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MARBES PROPERTY- FALL 2011 MARBES- Property- Fall 2011

PROPERTY OUTLINE CONCEPT OF PROPERTY AND PROPERTY RIGHTS What is Property? 1. The right to possess, use, and enjoy a determinate thing (either a tract of land or chattel) 2. A bundle of legally enforceable rights among people concerning valuable resources (EPUT) 3. The right of ownership (the institution of private property is protected from under governmental interference) BUNDLE OF RIGHT a. Real property is land and any structures built on it b. Personal property, which is everything else, consists of tangible items (things that can be seen or felt, such as a watch or book) and intangible items (property that cannot be seen, such as a bank account or a right not to be unfairly kicked out of law school). NOTE: Property is not limited just to what we can see or feel. Property can include a copyright, a promise, airspace, a right to fish, and so on. The function of property law is to determine who among the competing claimants gets what when and under what conditions. Bundle of Rights- EPUT Right to Exclude- sine qua non- give someone the right to exclude others from a valued resource- deny someone the exclusive right. Right to Possess Right to Use (and destroy) Right to Transfer

Calabresi & Melamed Define: Entitlement- whenever a state is presented with the conflicting interests of two or more people, or two or more groups of people, it must decide which side to favor.

MARBES PROPERTY- FALL 2011 ACQUISITION OF PROPERTY- FIRST IN TIME Methods of Acquiring Property Subsequent Possessor -Sale and Purchase -Gift -Find -Adverse Possession -Trust -Inheritance

First Possessor -Capture -Conquest -Creation

Theories of Property Rights: 1. First in Time- the first person to take occupancy or possession of something owns it Moore v. Univ.- Moores claim to his cells that were removed for genetic research Court found that Moore had no property rights to his discarded cells or any profits made from them. However, the court concluded that the research physician did have an obligation to reveal his financial interest in the materials harvested from Mr. Moore, and that Mr. Moore would be allowed to bring a claim for any injury that he sustained as a result of the physician's failure to disclose those circumstances. The opinion first looked at Moore's claim of property interests under existing law. The court first rejected the argument that a person has an absolute right to the unique products of their body because his products were not unique. ("[the cells are] no more unique to Moore than the chemical formula for hemoglobin"). The court then rejected the argument that his spleen should be protected as property in order to protect Moore's privacy and dignity. The court held these interests were already protected by informed consent. Finally, the property at issue may not have been Moore's cells but the cell line created from Moore's cells. The court then looked at the policy behind having Moore's cells considered property. Because conversion of property is a strict liability tort, the court feared that extending property rights to include organs would have a chilling effect on medical research. Laboratories doing research receive a large volume of medical samples and could not be expected to know or discover whether somewhere down the line their samples were illegally converted. Furthermore, Moore's interest in his bodily integrity and privacy are protected by the requirement of informed consent (which must also inform about economic interests).

MARBES PROPERTY- FALL 2011 Conversion- An intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.

Pierson v. Post-The hunter who actually kills or captures (capture rule theory) a wild animal, and immediately takes possession of it acquires title. RULE-Mere pursuit alone vests no property right in the huntsman; and that every pursuit, accompanied with wounding is equally ineffectual for that purpose, unless the animal be actually taken Johnson v. MIntosh-Indians have the power to give to private individuals to receive a title to land. Who first acquired the interest in the property? RULE-The Ds who obtain their title from the government, which acquired title through conquest/discovery, is the rightful owner of the land. The Indians held a right of occupancy:

2. Labor-Desert- people are entitled to benefit from the property that is produced by their labor. US Steel- union workers at the plant seek to enforce an alleged promise of the D who said they would keep the plants open as long as they remain profitable. Popov v. Hayashi- the possession of the baseball was lost. GRAYS RULE- Where an actor undertakes significant but incomplete steps to achieve possession of a piece of abandoned personal property and the effort is interrupted by the unlawful cognizable pre-possessory interest in the property. (constructive possession) Define: Constructive Possession- is a legal fiction to describe a situation where an individual has actual control over chattels or real property without actually having physical control of the same assets. At law, a person with constructive possession stands in the same legal position as a person with actual possession. For example, if one's car is sitting in one's driveway, one has physical possession of the car. However, any person with the key has constructive possession, as they may take physical possession at any time without further consent from one. Define: Legal Fiction- An assumption that something is true even though it may be untrue, made especially in judicial reasoning to alter how a legal rule operates.

MARBES PROPERTY- FALL 2011 3. Utilitarianism: Traditional Theory Under the traditional utilitarian theory, property exists to maximize the overall happiness or utility of all citizens. Accordingly, property rights are allocated and defined in the manner that best promotes the general welfare of society. This is the dominant theory underlying American property law. 4. Utilitarianism: Law and Economics Approach The law and economics approach incorporates economic principles into utilitarian theory. This view essentially assumes that human happiness can be measured in dollars. Under this view, private property exists to maximize the overall wealth of society. Critics question the assumption that social value can be appropriately measured only by examining ones willingness to pay. (a) Exclusivity - Other people can be excluded from, and making decisions regarding, what you own. You decide the most efficient way to handle your property. (b) Universality - If a resource is limited, it should be owned. If it is universal, like sunlight or air, it cannot be owned. (c) Transferability - You can sell or give your land to someone else. 5. Personhood-private property is essential to the complete development of a person Moore v. Univ. RIGHT TO EXCLUDE AND ITS LIMITS TRESPASS Right to Exclude is the sine qua non (of property). Give someone the right to exclude others from a valued resource i.e. resources that us scarce relative to human demand for it, and you give them property. Deny someone the exclusion right and they do not have property. Define: Trespass- the intentional entry (of the actor, a thing, or a third party) onto land owned or occupied by another (without privilege). Define: Ejectment- a legal action by which a person wrongfully excluded from property seeks to recover possession, damages, and costs. Define: Intentional- Requires no malice or actual purpose to do harm; the entry was a result of a voluntary act. Entry onto land without privilege Owned or Occupied by Another Define: Possession- A person who is possession of land includes only one who: Is in occupancy with the intent to control it or

MARBES PROPERTY- FALL 2011 Has been no longer is in occupancy; after he ceased his occupancy without abandoning the land, no other person has obtained possession, or Has the right as against all persons to immediate occupancy of land, if no other person is in possession. Define: Privilegeo Consent-Explicit; Implicit o Necessity-To prevent serious harm to person or property

Jacque v. Steenberg- dragged mobile home through their land. RULE- Nominal damage for intentional trespass to land may support an award of punitive damages. Define: Property rule- someone wishes to remove the entitlement from its holder must buy it from him in a voluntary transaction in which the value of the entitlement is agreed upon by the seller Uses the least amount of state intervention Involves a collective decision as to who is to be given an initial entitlement but not as to the value of the entitlement. Define: Liability rule- whenever someone may destroy the initial entitlement if he is willing to pay an objectively determined value for it, entitlement is protected by this rule. The value maybe what it is thought the original holder of the entitlement would have sold it for. Requires some state intervention Liability v. Property Liability Rule Property Rule Whenever someone Whenever someone who may destroy the initial wishes to remove the entitlement of another, entitlement from its if he is willing to pay an holder must buy it from objectively determined him in a voluntary value for it. This value transaction in which the should be equal to the value of the entitlement amount for which the is agreed upon by the original holder of the seller. entitlement would have sold it. 5

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Define: Sunbursting- exception to the general rule Blackstonian Doctrine- a decision which overrules precedent is accorded retroactive effect State v. Shack- migrant worker wants government employee to come on owners land to help them.
Issue Whether the convictions of defendants for criminal trespass should be upheld Rationale Property rights serve human values. They are recognized to that end and are limited by it. We find it unthinkable that the farm employ can assert a right to isolate the migrant worker in any respect significant for the workers well-being VALUES Promoted: Reduction or avoidance of violence Productive use of resources o Money that would be spent on security measures can be spent on other activities o Land is used to fullest potential

PRESCRIPTIVE EASEMENTS Melendez v. Hintz- argument over the sharing of a driveway Elements of Prescriptive Use C/U O/N P A H
1. 2. Actual- the claimant must make sure actual, physical use of a defined area. Open & Notorious the claimants use must be sufficiently visible and apparent that a diligent owner who was present on the land would be able to discover the claimants use the use must not be hidden or concealed but it is NOT necessary the true owner have actual knowledge of the use. Hostile (and Under a Claim of Right)- the use must interfere with the title owners rights to use the property. Exceptions

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Compatible Use- if the true owner of property constructs a way over his own land for his own use, then the mere use by others that does not interfere with the true owners use is presumed to be permissive. o Wild Lands- if the land that is used is wild, unenclosed or unimproved, then the use is presumed to be permissive. Continuous and Uninterrupted the claimants use must be as continuous and frequent as is appropriate given the location, nature and character of the land. The record owner must not succeed in stopping the claimants use---even for a short time- or the period restarts. Prescribed Period- claimant must use the property (as described in all previous elements) for the period prescribed by applicable law. a. Common law- 21 years b. Statutes- 5-40 years o

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ADVERSE POSSESSION Define: The enjoyment of real property with a claim of right when that enjoyment is opposed to another persons claim and is continuous, exclusive, hostile, open and notorious. (POACHER) Possession Open Actual Continuous Hostile Exclusive Required Period

Actual possession of the property must physically use the land as a property owner would, in accordance with the type of property, location, and uses. Merely walking or hunting on land does not establish actual possession. The actions of the disseisor must change the state of the land, as by clearing, mowing, planting, harvesting fruit of the land, logging or cutting timber, mining, fencing, pulling tree stumps, running livestock and constructing buildings or other improvements. Open and notorious use of the property use of the property is so visible and apparent that it gives notice to the legal owner that someone may assert claim. It must be of such character that would give notice to a reasonable person. If legal owner has knowledge, this element is met; it can be also met by fencing, opening or closing gates or an entry to the property, posted signs, crops, buildings, or animals that a diligent owner could be expected to know about. Actual Continuous use of the property for statute of limitations purposes, hold that property continuously for the entire limitations period, and use it as a true owner would for that time. This element focuses on adverse possessor's time on the land, not how long true owner has been dispossessed of it. Occasional activity on the land with long gaps in activity fail the test of continuous possession. Courts have ruled that merely cutting timber at intervals, when not accompanied by other actions that demonstrate actual and continuous 7

MARBES PROPERTY- FALL 2011 possession, fails to demonstrate continuous possession. If the true owner ejects the disseisor from the land, verbally or through legal action, and after some time the disseisor returns and dispossesses him again, then the statute of limitation starts over from the time of the disseisor's return. He cannot count the time between his ejection by the true property owner and the date on which he returned. Hostile or adverse use of the property The disseisor entered or used the land without permission. Renters, hunters or others who enter the land with permission are not hostile. The disseisor's motivations may be viewed by the court in several ways: Objective viewused without true owner's permission and inconsistent with true owner's rights. Bad faith or intentional trespass viewused with the adverse possessor's subjective intent and state of mind (mistaken possession in some jurisdictions does not constitute hostility). Good faith viewa few courts have required that the party mistakenly believed that it is his land. All views require that the disseisor openly claim the land against all possible claims. Exclusive use of the property The disseisor holds the land to the exclusion of the true owner. If, for example, the disseisor builds a barn on the owner's property, and the owner then uses the barn, the disseisor cannot claim exclusive use. (Note: There may be more than one adverse possessor, taking as tenants in common, so long as the other elements are met.) Required Period

Policies for Adverse Possession 1. Stale Claims: Acts as a conclusive presumption of ownership after too much time as elapsed to insure accurate resolution of title disputes. 2. Quieting Title: Reduces costs associated with clearing or quieting title. 3. Sleeping on Rights: Punishes TOs who fail to effectively assert property rights. 4. Earning Rights: Rewards those who effectively use property and protects reliance interests. Mullis v. Winchester P used land to cultivate timber Claimant asserts title by adverse possession to an entire land, typically by virtue of an invalid deed or perhaps due to an ambiguity arising from confusion about inheritance. (this case- Invalid Deed) Define: Boundary Disputes or the situation in which an owner of one parcel encroaches upon (and subsequently claims title to) a portion of a neighboring parcel. Define: Office of color of title is to define the extent of the claim and to extend the possession beyond the actual occupancy to the whole property described in the paper. His actual possession of a portion of the property will be constructively extended to the boundaries defined by his color of title RULE- the claimant must actually possess a defined area of land. 8

MARBES PROPERTY- FALL 2011 The claimants possession must be as continuous and frequent as is appropriate given the location, nature and character of the land. The record owner must not succeed in stopping the claimants possession even for a short time or the period restarts.

Open and Notorious Possession Stump v. Whibco- involves boundary disputes- when one neighbor has possessed some land beyond the actual boundary of an adjacent parcel owned by someone else.
Stumps have failed to sustain their burden of proving open and notorious possession for a period of time. (30 year statute)

Calculating The Period Tolling: In calculating the period under the SOL, subtract the time the title owner is legally disabled from protecting his property. Disability: typically includes under age of majority, mentally incompetent, imprisoned Majority: The period will be tolled only if the disability exists at the time AP enters. Minority: The period will be tolled anytime the TO suffers a disability. Tacking: In calculating the period under the SOL, add the time a predecessor in privity adversely possessed the property. Privity: Is a nexus or relationship that exists when one person voluntarily transfers her possessory rights to the next possessor. Privity does NOT exist when one person ousts another or simply trespasses after the other abandons the property. Rule: possession is open and notorious only when the true owner has actual knowledge. When the possession of land is clear and large enough to be immediately visible, there is a presumption that the true owner has actual knowledge of the adverse occupancy; however, there is no presumption of actual knowledge by the true owner when the encroachment is of a small area along a common boundary and is not clearly and self-evidently apparent to the naked eye. Hostility and Claim of Right Norman v. Allison- Norman built a fence on Allisons land Adverse under- Claim of Right The conduct must interfere with the title owners rights to possess the property and evidence the adverse possessors claim of right. Define: Claim of Right Objective- APs state of mind is irrelevant Good Faith- AP must believe, in good faith, which she/he owns or holds title to the land Intentional Tresspass- AP must
Know the s/he does not actually own or hold title to the land; and Subjectively intend to take title from the TO

MARBES PROPERTY- FALL 2011 Related Doctrines Mutual Recognition and Acquiescence-Estoppeltoppel Principles The true owner is estopped from reclaiming title to a dispute parcel because:
a. b. c. The true owner made representations to the other party as to the location of the boundary; The claimant detrimentally and reasonably relied upon such representations; and The claimant would be unduly injured if the true owner were permitted to recover possession now.

The Good Faith Improver An improvement is mistakenly made on land owned by another and the improver acted in good faith and under a claim of right, then the improver will be entitled to relief if the true owner, after he knew of the mistaken improvement, failed to act or otherwise engaged in misconduct

Freehold Estates Present Estate FSA FSD FSSCS FSSEL Fee Tail Life Estate Future Interest Grantor Possibility of Reverter Right of entry Reversion Reversion Executory Interest Remainder Remainder Future Interest 3rd party

Non-Freehold Estates Present Estate Tenancy for Yrs Periodic Tenancy Tenancy at Will Tenancy at Sufferance Future Interest Grantor Reversion Reversion Reversion Reversion Future Interest Third Party Remainder Remainder Remainder Remainder

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Present Estate- Is the present legal right to immediate possession of the property. Future Interest- Is the present legal right to future possession of the property. Words of Purchase- specify to whom the transfer will be made. Words of Limitation- describe the duration of the estate or interest and identify the type of rights transferred. Present Estates- FSA, Fee Tail, Life Estate (FLOW CHART AT THE END) SEE FLOW CHART FOR Freehold Estate FSA Fee Tail Life Estate How to Analyze the Grant Analyze the Terminology in Grant Read the grant from beginning to end- reading comma to comma Identify who holds the estate or interest Identify which estate or interest is involved Identify how long the estate or interest lasts

Present Estates How is the estate created? What is the duration of the estate? When is the estate transferable?

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MARBES PROPERTY- FALL 2011 White v. Brown- Action to determine whether a will conveyed a fee simple to the P, Evelyn White or merely a life estate to the P with the remainder interest going to the Ds Rule: When constructing a will it is important to clearly delineate the intent of the grantor, as rules of construction of wills will favor fee simple possessory interests as to not alienate the property interest Holographic will- A will that is handwritten by the testator

Restatement 2d of Property- identifies three types of direct restraints 1. Disabling restraint- this is yours, but any attempt to transfer it will be void- purports to deny the grantee any power to alienate the property in the future. 2. Forfeiture restraint- this is yours, but if you transfer it, then the property reverts back to me- does not expressly purport to prevent the grantee from transferring the land, but provides for a forfeiture in the event of any such transfer. 3. Promissory restraint- this is yours and you promise not to transfer it in the future- involves promise by the grantee not to alienate the land, which promise might be enforced by an action for damages or for an injunction.

Baker v. Weedon- The Appellee wishes to sell the property to provide adequate income for the rest of her life, as she can no longer farm the land. The law of waste concept is designed to ensure that uses of the property maximize the propertys value. The central idea of the law of waste is to ensure that the life tenant of the property does not unreasonably interfere with the expectations of the remaindermen New RULE was adopted- the sale would be proper if necessary for the best interest of all the parties Courts have identified three basic types of waste:
Voluntary or affirmative waste- is an affirmative action by the life tenant that damages the land by changing its nature, character, or improvements to the detriment of the future interest holders rights Ex: destruction or substantial alteration of a structure on the property. (action-loss of value) Permissive waste- damage to the future interest holder that occurs by virtue of the life tenants failure to maintain and preserve the land and its improvements properly. Ex: the life tenants failure to pay real estate taxes or her failure to maintain the roof of a building. (inaction- loss of value)

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Ameliorating waste- arises when the life tenant changes the nature or character of land or its improvements, but the change increases the economic value of the land. (action-increase of value) Ex: developer wants to tear down older homes and put in a multi-use project- neighbors would not like it. Conservation purposes- wants to improve it or completely change it.

Present Estates- Defeasible Fees SEE FLOW CHART FOR FSD FSSCS FSSEL 1. Alienable can be transferred through an inter vivos conveyance (such as a deed or trust document) 2. Devisable can be transferred through a testamentary conveyance (by a valid will). 3. Inheritable can be transferred through operation of law when the owner dies intestate (without a valid will). Marenholz- (FSD) Conveyed land with this clause this land is to be used for school purposes only; otherwise to revert to Grantors herein Rule: Use of the word only in granting clause regarding a condition establishes that a grantor intended to create a fee simple determinable rather than a fee simple subject to condition. The language this land to be used for school purpose only is an example of a grant which contains a limitation within the granting clause. It suggests a limited grant, rather than a full grant subject to a condition, and thus, theoretically and linguistically gives rise to a fee simple determinable.

Roberts v. Rhodes- (FSA) conveyed land with this clause it being understood that this grant is made only for school or cemetery purposes Humphrey v. CG Jung Educational Center The language is ambiguous because it creates a right to re-enter but also contains terms giving grantors the option to enforce restriction through injunction or damages 13

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Alby v. Banc One FinancialRESERVATION- in favor of the Grantors, their heirs and assigns, an automatic reverter, should the property conveyed herein ever be mortgaged or encumbered within the life time of either Grantor. Restraint on alienation- a restriction, usually in a deed of conveyance, on a grantee's ability to sell or transfer real property; a provision that conveys an interest and that, even after the interest has become vested, prevents or discourages the owner from disposing of it at all or from disposing of it in particular ways or to particular persons.

SEE FLOW CHART FOR-

Future Interests

Kost v. Foster Rule: the remainder is a vested remainder in those remaindermen in being at the time of the deed where there is no clause inserted in the conveyance which would make the remainder subject to being divested. RAP and Other Special Rules SEE FLOW CHART FOR Merger Rule The Rule on Shelleys Case Doctrine of Worthier Title RAP Abrams v. Templeton Hensley-ONeal v. Metropolitan Natl Bank- Grandmother leaves land to family as deep as great grand children RAP was violated because the gift to the grandchildren was not vested. Inserted the savings clause-who are alive at the time of my death which put the measuring life for the RAP the testators grandchildren. 14

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CONCURRENT ESTATES A concurrent estate exists when two or more persons hold title to or interests in a present possessory estate in property. Types 1. Tenancy in Common 2. Joint Tenancy 3. Tenancy in the Entirety Concurrent Ownership: Tenancy in Common, Joint Tenancy, and Tenancy by Entirety Successive ownership (i.e. a life estate in A, followed by a remainder in B). Property can also be owned by two or more persons concurrently.

For example, A and B can be concurrent owners of a possessory fee simple, a life estate, or even a remainder. Courts will always look at the grantors intent. TENANCY IN COMMON To A and B as tenants in common in fee simple absolute EERYONE HAS EQUAL PERCENTAGE OWNERSHIP- default Exclude Posses Use Transfer A tenancy by two or more persons in equal or undivided fractional interest of shares each person having an equal right to possess the whole property but no right of survivorship. (each person has 50% ownership in the property so if one dies it does not automatically go to the other owner- it goes to the persons estate)

Can transfer by sale, inter vivos gift or will upon death (alienable, devisable, & inheritable)

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MARBES PROPERTY- FALL 2011 Example- O conveys to N and E as tenants in common. Each tenant can take possession of every square foot of the property and use it to the same extent as if he owned it individually. N or E cannot exclude each other from enjoying possession of the property. A tenancy in common is a form of concurrent ownership wherein: Each co-tenant is the owner of a separate and distinct share of the property, which has not been divided among the co-tenants. Each tenant in common holds an undivided fractional share in the entire property Tenancies in common can arise by an express conveyance or devise to persons as tenants in common or when persons inherit property from a decedent. Today, a grant only from A to B creates a tenancy in common, unless specific language in the instrument makes it a joint tenancy (on this specific point, see "joint tenancy" below). Each tenant in common has the right to possess and enjoy the entire property, subject to the same right in each co-tenant. One co-tenant can go into possession of the whole unless another co-tenant objects. EX: O dies, leaving a son S and a daughter D as her heirs. D has the right to, and does, move into the house. Unless S objects, there is no problem with respect to the right of possession. When a tenant in common dies, his interest passes to his devisees or heirs. It does not go to the surviving tenant in common. Unlike a joint tenancy or a tenancy by the entirety, a tenancy in common does not have a right of survivorship. Equal shares are not necessary for a tenancy in common. A and B can be tenants in common, with A holding a four-fifths interest and B holding a one-fifth interest. It is presumed that the shares of tenants in common are equal, but this presumption can be overcome by evidence that unequal shares were intended. EX: A and B, who are not related to each other, purchase property as tenants in common. If A puts up three-quarters of the purchase price and B one-quarter, it will likely be held that A did not intend to make a gift to B, and that the parties have undivided interests proportionate to the amount each paid. 16

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Tenants in common can have different types of estates. Suppose that A and B are tenants in common, and that A dies, devising his halfinterest to C for life, remainder to D. C now owns a life estate and D a remainder in a one-half interest held in a tenancy in common with B. A tenant in common can sell, give, devise or otherwise dispose of his undivided share in the same manner as if he the property. were the sole owner of

A tenant in common can do as he wishes with his property without the consent of the other tenants. Example- O conveys to N and E as tenants in common. Each tenant can take possession of every square foot of the property and use it to the same extent as if he owned it individually. N or E cannot exclude each other from enjoying possession of the property. EX: A and B are tenants in common. Subsequently A conveys his one-half interest to C, D, and E as tenants in common. Thereafter B, C, D and E are tenants in common, B owning a one-half undivided interest and C, D, and E each owning a one-sixth undivided interest. In a tenancy in common, a creditor can only reach the interest of the tenant with the bad credit. If a husband and wife have a tenancy in common and decides how to split the property interest. get a divorce wherein each one contests the other's property interest, then a judge

Under modern law, whenever a conveyance is made to two or more persons who are not husband and wife, they are presumed to take as tenants in common and not as joint tenants, unless there is evidence that a joint tenancy is intended. JOINT TENANCY- All four have to present at the same time and on the same instrument. A tenancy with two or more co-owners who take identical interests simultaneously by the same instrument- 70% owner/30% owner but still own the entire property as a whole with the same right of possession. joint tenant has a right of survivorship to the others share (the death of one joint tenant will result in ownership of the land by the surviving tenants legal fiction- per my et per tout- by the share and by the whole 17

MARBES PROPERTY- FALL 2011 transferable during your lifetime if no will- death extinguishes their share and goes to surviving tenants- who all along owned the entire interest the property is subject to partition not devisable or inheritable How do you destroy the joint tenancy- transfer the unity of title, time To A and B as joint tenants with right of survivorship in fee simple absolute, and not as tenants in common for and during their joint lives and upon the death of either of them, then to the survivor of them (indicates an intention of the parties to share a tenancy in common for life, with cross remainders for life, with remainder in fee to the ultimate survivor). EXAMPLES- of using language that is to ambiguous O to A and B as joint owners it is not clear whether A and B were meant to hold title as tenants in common or as joint tenants. A joint tenancy is a form of concurrent ownership wherein: each co-tenant owns an undivided share of property (as in a tenancy in common) the surviving co-tenant(s) has the right to the whole estate. The right of survivorship is the distinctive feature of the joint tenancy. There is no limit on the number of persons who can hold together as joint tenants. On the death of each joint tenant, the property belongs to the surviving joint tenants, until only one is left. The tenant(s) who lives longest takes the property by himself. A joint tenancy can be created by the deed or by will, or by a joint adverse possession. Joint tenancy does not arise where persons inherit property by intestate succession. Heirs always take as tenants in common. The presumption today is that a conveyance to two or more persons creates a tenancy in common, but there are exceptions. In some states, a husband and wife are presumed to take as joint tenants or tenants by the entirety. Executors and trustees are presumed to hold as joint tenants. Thus, upon the death of one fiduciary, the surviving fiduciary continues to manage the estate or the property, since it would be very inconvenient to have the heirs of the dead fiduciary come in and claim to be co-executors or co-trustees.

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MARBES PROPERTY- FALL 2011 A joint tenancy can be created in either real or personal property. Since the joint tenants are regarded, by a common law fiction, as composing one entity, the common law requires their interests be equal in all respects. They must take their interests: (i) at the same time (ii) by the same instrument, (iii) with identical interests, AND (iv) with an equal right to possess the whole property. When a grantor failed to create a tenancy because one of these four entities was not present, a tenancy in common was created. a. Unity of time - The interest of each joint tenant must vest at the same time. Ex: O conveys "to A for life, then to the heirs of A and the heirs of B as joint tenants." The heirs of A are ascertained at A's death, and the heirs of B are ascertained at B's death. Since the holders of the remainder are ascertained at different times, the heirs of A cannot take as joint tenants with the heirs of B. Since a unity does not exist, they take as tenants in common. b. Unity of title - All joint tenants must acquire title by the same deed or will, or by a joint adverse possession. The unity of title requirement prevents conveyances by a sole owner to himself and another as joint tenants (i.e., in a conveyance by a husband to himself and his wife as joint tenants). EX: A conveyance by H to "H and W as joint tenants," violates the unities of time and title. Because of the common law rule that one person cannot convey to himself, the conveyance by H to "H and W as joint tenants" is viewed as in reality only a conveyance of a half-interest by H to W. Since the unities of time and title are lacking, at common law H and W held as tenants in common. 19

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Exception to this example is the strawperson-a strawperson is a person not intended to have any beneficial interest in the property, who must convey as directed by the beneficially interested parties. A strawperson is usually a lawyer or the lawyer's secretary. Thus, where H wants to convey "to H and W as joint tenants," he can accomplish his wishes by conveying the property to a "strawperson." After H conveys to the strawperson, the strawperson conveys to "H and W as joint tenants." The second deed complies with the four unities rule. c. Unity of interest - Since in theory joint tenants hold but one estate as a single entity, the interest of each joint tenant must be equal in an estate of one duration. It is not possible, for example, for O to create a joint tenancy by conveying "one-half to A and his heirs, and onehalf to B for life, A and B to hold as joint tenants." A and B would hold as tenants in common, which does not require unity of interest. To create a joint tenancy, the shares of each joint tenant must be equal. One joint tenant cannot be given a one-third share and the other a two-thirds share at the time of the creations of the joint tenancy.

However, after the joint tenancy is created, any joint tenant can petition a court to terminate the joint tenancy by partition sale. Upon the sale of the property, the court may divide the sale proceeds in accordance with the proportionate considerations paid. Property can be divided into fractional shares, one of which is owned by persons as joint tenants and the other owned by persons as tenants in common. EX: O conveys Blackacre as follows: "a one-half undivided interest to H and W as joint tenants, and a one-half interest to A." As between themselves, H and W are joint tenants, and if H dies first, W will own the entire one-half interest relieved of H's participation. As between H and W on the one and A on the other, the parties are tenants in common. There are no survivorship rights between A and the joint tenants H and W.

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MARBES PROPERTY- FALL 2011 Unity of possession - Unity of possession requires that each joint tenant have the right to possession of the whole. After a joint tenancy is created, the joint tenants can agree that one joint tenant has the exclusive right of possession. Such an agreement does not break the unity of possession; the joint tenant out of possession is merely waiving his right to possession. A joint tenancy can be created only by express words in an instrument indicating an intent to create a joint tenancy. The clearest way to create a joint tenancy is to convey "to A and B as joint tenants with the right of survivorship, and not as tenants in common." These words will create a joint tenancy, but anything else--such as "to A and B as joint tenants" or "to A and B jointly"--might not create a joint tenancy. In some states, a joint tenancy can be created only if survivorship is expressly provided for. "to A and B as joint tenants with the right of survivorship, and not as tenants in common." The joint tenancy is a useful estate, particularly since it avoids probate. When a person dies either intestate or testate, probate proceedings have to be opened in a local court in order to, among other things, change the title from the decedent to the new owner. Probate is expensive and time-consuming. With a joint tenancy, there is no need to change title at a joint tenant's death, since the surviving joint tenant owns the whole by virtue of the right of survivorship. Any joint tenant can at any time destroy the right of survivorship by severing the joint tenancy. Upon severance, the joint tenancy becomes a tenancy in common, and the right of survivorship is destroyed. Modern law generally follows the old common law view that severance of one of the four unities severs the joint tenancy. There are other ways to sever the joint tenancy: Each joint tenant has the right to convey his interest. A conveyance of the tenant's entire interest or share severs the joint tenancy with respect to that share. Either a conveyance to a third person or to another joint tenant severs the share conveyed from the joint tenancy. EX: A, B and C are joint tenants. On his death bed, A conveys his share to D, thus destroying the unities of time and title between B and C and their new cotenant, D. B and C remain joint tenants between themselves, but D holds his share as a tenant in common with them. When B subsequently dies, C attains B's interest through right of survivorship. C will then own a two-third interest and D a one-third 21

MARBES PROPERTY- FALL 2011 interest as tenants in common. NOTE: The ease of conveying away a share in a joint tenancy illustrates just how easily a joint tenancy can be severed. A partition can destroy a joint tenancy. Under old common law a joint tenant who wished to convert the tenancy to a tenancy in common had to convey to a strawperson, who conveyed back to the joint tenant. The common law required that, in order to have a legal transfer, one person must convey to another person, and not to himself; hence the joint tenant could not convey directly to himself, or the joint tenancy would be destroyed. See above on how the joint tenant nowadays can successfully transfer an interest to himself through a straw person. Severance of Joint Tenancies How do you destroy the joint tenancy?- When a joint tenancy is coupled with a right of survivorship, the right of survivorship can, under certain circumstances, be destroyed by one party acting alone (Transfer of TTIP- destroys the joint tenancy) Because survivorship rights often encumber land, our courts require clear, unambiguous, and express language to create a joint tenancy with rights of survivorship and will construe instruments in favor of tenancies in common whenever possible. Harms v. Sprague RULE: A joint tenancy is not severed when one joint tenant executed a mortgage on his interest in the property, since the unity of title has been preserved. If giving a mortgage creates only a lien, then a mortgage should have the same effect on a joint tenancy as a lien created in other ways. The four unities (time, title, possession and interest) if severed, destroy a joint tenancy. A mortgage does not transfer title, because the unity of title is preserved, title is not transferred, the joint tenancy is not destroyed by the mortgage. TENANCY BY THE ENTIRETY-HUSBAND AND WIFE To H and W as tenants by the entirety in fee simple absolute A tenancy by entirety is a form of concurrent ownership that can: be created only between husband and wife, holding as one person 22

MARBES PROPERTY- FALL 2011 The tenancy by the entirety is like the joint tenancy in that the four unities (plus a fifth--the unity of marriage) are required for its creation, and the surviving spouse has the right of survivorship.

Husband and wife are considered in law to be one person. The fiction that husband and wife are one person reflected the realities of English common law, where a married woman was not a legal person and her husband controlled her interests. This peculiar legal fiction of unity of husband and wife still underlies the tenancy by the entirety and causes trouble. Although the tenancy by the entirety resembles the joint tenancy in that the same four unities are required for its creation, it is unlike the joint tenancy in that severance of the tenancy by one tenant is not possible. Neither tenant acting alone can sever the four unities and destroy the right of survivorship. This is the chief difference between a tenancy by entirety and a joint tenancy. Modern law permits husband and wife to take as tenants in common or as joint tenants. Where the conveyance is unclear,most states that retain the tenancy by the entirety presume a conveyance to husband and wife creates a tenancy by entirety. In some states, when the conveyance is ambiguous, husband and wife take as tenants in common, while in other states, they take as joint tenants.

Like a joint tenancy, a tenancy by entirety can be created in either real or personal property.

The courts in the majority of states hold that creditors of one spouse cannot reach the property because neither the husband nor the wife acting along can transfer his interest. Creditors have tried to abolish the tenancy by entirety for this reason, while debtor protection groups have tried to preserve it. In most states, a divorce terminates the unity of husband and wife and therefore the tenancy by the entirety The survivorship provision can be destroyed by severance of the joint tenancy, which automatically transforms it into tenancy in common. This occurs if one joint tenant transfers away his interest in the estate, either voluntarily (i.e., giving it to his heirs) or involuntarily (i.e., by execution by his creditors). COURTS commonly state that partition is available to tenants in common and joint tenants as a matter of right Rights and responsibilities of cotenants in the absence of an agreement 3 default rules of actions between cotenants:

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MARBES PROPERTY- FALL 2011 1. Accounting- an action in which one cotenant (typically a cotenant that is not in possession of the land) seeks to compel another cotenant (typically the cotenant in possession) to share benefits obtained from the leasing, exploitation, or use of the property (e.g. rents, profits, or proceeds). Example- cutting timber, mining, oil and gas (constitutes a profit v. leasing) livestock could fall under personalty not realty. Calculating Net Proceeds- Gross Revenues-Operating Costs = Net proceeds Divided pro rata among the co-tenants Raw value v. Process Value2. Contribution- an action in which one cotenant seeks reimbursement from the other cotenant for a pro rate share of expenses that the complaining cotenant has paid (e.g. taxes, mortgage principal & interest, insurance) Not reimbursable repairs and maintenance improvements- have to have actually added value (or award that co-tenant) 3. Final Settlement on Sale or Partition- A cotenant can bring an action for an accounting or for contribution without terminating the cotenancy. Repairs and maintenance Rental or other proceeds not accounted for Carrying costs- repair (lack of functionality is repaired), maintain (so it doesnt fall into disrepair) and improve (upgrade the value of something) Type and timing will change Tenants in Common x Joint Tenancy x x x x Tenants by the Entirety x x x x x

Possession Interest Time Title Marriage

When one co tenant ousted the other there is no obligation on the other tenant Absent and agreement

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MARBES PROPERTY- FALL 2011 Smith v. Rucker Whether those survivorship rights are paired with a tenancy in common and therefore indestructible or whether they are paired with a joint tenancy, in which case the property would be subject to partition at the whim of either party. The deed in the instant case does not contain the language suggested by section of the SC code, it does satisfy the four unities required to create a joint tenancy: both Husband and Wife have the same interest created by the same conveyance which commenced at the same time and they hold the property in undivided possession. Wifes deed created a joint tenancy by satisfying the four unities required under common law and by unambiguously creating a right of survivorship. United States v. Craft New interpretation of the property rights of an individual that holds property as tenancy by the entirety is subject to a Federal tax lien. The court puts the individual rights in the real property under a microscope, and lists a number of rights one spouse has in real property held by tenants by the entirety. These are as follows: The right to use the property; The right to exclude third parties;The right to share in income produced; The right of survivorship; The right to become a tenant in common upon divorce; The right to sell the property with spousal consent; and The right to encumber the property with spousal consent. Therefore the Federal Tax Lien does attach to the taxpayers interest in entireties property. RULES GOVERNING THE LEGAL RELATIONSHIP BETWEEN COTENANTS Schmidt v. Wittinger-Donald, Keith and Albert Wittinger are brothers who inherited from their parents undivided equal interests in farmlandAlbert was sued by his brothers and Schmidt for partition sale of the property. Issue: Whether the court could force a partition by sale 25

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Partition action: co-owner can seek to partition property thereby terminates a co-ownership. The idea that the property is unique.

By sale- a judicial sale of the entire parcel, followed by a distribution of the sale proceeds to each cotenant in accordance with each cotenants share. In kind- is physical division of the property; the court divides the property into separate tracts, and vests individual title to a tract in each of the cotenants based upon each cotenants respective shares.

Owelty- a sum of money that balances the parties respective shares (can be used to help dictate a partition in kind- this payment is made to adjust) Holding- the trial courts findings are not clearly erroneous. The Ps have met their burden of proving that a partition in kind could not be made without great prejudice to the owners. Costs to partition to the existing fence was high- rivers meanders through the property Building and maintaining of fences by adjoining owners Albert is hostile towards others Not all tracts had a water supply Property being operated and farmed in a sufficient manner Current house that is built is on the premises- section line 5-8 cannot be partitioned. Value of the Wittengers share would be less than the whole Partition in kind would result in great prejudice to the owners, that is why the partition by sale was ordered by the court.

Joint tenant is liable to account to his cotenants for receiving more than a proportionate share of the rents and profits. Estevez v. Estevez OusterNeed to show physical interference- i.e. change the locks Reflect a clear repudiation of the other co-tenants claim of title

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MARBES PROPERTY- FALL 2011 1) on a sale of commonly owned property, an owner who has paid less than his pro-rata share of operating and maintenance expenses of the property, must account to the co-owner who has contributed more than his pro-rata share, and that is true even if the former had been out of possession and the latter in possession of the property. 2) the fact that one tenant in common occupies the property and the other does not, imposes no obligation on the former to make any contribution to the latter. All tenants in common have a right to occupy all of the property and if one chooses not to do so, that does not give him the right to impose an occupancy charge on the other. 3) when on a final accounting following sale, the tenant who had been in sole possession of the property demands contribution toward operating and maintenance expenses from his co-owner, fairness and equity dictate that the one seeking that contribution allow a corresponding credit for the value of his sole occupancy of the premises. Marital Interests Property interests that arise out of a marital relationship. One spouse can claim can claim property interest in land or other assets that otherwise belong to the other spouse individually (or are titled in the other spouses name). a. Jure Uxoris- is a Latin term that means "by right of his wife" or "in right of a wife". It is commonly used to refer to a title held by a man whose wife holds it in her own right. In other words, he acquired the title simply by being her husband. b. Curtesy- A husbands entitlement to a life estate that his wife possessed at her death is curtesy right. The couple must have a living child capable of inheriting his/ her mothers estate. The common law provides that upon marriage, a husband acquires a right, under a freehold estate, to the use and profits of his wifes lands. Upon the birth of a child capable of inheriting the land, a husband acquires a life estate or property interest. The husband can sell or mortgage the land and it can satisfy the claims of his creditors. Curtesy initiate is a husbands right of curtesy before his wifes death. It is the right created upon the birth of the couples first child.

Curtesy consummate is a husbands right of curtesy after his wifes death. Upon the death of the wife, curtesy initiate becomes curtesy consummate.

c. Dower- is a wifes interest in her husbands property upon his death. It is a portion of a deceased husbands real property, usually one-third, that a widow is legally entitled to use during her lifetime to support herself and their children. A wife may claim the dower if her husband dies without a will or if she dissents from the will

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MARBES PROPERTY- FALL 2011 The main elements of a dower claim are as follows: A valid marriage; A sole and beneficial seisin of property by the deceased spouse at any time during the marriage; Living issue(s) during the marriage; and The death of a spouse leaving the surviving spouse to claim dower. ELECTIVE SHARE- The Modern Successor of the Estates of Dower and Curtesy Dower and Curtesy are now abolished- but these estates did serve an important purpose---to ensure that ones spouses death did not leave the surviving spouse without any property on which to sustain himself or herself. d. Elective Share- An elective share is a term used in American law relating to inheritance, which describes a proportion of an estate which the surviving spouse of the deceased may claim in place of what they were left in the decedent's will. It may also be called a widow's share, statutory share, election against the will, or forced share. Typically applies only to property that would pass by probate transfer. Example: "A" and "B" are both recent widowers. Husband "A" inherited $100,000 from his wife. Husband "B" was completely cut out of his wife's will, but after claiming an elective share of his wife's estate (30% of the elective estate), he too received $100,000 from his wife's estate. e. Community Property- In a community property jurisdiction, most property acquired during the marriage (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment or death. Joint ownership is automatically presumed by law in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property. f. Equitable Distribution- Division of property, also known as equitable distribution, is a judicial division of property rights and obligations between spouses during divorce. It may be done by agreement, through a property settlement, or by judicial decree. Distribution of property is the division, due to a death or the dissolution of a marriage, of property which was owned by the deceased, or acquired during the course of the marriage. In Re Marriage of Graham page 387 Wife supported her husband financially while he attended school. The spouses filed for divorce and the issue became whether the husbands degree was marital property that could be divided. 28

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Rule of Law. An educational degree is not encompassed by even a broad interpretation of property. An educational degree is not encompassed by even a broad interpretation of property. It does not have any of the characteristics of the concept of property. An educational degree cannot be transferred. It has no exchange value on the open market and terminates upon death. OBrien v. OBrien page 391 A spouse sought to have a professional license declared as marital property, thus subject to equitable distribution. Rule of Law. An interest in a professional or professional career potential is marital property, which may be represented by direct or indirect contributions of the non-title holding spouse. Marital property is subject to equitable distribution. It is property acquired by either spouse during the marriage regardless of the form in which title is held. An interest in a professional or professional career potential is marital property, which may be represented by direct or indirect contributions of the non-title holding spouse. Mahoney v. Mahoney Melvin and June were married. Melvin went to school to get an MBA. During this time, June was the sole income earner for the family. The Court created the concept of reimbursement alimony as an equity device. Reimbursement alimony gives a spouse half of all financial contributions made towards one spouse's education; including tuition, books, household expenses, etc. There is an expectation that they would get some benefit for supporting their spouse's education. Reimbursement alimony is not to be granted in every case. It is only for monetary contributions made with the mutual and shared expectation that both parties to the marriage will derive increased income and material benefits from the degree. RULE- a degree is not marital property. There are three reasons for this: o The value of the degree is speculative, How much money the degree is worth depends on what particular job a person takes later in life. That could be vastly different. Working for a law firm or a non-profit makes a big difference after law school. o A degree is personal to the holder, June didn't do the work to get the degree, only Melvin. 29

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o

The degree produces income after the period of marital property has ended. Melvin shouldn't have to pay June for income he earns after the divorce. Chapter 7 The Law of Landlord and Tenant The Nature of the Lease and the Covenant of Quiet Enjoyment

1. The Dual Nature of Modern Leases Lease is a conveyance (contract) in which the owner of real estate transfers the right to immediate and exclusive possession of specific real property either for a fixed period of time or for as long as the landlord and tenant desire. Privity of estate Privity of contract Need to know on the first day when the term will end. The lease will end, it will expire. The person who holds the right to possession has an estate- a recognizable possessory interest in the land. When the lease terminates Why do you have a lease? Dominion and control over a specific area or property Need contract rules added onto my conveyance model. Which gives us the modern residential lease. Non-Possessory Interest (v. Leases) Profits- A right to enter onto and remove some part of land or product of land possessed by another Ex: right to cut timber, hunt on property, extract minerals, oil and gases Licenses- it is revocable grant of permission to go onto land in the possession of another for a specific purpose Easement- non-possessory right it is revocable or irrevocable permitting holder to enter onto and make a particular use of land in possession of another.

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MARBES PROPERTY- FALL 2011 Cook v. University Plaza The plaintiffs and University Plaza entered into a Residence Hall Contract Agreement that stipulated that the parties did not intend a landlord-tenant relationship. The defendant reserved the right to require a resident to move from room to room. Issue: Whether a K is a lease or a license is not to be determined from the language that the parties choose to call it but from the legal effect of its provision. Is a contractual agreement between students and a university dormitory a lease or a license? Rule: The essence of a lease is transfer of possession, while a license is an agreement which merely entitles one party to use property subject to the management and control of the other party. Therefore, an agreement which allows a dormitory to move students from room to room at its discretion is a license because it fails to pass a possessory (exclude, possess, use, transfer) interest in specific property. Rule: An instrument which merely gives to another the right to use premises for a specific purpose; the owner of the premises retaining the possession and control of the premises, confers no interest in the land and is not a lease but a mere license. Opportunity CostsStatus is what we used to rely on- we are now going over rights with a contract Equity- it would be inequitable not to permit the student back because of her status. She had legally enforceable rights as long as she was paying to use the premises. Look at the specific rights

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MARBES PROPERTY- FALL 2011 Types of Leasehold Estates A leasehold estate is an estate in real property of a lessee, created by a lease Three types of leasehold estates: tenancy for years, tenancy at will, and a periodic tenancy Tenancy for term (years) -- This has a stated, definite maximum duration. It cannot last longer than this specified period, unless it is renewed. (No notice to terminate for lessee is necessary; lessor cannot terminate.) Expires automatically Fixed in advance Computed using an agreed upon formula Tenancy at will-without a fixed duration and without defined renewable periods 1. A tenancy for an indefinite, uncertain period of time 2. Either party can terminate the lease with reasonable warning- immediately 3. Any unclear, ambiguous tenancy defaults to a tenancy at will 4. There is no right to renewal A tenancy at will is broken, again by operation of law, if the: Tenant commits waste against the property; Tenant attempts to assign the tenancy; Tenant uses the property to operate a criminal enterprise; Landlord transfers his/her interest in the property; Landlord leases the property to another person; Tenant or landlord dies. Periodic tenancy- This is a tenancy which is renewed automatically at the end of each period. continues from month to month, or year to year, unless lease is terminated by proper notice. Proper notice o Common law: The amount of notice must be the same as the period (i.e., for a month tenancy, 30 days is required). o Modern rule: By statute, many states require only 30 days notice, regardless of the period involved. Renewal: The lease automatically renews unless a party gives notice.

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MARBES PROPERTY- FALL 2011 Tenancy at Sufferance- (sometimes called a holdover tenancy) exists when a tenant remains in possession of a property after the expiration of a lease until the landlord acts to eject the tenant from the property. Although the tenant is technically a trespasser at this point, and possession of this type is not a true estate in land, authorities recognize the condition in order to hold the tenant liable for rent. The landlord may evict such a tenant at any time, and without notice. The landlord may also impose a new lease on the holdover tenant. For a residential tenancy, this new tenancy is month to month. For a commercial tenancy of more than a year, the new tenancy is year to year; otherwise it is the same period as the period before the original lease expired. In either case, the landlord can raise the rent, so long as the landlord has told the tenant of the higher rent before the expiration of the original lease. David Properties, Inc. v. Selk Selk- is the seller and tenant David Properties was the buyer and landlord Issue: Whether the D, having written those letters to the P setting the rent at $300 per month if the P continued to live on the property, and having received no reply whatsoever from the P, who continued to live there, is entitled to that much as rent? HELD- that when a landlord demands different rent for continued possession of property after expiration of lease and tenant receives demand and thereafter continues on in possession without protest, the tenant impliedly agrees to pay the rent demanded. The Transferability of the Leasehold Estate Lease- entitles the holder to immediate and exclusive possession of specific land for a specified period of time or for as long A tenant may conclude that she no longer needs possession of the leased premises. 1. Residential- Because the tenant has to move suddenly- (job transfer) 2. Commercial- business failed or very success and they have outgrown their current space. Tenant wishes to transfer its leasehold estate- its right to possession- to another person who wants it.

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MARBES PROPERTY- FALL 2011 General policy is in favor or alienability for the tenant to transfer its rights. Two types: Assignment-the tenant transfers its entire remaining interest (the right to possession for the full balance for the lease term) o Part Assignment o Full Assignment Sublease- tenant transfers less than its entire remaining interest (creates an entirely new landlord-tenant relationship between the sublessor (original tenant) and the sublessee (the original tenant) Julian v. Christopher (1990) Tenants purchased a tavern and restaurant business, as well as rented the business premises from landlord, Guy D. Christopher. The lease stated in clause ten that the premises, consisting of both the tavern and an upstairs apartment, could not be assigned or sublet "without the prior written consent of the landlord." The circuit judge noted: "If you don't have the words that consent: will not be unreasonably withheld, then the landlord can withhold his consent for a good reason, a bad reason, or no reason at all in the context of a commercial lease, which is what we're dealing with."

Issue : Whether the Klawans holding should be modified in light of the changes that have occurred since that decision? Get from the powerpoint The Klawans opinion cited Restatement of Property 410 as authority for its holding. The current Restatement (Second) of Property 15.2 rejects the Klawans doctrine and now takes the position that: A restraint on alienation without the consent of the landlord of the tenant's interest in the leased property is valid, but the landlord's consent to an alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute right to withhold consent. Since Klawans, the trend has been in the opposite direction. "The modern trend is to impose a standard of reasonableness on the landlord in withholding consent to a sublease unless the lease expressly states otherwise." 34

MARBES PROPERTY- FALL 2011 Probably the most often used clause is a "silent consent" clause similar to the provision in the instant case, which provides that the premises may not be assigned or sublet without the written consent of the lessor. In a "silent consent" clause requiring a landlord's consent to assign or sublease, there is no standard governing the landlord's decision. Courts must insert a standard. The choice is usually between 1) requiring the landlord to act reasonably when withholding consent, or 2) permitting the landlord to act arbitrarily and capriciously in withholding consent. Public policy- requires that when a lease gives the landlord the right to withhold consent to a sublease or assignment, the landlord should act reasonably, and the courts ought not to imply a right to act arbitrarily or capriciously. If a landlord is allowed to arbitrarily refuse consent to an assignment or sublease, for what in effect is no reason at all, that would virtually nullify any right to assign or sublease. There are two public policy reasons why the law enunciated in Klawans should now be changed. Against restraints on alienation implies a covenant of good faith and fair dealing in every contract.

Because there is a public policy against restraints on alienation, if a lease is silent on the subject, a tenant may freely sublease or assign. Restraints on alienation are permitted in leases, but are looked upon with disfavor and are strictly construed. If a clause in a lease is susceptible of two interpretations, public policy favors the interpretation least restrictive of the right to alienate freely. Interpreting a "silent consent" clause so that it only prohibits subleases or assignments when a landlord's refusal to consent is reasonable, would be the interpretation imposing the least restraint on alienation and most in accord with public policy. Examples of reasonable objections: sprankling financial irresponsibility or instability of the transferee unsuitability or incompatibility of the intended use of the property by the transferee nature of the proposed use legality of proposed use 35

MARBES PROPERTY- FALL 2011 need to alter the premises whether use will compete with landlords business or other existing tenants

If the reasons for withholding consent have nothing to do with the intended transferee or the transferee's use of the property, the motivation may be suspect. Alleged in this case, the refusal to consent was solely for the purpose of securing a rent increase, such refusal would be unreasonable unless the new subtenant would necessitate additional expenditures by, or increased economic risk to, the landlord. Ernst v. Conditt. The Complainants, Mr. and Mrs. Ernst (Complaintants), approved a modification to a lease that allowed the Defendant, Conditt (Defendant), to sublease the premises and left the lessee personally liable. Defendant ceased paying rent and Complainants sued to determine whether the instrument was a sublease or assignment. Rule. The words used in an instrument are not conclusive, rather it is the intentions of the parties that govern whether the instrument is a sublease or assignment. Issue. Whether the transfer of the leasehold interest in the premises from Rogers is an assignment of the lease or a sublease? Held. Affirmed, the use of the word sublet is not conclusive of the construction to use on the instrument. Rather the instrument was an assignment. A sublease grants the sublessee an interest in the lease premises with a reversionary interest remaining with the lessee. An assignment conveys the whole term, leaving no interest or reversionary interest in the lessee. The Common law rule is if the instrument purports to transfer the lessees estate for the entire remainder of his term, it is an assignment, regardless of its form or the parties intentions. This current agreement, despite its terms, does not leave the lessee with a right to re-enter or a reversionary interest, thus it is an assignment.

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MARBES PROPERTY- FALL 2011 Dumpors Case The Rule in Dumpor's Case is a common law rule of property law first set forth by Sir Edward Coke in 1578. In its most basic form, it states that once a landlord has consented to an assignment of a tenant's interest in a leasehold estate, he implicitly consents to all future assignments by the tenant. DVM Co. v. Bricker Arizona Souvenirs case Tenant shall not use or permit the premises to be used for any other purpose or purposes without the written consent of the landlord first had and obtained. Held. After trial to the court without a jury, the court held that while selling T-shirts with some identification of Arizona, Phoenix, cactus or such things did not violate the use clause, the sale of T-shirts with movie, TV or cartoon personality imprints did violate the lease. However, the court also found: The breach of the lease agreement for the Basket House was not sufficiently material in nature to warrant recovery and possession of the subject premises under the provisions of A.R.S. 33-361 or the lease agreement. The trial court awarded DVM attorney's fees, but refused to terminate the lease. o As long as a tenant is in possession of the property, the landlord should not be forced, pending determination of the matter, to refuse rental payments by a tenant in possession. We hold that under this specific fact situation, accepting rental payments during the pendency of this action does not result in a waiver of a claim to forfeiture. The Landlords Responsibilities Related to the Condition of the Premises Traditional view of leases as conveyances- landlords primary responsibility was to provide tenant with the legal right to possession and to not interfere with that possession during the term of the lease. Caveat lease- let the buyer beware Limited common law circumstances of landlords obligations Property suffered latent defects which landlord knew or should have known 37

MARBES PROPERTY- FALL 2011 Maintaining the physical condition of common areas Agreed to perform any repairs, the landlord was obligated to perform that agreement Lease was a short term- for the rental of furnished premises- landlord responsible for physical condition of the premises Building under new construction-Lease contained an implied covenant by the landlord that it would be fit for purpose for which the tenant entered into the lease

Tenant cannot withhold rent for any of these circumstances unless: (Common Law) 1. The lease specifically provided the tenant with the termination right 2. Tenant had a duty to pay rent 3. The landlords breach resulted in conditions that were so serious as to justify a constructive eviction The Covenant of Quiet Enjoyment and Constructive Eviction Implied Covenant of Quiet Enjoyment- default law- despite of the fact the parties did not mutually assent to it. Breach of Quiet Enjoyment- without a physical ouster 1. Active interference with its possession ( or the landlords inaction in relation to a legal duty owed) 2. The interference is attributable to the landlord, landlords agent or title holder- cannot be from a third party must be a direct action by the landlord breaching the covenant of quiet enjoyment 3. Interferes with the tenants bargained for possession- tenant promptly departs the premises 4. Tenant leaving constitutes a constructive possession terminating the leasehold and any liability for future rent. American Rule Legal possession Tenant must sue holdover tenant to gain actual possession English Rule Physical possession Lanlord must sue holdover tenant to deliver actual possession Constructive eviction is a term used in the law of real property to describe a circumstance in which a landlord either does something or fails to do something that he has a legal duty to provide (e.g. the landlord refuses to provide heat or water to the apartment), rendering the property uninhabitable. A tenant who is constructively evicted may terminate the lease and seek damages.

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MARBES PROPERTY- FALL 2011 To maintain an action for damages, the tenant must show that:

the uninhabitable conditions (substantial interferences) were a result of the landlord's actions (not the actions of some third party) and that the tenant vacated the premises in a reasonable time and relieved of obligation to pay future rent

A tenant who suffers from a constructive eviction can claim all of the legal remedies available to a tenant who was actually told to leave. Need to remember: 1. a physical interference cannot breach the covenant of quiet enjoyment unless it is attributable to the landlord, the landlords agent, or a paramount title holder. 2. 3rd parties- cannot breach this covenant (duty to act) 3. Not all interferences will justify a constructive eviction a. Must be intentional- by conduct (not all courts) b. Substantial- always c. Permanent (not all courts) 4. Tenants possession, use and enjoyment of the premises Fidelity Mutual Life Ins. Co v. Kaminsky- OBGYN with protesters Issue: Whether there is sufficient evidence to supports the jurys findings that the landlord and appellant, Fidelity Mutual Life Insurance Co, constructively evicted the tenant, Kaminsky by breaching the express covenant of quiet enjoyment contained in the parties lease. Constructive eviction- occurs when the tenant leaves the leased premises due to conduct by the landlord which materially interferes with the tenants beneficial use of the premises. Rule: that a landlord is not responsible for the actions of third parties, applies only when the landlord does not permit the third party to act, BUT Ps lack of action or inaction when put on notice constitutes a violation to this rule From Caveat Lessee to the Implied Warranty of Habitability Commercial transactions- the caveat lessee rule is normally used.

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MARBES PROPERTY- FALL 2011 Urban residential (single unit housing) replaced rural agricultural tenancy The Development of Housing Codes- 1867 (NY Tenement House of Law) 1. Structural integrity- walls, roofs, floors 2. Nonstructural fixtures- toilets, sinks, door and door locks, windows and window locks 3. Services- heat, water, sewer, garbage, elevators 4. Occupancy- limiting numbers of occupants per dwelling

Problem: Were not universal Tenants who complained their leases were not renewed Enforcement was sporadic Only could complain to the public official- not private tenant Housing offices- understaffed and overworked, poorly trained and corrupt Exceptions: Short term lease Premises conditions were fraudulently misrepresented Latent defects The Illegal Lease A tenant signed a lease for premises that the landlord knew were in substantial violation of DCs housing code. When the landlord failed to correct the violations- the tenant did not pay rent and vacated. Problem: tenants would complain then had to vacate- so people would no complain about unhealthy and unsafe conditions. Warranty of habitability- covenant by the landlord, implied by law into residential leases, that the landlord will maintain the premises in a habitable condition throughout the duration of the lease. Tenants obligation to pay rent were dependent on the landlord compliance with the implied warranty habitability. Poyck v. Bryant Issue- Whether secondhand smoke emanating from a neighbor gives rise to a breach of the implied warranty of habitability and a constructive eviction under the realities of modern urban dwelling. 40

MARBES PROPERTY- FALL 2011 There is a duty to protect each other's right to privacy and a responsibility not to invade a neighbor's privacy. such as noise smells odors fumes dust water secondhand smoke.

RULE- When neighbors fail to respect each other and the landlord does not act, the law imposes its will on landlords and tenants through the statutorily enacted implied warranty of habitability pursuant to Real Property Law 235-b. Implied Warranty of Habitability RULE-Real Property Law 235-b was enacted in August 1975, to provide modern urban dwellers with much needed protections and rights to compel landlords to make necessary repairs and provide essential services. Landlord impliedly warrants as follows- Defined Habitability 1. the premises are fit for human habitation or 2. the condition of the premises is in accord with the uses reasonably intended by the parties; (landlord has to be aware) or 3. the tenants are not subjected to any conditions endangering or detrimental to their life, health or safety." 4. Complies with the building code 5. Maintain the structural integrity and working systems of the building 6. Not single family home or duplex a. Exterminate pests b. Maintain functioning facilities for heat in the winter, running water and The standard for a breach of the implied warranty of habitability is measured "in the eyes of a reasonable person" not in a vacuum which ignores the "essence of the modern dwelling unit." If a landlord fails to meet their legal responsibility to maintain rental property, tenants may respond in a variety of ways, including withholding the rent or repairing the problem (or hiring someone to do so) and deducting the cost from the rent. 41

MARBES PROPERTY- FALL 2011 The Landlords Tort Liability Due to Property Conditions- page 475 Example- about tenant leases apartment infested by rats, gets bitten, incurs med bills, destroys personal property- does the tenant have any rights to sue landlord? Traditional general rule- the landlord is not liable in tort personal injury cases- landlord had no duty to protect the tenant or 3rd parties from such personal injury and/or property damage. Implied warranty of habitability- is meant to protect the benefit of the tenants bargain- to protect the tenant from the loss occasioned by the devaluation of the tenancy by uninhabitable conditions. Ransburg v. Richards Lenna Ransburg, d/b/a Twin Lakes Apartments ("Ransburg"), brings this interlocutory appeal to challenge the trial court's denial of her summary judgment motion in a negligence action filed by her tenant, Barbara Richards. We affirm. Issue Whether the exculpatory clause contained in the residential lease between the parties is void as against public policy and whether, as a result, the denial of summary judgment in favor of Ransburg was proper. Exculpatory clause- A contract provision that relieves one party of liability if damages are caused during the execution of the contract. The party that issues the exculpatory clause is typically the one seeking to be relieved of the potential liability. For example, a venue may print an exculpatory clause on tickets it sells for a concert indicating that it is not responsible for personal injury caused by employees or others during the show. Whether this lease provision is void as against public policy turns on fairly balancing the parties' freedom to contract against the policy of promoting responsibility for damages caused by one's own negligent acts. As a general rule, the law allows persons of full age and competent understanding the utmost liberty of contracting, and their contracts, when entered into freely and voluntarily, are enforced by the courts. It is in the best interest of the public that persons should not be unnecessarily restricted in their freedom of contract. However, in certain circumstances a court may declare an otherwise valid contract unenforceable if it contravenes the public policy of Indiana Court categorized three situations where courts have refused to enforce private agreements on public policy grounds: 42

MARBES PROPERTY- FALL 2011 o o o agreements that contravene statute; agreements that clearly tend to injure the public in some way; agreements that are otherwise contrary to the declared public policy of Indiana

Parties are permitted to make such contracts so long as they are knowingly and willingly made and free from fraud. No public policy exists to prevent such contracts. Exceptions: where the parties have unequal bargaining power the contract is unconscionable the transaction affects the public interest such as utilities, carriers, and other types of businesses generally thought to be suitable for regulation or which are thought of as a practical necessity for some members of the public.

With these thoughts in mind, we conclude that the five factors outlined by our supreme court weigh in favor of not enforcing this type of clause in residential leases. 1. the nature of the subject matter of the contract; 2. the strength of the public policy underlying the statute; 3. the likelihood that refusal to enforce the bargain or term will further that policy; 4. how serious or deserved would be the forfeiture suffered by the party attempting to enforce the bargain; and 5. the parties relative bargaining power and freedom to contract. Three remedies to stay in possession One remedy for constructive eviction Damages-page 461 As warranted v. as is As agreed v. as is Value of total premises (the lesser amount x .25 = 150)- unusable premises Read retaliatory eviction Waiver of protection Majority Minority

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MARBES PROPERTY- FALL 2011 Landlords Remedies for Tenant Breach The tenant has no ability to terminate the lease prior to the end of the term, absent an express lease provision to that effect. Options available to tenant to limit her financial liability 1. Tenant can terminate her leasehold estate by giving timely notice a. Can try to assign or sublet- if permitted 2. Negotiate directly with the landlord to terminate the lease a. Reach a compromise and pay something to the landlord for early termination 3. Tenant may choose to stop paying rent and abandon the premises altogether (or remain in possession) Abandonment Default

How does the tenant end the lease: Termination when the lease expires Termination by notice Periodic tenancy Tenancy at will Landlords option when a tenant breaches the lease but remains in possession o Self-help-without going thru court proceedings o Eviction o distraint o Judicial process- eviction Landlords option when a tenant abandons the premises- w/o paying rent Forcible entry and detainer (FED) 1. To limit the landlords use of force in self help eviction 2. To provide a more streamlined judicial process for eviction Self Help- evaluate the landlords conduct at the time the eviction happens 1. Use force to the extent reasonably necessary to evict the tenant 44

MARBES PROPERTY- FALL 2011 2. Retake possession only through peaceable means (entry without threated or actual force) Self Help: eviction Eviction procedure 1. Give tenant a Notice of default and number of days to cure 2. If they do not vacate- files an action seeking an expedited statutory eviction 3. Tenant does not answer- default 4. Tenant answers and may assert affirmative defenses 5. Landlord request trial date- normally within a few weeks 6. If tenant wins and not at default- may recover damages and attorneys fees 7. If tenant loses- may appeal or seek a stay of execution 8. If landlord wins and tenant does not move- landlord obtains a writ of possession- serves notice to vacate on tenant- or sheriff may forcibly evict Gorman v. Ratliff 1986 (SC Arkansas) Arkansas Supreme Court refused to allow a self-help lien enforcement and repossession of a tenant's goods by the landlord. The lease agreement between the parties in Gorman expressly authorized the landlord to enter the premises and store all of the tenant's personal property upon the tenant's non-payment of rent. The lease also expressly created a lien in favor of the landlord upon the tenant's personal property. the legislature evinced a desire to extend additional protection to parties in possession of property before that property could be taken from them, as well as to provide for procedures to expedite the removal of parties who are unlawfully in possession of property. Section 34-1503 defines those acts that will constitute a forcible entry and detainer as follows: If any person shall enter into or upon any lands, tenements or other possessions and detain or hold the same without right or claim to title, or who shall enter by breaking open the doors and windows or other parts of the house, whether any person be in or not, or by threatening to kill, maim or beat the party in possession or by such words and acts as have a natural tendency to excite fear or apprehension of danger or by putting out of doors or by carrying away the goods of the party in possession, or by entering peaceably and then turning out by force or frightening by threats or other circumstances of terror the party to yield possession, in such cases every person so offending shall be deemed guilty of a forcible entry and detainer within the meaning of this Act. Included in this list is the action taken by the landlord in this case: "carrying away the goods of the party in possession". 45

MARBES PROPERTY- FALL 2011 No person shall enter into or upon any lands, tenements, other possessions, and detain or hold the same, but where an entry is given by law, and then only in a peaceable manner. Notes: 1. Summary Eviction Statutes and Their Impact upon the self-Help Remedy Common law- Traditionally a landlord could use self help if he did not breach the peace 2. Agreements to permit self-help There is a substantial limitation- if the tenant raises an objection, most courts will stop the landlord self help 3. Repossession of Tenants Personal Property Ancient Common Law- Distraint- or distress is "the seizure of someones property in order to obtain payment of rent or other money owed", especially in common law countries.[1] Distraint is the act or process "whereby a person (the distrainor), traditionally even without prior court approval, seizes the personal property of another located upon the distrainor's land in satisfaction of a claim, as a pledge for performance of a duty, or in reparation of an injury." Distraint typically involves the seizure of goods (chattels) belonging to the tenant by the landlord to sell the goods for the payment of the rent. In the past, distress was often carried out without court approval. Tenant Abandons- the tenant vacates (an intention not to return) the premises fails to pay the monthly rent prior to the end of the lease; vacates the property without proper notice and/or sublets and subleases the premises without the landlords permission. Abandonment occurs when the Tenant: 1. Vacates the premises without justification (because of some breach by the landlord) 2. Lacks the present intent to return to the premises; 3. Defaults in payment of the rent due Landlord Remedies 1. After the tenant abandons the property, allow it to stay vacant and collect the rent as it accrues until the lease term ends. 2. Allow tenant to vacate and terminate the lease, with any re-letting occurring on the landlords behalf (tenant not liable for anymore rent payments). 3. The landlord can re-enter and lease the premises to another tenant, making the tenant liable only for the remaining rent deficiency between the new tenant and time lost or the difference in rent.

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MARBES PROPERTY- FALL 2011 Frenchtown Square Partnership v. Lemstone, Inc.- shopping mall rented to Christian bookstore- left because of other store selling similar stuff Under common law, a lessor bore no obligation to mitigate damages when a lessee abandoned the leasehold. The common law allowed a lessor to "stand by and do nothing, arbitrarily refusing to accept any new tenant." Under the common law of contracts, mitigation is a fundamental tenet of a damage calculus. Contracts are the mutual exchange of promises, with each party holding an expectation of certain obligations and benefits. As Frenchtown and Lemstone acknowledge, a "modern trend" is eroding the common-law approach of treating leases strictly as conveyances of real property. Lemstone's argument that a rule that permits landlords to "stand by and do nothing" while still reaping the benefit of its lease agreement would encourage vacant properties at least as much as a rule disfavoring mitigation. In fact, if Frenchtown did not take reasonable steps to relet its Frenchtown Square property following Lemstone's abandonment, then it contributed to the problem it asks us to prevent. Conclusion As we stated in Dennis, landlords owe a duty to mitigate their damages caused by a breaching tenant. That rule flows from the premise that modern leases are more than simply property-interest transfers; rather, leases possess contractual qualities that often include myriad covenants and duties and arise from a bargained-for relationship. We see no valid reason to exempt commercial leases from the duty to mitigate. A lessor has a duty to mitigate damages caused by a lessee's breach of a commercial lease if the lessee abandons the leasehold. The lessor's efforts to mitigate must be reasonable, and the reasonableness should be determined by the trial court. Failure to mitigate damages caused by a breach of a commercial lease is an affirmative defense. Accordingly, we affirm the appeals court's decision and remand this case to the trial court on the question of mitigation, and for a determination of damages. Judgment affirmed.

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MARBES PROPERTY- FALL 2011

PRESENT POSESSORY ESTATES


1. What language created the estate- Words of Purchase indicates to whom the property is being transferred 2. What is the duration of the estate- Words of Limitation indicate the duration of the estate 3. Are any future interests created

FEE SIMPLE ABSOLUTE (FSA) Will last forever NO FUTURE INTERESTS Modern trend default Language Created Words of Purchase To A Words of Limitation and her heirs/and his heirs
O To A and her heirs Words of Purchase+ Words of Limitation ----------------------------------------------------------------Duration- Words of Limitation O O owns the estate for eternity O The cross line indicates the point in time when the owner conveyed the property O A- FSA

FEE SIMPLE DEFEASIBLE (FSD) May/May not last forever FUTURE INTERESTS Subject to being terminated if the express condition occurs Three types of FSD Questions to ask: 1. Identify which future interest it is 2. Identify who holds the future interest 3. Indicate the duration of the future interest Who holds the future interest?- the original grantor or 3rd party If the grantor retains the future interest how does the condition subsequent cut short the Fee Simple- automatically? Or only upon the grantors action?
Duration- FUTURE INTEREST HOLDER- will always be in Fee Simple absolute for all THREE defeasible fees

FINITE ESTATES
Must end- never in terms of years FUTURE INTERESTS

Three types of Finite Estates

Life estate (most common)


Common law default Must be measured by explicit lifetime terms (not years) O to A for life A would hold only a life estate. A is the life tenant and O has a future interest of reversion When A dies it reverts back to O- if O dies it goes to Os heirs. O to A for the life of B Life tenant A transfers his or her interest to B the grantee/transferee now holds a life estate Pur Autre Vie- a life estate measured by the life of another. While A is still alive, Bs life estate pur autre vie is transferable, inheritable and devisable, but upon As death the life estate pur autre vie immediately expires- even if B is still alive

Fee Simple Determinable (FSD)


1. Future interest held by grantor (O) is called the possibility of reverter. Language Created Words of Purchase OTo A and his heirs

O conveyed to A a FSA. Since FSA lasts forever A receives the whole unbroken timeline

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MARBES PROPERTY- FALL 2011 Words of Limitation- until, as/so long as, while, during Express Condition- so long as it is used for. Look at the condition if it cuts short the FSA and automatically reverts back to the grantor

Modern Trend: O To A and her heirs O To A forever O To A Common LawO To A and her heirs

Life tenant must not commit waste Cannot do anything that would hurt the future interest holders The end of the life tenants lifetime- some other person has an interest to take it.

O Best present possessory estate to have Duration- It lasts forever NO FUTURE INTERESTS No inherent condition or restriction limiting how the owner can use the property when Owner is alive Alienable- transfer the property freely to whomever he or she wishes

A- FSA

Fee simple may end- automatically (dotted line) if the qualifying condition occurs- but if the condition does not occur it will last forever

Fee Simple Subject to Condition Subsequent (FSSCS)


1. Future interest held by grantor is called a power of termination or right of reentry 2. Condition subsequent (words of limitation- as long as, while or until) condition which applies AFTER the interest becomes possessory Language Created Words of Purchase-OTo A and his heirs Words of Limitation-but if, upon condition that, provided that, right to enter or power to terminate Express Condition- upon condition that.. Look at the condition if it does NOT automatically cut the FSA- but gives the grantor the option to terminate- has the right of reentry clause to reclaim the land

When Owner dies Devisable- Passes by will Inheritable- Passes intestate (w/o a will) to ones heirs Example: Olivia who holds Blueacre in fee simple, can convey her estate to Arnold with the words to Arnold and his heirs or to Arnold- Arnold now holds a fee simple absolute

1. Voluntary waste- affirmative waste- over conduct that causes a drop in value a. Willful acts of destruction- Life tenant kicks in one of Blackacres walls 2. Permissive waste- neglect- when the land is allowed to fall into disrepair a. Life tenant in other words is failing to keep up with the premises b. The life tenant must simply maintain Blackacre- keeping up with it- EX: fix a ceiling leak so the ceiling does not come crashing down 3. Ameliorative waste- the life tenant must not engage in conduct to enhance the premises value- unless all future interest holders consent. a. Ex: Youre a life tenant- Blackacre would enjoy an increase in revenue if I convert the home into a Radio Station- without permission from the future interest holders. b. Trying to recognize the sentimental value- the future interest holders want the property to remain the same even if it is increased in value c. Life estate accompanying future interest- if held by O- O has a reversion 49

MARBES PROPERTY- FALL 2011 d. Remainder arises when the future interest is held by a 3rd party

O To A and her heirs, but if A sells alcohol on the land then O has the right to re-enter and reclaim the land O A- FSSCS

Fee Tail
Product of history- Virtually abolished Series of life estates To the immediate grantee Upon his death- a life estate to his or her children Upon each childs death- a life estate to that childs children and so on..until the blood line ends. Language Created O To A and the heirs of her body, then to B and heirs of his body Fee tail male- and the male heirs of her body Fee tail female- and the female heirs of her body

Fee simple may end- IF the owner exercises their right to reenter or power of termination (dotted line) if the qualifying condition occurs- but if the they decide not to the condition will last forever

Fee Simple Subject to Executory Limitation (FSSEL)


1. Future interest held by 3rd party is an executory interest Language Created Words of Purchase- O To A and her heirs Words of Limitation- , but if Express Condition- A sells alcohol on the land then to Executory Interest- B and his heirs O To A and her heirs, but if A sells alcohol on the land then to B and his heirs Does NOT matter of the words of limitation IF it is conveyed to a 3rd party it is FSSEL

Term of years
Express language of the conveyance establishes a finite duration which is calculable on the day the interest is created---the end date must be capable of being determined on the first day the interest becomes possessory. Need not be for a year or longer

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MARBES PROPERTY- FALL 2011 Two types of executory interest: 1. Shifting- right to possession is being taken from a 3rd party Language Created for (some finite time period) from (a date certain) to (another date certain)

EX: To A but if B returns from Canada next year to B (A is limited- it could be interrupted by B- B has a shifting executory interest) O To A for 5 years Why doesnt B have a remainder?- Remainders O To A from January 1, 2006 until December 31, 2010 never follow defeasible fees- they typically follow O To A for 180 days starting today life estates (since they are patient and are waiting) FUTURE INTERESTS- for LE, FE, and FT 2. Springing- right to possession is being taken Question: After you determine it is a finite estate you from the grantor ask Who takes the future interest Ex: O conveys to A if and when he marries (A is not married- A has a springing executory interest- so when A does get married they can cut off O the grantor)

A- LE

Because the diagram does not account for the whole timeline, there MUST be a future interest following the finite estate Two types of future interest: 1. Reversion if the grantor holds the future interest 2. Remainder if a 3rd party holds the future interest

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MARBES PROPERTY- FALL 2011 Two types of remainders: a. Vested remainder- if the remainderman (the party who holds the remainder) is: Born and Ascertainable (you can identify the party by his or her personal name), and There is no express condition precedent (words of limitation-if)in the same clause creating the remainder or the preceding clause (A condition precedent is one which typically must be satisfied BEFORE the remainderman can take actual possession) MUST satisfy all three or it is Contingent. Ex: O To A for life, then to B and his heirs O To A for life, then to B for life Which category of vested remainder is this? There are 3 kinds 1. Indefeasibly vested remainders- the best kind to have- when the taker is known and not subject to any conditions. OTo A for life, then to B 2. Vested remainder subject to complete divestment- the vested remainder subject to complete defeasance - how do you know? Remainderman exists- not waiting for him to be born Not subject to a condition precedent- nothing the remainder has to do that he hasnt yet done 52

MARBES PROPERTY- FALL 2011 to be eligible Remainderman is subject to a condition subsequent- a condition subsequent some event if it occurs will take it all away O To A for life, then to B, but if B dies under 25 to C (A is alive and B is only 20- B has a vested remainder subject to complete divestment- if B dies under 25- Bs estate loses everything instead C takes it) 3. Vested remainder subject to open- the remainder is vested in a group or category or class of takers- at least one of whom is eligible to take O To A for life, then to Bs children (A is alive, B has two children C and D- what do C and D have- vested remainder subject to open) they have remainders that are vested in a group or categorya. Is this class open or closed? 1. Class is open when others can still join 2. Class is closed when no one else can join- class closes when any member can demand possession O to A for life, then to Bs children (When would the class close? when A dies-any Future interest is going to be a remainder or executory interestTo A for life

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MARBES PROPERTY- FALL 2011 4. Contingent remainder- default unless they meet the test for vested Person is NOT ascertainable (no personal name) Remainder is subject to a condition precedent, or both (must take place BEFORE the remainder becomes a present estate

Ex: O To A for ten years, then to whomever is then President of the USA. Terms of Years (10 years), President is born in the last ten years BUT there is no personal name- (not ascertainable) so it is Contingent Ex: O To A for life, then to B and his heirs if he gets married B gets the possessory interest if, and only if, he gets married. This must occur BEFORE Bs right can become possessory- it is a condition precedent- B holds a contingent remainder Ex: Olivia conveys Redacre To Arnold for life, then to Claire and her heirs if Claire reaches the age of 18. (condition precedent) (Claire is an ascertainable person, but she must meet a condition precedent reaching 18- before her interest can become possessory

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MARBES PROPERTY- FALL 2011

THE RULE OF DESTRUCTIBILITY OF CONTINGENT REMAINDER-a contingent remainder was destroyed if it had not vested at or before the
termination of the preceding freehold estate Ex: O to A for life and if B reached 21 to B (A the life tenant has died and B is only 19- Bs interest is now destroyed since he was not 21 when A died)- IT IS ABOLISHED- today the future interest will persist. Ex: OTo A for life, then to Bs heirs (A later died, with B surviving him. Because B was still alive, Bs heirs were not yet ascertainable; as a result, the remainder in Bs heirs was still contingent. Problem: 1. The land was effectively inalienable until Bs death 2. There cannot be a abeyance of seisen- the law had to be able to identify the person who would be seised of the land upon As death RULE IN SHELLYS CASE- (rule of law) if one instrument creates a life estate in a grantee and attempts to create a remainder in the grantees heirs, and both the life estate and the attempted remainder are life estates, the remainder in the grantees heirs is converted into a remainder in the grantee. Ex: O owner of Blueacre in FSA conveys To A for life, then to As heirs The rule applies. In one deed, O has created a legal life estate in A, and has tried to create a legal remainder in As heirs. Shellys rule converts the remainder in As heirs into a vested remainder in A in FSA. It is rewritten as: To A for life, then to A

IT IS ABOLISHED- today A has a life estate, As heirs have a contingent remainder.

DOCTRINE OF WORTHIER TITLE- applies to future interest (remainder or executory interest) ONLY given to the grantors heirs. (Cannot go to Os future interest to children, nieces and nephews or any other relative or friend. If one instrument conveys a possessory interest to a 3rd third party and the same instrument purports to give a remainder or executory interest to the grantors heirs, give that future interest in the grantor

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MARBES PROPERTY- FALL 2011

O To A for life, then to the heirs of O and their heirs A has a life estate Os heirs have a contingent remainder in FSA O has a reversion in fee simple
If O were to die before A, and O did not dispose of the reversion by transfer or devise, the heirs of O would end up receiving the future interest---but through their right of inheritance, subjecting them to the feudal inheritance tax.

O To A for life, then one day after As death, to Os heirs and their heirs.
- This is the classic GAP scenario - A has a life estate - O holds a reversion in FSA to an executory limitation - Os heirs hold a springing executory interest in fee simple Apply the Doctrine - O would then hold a reversion in FSSEL and the springing executory interest in FSA- they would both merge - A then holds a life estate, O holds a reversion in FSA. If O dies- then the heirs would be subject to the tax since the doctrine was not applied. (Thanks to the doctrine of worthier title the contingent remainder is Os heirs is void- A instead has a life estate and O has a reversion- IS APPLIED TODAY IN MOST STATES Exists to promote the free transfer or alienability of land

THE MERGER RULE If one person holds a present possessory estate and the next vested future interest, then the present estate merges into the future interest and is terminated O A A It merges the present and future interest in FSA (becomes one estate) Ex: OA for 5 years, then to B for life, then to A, so long as ________________________________
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MARBES PROPERTY- FALL 2011

B dies- the merger rule applies (FSD) Summary for RAP


RAP common law21 years Life in being at time of conveyance Vested USRAP- adds 21 years- if possible 90 years to vest and terminate Basically states to wait and see plus what happens 3rd RAP restatement 21 years 90 years to vest and terminate Only passes down 2 generations Related generation through the blood line Beneficiaries- non related no more than 2 generations Cy pres- aka Equitable Modification- A statutory provision that allows courts to reform a will, deed, or other instrument to avoid violating the RAP; the equitable doctrine under which a court reforms a written instrument with a gift to charity as closely to the donors intention as possible, so that the gift does not fail. Doctrine of equitable approximation-A doctrine that authorizes a court to vary the details of a trusts administration to preserve the trust and to carry out the donors intentions The savings clause has two basic components 1. An alternative vesting point (or termination date) to the one provided elsewhere in the document 2. Directions for how the property is to be distributed at the alternative vesting/termination point Option is a right, given by contract, whereby the optionor (owner of the property) gives the optionee the right to purchase the property at a defined price some time in the future.

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MARBES PROPERTY- FALL 2011 Right of first refusal is a specialized type of option- gives the holder the first opportunity to purchase the property when the owner decides to sell it, and it prevents the owner from selling the property to a 3rd party without first offering it to the holder on the same terms.

Preemptive right- gives a perspective purchaser the right to decide whether to buy the property before all others should decide to sell- it is subject to
the RAP.

KNOW, IDENTIFY AND APPLY the rule A. Life Estate B. Contingent Remainder in Fee Simple C. Reversion in Fee Simple RULE AGAINST PERPETUITIES- eliminates uncertainty that is too far out in the future ONLY applies to unvested interest If at all means is not required to vest, must vest or fail to vest within the time of conveyance. No interest is good, unless it must vest, if at all, not later than twenty one years after some life in being at the creation of the interest. Concerned with remoteness of the moment when no uncertainty RAP cannot invalidate any future interest of the grantor (Look at the example and if O gives something away with a condition- O never transferred the entire estate in the first place because he did not transfer it- he still owns a portion and it is ALWAYS vested) Possibility of reverter (on with Fee Simple Determinable) Right of entry; or Reversion Only valid with: Contingent remainder- they cut short
Person is NOT ascertainable (no personal name) 58

MARBES PROPERTY- FALL 2011 Remainder is subject to a condition precedent, or both (must take place BEFORE the remainder becomes a present estate

It is contingent unless you can show it is vested Vested remainder- if the remainderman (the party who holds the remainder) is: Born and Ascertainable (you can identify the party by his or her personal name), and There is no express condition precedent (words of limitation-if)in the same clause creating the remainder or the preceding clause (A condition precedent is one which typically must be satisfied BEFORE the remainderman can take actual possession) Ex: O To A for ten years, then to whomever is then President of the USA. Terms of Years (10 years), President is born in the last ten years BUT there is no personal name- (not ascertainable) so it is Contingent Ex: O To A for life, then to B and his heirs if he gets married B gets the possessory interest if, and only if, he gets married. This must occur BEFORE Bs right can become possessory- it is a condition precedent- B holds a contingent remainder Ex: Olivia conveys Redacre To Arnold for life, then to Claire and her heirs if Claire reaches the age of 18. (condition precedent) (Claire is an ascertainable person, but she must meet a condition precedent reaching 18- before her interest can become possessory

Executory interests
Future interest held by 3rd party is an executory interest Language Created Words of Purchase- O To A and her heirs Words of Limitation- , but if Express Condition- A sells alcohol on the land then to Executory Interest- B and his heirs O To A and her heirs, but if A sells alcohol on the land then to B and his heirs Does NOT matter of the words of limitation IF it is conveyed to a 3rd party it is FSSEL 59

MARBES PROPERTY- FALL 2011

Two types of executory interest: 1. Shifting- right to possession is being taken from a 3rd party EX: To A but if B returns from Canada next year to B (A is limited- it could be interrupted by B- B has a shifting executory interest) Why doesnt B have a remainder?- Remainders never follow defeasible fees- they typically follow life estates (since they are patient and are waiting) 2. Springing- right to possession is being taken from the grantor Ex: O conveys to A if and when he marries (A is not married- A has a springing executory interest- so when A does get married they can cut off O the grantor)

Vested remainder subject to open- the class has to close within the RAP period
The remainder is vested in a group or category or class of takers- at least one of whom is eligible to take O To A for life, then to Bs children (A is alive, B has two children C and D- what do C and D have- vested remainder subject to open) they have remainders that are vested in a group or categorya. Is this class open or closed? 1. Class is open when others can still join 2. Class is closed when no one else can join- class closes when any member can demand possession O to A for life, then to Bs children (When would the class close? when A dies-any Future interest is going to be a remainder or executory interest- To A for life

CREATE KILL COUNT- after you kill everyone is there anyway the person that we created can take a future interest in 21 years?

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MARBES PROPERTY- FALL 2011

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