zone This power has been delegated to cities and counties by statutes called "enabling statutes" All local zoning activity must abide by the enabling statutes Goals of Zoning Orderly development of the community Promotes economic growth, community health, welfare, and safety How Zoning Works Fundamental characteristic is that is segregates uses of land into geographic regions Can be used to foster commercial districts as well as residential districts For health and safety reasons, can regulate the density of human population This can be achieve by limiting building heights, providing for min/max yard sizes, etc Constitutional Considerations If the zoning in an area is going to be changed, due process requires that the landowners in the area be given a hearing Zoning restrictions must be for a legitimate governmental objective Equal Protection Clause requires that all landowners who are similarly situated be treated equally, unless there is a legitimate reason for not doing so If zoning regulations amount to a taking, just compensation must be given by the state Local government properly exercises its police power when it phases out uses that are inconsistent with newly enacted zoning changes A use that, due to a zoning change, is no longer permitted is a nonconforming use Most courts say that the landowner must be given a reasonable time to cease his nonconforming use Length of time for ceasing the nonconformity may be based on the dollar value of the improvements of the land Limits under 5th amendment of government to take private property Allows government to take title where the objective is broad public purpose as long as there is just compensation Under 14th amendment Government can regulate use of property without just compensation as long as it rationally relates/serves the police power or state objectives
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rationally relates/serves the police power or state objectives Euclid What are limits with regard to regulation where there is no compensation? Regulatory takings question SC has made statements that government cannot be required to compensate you--equating takings clause to due process clause Takings clause must serve an objective other than satisfying rational objectives of due process clause What is this objective? What's the test? No legislative history What's the purpose of the takings clause? If government has this kind of takings power, does it affect the economy? Fairness? Village of Euclid v. Ambler Realty Co. a comprehensive zoning plan restricting uses of properties according to areas designated by a legislative body (where it divides 1 continuous parcel into 3 different uses) is NOT unconstitutional for violation of Due Process and Equal Protection clauses Ordinance under review and all similar ones must find justification under the police power of the state asserted for the public welfare If the validity of a legislative classification for zoning purposes is fairly debatable, the legislative judgment must be allowed to control It is reasonable for a legislature to regulate building to avoid nuisances and promote safety, and if some harmless type of building is also excluded, this will not invalidate an otherwise good law Complete restriction of all industry and apartment buildings from a purely residential district is proper in that fire and health protection is thereby more fairly suited to the task, traffic congestion and street accidents are reduced, and a safer, cleaner, and more enjoyable place for detached housing development is provided Apartment buildings or industry, taken as a whole, would negate these benefits If the provisions of a law are applied to a specific property, they may be found to be arbitrary and unreasonable Court will not examine each line of the ordinance and enjoin the enforcement if no injury is shown other than a general allegation that property values were affected In the development of constitutional law, court will not speculate with general rules beyond the immediate question presented Value plummeted overnight What did Ambler claim was the constitutional provision violated? 14th amend Ohio constitution--court said same thing Substantive due process Substantial or rational relationship Legitimate objective Scope of police power? Looks to nuisance, but says it's not co-extensive Height is ok--tied to physical health and safety History of excluding offensive trades from area Industry--as a whole can create property, have certain nuisance, but legal overall on its face Apt houses from duplexes? (one residential use from another) What is still open? Line drawing--did not address whether it was rational Nonconforming uses--whether existing activities can be limited Whether it is taking--its relationship to 5th amendment Justifications which don't fall w/in physical nuisance justifications (like what if
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 Justifications which don't fall w/in physical nuisance justifications (like what if city zoned for aesthetic purposes, economic purposes) Where general public interest outweighs interest of municipality Nectow v. City of Cambridge g. Administration of Zoning Ordinances i. Intro Zoning ordinances present numerous opportunities for abuse and for objection by affected landowners Administration of zoning ordinances thus creates the potential for considerable litigation ii. Comprehensive Plans Enabling acts inevitably require the local zoning authority to adopt a comprehensive plan (which can be revised) Zoning must conform with the plan Plan serves to limit the local zoning board's whims iii. Nonconforming Use PA Northwestern Distributors, Inc. v. Zoning Hearing Board a zoning ordinance that requires the amortization and discontinuance of a lawful preexisting nonconforming use is confiscatory and violative of the state constitution as a taking of property without just compensation Lower court based its dismissal on opinion in Sullivan v. Zoning Board, which is not a correct statement of the law Sullivan presents a standard whereby the property interests of an individual are balanced with the health, safety, morals, or general welfare of the community at large Period of time had to be reasonable Zoning involves governmental restrictions upon a property owner's constitutionally guaranteed right to use her property, unfettered by governmental restrictions, except where the use violates any law, creates a nuisance, or the owner violates any covenant, restriction, or easement Based on state constitution A lawful nonconforming use establishes in the property owner a vested property right that cannot be abrogated or destroyed, unless it is a nuisance, it is abandoned, or it is extinguished by eminent domain If the effect of a zoning law or regulation is to deprive a property owner of the lawful use of her property, it amounts to a taking for which she must be justly compensated Concurrence: Blanket rule against all amortization provisions should be rejected Instant provision is confiscatory but the Sullivan standard should be upheld If government can't stop you without compensation, what have you lost? What has government taken? Investments that cannot be recovered (uniquely associated with that use/place) Damages to customer base? Doctrine of pre-existing use Variances 1) Generally Zoning by its nature is general--does not take into account the particularities of every lot in the zone For that reason, boards of zoning adjustment have been established locally Boards are empowered to grant variances for conditions that are unique to a particular lot or 2 If the condition is not unique, a change in zoning should be sought
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 If the condition is not unique, a change in zoning should be sought Ex: if a tract of land was changed from commercial to residential and 20-ft side yard requirement imposed If there were lots that, due to their shape, could not be used for housing if the 20-ft side yard was required, zoning adjustment board could grant variance Case by case determination if zoning that would otherwise apply can be varied Commons v. Westwood Zoning Board, pg. 955 What does he have to show to get a variance? Undue hardship--no effective use of the property without the variance No value without the variance No interference with purposes of zoning on others Made reasonable efforts to comply--how much does court judge legitimacy of efforts? Can't be self-inflicted/self-creating Conserving property value is legitimate objective of zoning Proper to turn down variance for reducing other property's values? What if it's just aesthetics? How relevant is it if neighbor's veto? Mere fact of objection is not enough-need to address statutory factors of undue hardship, etc This was area variance Courts are much more tolerant of area variances than use variances 2) Special Exceptions Not the same thing as a variance Where a particular use is compatible in theory with the surrounding zoning if certain conditions are met, a special exceptions can be issued Criteria must be established for granting special exceptions Ex: gas station may be compatible with a residential neighborhood if the gas storage tanks are placed underground Ordinance regarding special exceptions would have to set forth the requirements for permitting a gas station in a residential neighborhood City has zoned areas for particular use, but in ordinance itself it provides that certain types of uses may be authorized in that area on a case -by-case basis Pre-existing exceptions granted out one by one Easier for broad zoning areas 3) Justification for Refusing Variance Request Commons v. Westwood Zoning Board of Adjustment Variance must be necessary to avoid imposing undue hardship on owner of land in question (no effective use of property can be made if variance is denied); must not substantially impinge upon public good and the intent and purpose of the zoning plan and ordinance Owner must first have made reasonable efforts to comply with zoning ordinance, also hardship must not have been self-inflicted 4) Excessive Discretion Granted to Local Zoning Board Cope v. Inhabitants of the Town of Brunswick Can condos go in residential zoning area? Essentially legislative determination to decide if it is consistent with objectives How is it different from variance? iv. Amending Zoning Ordinances--local legislative body has power to amend the zoning ordinances; need not follow the zoning board's recommendations 1) Spot Zoning Occurs when the local legislative body amends the zoning ordinance to permit a
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 Occurs when the local legislative body amends the zoning ordinance to permit a new zone that is limited in size (although it can be more than 1 lot) and does not conform to the comprehensive plan 2) No Spot Zoning Found State v. City of Rochester Zoning or rezoning classification must be upheld unless opponents prove that the classification is unsupported by any rational basis related to promoting the public health, safety, morals, or general welfare, or that it amounts to a taking without compensation Here, it is invalid spot zoning Creates an island of nonconforming use within a larger zoned district and dramatically reduces the value for uses specified in the zoning ordinance of either rezoned plot or abutting property Spot zoning invalid where some or all of following factors present: i) Small parcel or land is singled out for special and privileged treatment; ii) Singling out is not in the public interest but only for the benefit of the landowner; iii) Action is not in accord with a comprehensive plan 3) Floating Zones Defines a zone but reserves the decision about its location for the future i) Local government creates a use district by an ordinance that specifies standards and criteria to govern the uses permitted in the zone ii) Later in time, zone is brought to earth, attached to a particular area through zoning amendment Only approved explicitly by handful of states 4) Cluster Zones A developer is permitted to construct dwellings in a pattern not in literal compliance w/ area restrictions of a zoning ordinance Provides some of the amenities of rural environment in otherwise urban setting PUDS (planned unit developments)--contemplate a mix of residential, commercial, and sometimes even industrial uses Vs. cluster zones, which are area variations, not area AND use variations 33. The Takings Issue No per say rule--less than 100% loss is judged on case by case basis Uses balancing test If government regulates land to the point that it loses all of its value, the injured party can either sue to have the regulation invalidated or seek damages in an inverse condemnation suit Difficult problems arise when not all the value is lost, but a significant part of the value is Tests i. Harm Some courts hold that the test for determining whether the land has been regulated to the point that is has been "taken" involves looking to see if the regulation has as its goal and effect protection of the public from harm If this is the case, the regulation is a valid exercise of the police power ii. Loss of economic value Look to see if the regulation deprives the affected land of any practical economic value Land must have practically no economic value left to it Sometimes even severe loss is not enough to constitute a taking iii. Total Restriction of Use of Land Pennsylvania Coal Co. v. Mahon a state may NOT regulate use of private property so as to prevent the property owner from using its property Exercise of the police power necessarily affects some property rights. Government could not act if it had to pay for every diminution of property values caused by the laws it enacts
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values caused by the laws it enacts However, the exercise of the police power is limited by due process One consideration in determining the limits is the extent of the diminution When it reaches a certain magnitude, there must be an exercise of eminent domain and compensation to sustain the states action In this case there is a single private house The source of damage to such house is not a public nuisance; damage is not common or public In dealing with Ps position alone, it is clear that the statute does not disclose a public interest sufficient to warrant so extensive a destruction of Ds constitutionally protected rights to mine its coal A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter route than the constitutional way of paying for the change Whether compensation is required for taking is a matter of degree Clearly, it is here so required The statute is unconstitutional in providing for such a drastic taking without compensation So far as private persons or communities have seen fit to take the risk of acquiring only surface rights, the fact that their risk has become a danger does not warrant giving to them greater rights than they bought Dissent: Brandeis The right of an owner to use his land to mine coal is not absolute He may not so use land as to create a public nuisance; and uses, once harmless, may, owing to changed conditions, threaten the public welfare seriously Whenever they do, the legislature has power to prohibit such uses without paying compensation; and power to prohibit extends alike to manner, character, and purpose of the use A prohibition of mining that causes subsidence of structures is obviously enacted for a public purpose; and it is likewise clear that mere notice of intention to mine would not in this connection secure public safety The majoritys conclusion that the statute is unconstitutional seems to rest on the assumption that in order to justify such an exercise of the police power there must be an average reciprocity of advantage as between the owner of the property restricted and the rest of the community, and that such reciprocity is lacking here Reciprocity is an important consideration when a states power is exercised for the purpose of conferring benefits on property of a neighborhood, as in drainage projects, or on adjoining owners, as by party wall provisions But when police power is exercised, not to confer benefits upon property owners, but to protect the public from danger and detriment, there is no room for considering reciprocity of advantage There was no reciprocal advantage to the owner prohibited from using his oil tanks, brickyard, billiard hall, oleomargarine factory, etc., unless it be the advantage of living and doing business in a civilized community That reciprocal advantage is given to the coal operators by the Act. There was no fact-finding as to the "commercial practicability" of mining after
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 There was no fact-finding as to the "commercial practicability" of mining after the state interference by the Kohler Act iv. Property Value Extinguished Lucas v. South Carolina Coastal Council the Act's effect of rendering P's property valueless accomplishes a taking of private property under the 5th and 14th amendments requiring payment of just compensation The state supreme court erred in applying the harmful or noxious uses principle to decide this case Regulations that deny the property owner all economically viable use of his land constitute one of the discrete categories of regulatory deprivations that require compensation without the usual case -specific inquiry into the public interest advanced in support of the restraint Although the Court has never set forth the justification for this categorical rule, the practicaland economicequivalence of physically appropriating and eliminating all beneficial use of land counsels its preservation A review of the relevant decisions demonstrates that: the harmful or noxious use principle was merely this Courts early formulation of the police power justification necessary to sustain (without compensation) any regulatory diminution in value; that the distinction between regulation that prevents harmful use and that which confers benefits is difficult, if not impossible, to discern on an objective, value-free basis; and that, therefore, noxious-use logic cannot be the basis for departing from this Courts categorical rule that total regulatory takings must be compensated Rather, the question must turn, in accord with this Courts takings jurisprudence, on citizens historic understandings regarding the content of, and the states power over, the bundle of rights that they acquire when they take title to property Because it is not consistent with the historical compact embodied in the Takings Clause that title to real estate is held subject to the states subsequent decision to eliminate all economically beneficial use, a regulation having that effect cannot be newly decreed, and sustained, without compensation being paid to the owner However, no compensation is owedin this setting as with all takings claimsif the states affirmative decree simply makes explicit what already inheres in the title itself, in the restrictions that background principles of the states law of property and nuisance already place upon land ownership Although it seems unlikely that common law principles would have prevented the erection of any habitable or productive improvements on Ps land, this state law question must be dealt with on remand To win its case D cannot simply proffer the legislatures declaration that the uses P desires are inconsistent with the public interest, or the conclusory assertion that they violate a common law maxim such as sic utere tuo ut alienum non laedas, but must identify back-ground principles of nuisance and property law that prohibit the uses P now intends in the propertys present circumstances. Concurrence: Kennedy In my view, reasonable expectations must be understood in light of the whole of our legal tradition The common law of nuisance is too narrow a confine for the exercise of regulatory power in a complex and interdependent society.
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of regulatory power in a complex and interdependent society. Dissent: Blackmun I find no clear and accepted historical compact or understanding of our citizens justifying the Courts new taking doctrine Instead, the Court seems to treat history as a grab-bag of principles to be adopted when they support the Courts theory, and ignored when they do not. Stevens The test the Court announces is that the regulation must do no more than duplicate the result that could have been achieved under a states nuisance law Under this test the categorical rule will apply unless the regulation merely makes explicit what was otherwise an implicit limitation on the owners property rights The Court is doubly in error The categorical rule the Court establishes is an unsound and unwise addition to the law and the Courts formulation of the exception to that rule is too rigid and too narrow Also a taking if it prevents you from valuing 100% of property Why does it matter? Problems associate with this category 100% of what?--how do you know if 100% of value was gone? In this case, state court had made that in record When? Can't sell it at all Have to know the denominator Can't lose what you've never owned Scalia says you never have right to commit CL nuisance Takings can never apply on governments ability to restrict you from doing something that would otherwise have constituted CL nuisance 5th amendment Expansion to cover regulatory actions S.C. has come up with 2 rules when there will be violation of federal takings clause --have to provide compensation 1) Permanent physical occupation, regardless of economic value 2) Per say rule from Lucas--if the value reaches 0, it will constitute per se taking (100% diminution in value) These rules are narrow, don't cover all governmental regulatory activity How does SC approach problem when it's regulation of what you can do and does not result in 100% loss in value? SC says ad hoc (case by case) evaluation This approach is confusing--hard to figure out what exactly they are trying to accomplish No guidance Factors to be used (most of them discussed in penn Coal): a) Diminution in value How far is too far? How do you judge before/after? Focus is on how much property lost, but do not know how to calculate it b) Legitimate exercise in police powers? Don't need takings clause b/c we have due process clause If it does satisfy due process, then it can't be taking This has been rejected as factor by most courts c) Reciprocity of advantage A government regulation is less likely to be taking if it is so broadly
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 A government regulation is less likely to be taking if it is so broadly applicable that there is mutual exchange of benefits You may have detriment to your property but you get benefit from someone else's--therefore have not suffered loss Applied to group of people Has someone been singled out? Due process concern--spot zoning Not in Kohler Act How does it play out over time? Benefits/burdens distributed fairly over time? Is this different than spreading out over space? Focus on process of selection d) If it prevents harmful activity, less likely to be taking Distinction between harm-preventing and benefits-conferring activities Stopping land from eroding vs building a park Following Lucas, seems like idea of preventing CL nuisance cannot be taking What about activities that don't fall within any recognized CL nuisance, but still might be harmful? Drawing the line can be very tricky In some ways, when you're preventing harm, you're conveying benefit on whatever is getting the advantage e) Whether it interferes with reasonable investment-back expectations f) Emergency exceptions Blow up building to stop fire--probably not a taking Why not a taking? Who picks who is going to be singled out for this emergency? Usually nature, at least in above example g) Not a taking unless you've been singled out How do you evaluate all these factors? Some states have come up with statutory takings provisions This includes Texas Private Real Property Rights Preservation Act Gives you cause of action Defines taking as 25% loss in value, measured by comparing FMV Courts do not like this, very hard to win

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