Property Outline

Conceptions of Property
1. Property is foundational to law a. Property defines many other bodies of law: E.g., Criminal law (theft); tort law (trespass); contract law (sales contracts); Con law (takings) b. Property is also defined by other bodies of law: I.e., remedy defines the right (e.g., criminal law and tort law protecting against trespass is what makes right to exclude so powerful) 2. Property law is fragmented a. More state variation than other bodies of lawb/c developed based on land, which doesnt move less pressure for uniformity b. Also covers specialized topics including IP, wills, estates, land use planning, etc. c. Themes: how law defines property interests; how these interests can be divided, shared among people, across time, enforcement of property rights 3. Two conceptions of Property: a. Property as a right to a thing, good against the world. b. Property as a bundle of rights, with content that varies according to context and policy choices. 4. Title is RELATIVE a. Always just trying to resolve who has better title b/w the parties dont have to decide who owns it in absolute sense (may still be a True Owner out there w/ better title still) b. Usually amounts to first in time but first in time to what depends on context c. Jus Tertii cannot bolster claim of title by pointing to someones elses superior title 5. Trespass to Land a. Jacque v. Steenberg Homes (1997) [p. 1] i. Easiest route to deliver mobile home was across Jacques land, which Steenberg did despite protests. Court held both individual and society have significant interests in deterring intentional trespass to land, regardless of a lack of measurable resulting harm. Recognizing the individuals right to exclude others from private property. A. Upholding interest makes people less likely to resort to self-help remedies. B. Doesnt matter whether Jacques were reasonable in denying access. C. Note: No necessity defense b/c Steenberg knew about hairpin turn long ago. ii. Court holds nominal damages ($1 actual harm) can support punitive damage award ($100k) in case of intentional trespass. A. Trespass = any intentional intrusion that deprives another of possession of land, even if only temporarily B. Strict Liability no showing of harm required. Punitive damages necessary to prevent private parties from trampling rights based on ad hoc balancing test. b. Policy: Right to exclude others is one of the most important sticks in the bundle of rights. i. Protect investments ii. Reinforce privacy/autonomy/liberty iii. Safety and security. iv. Prevent self-help v. Value of bright-line ruleclarity, reduce litigation c. Exceptions to Right to Exclude: i. Necessity (e.g., torts dock cases Ploof v. Putnam) ii. Eminent Domain iii. Conditional temporary right to enter until non-consent is clear (e.g., to knock on door) iv. Contracts v. Adverse Possession vi. Rental agreements vii. Recovery of property (e.g., Thorns case) viii. Cannot discriminate in public accommodation. d. Hinman v. Pacific Air Transport (1936) [p. 9]

i. Airplanes flying 100 ft. over Hinmans land. Sued for trespass based on Ad Coelum doctrine: Whoever
owns the soil owns also to the sky and to the depths. Court holds air, like the sea, is incapable of private ownership except to the extent its actually used or occupied. Only a trespass if Hinman is using the space somehow. ii. No technical tort allowed for airspacedepends on how space has been occupied. iii. Any use of such air or space by others which is injurious to his land, or which constitutes an actual interference with his possession or his beneficial use thereof, would be a trespass for which he would have a remedy. But any claim of the landowner beyond this cannot find precedent in law, nor support in reason. iv. Policy: Air travel not possible w/o using air rights; not feasible to negotiate w/ every individual owner below flight path (unlike in Jacques) 6. Two Philosophical Perspectives on Property Conceptions a. Essentialistsseek a single true legal definition of property, something along the lines of property conferring exclusive sovereign control over some external thing i. Blackstone: that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual ii. Exclusion thesis: right to property is a right to exclude others, grounded by the interest we have in the use of things (Penner) iii. In remgood against all the world iv. E.g., Jacques despotic rights b. Modern Legal RealistsBundle of sticks, collection of rights i. In personamProperty defines relations b/w persons (not b/w person and thing owned) ii. Subject to adjustment in interest of society, can be fractured, fragmented iii. Nothing conceptually distinctive about propertysticks can be pulled apart (Grey). iv. E.g., Hinmanproperty rights are relative v. Most significant sticks in the bundle: A. Right to Possess B. Right to Exclude C. Right to U/E D. Right to Convey 7. Trespass/Nuisance Divide: a. Distinction: i. Trespass involves invasions of land by tangible objects (interference with possession of land) ii. Nuisance involves interferences with use/enjoyment (U/E) of land caused by some activity on neighboring land (pollution, noise) b. Nuisance i. Hendricks v. Stalnaker (1989) [p. 23] A. Question whether water well near property line was a nuisance since it prohibited the installation of a neighbors septic system. Nuisance: intentional act substantially certain to result in the harm, that is unreasonable. Only question: Was installing the well unreasonable? (Reasonable means balancing harms and utility Restatement). B. Lower court found unreasonable, b/c prevented septic tank. But the tank and well were mutually exclusive; both would be unreasonable vis--vis the other, by that logic. C. Court finds reasonable: based mostly on first-in-time principle; also focuses on the literal seeping of the sewage as more invasive than a well merely drawing water. D. Policy: Cant overprotect nuisance, b/c want to promote active U/E of land. Right to U/E is both active and passive: the more active use & enjoy, the less protection of neighbors passive right, and vice versa. Right to U/E cannot be enforced absolutelywill always be relative, mushy, balancing test. E. Possible factors that guide courts, aside from harm/utility balancing test: 1. Mini-trespassory invasion (by particles) 2. Normal uses of land; custom 3. Temporal priority 4. Neighborliness c. Exclusion and Governance i. Two strategies for delineating property rights:

A. Exclusion: decisions about resource use are delegated to an owner who acts as the manager/gatekeeper of the resource. Likely to be used when a resource has multiple potential uses, and want owner to have discretion to choose which use is most valuable. Task of judges/law is to back up the owners authority. E.g., trespass. B. Governance: prescribes rules about prohibited and permitted uses without considering all possible uses. Can be derived from social norms, contracts, govt regs, or CL. E.g., nuisance. d. Coase Theorem i. In hypothetical world of rational maximizers and no Transaction Costs (TCs): Irrelevant where initial entitlement is assigned, b/c assignments will reach most efficient (i.e., joint-welfare maximizing) outcome through bargainingonly distributional benefits are affected by the initial entitlement. ii. Factors that increase TCs in the real world: A. Bilateral monopoly B. Assembly problems (holdouts) C. Diffuse effects on many people D. Bad Blood E. Wealth effects parties w/o initial wealth cant buy the entitlement at all, if not assigned it initially iii. In reality (b/c of TCs): matters greatly where initial entitlement assigned, b/c it might stay there. iv. Always evaluate legal rules/outcomes in terms of the deals that could have been made (Coasean Bargains) incentive effects 8. Property and Equity a. Equity started out as a way to grant exceptions from the limitations of CL courts. Disputes resolved by issuance of mandatory decrees directing individuals to perform certain acts (binding on the parties to the case, but no one else). Property rights typically had special protection at equity (specific performance granted on contracts to sale real property). Today, if a P wants an injunction, still has to satisfy traditional equity elements. b. Repeated Trespasses i. Baker v. Howard County Hunt (1936) [p. 42] A. Bakers moved to country home and raised experimental rabbits; Hunt dogs entered property repeatedly, attacked his rabbits and bit his wife. P sues hunt. B. Question whether injunction allowed against a series of non-continuous trespasses. C. General rule: Not liable for trespass of dog. (B/c dog has its own volition). D. Exception: Liable if deliberately drive dog onto land, or let it go, knowing its propensity to do harm. E. Here, hunt was not liable for first incident, but liable for second (b/c knew propensity for harm). F. Generally, no injunction for mere trespass. But injunction warranted here, where D manifests intention to persist in the trespasses, and thus damages would be inadequate. Injunction can avoid further lawsuits. G. Two maxims of equity: (1) clean hands requirement; (2) remedy at law inadequate. H. Note: Both injunctions & punitive damages elevate entitlements above mere liability rule (i.e., more than mere compensation) c. Building Encroachments i. Typical Case: A builds a structure thinking its on As land, but a portion happens to be on Bs land, creating a continuing trespass through a building encroachment. Even if initially unintentional, becomes intentional trespass after mistake is revealed but building remains. ii. Pile v. Pedrick (1895) [p. 50] A. Good faith mistake causes foundation wall to project 1 3/8 over property line, underground. B. Court awards injunction D must remove wall, including entire building on top of it. C. Court splits litigation costs only concession it is able to make to D (though recognizes hardship). iii. Golden Press v. Rylands (1951) [p. 51] A. Similar facts to Pilebuilding encroachment of mere inches underground. B. Court creates exception to standard mandatory injunction rule. C. Golden Press Rule: When initial encroachment was in good faith, harm is trivial, and cost of removal very great, then will only award compensatory damages. 1. Note: If in bad faith, then dont weigh hardship mandatory injunction. D. Rationale (ex post perspective): 1. Avoid oppression/waste tearing down wall disproportionate burden 2. Avoid extortion P is trying to get a windfall by holding out for huge payout from D

3. Unclean hands? P stood by and watched wall get built E. Possible worry here: Court presumed good faith, absent proof of bad faith could encourage tiny encroachments in future. d. Property vs. Liability Rules (Calabresi & Malamed) i. Awarding damages vs. an injunction tracks the distinction between liability rules and property rules ii. The state has to decide where to place the entitlement, how to protect the entitlement, and whether individuals can sell/trade entitlements. iii. Property Rule: Backed by injunction entitlement cannot be transferred w/o consent. State sets the entitlement, but cannot set the value. iv. Liability Rule: Backed only be compensatory damages initial entitlement can be transferred by forced sale, no consent. State determines initial entitlement and its value. v. Inalienable Entitlements: Transfer unpermitted, even between willing buyer and seller. State determines initial entitlement, compensation if entitlement taken/destroyed, and to forbid its sale under set circumstances. Limits/regulates grant of entitlement, rather than protect it.
Entitlement Recipient/Mode of Protection Plaintiff (Invadee) Property Rule Liability Rule

Defendant (Invader)

Rule (1) D liable / P gets injunction, or other protection to ensure D cant take w/o Ps consent (e.g., criminal sanctions or punitive damages) - E.g., Pile v. Pedrick Rule (3) D NOT liable / if P tries to prevent, D can get injunction against P. - E.g., Hinman

Rule (2) D liable / D must pay P damages (D can take Ps entitlement w/o consent, upon payment of court-determined damages) - E.g., Golden Press v. Rylands Rule (4) D NOT liable / but if P prevents, D only gets damages (P can force D to give up entitlement for $) - E.g., Del Webb (stinky cattle feed lot has to move, but developer P has to pay costs)

A. Choose rule according to economic efficiency, distributional preferences, and other justice considerations B. Coase: 1. When TCs low favor property rules since they can sell their entitlement or get an injunction. Decide who gets the entitlement (P or D) according to distributional or justice concerns. 2. When TCs high favor liability rules better b/c solves assembly and holdout problems. C. Ex Ante vs. Ex Post Perspectives 1. Ex Ante a. Analyze the situation before the critical event (accident, contract) or commitment to a particular use of resources takes place b. Prefer clear bright line rule leads to clarity for future parties; incentives to take care, not build up to property line (e.g., Pile) 2. Ex Post a. Analyze the situation as it currently stands between the parties b. Achieve fairness b/w the parties; reduce waste (e.g., Golden Press)

Acquisition of Property
1. By Capture/Occupancy (First Possession) a. Wild Animals i. Pierson v. Post (1805) [p. 81] A. Facts: Post in pursuit of fox w/ dogs & hounds on uninhabited beach; Post in sight of fox; Pierson, knowing all this, seized the fox and claimed it himself. B. Issue: Did Post develop a property right to the fox? B/c fox was ferae naturae, must show possession or occupancy. C. Holding: Mere pursuit occupancy. D. Rule of Capture: Occupancy could be met by: 1. Manucapture (actual corporal possession of animal)

2. Mortal wounding + continuing hot pursuit

3. Deprive of natural liberty + render escape impossible (e.g., ensnare w/ nets & toils) 4. Bring w/in certain control + clear intention to appropriate (i.e., assert dominion) E. Policy: Rule of certain control (rather than mere pursuit) will lead to fewer quarrels, less litigation. F. Dissent: Custom should control; Reasonable prospect of capture is enough to acquire property right 1. Rationale: protect hunters investment in the pursuit by granting property right 2. Note: Dissent is wrong about incentives: goal of hunting is sport, not elimination of foxes G. Note: Piersons bad faith (intervened while knowing Posts intentions) irrelevant to occupancy; if Post had sued under theory of malicious interference, this would be important. H. Note: Landowners have constructive possession of wild animals on their property, and Rule of Capture is inapposite; Pierson and Post would be trespassers and neither could capture. I. Note: Majority is traditionalist law is out there in books, needs only to be found; Dissent is realist law should work for society. ii. Ghen v. Rich (1881) [p. 88] A. Suit to recover value of a whale. Whale killed by lance, washed to shore 17 miles away. Custom: whale belongs to person whose lance killed it (finder gets small commission). B. Rule: Occupancy requires the only act of appropriation possible in the nature of the case. If fisherman does all that is possible to do to make the animal his own, that is sufficient. C. Rationale: Whaling industry will collapse if dont protect large investment required. Nature of whaling is that actual manucapture or certain control impossible. To protect industry, need special rule for whaling. Here industry custom provides the proper rule. (Diff. from Post: whaling is valued economic activity; fox hunting is just sport.) Policy: Protect investments, discourage free riding. iii. Keeble v. Hickeringill (1809) [p. 92] A. Neighbor (D) shot guns intentionally to frighten away birds from Ps decoy pond; Ps pond is both lawful and profitable. Note: Case is about disturbance of enjoyment, not possession/acquisition (P did not own the ducks.) B. Rule: Knowing & malicious intervention w/ anothers trade or livelihood is actionable. (Foreshadow of rule that you have a property right in pursuing a trade or business.) C. Distinguish from fair competition, which is permissible, e.g., if D had set up his own decoy pond. D. Policy: Encourage productive activities/use of land. E. For any interference, ask two questions of fairness: 1. Backward-looking: Is this fair to the first guy? 2. Forward-looking: Is this the sort of behavior we want to encourage? iv. Hierarchy of Ownership: A. True Owner (if there is one) B. Landowner (if trespass occurred prior to mortal wounding or certain control) C. Prior Captor (who lost it) D. Captor E. Hunter who was in pursuit b/f capture (loses to Captor Pierson) F. Malicious Interferer (loses to hunter in pursuit Keeble) Finders: Finder has a superior right to the thing relative to everyone in the world, except the true owner. Shipwrecks: Eads v. Brazelton (1861) [p. 102] i. Abandoned goods = res nullius (no true owner) open for claiming by finder. ii. Brazelton found a sunken ship with lead inside and marked it onshore, but did not keep his boat over it. Nine months later, Eads came along with better equipment and salvaged the ship. iii. Rule: Must take such possession as nature and situation permitted. Signaling claim is not enough. Requires persistent efforts directed to raising the lead, keeping his boat in place, standing guard. iv. Policy: Encourage efficient pursuit by requiring you to keep at itactive steps to reduce to possession. Baseballs: Popov v. Hayashi (2002) [p. 108] i. P caught home run ball, but was mobbed and H (not part of mob) obtained the ball. P sued H, claiming first possession. But failed to prove certain control necessary for possession (was still bobbling ball when went down); plus, H was not a malicious interferer.

b. c.

d.

ii. Judge wimped out with Solomonic judgment: and . Split entitlement. Found P had pre-possessory
interest, good against world, not just malicious interferers; while H had first unambiguous possession each had a superior claim good against the rest of the world. iii. Estlund: This is cop-out; H should have won. Burden of proof on P b/c (1) He is Plaintiff; (2) H is the only one who has shown actual possession. If P cant meet burden, should remain w/ H. iv. First in time principle: works better when people have heterogeneous knowledge & abilities (clear winner can be declared at an early stage); when homogeneous (e.g., fans at baseball game) first-intime leads to wasteful and destructive racing behavior (in this case, governance scheme works better). e. Oil & Gas: Hammonds v. Central Kentucky Natural Gas Co. (1934) (Supp 1) i. Gas co. empties fieldthen re-injects new gas (using natural reservoir as a storage tank). Some of reservoir is below Hammonds land. ii. Issue: Whether gas injected into underground reservoir causes trespass to surface owner. iii. Oil/gas has migratory/fugitive nature ferae naturae. Like wild animals, difficult to own until actually reduced to possession. Ownership of ferae naturae is always qualified; if they escape, they return to natural state, lose ownership. Returns to state of res nullius (belongs to no one). iv. Holding: In turning the gas loose underground, D surrendered ownership thus, not liable for trespass. v. Note: Gas Co. doesnt own their oil anymore! (Maybe a poor litigation choice) f. Open Access and the Commons i. Tragedy of the Commons: open-access resources each owner has right to extract as much as possible. Incentive to race to beat neighbors unrewarded for moderation, even if all would be better off if conserve. Leads to wasteful overinvestment, pollution, depletion. Costs not internalized. ii. Solution: Must create common entity to make decisions in aggregate. Voluntary sale is hard b/c of holdout problems. Sometimes requires state intervention/regulation. iii. Anti Commons and Semicommons A. Anticommons: Opposite of commons Too many have the right to exclude, so no one is able to use a resource. E.g., holdoutsif too many permissions required, rights to larger resource may never be assembled. Both commons and anticommons create incentives for individuals to act in a way that imposes costs on others. Overcoming the problem requires a realignment of rights, including dealing with holdouts and freeriders. B. Semicommons: occurs when a resource is subject to private exclusion rights in some uses/dimensions, but is open access for other purposes/dimensions. g. Fisheries huge tragedy of commons problem i. Solutions: A. Cooperatives hard to do. Worked for oyster beds, b/c oysters dont moveallow accountability. B. Regulation Cap total, implement cap & trade system; ITQ Individual Transferable Quotas using property rights in service of public objectives; question: How to divvy up? ii. Alliance Against IFQs v. Brown (1996) [p. 1127] A. ITQs assigned to owners/lessees of vessels that fished during 3-yr period prior to regulation. B. P challenge ITQ distribution scheme as not fair or based on present participation: 1. 3-yr period is arbitrary cuts people out who fished in other years a. Justification: 3-yr rule prevented mad rush to fish while rule was under consideration. 2. Shares given to boat owners, not crews. a. Justification: Admin nightmare to track down all the crew members. Plus, crew members dont lose labor investment still presumably will be hired by boat owners. C. Holding: Justifications were good enough to not be arbitrary and capricious. (But note that giving entitlement to the ship owners is distributionally a big windfall for them.) 2. By Creation a. Being first is necessary but not sufficient for property rights by creation (unlike discovery). Need novelty. b. Hot News i. INS v. AP (1918) [p. 135] A. Issue: Can AP enjoin INS from republishing APs already-published news (while its still hot)? Note: Injunction usually requires a property right to protect. Background rule: Copying ideas is OK (copyright/patent/trademark are exceptions to this general rule). B. Holding: AP abandoned its in rem rights (good against world) when published the news. However, still has quasi-property right against unfair competition (in personam right vis--vis competitors).

Upholds injunction against INS until news value lost. Note: Keeble right re unfair interference has ripened into a property right, at least for equity purposes. C. Policy: Ex post: Fair, b/c AP exerted the effert; Ex ante: Good, b/c want to protect investments; discourage free-riding. D. Dissent (Brandeis): Public interest in availability of news very complicatedbetter leave to legislature. E. Note: INS has been confined to its facts. No general principle of shall not reap what you didnt sow. c. Right of Publicity i. Midler v. Ford Motor Co. (1988) [p. 147] A. Yuppie ad campaign; Mimicked sound of Bette Midlers voice, after she refused. B. Claim: Appropriation of sound of voice. (Note: no copyright claimco paid for rts to use song.) C. Holding: Deliberate imitation to sell product appropriation of identity tort. But only in personam property rightwrong derived from using it for commercial value where she had refused. D. Note: Not as sweeping as INS v. AP: Here, just limited to CA law; precise copying of voice; less compelling public need for Midlers voice than news of the war fewer implications from right. ii. Vanna White case (White v. Samsung) (1993) [p. 151 Notes] A. Robot in wig turned letters like Wheel of Fortune. Evoked idea of Vanna but unlike Midler, no worry public will actually mistake the robot for Vanna. White won on common-law rt of publicity. B. Strong Dissent (Judge Kozinski): Expanding property rts puts cost on public e.g., right to parody. d. Copyright i. Eldred v. Ashcroft (2003) [p. 1089] A. Ps business relied on using things on which the copyright had expired. In 1998, Congress extended copyright terms for future and existing copyrights. B. Issue: Does extending terms of existing copyrights violate Constitution? 1) Copyright Clauses limited time prescription; 2) First Amendment free speech guarantee. C. Claim: Time period fixed at time of invention becomes Constitutional limited time boundary. Plus, rationale of Copyright is incentive to create. Thing is already inventedobv. Incentives were enough. D. Holding: Court cant second-guess Congress policy choice; long history of applying extensions to existing copyrights has constitutionalized the practice. Plus: inventor could have anticipated extension, and been extra motivated. Plus: copyright law accommodates First Amendment public domain: 1) cant copyright an idea; 2) fair use exception scholarship, criticisms, parody, satire. e. Patents/Inventions i. Patent law = stronger property rights than copyright. ii. Trenton Industries v. A.E. Peterson Manf. Co. (1958) [p. 154] A. P invented collapsible high chair that folds more compactly. P showed plans to D to consider partnership; D refused, then copied invention. Chair did not rise to level of patentable invention (just a smart next step). Rule: Patent invalid if prior art makes the invention obvious to someone w/ ordinary skill familiar w/ art. Avoid wet blanket on routine improvements. B. Holding: D liable for unjust enrichment. Even though patent invalid, D learned about under pretense of partnership cheating. Disclosed w/ understanding of confidence, even if not explicit. C. Note: Seems like in personam property right. Proliferation of property-like in personam rights to safely squash unfair actions w/o messing up overarching scheme as a whole. f. Trade Secrets i. Trade secret proprietary info info youve worked for, would be valuable if got out. ii. Must be kept secret, promise not to use. E.g., Coke recipe. iii. Covenants Not To Compete cant take trade secret to competitor employer. iv. Note: Midler, Trenton not trade secrets no secret, or no explicit promise not to use. 3. By Accession, Ad Coelum, & Find a. Principle of accession: Acquire resource through possession of a superior one. i. E.g., doctrine of increase: offspring of domestic animals belong to whomever owns the mother animal ii. E.g., seabeds associated w/ closest landmass. b. Doctrine of accession: CL doctrine that applies when someone mistakenly takes up a physical object that belongs to someone else and transforms it through labor into a fundamentally different object. i. Wetherbee v. Green (1871) [p. 166] A. W got permission from a non-owner to cut down timber in good faith, and then converted into barrelhoops (expended labor/money to make 30x more valuable). G sued for replevin of the hoops.

B. Old Rule: If taking in good faith, ask how physically/chemically transformed it is (e.g., grapes into wine). Problem: over-punishes/over-rewards. Here, barrel hoops would be given to Ghuge windfall. C. New Rule: Ask how much value has been added. Here, huge value added. W retains, but pays restitution to G for value of timber. Policy: Protect the labor that has been put into the product. D. Note: If taking in bad faith, first owner gets finished product, no matter how transformed. Burden of proving good faith is on the taker. First owner can ask for $ value if doesnt want the good back. c. Ad Coelum Rule: To whomever the soil belongs, he owns also to the sky and to the depths. Can act as principle of accession: whoever owns surface owns anything valuable above or below it. i. Edwards v. Sims (1929) [p. 175] A. Edwards discovered/improved cave with an entrance on his land. Neighbor Lee sued claiming a portion of the cave was under his land, seeking compensation. B. Issue: Whether to uphold lower court order to survey cave to determine if under Lees property. Harm: One-time intentional trespass in Edwardss land. Court tolerates the trespass b/c of AD COELUM: to determine if Edwards is committing recurring trespass to Sims. C. Dissent: Rejects literal ad coelum rule; thinks Edwards owns ALL of cave, even if under Lees land, b/c he found it, developed it, has the only entrance. Rule: Only own that which you can subject to your profit, control, pleasure from your surface. Protect Es investment of danger, risk, labor, insight assign property to him. But note: dissents rule may counteract peaceful negotiation; requires Lee to make 2nd entrance if wants any profits, may ruin cave. D. Distinguish from airplanes: Latin rule developed when underground valuables already contemplated; not airplanes. Airplanes public good; cave only private. Sky infinite- must cut off somewhere. 4. By Find (Sequential Possession) a. Relativity of title i. Court will only determine who has superior title between the parties of dispute. ii. Jus Tertii - right of 3rd parties not a defense to wrongful taking. Cs right is not bolstered against B by pointing to superior title in A. Reason: Protect peaceful possession + procedural (cant cross-examine A). b. Sequential Possession Problems i. Most sequential possession problems can be resolved by first-possession rule (F1 beats F2; T1 beats T2; F1 beats T2; even T1 beats F2 technically) ii. Simple first-possession rule saves us from dealing w/ a lot of facts we would have to face if cared about how prior possession came about. iii. Sometimes, constructive prior possession enough (e.g., Buyer who has not yet taken actual possession). iv. Sometimes, prior possession doesnt count: A. If abandoned (question of intentperson claiming abandonment has burden) B. If sold (lose rt at least against your successors)successors count your possession as their own C. If you were a mere agent (goes to principal) D. If it was only a bailment (i.e., voluntary transfer of possession not intended to transfer title) v. Replevin want to recover the thing itself (less complicated only one thing) vi. Trover/Conversion sue for $ damages (might permit double liability or double recovery) vii. Locus in quo place where thing was found (significant to ownership) c. BURDENS: A = Prior Possessor; B = Current Possessor i. B (Current Possessor) has presumptive title (a.k.a. possessory title) good against all world except TO. ii. A (Prior Possessor) must prove prior possession (initial burden to overcome possessory title). iii. B (Current possessor) can then prove abandonment. (A doesnt have to prove non-abandonment.) d. Armory v. Delamirie (1722) [p. 220] i. Chimney sweep found a jewel and brought it for valuation to a shop, where Master wouldnt return it. ii. Rule: Finder has a property right good against all the world except True Owner (i.e., prior possessor whose prior possession counts). iii. Hierarchy: T.O. Finder Everyone else iv. Bailee may not count his possession against O (knows transfer of custody not meant to transfer title). e. Clark v. Maloney (1840) [p. 222] i. Finder 1 and Finder 2, vying for right to possess ten logs found in a river. ii. Rule: Finder 1s right to property superior to Finder 2 (this is Armory, plus first-in-time principle). iii. Hierarchy: T.O. F1 F2 Everyone else f. Anderson v. Gouldberg (1892) [p. 223]

Ps cut down logs they didnt have permission to take, and hauled them off. Defs took the logs from there on authority of a landowner who erroneously said they were cut from his land. ii. Rule: Possession is good title against whole world except those having better title. iii. Hierarchy: T.O. Thief 1 Thief 2 Everyone else. iv. Rationale: Protect peaceful possession; discourage thievery ad infinitum; TO more likely to get from T1. g. Thief v. Subsequent Finder i. Technically, Thief wins but courts find a way to give to the Finder. h. Abandoner vs. Finder i. Finder wins against Prior Owner if can prove abandonment (question of intent). i. Seller vs. Buyer Buyer wins Non-derogation from grant i. Seller may not derogate from grant by claiming prior possessory rts as against grantee. j. Seller vs. Subsequent Finder (e.g., A sells to B, who loses, C finds) A sues C i. As arg- only gave up right w/r/t B; plus, A more likely to return to T.O. ii. Problem: Many previous ownersall have right? Disruptive to voluntary transfer system. iii. Probably better if C (Finder) wins better for system to treat sale as abandonment. k. Agent vs. Principal i. If Agent possessed in course of work, possession never countedgoes to Principal. 5. Competing Principles of Acquisition Effect of Locus in quo on claims of ownership a. Conflicts between first possession and accession. First possession is privileged, but outcome typically turns on which of two rival claims court finds more compelling. b. Ratione Soli rule: LO deemed in possession of wild animals captured on his land (accession doctrine). c. Fisher v. Steward (1804) [p. 227] LO beats Trespasser. i. P discovered a bee hive with honey and marked it (= capture), but Landowner cut down & claimed it. ii. Bees wild animals subject to Rule of Capture; but P loses to LO b/c of Trespass. iii. Rule: LO has constructive possession of all stuff on land, as against trespassers. d. Goddard v. Winchell (1892) [p. 229] LO constructively possesses everything underground. i. Accession: Meteorite fell into a field, buried 3 feet under earth; Tenant (who had only grass rights, not mineral rights) permitted friend to dig it out. LO sued for replevin. ii. Court awards to LO. D not actual finder, b/c never lost or abandonedwent directly into Ps land, i.e., into Ps possession. Relevant that it was in, not on, ground, and that composition was not foreign. iii. Estlund: Case should have been resolved on trespass, b/c Tenant only had grass rights. e. Hannah v. Peel (1945) [p. 234] Finder beats LO if special conditions met. i. Military occupant (Hannah) of a house found brooch in window frame crevice, and turned it into police. Homeowner (Peel) never lived there, didnt know about brooch. ii. Rule: Finder wins against L.O. when: (1) Object lost in ordinary sense (if only mislaid, i.e., intentionally set down implied bailment to LO LO has constructive prior possession as against F goes to LO); (2) For considerable period of time (less likely TO is still looking for it); (3) Finder acted commendably (reward F); (4) LO never in possession of premises (possn of home possn of all contents); (5) LO didnt know about of brooch (Note: #5 is bare minimumif LO had ever picked up and set back down, winseverything you know is on your land is yours. Deemed in constructive possession of everything in dwelling place. No finding possible, b/c not lost if LO knows about it.) iii. Bridges case (discussed in Hannah) A. Banknotes found on floor in small shop: F beats LO. 1. But, if notes had been in back office (more private): occupancy + general exclusion from public might rise to presumption of constructive possession, like a home. 2. If locus in quo is public place F wins; The more private locus in quo, more like LO wins. iv. South Staffordshire Water (pool case discussed in Hannah) A. LO wins b/c Finder is mere agent of LO on LOs property. B. Note: If Principal LO, goes to Principal if Agent acting w/in scope of license. C. Note: If agent exceeds license Agent becomes Trespasser LO wins on Trespasser rule. f. Finder requirements to win over LO (hard to walk this line): i. Must be rightfully on property

i.

ii. Not exceed license for being there (otherwise, trespass)

iii. Not be considered as acting as agent (otherwise, goes to principal) g. LO beats F if any of following (exceptions to Finder rule almost swallow the ruleLO almost always wins): i. Thing is mislaid laid down intentionally then forgotten (or lost for short time?) ii. F is dishonest or Trespasser or Agent iii. Thing is underground or in private place in possession of LO. iv. LO knew the object was there. (No find unless LO doesnt know about it.) h. Note: LO always wins when object is underground (e.g., pool case, Elwes (buried boat case), Goddard). 6. Land Disputes a. In U.S., perfect title is traceable back to land grant from U.S. (patent title). b. Paper Title: series of valid conveyances, going back to prior possession. c. Common problem: Two-timing Seller. Seller conveys land twice- both chains trace back to grant. d. First conveyance by the bad Seller (and its subsequent chain) wins. e. But even possessor in BAD chain has superior title to stranger ouster (stranger cant rely on Jus Tertii by pointing to the valid title chain). Plus, bad chain can trump perfect title chain by any period of AP w/in chain. f. Finders cases can be translated into land context: Present possessor has title good against world except prior possessor or his successor in title. i. Finder = Squatter = one who takes possession of unoccupied land. ii. Thief = Forcible Dispossessor g. Note: Cannot abandon title to real property; but can abandon an AP claim (e.g., break continuity). 7. Adverse Possession a. Possession of the requisite character maintained over a long enough period of time can trump an otherwise valid claim of title (based on prior possession or first in time principles). b. When an owner sits on her right to exclude, and the SOL for challenging unlawful entry expires, original owner is barred from asserting right to exclude and a new title springs up in the adverse possessor. Adverse possessor becomes the true owner and can exercise the right to exclude against all the world, including the original owner. Applies to real and personal property. i. If owner fails to prevent someone from using property (not possessing) and SOL runs, that can create a prescriptive easement. Different standards: Weaker presumption of adversity; more open & notorious. c. Basics of AP: i. Present possessor has possessory title no challenge until someone else shows better paper title. ii. Only then does present possessor need to make AP claimdont jump to AP w/o showing better title! iii. Once you get AP title, wipes out prior trespasses. iv. Can always defeat AP by giving permission at any time prior to end of SOL. d. AP Requirements: i. Ouster + possession (tacking w/ privity if necessary) for time period > SOL. A. Privity when analyzing, remember purposes of AP doctrine (e.g., attachment to land) B. Unclear whether GF jx requires GF from predecessors-in-privityat least GF consensual transfer. ii. Character of Possession (i.e., owner-like behavior) Baseline Question: possession of character that announces claim of ownership? A. Actual (to give true owner opportunity to bring action for trespass, etc) - Ewing B. Exclusive C. Open and Notorious (to give notice to true owner) D. Continuous (to show SOL began to run at original entry)- only such continuity as TO would exercise E. Adverse/hostile under a claim of right (without permission, license, or lease of TO) 1. Claim of Right acting like owner, in manner that is contrary to a superior title. 2. Color of Title e.g., deed turns out to be flawed. Gives constructive possession of all land in deed, even if not occupied, sometimes shorter SOL. In GF jx, claim of right usually = color of title. 3. Hostile if no permission, then hostile by definition. 4. GF Jurisdictions (minority) requires GF belief that entitled to possession; no squatters. 5. Objective Jurisdictions no GF belief that its yours necessary; just intent to claim as your own, and then acting like you own it; squatters can obtain AP title. e. Purposes of Adverse Possession i. Growing psychological attachment to land developed through longstanding possession. ii. Encourage productive use of land, penalize neglect/sleeping on rights. (though productive use not nec.)

10

f.

g.

h.

i.

iii. Every COA has an SOL court doesnt care about your rights if you dont. iv. Reduces transaction costs of tracing long title chains wipes the slate clean. v. Protect 3rd parties who rely on acts of possession. Adverse Possession Against the Government i. AP cant be claimed against the federal govt and some states. Other states have longer SOL against the govt than private owners. Some do allow AP though. Ewing v. Burnet (1837) [p. 194] i. Two-timing seller. Burnet has paper title; but Ewings is superior. Only way for B to win is through AP. ii. Symmes Foreman (1798) Williams Ewing (1824) Burnet (D) (1803) ---------------------------- present (1834) iii. Ouster > SOL (since at least 1803); Burnets own possession > SOL (since at least 1803) iv. Possession was of owner-like character A. Open/NotoriousB signaled it was his; No fence, but land was unfenceable; Paid taxes, brought trespass actions. Exclusive: granted/denied rights to take sand. Continuous no break. B. Possession was actual enoughas owner-like as the land permitted. Key element was NOTICE. Carpenter v. Ruperto (1982) [p. 203] i. P fenced in 60 feet of neighbors non-cornfield property, planted grass, built a driveway, propane tank, used it, etc. for 30 years. But she did investigate the property line at the courthouse once, and knew it belonged to the neighbors even though they didnt use it. ii. P loses b/c no good faith claim of right (knew title was not hers), though exercised owner-like behavior. GF designed to bar squatters claims. iii. Note: Mentions case where AP fails even for wild lands, b/c knew didnt have title, even if no one else did. Howard v. Kunto (1970) [p. 208] i. Description in deed did not match houses each LO is one lot east of deeded land. ii. Issues: (1) Summer occupancy only = continuous? (2) Is privity allowed where formal deed does not contain any of the occupied land? iii. Holding: YES. (1) AP requirements depend on nature/condition of property summer occupancy normal given nature of land meets continuity requirement; (2) Privity met by long periods of (mistaken) goodfaith deed transfer Privity only meant to defeat unconnected trespassers. (Privity requirement is not more than judicial recognition of the need for some reasonable connection b/w successive occupants of real property so as to raise their claim of right above the status of the wrongdoer or the trespasser.)

ANALYZING ADVERSE POSSESSION CLAIMS: P (Possessor) vs. TO ("True Owner")* 1. Was TO (or predecessor in title) ousted from possn > X [= SOL] yrs ago?**

Yes

No --------------------------------> TO wins

2. Has P been in possession > X (SOL) years? Yes No

3. Can P show privity w/ prior possessor(s) to fill in SOL? Yes 11 No-----------------> TO wins

4. Was possession of character reqd for AP? (baseline: character that announces claim) Actual (not necessarily physically occupying) Exclusive (giving/refusing permission) Open & notorious (neighbors would know) Continuous (only such continuity as an owner would exerciseno interruption by TO) Under adverse/hostile claim of right/title Yes: AP No-------------------------------------------------------------------> TO wins

Possessor: typically present possessor. But a recently-ousted possessor can assert AP vs. a present possessor who has better paper title based on succeeding to prior possessor. "True Owner" is one w/ superior (not necessarily perfect) paper title based on prior possession or succession (on paper) to prior possession.

** Ouster = Adverse entry that (1) was actionable as trespass vs. TO or predecessors in title, & (2) resulted in actual possession, so as to start SOL clock ticking. Values Subject to Ownership (or Not) Limits of Property
1. Some interests are too private/connected to personhood to be subject to property rights (human bodies, body parts). Some are too public (harbors, beaches). Water and electronic communications seem to require a mix of open access and private rights. 2. Human Body a. Touchstone: No person can own another. Inalienable- cant be sold. b. Moore v. Regents of U.C. (1990) [p. 255] i. Doctor removed Ps spleen cells for leukemia treatment then created profitable cell line w/o disclosing to P. P sues for conversion (tort- exercising control over property of another). ii. P owned cells when in his body prior possession. Should be good enough for superior title: A. No abandonment w/o informed consent. B. Doctrine of Accession (i.e., UC labor transformed good) would at least entitle to restitution. iii. Court declines to apply ordinary property principles treats as sui generis. Admits that interest in removed cells could be propertybut dont want to extend law. Worried about conversion tortStrict Liability, everyone in possessory chain could be liable will squash valuable research. iv. Ms interest only protected by law of informed consent VERY weak protection; must show would not have undergone surgery at all; plus must suffer HARM (most here is dignitary harmbut not much). v. Majoritys refuge: Leave to the legislature cop out. Legislature will not mobilize. A. Penalty Default Rule: Set rule against the party that has the power to trigger legislative change. Here, entitlement given to drs and researchers, against unknown future patientsno coalition possible. vi. Majoritys worries: commodification of body, market-driven patient decisions; dr conflict of interest majority fails to avoid these. Possible solution: Cut doctor out of profit remove conflict of interest. c. Newman v. Sathyavaglswaran (2002) [p. 244] i. Issue: Do parents have property right to dead childrens corneas for purpose of Due Process? ii. CA law said corneas removable from corpse if no known objection by kin; no notice required. iii. Note: State law sets entitlementbut cant set procedures for deprivation. Once entitlement = property, entitled to DP. Therefore, state law not requiring notice is not dispositive. DP requires notice, hearing. iv. Holding: Yes parents have property rt in dead childrens corneas protected by DP. Reasoning: State CL & statutes grant kin rt to possess dead bodies, rt refuse organ transfer rts include power to exclude therefore, amount to property right for DP. Note: DP has lower bar than Conversion.

12

Note: Must always determine property relative to a purpose. Positive law sets entitlementsbut does not answer whether such entitlement amounts to property for Due Process, for Conversion, Takings, etc. d. Hecht v. Superior Court (1993) [p. 268] i. Crazy man leaves a sperm donation for his girlfriend then kills himself. Issue: Property for probate? ii. Holding: Sperm is property of decedent, w/in jx of probate court. iii. Factors tipping scale toward property right: A. Fundamental right to procreate, including right to sperm donation (legislature cant mess w/?) B. No applicable legislation C. Precedent - Davis case held donors have control over gametes D. Dispositional control D extracted sperm for specific purpose, sperm banks give owner control E. Less troublesome than Moore no holdout problems for research, no tort liability, limited effects 3. Academic Perspectives on Domain of Property: Limits of Ownability and Alienability a. Demsetz [p. 292] i. Thesis: When externalities become worth taking into account private property rights develop. ii. Main function of property rts is internalization of beneficial and harmful effects. Externality: Effect for which cost of bringing it to bear on decision is too high to be worthwhile. Internalization: Process of enabling these effects to bear on decisions (usu. through adjusting property rts). iii. E.g., fur trade: increased value of furs and hunting activity began to allot territories for exclusive hunting. b. Ellickson [p. 296] i. Private ownership based on exclusion; Group ownership based on governance, cooperation. ii. Reason private property allocation is good solution: Cheaper & easier to exclude (& detect exclusion violations)e.g., fences, dogsthan to enforce group cooperation (& detect shirking). c. Radin Personhood [p. 298] i. Property for personhood: Objects w/ sentimental, identity valuesbound up w/ persons identityloss would cause pain not relieved by replacement (e.g., wedding ring). Fungible property: purely instrumental, replaceable (e.g., money). ii. Continuum of protection: The more personal, the greater the protection of the property rt; The more fungible, the less protection. iii. Body is quintessentially personal property; body parts are property only after removal from the system. d. Anti-Commodification and Inalienability i. Rationales for inalienability: reduce externalities (prevent someone from using thing to harm others), moralisms/makes people uncomfortable (selling organs, slavery), paternalism (help person by prohibiting bargaining), imperfect information (give incentive to disclose, e.g., blood donation); Tragedy of Commons. ii. Radin [p. 304] A. Three possible justifications for inalienability based on personhood: 1. Prophylactic high chance sale is coerced ban them all (might over-protect) 2. Prohibition moral requirement against commodifying certain goods. 3. Domino allowing a commodified version of good ruins/degrades non-commodified version. 4. Note: #2 and #3 can merge B. Procedure: Determine if thing falls under domino theory. If so, prefer inalienability; but query whether poor/oppressed class will unduly suffer, and determine if justifiable. 4. Public Rights: Waterways & Airways a. Resources too public to be parceled out into private ownership; accessible on equal terms to all public. b. Navigation Servitude Federal Commerce Clause (WATERS) i. Navigable Waters [p. 308] A. Public has right of access to navigable streams and bodies of water. Grounded in Commerce Clause. Members of public can sue directly for access to navigable waters. No state can override. 1. Note: No answer to whether Congress has power to override; has never tried. B. Navigable waters have longest historical claim to being inherently public. English law: Must be subject to the tides. U.S. (functional): Extends to all waters navigable in fact (inc. Great Lakes and rivers like Ohio and Mississsipi). Generally any water you can get to by boat from the oceans. ii. Navigable Airspace [p. 313] A. United States v. Causby (1946) [p. 313] 1. Navigation servitude extends to navigable airspace. Federal govt has complete and exclusive national sovereignty in the air space. All citizens have public right of freedom of air travel. Ad

v.

13

c.

coelum doctrine has no place in modern world. Flights over private land are not a taking unless they are so low and so frequent as to be a direct and immediate interference w/ the enjoyment and use of the land. (e.g., chickens scared, dying). B. Further limitation of Hinman owner of surface cannot interfere w/ air travel, even if wants to build a huge silo and thus occupy that air space; public has superior right/easement. Public Trust Doctrine States (LAND) i. State holds lands in trust for public for their unobstructed enjoyment. Can apply to lands under navigable waters, adjacent beaches, public parks, state wilderness areas, maybe expired IP rights. ii. Most often applies to land under & adjacent to navigable waters. Boundaries of public trust area: edge of non-tidal waters; mean high tide line for tidal waters. iii. Per Estlund: Public trust is not well definedplus, no clear constitutional basis. iv. Purpestures - Encroachments on public lands that impede their use. Any permanent, stationary, or fixed object/impediment, as distinguished from a mere temporary obstruction incidental to a lawful use of the way, which unreasonably and unnecessarily interferes with public travel, or which endangers the safety of travelers, constitutes a public nuisance per se. v. Lake Michigan Federation v. U.S. Army Corps of Engineers (1990) [p. 324] 1. State conveyed land under Lk Michigan to Loyola Univ. for lakefill development. 2. Holding: Land conveyance violated public trust; Construction enjoined. 3. Basic principles of public trust: 1) Courts should be critical of attempts by state to surrender public resources to private entity (no deference to legislature); 2) Public trust violated when primary purpose of grant is to benefit private interest (even if brings incidental public benefit); 3) Public trust violated if state relinquishes power over the public resource. 4. Here, primary benefit is to Loyola (enlarging campus)- incidental benefit to public is mere valuebased judgment; State has relinquished power -- Loyola will be owner, rts superior to public. Current political bodies cant bind future public w/r/t disposition of public resources. Public right of access essential to public trust (as much as right to exclude for private property)here, demanding sacrifice of that right to large portions of the land. vi. State of Oregon ex rel. Thornton v. Hay (1969) [p. 333] 1. Issue: Whether State can prevent Owner from fencing in the dry-sand beach he legally owns. a. Dry-sand beach: Land b/w mean high tide line (edge of public recreation area) & vegetation line. 2. Holding: Public has right to dry sand beach based on custom. Injunction affirmed. 3. Custom: such usage as by common consent and uniform practice has become the law of the place, or of the subject matter to which it relates. Here, meets Blackstones 7 requirements of custom: a. Ancient (long-term & general) memory of man runneth not to the contrary b. W/o Interruption (no assertion of paramount right in interim) c. W/o dispute (peaceable) d. Reasonable (publics use has been appropriate to the land) e. Certain (defined by visible vegetation line, recognized uses) f. Obligatory (like claim of rightpublic acted as if they had rightmust be uniform across LOs) g. Not repugnant to other laws/customs 4. Note: Public prescriptive easement could also work herebut long-time use looked permissive better to go w/ custom. Plus, prescription would require new litigation for each property. 5. Note: Court dismisses S.Ct. Borax opinion giving LOs title to mean high tide line. Also: Court implies this is not a taking, b/c no reason for LO to think it was ever his. vii. Rose: Comedy of Commons (3-96) A. New frontier of public trust doctrine: Access to beaches for recreation. Justify based on socialization. B. Typically public trust is wet sand beach. Matthews (NJ case p. 341) Traditionally public trust only applies to wet sand; but for public to enjoy and make full use of wet sand, need reasonable access to dry sand as well. C. Criticisms: If public wants/needs these lands, it could just purchase them. Uncertainty about property rights creates conflicts and wastes resources. Public access creates a Commons that leads to deterioration and waste.

14

D. Or could see this as a case where the market will fail (too many interested parties with small individual stakes and disparate desires for the usage of the resource, so govt body is most useful manager). But need govt to regulate efficiently. E. Dont want to let individual owners hold up the publics use of a resource that is more valuable and requires continuity of access. F. Inherently public property collectively owned by society at large, citizens have standing to enforce rights; vs. Public property owned by government, only government officers can enforce.

15

Owner Sovereignty, Right to Exclude, and its Limits

1. Main rights presumptively in bundle of property rights: a. Right to possess ** (at the core) b. Right to exclude ** (close adjunct to Rt to Possess) protected by trespass c. Right to use & enjoy (both passive and active) d. Right to convey 2. Protecting the Right to Exclude a. Criminal Lawsreinforce civil remedies, prevent property rules from converting to liability rules i. Protecting Personal Propertyprotected by law of larceny: prohibits taking personal property from possession of another without legal authority ii. Protecting Real Property protected by trespass. Most have small penaltiesno deterrent effect. Main reason to criminalize trespass: allow recourse to police officer to evict trespasser (instead of resorting to self-help remedies). b. Civil Actions i. Protecting Real Property A. Trespass vindicates the interest that a person in actual possession has in exclusive possession. Remedy: damages for injuries incurred in past, injunction against recurring injury in the future. B. Ejectment vindicates interest of a person with title to land against a person wrongfully in possession. Remedy: damages for profits lost to title holder during period of wrongful possession and injunction to restore possession to owner. C. Nuisance protects the interest in use and enjoyment of land. Remedy: damages and injunction. ii. Protecting Personal Property A. Common Law writs/rights of action: 1. Trespass dba: forcible carrying off of ptfs goods 2. Detinue: unlawful detention of goods 3. Converstion (formerly Trover): def wrongfully converted the ptfs goods to his own use generally P can only recover damages. 4. Replevin: get the actual good back. Traditionally: landlord seized personal property of ptf as a distraint for unpaid rent (allows ptf to recover possession of goods rather than just damages, has been expanded beyond context of recovering rent, also applies to wrongful detention of goods in addition to takings) 5. Trespass to Chattels: D injured or interfered with Ps property while P retained possession (falls short of conversion)must show injury to the property itself. c. State v. Shack (NJ, 1971) [p. 401] i. Farmer Tedesco employs/houses migrant workers. Refuses entry (or at minimum privacy) to health worker and legal advisor who want to visit workers. Criminal trespass action against visitors. ii. Holding: No trespass. Ownership does not include right to bar access to necessary services. iii. Reasoning: Limitation on LOs property rights come from w/in the concept of property itself, based on human values: Property rights serve human values. They are recognized to that end, and are limited by it. p. 402. Importance of assistance was highlighted by federal program that sponsored it. iv. Workers autonomy interests were weighty. The more you open your property to others for your economic advantage, more your property rights become increasingly subject to their legal interests and rights. v. Note: Court resists putting migrant worker into existing tenant categorytreats as sort of sui generis. vi. Note: Crim law more concerned w/ protection of persons than propertymaybe explains why trespass was subordinate to aid workers access (at least in a criminal proceeding). d. Intel Corporation v. Hamidi (2003) [p. 412] i. Hamidi sent emails to Intel employees criticizing management; no security breach, allowed opt-out. ii. Issue: Whether emails (electron intrusion) can amount to trespass to chattel (i.e., of Intel internet server). iii. Holding: Emails were not a trespass to personal property b/c did not cause injury to the chattel itself, or to Ps rights in it. Indeedservers were unharmed and worked as intended! Disruptive harms to workforce were based on content of the emailstrespass to chattels isnt about this kind of harm. Self-help harms (i.e., time spent trying to block emails) dont count either. Harm must be direct and to the chattel.

16

iv. Dissent: Criticizes decision as endorsing might over right. Should issue injunction against future trespasses, even if no damages awarded for technical torts to property. Both parties are left free to resort to any technological means available to fight it out. Intel still has right to exclude, through self-help. e. Self-Help i. Generally: can use reasonable force to prevent/terminate unlawful entry or trespass upon land or trespass/carrying away of tangible, movable property. Usually no deadly force allowed for burglary unless there is a danger to persons. However, disagreement about whether you can use self-help to recover property once possession has been lost; divergence between real and personal property. ii. Berg v. Wiley (1978) [p. 428] A. Real Property case. Berg (restaurant tenant) allegedly violated lease by remodeling w/o permission & violating health code. Lease provided LL rt to retake possession in case of breach. T left jury found no abandonment/surrender. LL changed locks w/ police escort. T claimed wrongful eviction. B. Old CL rule: LL may use self-help to retake if (1) LL is legally entitled to possession (e.g., b/c of breach) and (2) means of re-entry are peaceable. Court found Wileys re-entry to be forcible as a matter of law, b/c if tenant had been home, there may have been an altercation. (Retaking possession from someone who wants to retain it will always risk violence.) Wants to encourage use of judicial system for resolution. C. Rule: No self help allowed to dispossess T who claims rt to possession. iii. Williams v. Ford Motor Credit Company (1982) [p. 434] A. Personal Property case. Default on car payment company has rt to repossess car. Sends repo guys at 4:30am, P protests. P sues for conversion; awarded jury verdict. B. Issue: Was self-help lawful, i.e., in this case, peaceable? C. Court finds peaceable b/c no violence in fact, and men were polite, not threatening. D. Problems: Encourages violence if P had reacted more violently, would have prevailed; Favors people capable of physical force. iv. Williams vis--vis Berg A. Both cases require threshold requirement that Self-Helper is the TO (has legal title). Becomes case of TO vs. Present Possessor. Though TO has legal title, will be a tort if TO reclaims it himself over possessors resistance. B. Protect present possession: 1. Dont make LL/Repossessor the judge of his own claim 2. Prevent erroneous deprivation (make sure its really his) 3. Endowment Effect people quickly develop personal attachment to the things they possess. C. Difference b/w cases turns on question of peaceable. Higher bar for LLs. D. General trend: Most states bar self-help by LLs; no states bar self-help for repossession. Reasons: 1. Personal property more mobile, easier to hide/ferret away 2. Personal property depreciates in value more quicklydelay of judicial process more significant. 3. Personal property less valuable than landcost of judicial process proportionately much greater. 4. Affordable creditlow income consumers would not be offered goods w/o self-help option. 3. Exceptions to the Right to Exclude a. Common Law Exceptions i. Necessity: Ploof v. Putnam (1908) [p. 439] A. Classic case of privilege based on necessity. Can enter property w/o owners consent (i.e., commit what would be trespass) to prevent serious harm. Applies w/ special force to human life. B. LO has affirmative duty to allow: Here, tempest-tossed Ploof wins against LO for refusing mooring. C. Dicta re other circumstances justifying necessity: dog chasing trespassing sheep off land who cant come to screeching halt at boundary; traveler who reaches obstruction; save good from loss by water or fire; save boat in danger of being carried off to sea. D. Necessity requires sudden, exigent circumstances beyond your control. Otherwise, want parties to BARGAIN and obtain consent (e.g., Jacques). ii. Custom: McConico v. Singleton (1818) [p. 442] A. Ancient privilege of access to unenclosed grounds for hunting. LO loses on trespass action, despite objecting vocally to trespass. Presumption: Must prove land is important to you by putting up a fence. B. Now: Many states have posting laws requiring clearly posted No Hunting or No Trespassing signs to assert rt to exclude; otherwise, subordinate to customary rt to hunt on land of others.

17

C. Note: Trespass by livestock: Most eastern states have fencing-in laws; Western have fencing-out laws; But even in West, there is now an informal norm of fencing in. iii. Public Accommodation Laws: Uston v. Resorts Intl Hotel (NJ, 1982) [p. 448] A. Court holds Casino cant exclude Uston for being a card counter. Rationales: 1. Comprehensiveness of casino regulation shows intended to be exclusive authority no prohibition on card counting. (But even if there were no statute, still have #2.:) 2. Revives old CL rule: If generally open to public, must accommodate everyone, unless there is good reason not to (e.g., dangerous or disruptive). B. Court cites State v. Shack (see above); & State v. Schmid Princeton pamphleteer whose free speech right trumped universitys right to exclude (esp. given idea-sharing nature of university) But Uston is not a case of a compelling need/Constitutional right trumping right to exclude Rather than Uston proving his right, Casino must justify its exclusion Rule has flipped! C. Modern Rule at time of Uston: Casino can exclude for any reason or no reason at all. D. New Rule: No rt to exclude others from places of public accommodation w/o compelling reason. E. NJ court is suspicious of modern CL rule; says exceptions have flipped it back to the old rule. F. Note: Whenever see proliferation of exceptions to owner sovereignty, ask question NJ court asked: Have we now flipped the presumption the other way? b. Constitutional Trumps i. Procedure:

(1) If state action (this is the TRESHOLD requirement) Marsh: Arrest & Criminal Prosecution (Trespass/Co Town) Shelley: Judicial enforcement of restrictive covenant Bell: Arrest & Criminal Prosecution (Trespass/Restaurant) (Note: Need public place b/f trespass enforcement is state action) (2) Then balance the competing rights: Property right (vs.) Company town/exclusion Right to restrict sale Private restaurant/Right to exclude (Constl) Access right 1st Amend. free speech**(WINS!) Equal protection**(WINS!) Equal protection

Marsh: Shelley: Bell:

ii. Marsh v. Alabama (S. Ct. 1946) (Supp 7)

A. Jehovahs witness arrested for trespass for distributing religious materials on sidewalk of shopping district of company-owned town w/o permit (which would have been denied). Town was just like any other town, other than being privately ownedhad post office, houses, worksite, shopping Public free to enter; Residents (employees of company) didnt often leave. B. State action (need state action for Constitutional rts to come into play): State arrested & prosecuted. C. Issue: May a company town deny 1st Amendment freedom of speech, in situation where govt municipality would not be able to? I.e., does corporations property interests change the analysis? D. Holding: Regardless of who owns the town (corporation or municipality) public has identical interest in community functioning w/ free channels of communication. Use balancing test, b/w owners property rts and federal Constitutional rights. Here, owners rt to exclude is weak already opened property to general public use. While rt to free speech is especially strong herecommunity is isolated, Owner is trying to pick & choose the messages they receive. People have right to get info where they are, w/o leaving the town. Constitutional rights trump owners right to exclude. E. Frankfurter (Concurrence): A company-owned town is a town; In its community aspects it does not differ from other towns. Local property rules cannot control federal Constitutional right. Anti-Discrimination laws: Shelley v. Kraemer (S. Ct. 1948) [p. 456] A. In 1911, the owners of land parcels in Missouri entered into restrictive covenant that prohibited anyone but whites from owning land in their area. Gave each owner right to enjoin any sales that

iii.

18

c.

would breach K (i.e., a property right). In 1945, Shelleys bought the land from willing seller; other beneficiaries of covenant sued B. On its own, the covenant is valid contract enforceable, and has no state action in it not a 14th Amendment question. But: public zoning laws to accomplish same thing clearly unconstitutional. C. Issue: Whether enforcement by state courts of private restrictive agreements counts as state action (and thus subject to Constitutional claims). Note: Unlike in Marsh (criminal prosecution), court here is merely enforcing a private agreement, i.e., as a neutral referee. D. Holding: Yes Absent judicial enforcement, Shelleys could buy the house therefore, clear state action resulting in denying equal protection of the laws. E. State action, for purposes of 14th Amendment, refers to exertions of state power in all forms. iv. Bell v. Maryland (1964) (Supp 12) A. Bell challenged trespass conviction for restaurant sit-in. Exclusion was racially motivated. B. Issue: Does state enforcement of private citizens discriminatorily-motivated trespass complaint = state action? C. Holding: Court dodged state action question, vacated convictions based on new state law. D. J. Black (Dissent): Trespass laws maintain social order by preventing self-help; should not be considered state action. E. J. Goldberg: Historical argument that 14th Amendment constitutionalized CL rts of equal access to public accommodationsjudicial enforcement of race-based trespass in pub accom = state action. F. J. Douglas: Thinks case is clear application of Shelley; state judicial enforcement = state action. G. Note: Issue never decided; CRA of 1964 passed, banned discrim in places of public accom. What counts as state action? i. I think requires quasi public relation to the community language from Goldberg concurrence in Bell. A. Marsh- The more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the statutory and constitutional rights of those who use it. but this quote seems to go more to the balancing test prongwant to attack at the threshold state action level if possible. ii. Note: Still have absolute right to exclude from private home. iii. Question: Is it the moment you open property to the public that it is subject to balancing test of rights? (Instead of an absolute right to exclude?) iv. Argument: All state enforcement = state action. v. Problem: Then even private homeowners rt to exclude will be subject to balancing test bad. vi. Argument: All state enforcement in properties open to public = state action. vii. Problem: Shelley was not open to public (does this matter??). Plus, there are gradations of being open to public. What about private homeowner throwing an open party for democrats in the area? viii. Argument: There is only state action where have state enforcing a private analog of something declared unconstitutional in the public context. A. E.g., Bell- 14th Amendment meant to give former slaves rights of whites, including CL rt to public accommodation B. E.g., Marsh public municipality cant restrict speech on sidewalksneither can company town C. E.g., Shelley- - public zoning laws struck down- cant do same thing by private contract ix. Problems: A. Might be bad to give wide discretion to police officers to balance rights, than enforce bright-line rule. B. Complicates prosecution evidence of personal animus would otherwise be irrelevantwhenever add material elements to offenses, more resources, fact-finding required for adjudicating. C. States actual interference is indistinguishable b/w state action and non-state action cases. D. Question of state action might turn on historical biases of locality. x. State constitution free speech does not require state action to enforce. A. Schmid (Princeton leafletter) no state action requirement, go immediately to balancing test. B. Pruneyard CA mall state constitution go to balancing test. But takings question. xi. Note: To get right to of access to communicate on private property, must closely analogize yourself to Marsh to win on 1st Amendment grounds

No 1st Amendment right to speak in private shopping center (Lloyd Corp. and Hudgens overruled Logan Valley) and arguably no state action when enforce trespass at shopping ctr for that purpose.

19

Town-like qualities must be more robust than just a shopping center (Universities, Military base, Gated communities with shops and schools, Retirement homes, etc). Audience must have need for message, lack of other options, best place available, etc.

20

PRESENT INTERESTS

FREEHOLD ESTATES

[NON-FREEHOLD ESTATES]

Fee Simple

(Fee Tail)

Life Estate

Term of Years

Periodic Tenancy

Tenancy at Will

Absolute

Defeasible In favor of another grantee: Subj. to Exec. Limitation

In favor of Grantor: Determinable ( as long as) Subj. to Cond. Subsequent (, but if )

Partial/Open* Indefeasible

Complete

Subj. to Divestment

Contingent*

Vested

Possibility Of Reverter

Rt. Of Entry/ Power of Term.

Reversion

Executory Interest*

Remainder

21

CREATED IN GRANTOR

CREATED IN A GRANTEE

FUTURE INTERESTS Perpetuities

*Subject to Rule Against

22

Forms of Ownership
1. Introduction a. Resources are often better utilized if shared, and divisions of property can be built into the title itself (across time, multiple owners). Having multiple owners can create a collective action/commons problem, so law limits the number and variety of ways in which coownership can be organized. This section focuses on freehold estates in land (one whose potential duration is either infinite or measured by the life of the holder, i.e. fee simple(s), fee tail, and life estate) (excludes leases). i. Freeholder of land has seisen as long as they havent been dispossessed. 2. Divisions at Same Time a. Diff ppl, equal right to possess Concurrent interests b. Diff ppl, diff rights e.g., Easement to cross land 3. Divisions by Time Estates and Future Interests a. Estates in Land i. Estate is a type of property right that measures a persons interest in the land in terms of duration. Can either be a present possessory interest or a future interest (one that doesnt take possession until a happening of some future event). b. Terminology: i. Conveyance: transfer b/w living persons (aka intervivos conveyance). Can be by sale or gift. ii. Devise: Left by will to other living persons. Only takes effect at time of death. iii. Inheritance: Technically, the passing of property to ones heirs at death w/o a will. iv. Heirs: Determined by law at moment of death NO LIVING PERSON HAS HEIRS! (only presumptive) v. Die intestate: Die w/o a will. vi. Nemo Dat: No one can transfer more than she owns. In a transfer, grantor is presumed to give all she has, unless indicating otherwise. To A and his/her heirs or To A in fee simple or To A. A. To A are words of purchase (designate someone to receive an interest) B. and his/her heirs are words of limitation (if A sells, the heirs lose expectancy, not an interest b/c they never had one to begin with) vii. Quit Claim Deed: Give whatever interest you have to someone else; no representation about the interest. viii. Freehold interests: Interest that is potentially infinite in duration, or measured by a life A. E.g., Fee Simple Absolute, Life Estate, and Defeasible Fees (last two leave room for future interests). B. Leases are nonfreehold estates. ix. Conservation of estates must figure out ALL the interests FOREVER (fee simple is measuring stick) c. Present Possessory Interests [p. 550] i. Fee Simple Absolute: largest package of ownership rights from which others are carved. Potentially infinite in duration. Only comes to an end if owner dies w/o will and w/o any heirs (then to state). Can be freely conveyed, devised and inherited. A. Note: All owners and future interest holders of an estate can get together and consolidate interests back into fee simple absolutebut harder to do the more people there are. ii. Fee Tail: tried to tie up property in a family over the generations. To A and the heirs of his/her body or To A and his/her issuewould create a nontransferable life estate

23

iii.

iv.

followed by a similar interest in the blood descendants of that person. Only the end of a bloodline could end the fee tail, and then property would revert to grantor. Abolished in the U.S. Life Estate: duration of estate comes to a natural end w/ death of a named person. To A for life, and then to B (life estate in A, remainder in fee simple in B). Life estate is alienable by gift or sale, but not by will. Can only give away what you have, so A can only give away her interest until her death; upon her death, B will take. As death terminates the estate, even if sold to new owner not very alienable. A. Life estate must be followed by REVERSION or REMAINDER. B. Note: Life estate can be made defeasible (e.g., O A for life unless .) C. Common conflict: B/w life tenant and future interest holder (e.g., Brokaw mansion case). Legal life estates are usually a bad idea, b/c goal is to provide for the life tenant, but ends up hindering and constraining her using a trust is usually a better solution. Legal life estates only make sense when the property is unique and special (e.g., ancestral home). Ask: Did grantor mean to convey the actual structure, or to take care of the life tenant. If the latter, then trust is better. Defeasible Fees: similar to a fee simple absolute except subject to conditions (in the document creating the interest) that may cut it short, at which point future interests would become possessory. A. 1st Question: Who gets the future interest? (grantor/grantee) if grantee, then must be subj. to exec. Limitation; 2nd question: If grantor, must determine if determinable or subj. to cond. subsequent. B. Fee Simple Determinable: ends automatically upon occurrence of a named event (limitation), whereupon the grantor or grantors successor retakes. (Though: event may never happen.) To A as long as limitation/contingency, then to O (or so long as, while, during, and until.) Automatically becomes fee simple absolute if limitation fails becomes present possessory interest in O. 1. Look for language of duration lasts only as long as limitation holds (as long as, until) 2. Always followed by POSSIBLITY OF REVERTER back to grantor. 3. Note: AP clock starts running immediately when the condition occurs. C. Fee Simple Subject to Condition Subsequent: fee continues indefinitely except that upon happening of a named event (the condition) the interest does not automatically end but can be ended by action (self-help or lawsuit) by the grantor or grantors successor (right of entry or power of termination). To A, but if it is not used for X purpose, then O has the right to reenter and take the premises (or on condition that, provided that, provided however, and iflook for separation from the described interest with a comma). (A has FSSTCS, O has right of entry/power of termination.) Non-automatic back to grantor. 1. Followed by RIGHT OF ENTRY IN GRANTOR. O just has option to reclaim possession. 2. Note: AP does not start running until O exercises right of reentry. However, rt of reentry usually subject to equitable doctrine of laches, which extinguishes right after set period, often SOL. D. Fee Simple Subject to Executory Limitation: when Defeasible fee is followed by an interest granted to a third party (not reserved to the grantor) at the time of conveyance of the present possessory estate. The following future interest is an executory interest. To A as long as X, then to B or To A, but if not used for X, then to B. Doesnt matter whether language tracks the FSD or FSSTCSregardless, the

24

d.

e.

f.

interest is automatically cut short by the following executory interest upon the happening of the contingency. Followed by EXECUTORY INTEREST in third party. Future Interests [p. 554] i. Interests Retained by the Grantor (reversionary interests) A. Reversion (follows a life estate, some leaseholds) 1. Residual category of all future interests retained by grantor thats not poss revert or rt to reentry. 2. Follows the natural end of a life estate and in other contexts where owner hasnt disposed of the entire fee. To A for life (O implicitly retains a reversion). 3. O must always have technical reversion whenever last interest is a contingent remainder. B. Possibility of Reverter (follows a FSD) 1. Once condition satisfied, automatically becomes fee simple (i.e., present interest) in O. 2. Interest reserved to grantor that follows a fee simple determinable. O automatically gets the property back if the limitation built into the grant occurs. To A as long as limitation, then to O or To A as long as limitation (explicit or implicit). If limitation occurs, then O automatically becomes fee simple owner again. O (or Os successor by devise, sale, etc.) will take. Note: Watch for AP! C. Right of Entry/Power of Termination (follows a FSSTCS) 1. Interest retained by grantor that follows a fee simple subject to a condition subsequent. To A, but if condition, then O has right to reenter and take premises. Condition is a condition subsequent for the preceding interest, and a condition precedent for the future interest. Upon occurrence, nothing happens automatically, but it gives O the right/power to oust the holder of the FSSTCS (by physical entry subject to self help limits, or through an action to recover possession). If enough time passes, the right of entry may no longer be exercisable under doctrine of laches (time period maybe SOL for bringing ejectment action). ii. Interests Created in a Grantee (where grantor simultaneously creates an interest in a third party) A. Remainder: Almost always follows a life estate. Must meet two tests: 1. Must be capable of becoming possessory immediately upon termination of previous estate; 2. Cannot divest (cut off) a prior vested interest. B. Executory Interest*: Any future interest in third party that is not a remainder. Divests or cuts short a previous interest. Never vested until becomes possessory. (* = Subject to R.A.P.) Vesting [p. 560] i. Interests vest in possession when the interest becomes a present possessory one. ii. Interest can vest in interest when uncertainty about the interest has been resolved. Can be uncertainty about who will take the interest (class subject to open) or about contingencies occurring (which children will pass the bar). A. Remainders may or may not be vested in interest upon creation; definitely are vested in possession after the preceding interests are terminated. B. Reversionary interests (all three types) are vested in interest upon creation, whether or not the interest ever becomes possessory. C. Executory interests normally must vest in possession in order to vest in interest. Types of Remainder i. Vested Remainder:

25

A. Not subject to condition precedent; B. Given to person already born and ascertainable. C. May be subject to condition subsequent (i.e., subject to divestment) ii. Contingent remainder* A. Not vested b/c uncertainty exists for one of three reasons: 1. Subject to condition precedent (e.g., To A for life, then to B if he graduates by age 19) 2. OR person not yet born (e.g., to As children where A has no children yet) 3. OR person not yet ascertainable (e.g., to first of As children to graduate law school) B. When uncertainty is resolved, the remainders vest in interest. The interest can vest (by the condition being satisfied) without the possession vesting (A dying). C. Alternate Contingent Remainders: Either goes to A or B, depending on same condition. D. Note: Can never end chain w/ a contingent remainder O always has a technical reversion. E. Note: Exec. Interest can never follow contingent remainder (b/c not vested). F. * = Subject to R.A.P. iii. Indefeasibly vested remainder (e.g., O to M for life, then to N.) A. Identity of the takers is known and there is no other contingency that must be fulfilled before their interest is ready to become possessory other than As death. And no condition subsequent can cut short the remainder. iv. Vested subject to complete divestment (e.g., O to M for life, then to N; but if C occurs, then to K) A. if occurrence of a condition can cause the interest to shift to someone else. To A for life, then to B; but if B fails to graduate by 19, then to C. (A has life estate, B has a remainder subject to complete divestment, C has a shifting executory interest.) v. Vested subject to partial divestment* (or subject to open) (e.g., To A for life, then to her children) A. B and C are As children already alive at the time of the grant. Since A still may have more children, the class is subject to open: B and C have vested remainders subject to partial divestment. B. * = Subject to R.A.P. Present Interest Fee Simple Absolute Examples O grants B to M. O grants B to M in simple fee. O grants B to M and her heirs. O grants B to M for life. O grants B to M for life, then to N. O grants B to M for life, then to her adult children. O grants B to M for life, then to N if Condition. O grants B to M for life, then to N, but if C, then to K. Remainder (in N); vested subject to complete divestment Remainder (in N); vested subject to open Typical Future Interest None None None Reversion (in O) Remainder; indefeasibly vested Remainder; contingent* Remainder; contingent*

Life Estate

26

Fee Simple Determinable Fee Simple Subject O grants B to M, but if C, then O has the right to Condition to reenter and take the premises. Subsequent Fee Simple Subject O grants B to M as long as C, then to N. to Executory Limitation O grants B to M, but if C, then to N. * Subject to Rule against Perpetuities.

O grants B to M for life, then to her children. [N was only child at the grant.] O grants B to M as long as C, (then to O).

Possibility of reverter (in O). Right of entry/power of termination (in O). Executory interest (in N)*

4. Maintaining the System a. Conservation of Estates: When a transfer is made, all of what grantor had must be accounted for (even if implied reversion). Fee simple (or original interest) must be conserved. The last interest (explicit or implied) in a conveyance must be a fee simple when it becomes possessory. i. Always ask Whats Left? Must fill in entire arrow (denoting estates over time). b. Williams v. Estate of Williams (1993) [p. 563] i. Holographic will handwritten by deceased himself; given more liberties in interpretation. ii. Granted farm to three daughters to have and to hold during their lives not to be sold during their lifetime (and if any marries, interest shall cease). 2 of the 3 daughters have diedonly Ethel is left. iii. Issue: What interest did Ethel get (either fee simple or life estate)? iv. Lower Court: Fee simple Construe ambiguities to dispose of entire estate, presumption agst intestacy. v. Supreme Court: Intent to convey life estate is sufficiently clear. Thus, W conveyed life estate to the 3 daughters, but died partially intestate reversionary interest in all his heirs (could be lots of people!) c. City of Klamath Falls v. Bell (1971) [p. 568] i. Corporation conveyed land to the city so long as it was used for a library; thereafter to Fred & Floy (sole shareholders of corporation). 44 years later, library closed; issue whether the land stays with the city or goes to the descendants of the corporations shareholders. ii. Grant was fee simple subject to executory limitation but future interest VOID by R.A.P. at moment of creation therefore, actually fee simple determinable w/ possibility of reverter. iii. Rule: If exec interest is void, first grantee becomes absolute owner unless language makes clear interest should terminate then possibility of reverter. Here, unquestionable intent to limit interest. iv. In OR: Possibility of reverter is inalienable. BUT: can descend to heirswhen corporation dissolved in 1927, Fred & Floy inherited poss of reverterwhen they died, all their heirs inherited. When condition occurred, poss. of reverter turned into fee simple absolute (which CAN be conveyedhere, to Marijane). d. Law of Disclaimer A. For a gift to be valid, it must be accepted by the donee. For a transfer, the potential transferee must accept it/has a veto power. Law of disclaimer: potential recipient can refuse property. e. Flexibility of the Estate System

27

Even though you have to fit in the prescribed boxes, you can combine them infinitely to create the result you want. Need the flexibility for Estate Planning. Might have to use 2 pieces of paper instead of 1. f. Numerus Clauses: menu of forms of ownership (catalog of estates) is fixed, finite, and closed. Cant create a new form of ownership (contrasted to contract law, where free customizability is the norm). 5. Mediating Conflicts Over Time a. Waste i. Waste = permanent injury to the inheritance, i.e., materially change property so that remaindermen dont get what they were granted. ii. Depends on Grantors intent. Ask: What did Grantor mean to convey? (actual structure?) iii. Only allowed to change property if all remaindermen agree (1 holdout can block). iv. Tension b/w present and future interestholders: A. Life estate will favor current consumptions and quick return investments. B. Remainders will prefer conservation and long-term investments. v. Brokaw v. Fairchild (1929) [p. 596] A. George has life estate in dads mansion (my residence); Wants to tear down to build apartment building (b/c cost of upkeep of mansion too great). Contingent remaindermen object. B. Court holds future interest clearly encompasses the mansion and not just the land (b/c of repetition of words my residence). Rejects view that building = economic value only (Melms). C. Court prohibits demolition to preserve future interests. vi. More typically, waste would prevent overconsumption, not preservation of mansions. A. Affirmative waste: life tenant takes affirmative action on property thats unreasonable and causes excess damage to the reversionary or remainder interest B. Permissive waste: life tenant fails to take some action with regard to the property and the failure to act is unreasonable and causes excess damage to the remainder interest C. Ameliorative waste: affirmative act by life tenant significantly changes the property but results in an increase (not diminution) in its market value (Brokaw) vii. Valuation of InterestsSometimes when there are multiple interests (life estate and remainder, for instance) and a property is sold, the proceeds must be fairly divided between all interested parties. Uses actuarial tables and discount rates. b. Restraints on Alienation i. General CL Rule: Owner may not transfer property to another on condition that the transferee will not retransfer the property. Limits freedom of the original owner to transfer barred from engaging in a transfer that limits further transfers. A. Ironically, these limit the unrestricted freedom of owners to dispose of things in order to preserve the right of future owners to engage in transfers of the same thing. ii. General Rules: A. Complete restraint on alienation of a fee (even for a limited period of time) VOID B. Partial restraints on alienation of a fee DISCOURAGED (e.g., Shelley) reasonableness test C. Restraints on alienation of a smaller interest (e.g., life estate) Generally okay. D. In case of uncertainty, preference against restraints on alienation. iii. Transfer A. Free transferability would lead to efficient allocation of resources throughout society with things owned by the people who value them most (if no transaction costs) B. Two types: exchanges/purchases (contract law) and gifts (trusts and estates)

i.

28

iv. Lauderbaugh v. Williams (1962) [p. 532]

A. Provision in deed restricting sale of lakeshore property to members of the Assn. Wife wants to strike down restriction- court grants, even w/o evidence it was restrictive in practice. B. General rule: Not all restraints on alienation are necessarily void, though disfavored. Absolute restraint is void, but limited and reasonable restraint may be valid. C. Holding: Standards of membership to assn very vague, restriction is perpetual could amount to complete restraint on alienation, or be used for impure motives. Mere caprice could deny P right to alienate her land. v. Statute of Frauds [p. 536] A. Wide range of interests in land including leases (unless term <3 years) must be put in writing and signed. Increases overall security of property rights, so property transfers more frequently with lower transaction costs. Restricts alienation by interfering with ability of owners to dispose of property by oral agreement or in an unsigned writing, but promotes overall transferability of property. vi. Mountain Brow Lodge v. Toscano (1968) [p. 607] A. Toscano conveyed land to P for the use and benefit of the lodge only, and upon failure of property to be used by P or if sold by P, to revert back to grantors. Court holds that provision restricting the sale of the property is void as public policy (absolute restraint against alienation)- inconsistent w/ the fee. B. Issue: Whether use condition is also void as restraint on alienation (or creates defeasible fee). (Lodge arguing former to get fee simple absolute.) C. Rule: Use restrictions allowed, even if completely impede alienation. Distinguish b/w use restriction on individual, vs. on organization latter more permissible to encourage donations to fraternal, education, charitable orgs. D. Dissent: Realistically, use restriction = restriction on alienation; if only lodge can use, who would buy? Rule Against Perpetuities (RAP) i. Invalidates interests that give too much control to the dead hand. Allows people to control use of property for one generation into the future, plus the next generation up to the traditional age of majority. Has turned into a formalistic rule, without policy references. ii. Policy: A. Promotes alienability of land by present holders at expense of grantors intentions. B. Similar policy reasons as for restrains on alienability. C. Compromise b/w grantors wishes and societys preference for alienability. D. Limit dead hand control. iii. Rule: A. 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. B. Just need uncertainties resolved during perpetuities periodnot possession. C. RAP prevents interests from (possibly) vesting (in interest) too remotely. D. Common law RAP operates at TIME of grant (no wait and see) iv. Interests that are not vested at time of creation are subject to RAP: A. Executory interest (uncertainty about when the cutting short/taking possession happens) B. Contingent remainders (need to ascertain identity, satisfy conditions precedent) C. Vested remainders subject to open (need class to close) v. Interests that are NOT subject to RAP: A. All interests in grantor B. Indefeasibly vested remainders

c.

29

C. Vested remainders subject to complete divestment vi. Measuring Lives A. Measuring lives must exist at the time of the creation of the interest. 1. In some cases, 9 months of conception are added to the perpetuities period. 2. For inter vivos conveyance, grantor is a life in being; For devise (will), grantor is not. 3. Technically, can be any life in the world. But can only prove when vesting must occur by using lives implicated in some way by the grant/devise. 4. Note: Not allowed to have children after death, even by sperm banks. vii. Red Flags A. Vesting at ages over 21 (Note: NY reform statute helps) B. Gifts to grandchildren of living people (b/c living people can still have more kids) C. Long-term limitations like using land for farming, when followed by executory interest. viii. Perpetuities Savings Clause (see p. 616) A. Grantor can put in grant to save it from RAP invalidation; specify back-up plan. B. Approximate the grantors intent, if challenged under RAP. ix. More generous to charities A. Rule of two charities: Interest does not violate RAP if involves transfer from one charity to another. x. Reforms A. Wait and See for CL RAP period: wait and see if interest vests remotely or not. If yes, then valid. Problem that you dont know for a while; Must tolerate uncertainty. B. Wait and See for CL period or 90 years: same as above, but caps period at 90 years. C. Interpretation and Implication: May reform an interest, e.g., change 25 years to 21 years. Or uphold an interest in a class that wasnt closed, but deny it to the member that joined too late. Rejects all-or-nothing approach. xi. Symphony Space v. Pergola Properties (1996) [p. 620] A. In 1978, Broadwest conveyed entire building to Symphony Space in fee simple absolute for: $10,000 + lease back of commercial space + option to repurchase. Repurchase exercise periods were in 1987, 1993, 1998, and 2003. When Pergola Properties tried to repurchase in 1993, Symphony Space said that the clause was invalid because the whole thing violated the RAP. B. Holding: RAP applies to commercial transactions. The option agreement creates precisely the sort of control over future disposition of the property that CL rule against vesting seeks to prevent. C. Further: RAP is only 21 years if no lives implicated (b/c no measuring lives that could validate the period). Could vest in 2003, which is >21 years. D. Further: NY reform statute doesnt help: No ambiguities to construe favorably, no age contingencies to reduce. Court rejects wait-and-see approach and claim of mutual mistake by the parties. (Afterall, ALL violations of RAP are by mistakerescinding for mistake would vitiate the rule.) xii. Vestigial Maintenance Doctrines A. Serve to clean up conveyances and make them more alienable B. Merger Rule: When any combination of transfers puts in the hands of a single person a series of interests that add up to a larger estate, the recipient is treated as a holder of the larger estate. C. Rule in Shelleys Case: If someone uses a single instrument to create a life estate in land in A, and also to create a remainder in persons described as As heirs, and both life estate and remainder are legal or equitable, then the interest becomes a fee simple in A. D. Doctrine of Worthier Title: Converts what is nominally a remainder in the heirs of O into a reversion in the grantor (O).

30

E. Destructibility of Contingent Remainders: If a condition of a contingent remainder

hasnt been satisfied when it comes time for that interest to take, then that remainder is destroyed and the interest becomes a supporting reversion retained by O. (Rule not used anymorecourts just treat a contingent remainder that does not become possessory upon the natural termination of the previous estate as if it were an executory interest.) 6. Concurrent Interests a. Basic Co-Tenancies i. Every estate can be shared by 2 people concurrently (i.e., w/o splitting up). ii. Each person has right to the whole microcosm of Tragedy of Commons. iii. Tenancy in Common A. Each tenant in common has a separate (independently descendible, conveyable, divisible) but undivided (each tenant has the right to possess the whole of the property) interest. B. No right of survivorship; Share of each TIC passes on death as part of his separate estate. C. TIC can be attached by creditors of each individual tenant. D. Only unity required to create TIC is that of possession. No requirement that each co-tenant hold an equal share. Ownership percentage determines the obligations (rent, profits, taxes) but each tenant has an equal right to possess the whole. E. Today, TIC is generally presumed unless theres a manifestation of intent to create a JT or TBTE. iv. Joint Tenancy A. Exactly like TIC except includes RIGHT OF SURVIVORSHIP - surviving tenant automatically acquires the interest of another joint tenant when the other tenant dies. Technically nothing passes; the deceased joint tenants interest is simply extinguished. B. JTs cannot devise (b/c no interest at death); but can sever, e.g., by selling to another create TIC. C. JT requires four unities at the time of creation: 1. Time (each interest must be acquired or vest at the same time) 2. Title (each must acquire title by the same instrument or by joint adverse possession, never by intestate succession or other act of law) 3. Interest (each must have the same legal interest in the property, i.e. fee simple, life estate, etc, - although in modern law, not necessarily identical fractional shares) 4. Possession (each must have the right to possess the whole, as in the TIC) D. If any of the first three unities is destroyed, then the JT is severed and a TIC is created. Each JT has the power to unilaterally transfer his interest while living. E. JT comes with a partial exit right (possibility of severance) to supplement partition. F. In Old CL, JT presumed in any conveyance that satisfied the four unities. (Survivorship cheaper & easier avoid probate, avoid dilution of interests across many heirs.) v. Tenancy by the Entirety (marital property arrangement, like JT but more durable) A. Only available for married couples in a minority of states. Each co-owner has a separate and undivided interest and the right to possession of the whole. ROS like JT. However, neither spouse can unilaterally transfer or encumber their share of the property without the consent of the other. B. No unilateral exit option as long as they stay married. Still need the four unities, plus a fifth: marriage.

31

C. At CL, TBTE presumed in any conveyance that satisfied the five unities. vi. Community Property A. For married couples: all property acquired during the marriage automatically become community property. Each spouse has a right to possess the CP, but any alienation or encumbrance must have the consent of both spouses. Property acquired before marriage is generally separate but may become CP through commingling with CP. Upon divorce, CP is subject to equal division. b. Terminology i. Right of Survivorship A. In JTs and TBTEs. B. Trumps inheritance, trumps devise. Must sever before death, or else interest is lost! ii. Severance - Changes from a J/T to a TIC. Doesnt destroy cotenancy, just ends ROS (reciprocally). A. Either JT can sever unilaterally, w/o consent, w/o notice. B. In a JT, either joint tenant can unilaterally sever the join tenancy, which destroys the right of survivorship and converts the tenancy into a TIC. At CL, severance required the destruction of one of the four unities, usually by conveyance to a third party who would reconvey to the grantor. Today can probably convey to yourself to sever the JT. Maybe also a unilateral lease by one JT or a unilateral mortgage (see Harms). iii. Partition - Legal action destroying cotenancy. A. Any cotenant can sue for partition for any or no reason, and court will grant request without inquiry into the reasonableness. Gives each cotenant an automatic right to terminate the co-tenancy at any time. Available to JT and TIC. TBTE must convert to TIC, JT, or divorce. B. Other cotenant only gets to oppose the type of partition (i.e., in kind vs. sale) C. Presumption in favor of partition in kind (to avoid dispossessing rightful tenant) respects subjective value of land. If only value land for economic value prefer partition by sale. D. Partition by sale requires: (1) Splitting up land not feasible (e.g., worth much more as a whole); (2) Sale is in the best interests of all parties (not just the one who wants $ $). But Delfino suggests that might now be an either/or test, instead of requiring both. E. Note: Only need 1 share to sue for partitionwhen shares very fractured (e.g., 20 shares), partition in kind will always be impracticable automatic partition by sale. iv. Ouster One cotenant denying the other of the benefits of ownership. A. Courts wont get very involved when parties continue in an ongoing relationship, but will get more involved when one party seeks partition or has ousted the other from possession. B. W/o ouster, no right to rent from cotenant, except pro rata share of actual profits she makes. C. W/ ouster, get fair market share of rental value! (Regardless of whether shes rented it out.) D. Note: Ouster to get rents lower bar than ouster for AP. Hard to get AP vis--vis a cotenant b/c occupancy doesnt countneed something like a trespass. c. Harms v. Sprague (1984) [p. 650] joint tenancy and mortgages i. P and brother were joint tenants. Brother John mortgaged interest in property as part of his co-signing a note for his friend, the D. Then devised interest to friend in his will. Then John died. ii. Issue: Did mortgage sever JT? Important, b/c cant devise unless already severed. iii. Holding: Mortgage mere lien no severance. Further, lien disappears when interest extinguished by death. P owns property in its entirety, unencumbered by lien!

32

iv. Trend to view mortgage as merely a lien on property interest (due to unique and narrow character of the title transferred) rather than as a transfer of title. d. Delfino v. Vealencis (1980) [p. 637] - PARTITION i. P (2/3) wanted to develop land they owned as tenants in common with D (1/3). Land occupied by D who made home and ran garbage disposal business there. P wanted to use land for residential development. P sought a partition by sale. D moved for partition in kind. ii. Court reverses lower court to allow partition in kind. iii. Rule: Partition by sale requires (1) Splitting up land not feasible; (2) Sale is in best interests of all parties. iv. Here, partition in kind is practical (no strange shapes, only 2 owners). Then court also considers best interests of all cotenants D had been in actual and exclusive possession for some time. YET, also seems like Ds getting punished for getting the partition in kind she gets the shaft (no water, road, less). v. Preference for partitions in kind, not partition by sale. Questionable assumption that this is inefficient because partition by sale would result in more valuable use of the land. Depends on whose value! e. Gillmor v. Gillmor (1984) [p. 646] OUSTER i. D grazed livestock over land in way that excluded cotenant P from any use. P wrote letter, was denied. ii. Holding: Ouster met if (1) Ousted tenant makes clear, unequivocal demand to use land that is in the exclusive possession of another cotenant, and (2) Ousting tenant refuses to accommodate ousted tenant's right to use the land. iii. Reasoning: Ouster requires necessary exclusion of cotenantnot just use of the entire property (which is w/in his rights). Requires either an act of exclusion, or use of such a nature that it necessarily prevents another cotenant from exercising his rights in the property. f. Class Hypo A & B cotenants. i. Ordinary lease granting exclusive possession probably not enough to establish ouster A will say she just conveyed her undivided interest in the whole (not exclusive vis-vis B). ii. Eviction demand letter not enough for ouster either asking for eviction is more than hes entitled to; sounds like a pro forma demand. 7. Marital Interests & Division of Assets Upon Divorce a. Married couples generally treated the same as co-owners (except TBTE). Special rules for marital interests emerge in divorce and inheritance contexts. Different treatment of property division upon divorce in community property vs common-law states. b. OBrien v. OBrien (1985) [p. 665] i. Parties only asset of consequence is husbands license to practice medicine, which he got while his wife put him through school. Both parties contributed to living/educational expenses while married and received help from both families. Wife contributed 76%. Wife diverted her career path, moved to MX. 9 year marriage. ii. Even though a degree is outside of traditional property concepts, it is marital property. Wife gets 40%. iii. Wife must point to her contributions to acquiring the degree for it to be joint property. iv. Value is not backward-looking reimbursement; rather forward-looking, value for career. Must determine full amount of husbands future career as surgeon nowno wait-and-see allowed. v. Problems: uncertainty of future; constrain choices. c. Opera Singer Case i. Even w/o degree, contribution to earning potential can count as marital property.

33

d. Other options, if reject OBrien i. Argue its not property b/c no alienability; license alone is valueless (only future efforts have value); just b/c license is property for DP doesnt mean property for marital property purposes. ii. Reimbursement only pay spouse back for literal contributions iii. Rehabilitation pay for whatever it takes to get spouse back on track e. Marital property rules are no longer immutable can contract around them.

Entity Property: Separating Management and Possession

1. For complicated entities, governance strategy is best to provide more effective management of resourceslets management of entity resources be separated from their use/enjoyment, with management functions concentrated in the hands of specialists. 2. Leases LL/Tenant Law a. Three appealing aspects of leases i. De facto financing devicefor people who havent accumulated assets or have poor credit ii. Operate as a risk-spreading device for both tenants and landlords iii. Complexes of assets can be integrated and professionally managed b. Possessory right, including right to exclude, is transferred from the LL to the tenant c. Has moved over time from status relation to mostly contractual relation. d. Lease Types i. Term of years: fixed time at which it terminates automatically: NO NOTICE REQUIRED. ii. Periodic tenancy: automatically rolls over for fixed period. NOTICE required; usu same period as rollover. iii. Tenancy at will: Either party can terminate at any time for any reason. iv. Tenancy at sufferance: exists when an individual who was once in rightful possession holds over after this right has ended. Differs from trespassing b/c entry was not wrongful. LL can evict using forcible entry, detainer statutes, action in ejectment, or possibly selfhelp. e. Independent Covenants Model i. Paradine v. Jane (1647) [p. 691] A. independent covenants model of LL-T relationship: all covenants must be performed without regard to whether other covenants have been or can be performed. T must pay rent even though kicked off by Prince Rupert. Rule: T bears risk, but also would get any profits from land. ii. Smith v. McEnany (1897) [p. 694] A. Actual eviction or ouster of T by the LL is an exception to the rule of independent covenants from Paradine. If the LL evicts the tenant, violates implied covenant of quiet enjoyment Ts covenant to pay rent is suspended as long as the eviction lasts. Covt of Quiet Enjoyment read into all leases exception to caveat lessee. B. Partial ouster of 1ft by brick wall (bad faith) = complete defense to paying rent. De minimus exception to this rule: Maybe if invasion smaller, e.g., 1 in, or if only by good faith mistake. iii. Sutton v. Temple (1843) [p. 696] A. Cows ate toxic grass and died. Premises were not suitable as eatage (LL knew Ts purpose). B. Caveat lessee: T should inspect no implied warranty of fitness for purpose. T must pay rent. C. Note: T might win if LL had known about defect (material nondisclosure); or if LL had expressly promised suitability (but still have to pay rentjust sue for value of cows).

34

f.

Can only get out of independent covenants if can show undermines quiet enjoyment (eviction even partial or constructive). D. Exception: Marrable mixed lease, esp. for short term (no opp to inspect)- implied warranty. iv. Forfeiture clauses: inroads into independent covenants Ts interest forfeited if fails to pay rent. Tilted independent covenants in favor of LLs (independent covts to Ts, dependent covts to LLs). A. Courts responded w/ two doctrines to help Ts: constructive eviction and surrender. v. Constructive eviction: T has no reasonable option but to vacate; Defense to abandonement & failure to pay rent. Three elements: A. LL breached CQE (active or inactive, if w/in control), Express Lease Covt, or Implied CL Covts B. Renders property worthless (subst. & perm. deprives of beneficial possession) C. T abandons w/in reasonable time vi. Surrender: A. Implied K of mutual release from lease. B. T offers vacates w/ intention never to return (abandons) C. LL accepts takes action inconsistent w/ Ts continuing rt to the leasehold interest. D. Tenant is only liable for full rent until moment LL accepts the surrender. vii. Blackett v. Olanoff (1977) [p. 703] A. Constructive eviction: very substantially deprived tenant of quiet enjoyment of their leased premises for a substantial time. Builds on the exception to independent covenants recognized for actual evictions. Must be caused by LLs action, or inaction when it was under LLs power to control. B. Ts disturbed by crazy loud music from nightclub that the LL leased next door and didnt enforce a noise restriction in that lease; they moved out premises not reasonably habitable. Though LL didnt create the condition, it was the probable consequence of lease to nightclub, and he had it within his control to correct it, so that amounted to constructive eviction. The Rise of Dependent Covenants & the Emergence of the Modern Lease i. Abandonment by Ts -> 3 main remedies for LL under CL: A. Treat as surrender and accept LL will do if FMV has increased since lease B. Re-enter and re-let for T1 (if explicitly authorized in lease) LL will do if risk averse (market has gone down, LL concerned about collecting from T1) C. Do nothing and sue for rent as it comes due easiest, but must track down T1 ii. In re Kerr (1939) [p. 707] A. Tenant in 2 year lease went bankrupt and stopped paying rent. B. Relet clause authorized LL to lease to another T2 as T1s agent, while keeping T1 still liable for difference in value. Here, LL leased to another T2 for longer than T1s lease. C. Holding: Relet clause only authorizes lease w/in current term; If extends beyond LL deemed to accept surrender (L1 not liable for rents). D. Note: Relet clauses create purely contractual duty T only liable for cover; LL has duty to mitigate. iii. Sommer v. Kridel (1977) [p. 735] A. K backed out of lease; begged mercy, offered surrender. LL then refused to show it to willing prospective T. K argued acceptance by silence (stretch). B. Issue: Duty for LL to mitigate when seeks to recover rents from defaulting T?

35

C. Holding: LL has obligation to mitigate damages (imported principle from contract

law). The landowner now has the responsibility of proving that he used reasonable diligence in attempting to re-let the apartment (factual determination). D. Note: More about fairness & efficiency than contract; after all, contract explicitly disclaimed duty to mitigate. iv. LLs duty to mitigate in case of abandoning T is a non-waivable duty! A. Can only reject willing T2 for objectively reasonable reasons. B. LL can still make lost volume argument. T will counter that apt is unique. g. Transfer of the Leasehold i. Sublease A. T carves out portion of his lease for the Sub-T. B. Each Sub-T deals with the T/LL directly above them in the chain. C. LL & T have privity of K and estate; T & Sub-T have privity of K and estate. ii. Assignment A. Assignee steps into shoes of assignorlease as a whole is transferred. B. Assignee deals directly w/ LL not a series of hierarchies. C. LL & T have privity of K; Assignee & LL have privity of estate Independent of D. Assumption: Assignee accepts privity of K w/ original LL (does not erase T). each other E. Novation: Parties agree to erase privity of K w/ original T. h. Two Sources of LL/T Obligation i. Privity of Contract A. Obligations that derive from being parties to binding contract, i.e., lease. ii. Privity of Estate A. Required conditions: 1. Parties interests must be nested one directly carved out of interest of other. 2. One of the parties must be in actual possession of property. B. Imposed duties: Those in original lease that run w/ the land. C. Test for whether runs w/ the land = touch & concern the land (i.e., relate to uses & activities on the land as opposed to, e.g., obligating the ST to perform some personal service or pay some $$ unrelated to the use of land.) iii. Kendall v. Ernest Pestana (1985) [p. 755] A. Lease requires LL consent for sublease or assignment. LL arbitrarily refuses consent to assignment. City ---- (hangar)----------> Perlitch (25 yrs) [assignment] [sublease] Pestana (assigned remainder) Bixler (tenant by sublease)

[wants to assign to] Kendall B. Issue: Whether lessor may unreasonably/arbitrarily withhold consent to an assignment, absent any express provision either way. C. Holding: Implied duty of good faith and fair dealing (from K law) requires commercially reasonable reason for refusal. D. Grounds: Policy against restraints on alienation; K principles implying GF in all Ks; Serve intent of parties to the extent that subletting clause suggested subletting should be possible at least sometimes (LLs interp would make it effectively impossible). E. Commercially Reasonable = LL gets what he bargained for in the lease (but NOT more than that) here, LL was trying to hold out for more.

36

i.

j.

k.

l.

F. Note: For purposes of case, doesnt matter if Kendall is sublease or assignment. But only applies to commercial leases residential may allow more leeway to refuse. G. Note: Not clear if Duty of GF is IMMUTABLE rule or just gap-filler in case of silence. Future Ts will argue LL non-waiveable, but Court leaves open. H. Note: T gets windfall from assignment, not LL inverse of Paradine rule. Condition of the Premises: Javins v. First National Realty Corp (1970) [p. 719] i. Issue: Whether housing code violations that arise after signing lease forgive Ts obligation to pay rent. ii. Court finds an Implied Warranty of Habitability (IWH) measured by housing regulation standards; breach of the IWH gives rise to remedies for breach of contract. (Limited to residential leases.) IWH is non-waivable! iii. Overturns all basic premises of caveat lessee! A. Old rule: no implied duties New rule: huge implied duties (e.g., repair & maintain) B. Old rule: Independent covenants New rule: everything dependent C. Old rule: Literal eviction necessary New rule: societal baseline of decency. iv. Court claims this is K lawbut striking down the K! Really about public policy, protecting party of unequal bargaining power acts as a restraint on K. More like STATUS. Hypo: What if T explicitly waives IWH for lower rent? Then refuses to pay rent under IWH. i. Ts arg: Waiver invalidIWH non waivable. Otherwise, all LLs will require waiver. ii. Response: Javins only applies to form lease. Here, T specifically bargained. iii. Counter: IWH protects society as a whole. Should not allow T to waive it. iv. Response: This T may not be able to afford any housing at all that meets IWH. IWH Application i. Replaces Brown illegal lease doctrine; applies to violations at start of lease (patent defects) and that occur during lease (duty to maintain). Set baseline decency. ii. Allows T to go on rent strike. Can stay in apartment and not pay rent. iii. Nonwaivable A. Certainly boilerplate nonwaivable. Even explicitly negotiated probably not waivable, b/c there are societal externalities. B. Policy worry: Some Ts will be left w/o any housing they can afford. iv. What does T owe during period before repairs are made? A. Argument: it should be what they negotiated for the defective premises. B. Problem: No incentive to changedefeat the purpose of IWH. C. Damages must be LOWER than FMV if goal of IWH is to make conditions decent. D. But damages should be above ZERO for fairness. Strike balance. v. Remedies for IWH violation: 1. recission of lease by tenant, 2. order directing specific performance of IWH, 3. action for damages for breach of IWH, 4. withholding all/some rent, 5. set-off against rent liability if LL sues for unpaid rent. vi. IWH is more like status than K law A. K law doesnt impose affirmative duties outside of K. Even consumer protection (constraint outside of K law) are waivable. IWH goes even further. vii. Note: commercial leases K law, but havent moved to status, unwaivable duties, etc. A. Constructive eviction continues to be useful for commercial leases and for habitability problems not addressed by the housing code. Some Economics of L-T Reform i. Consequences of IWH: IWH could cause rents to rise and supply of low-cost housing to fall. Poor tenants either have to pay more or take on more roommates. OR demand and supply of low-income housing is inelastic, so IWH accomplishes redistribution b/w LLs to tenants. Or maybe some tenants (slightly better off) win and others (really poor) lose. ii. IWH hasnt dramatically affected housing market, for good or for bad.

37

iii. Rent Control: A. Rent freezes are adopted in response to an anticipated surge in demand for rental housing, and are designed to prevent unexpected hardships to tenants and windfall profits for LLs. Usually are only used for short terms. B. Rent stabilization: govt authority sets a fair rent, or uses vacancy decontrol that permits rent increases only when apartment is vacated. Requires periodic tenancies, not term of years. m. Economists arent too positive about rent controlgives tenants less housing or poorer quality housing than they would have if govt did not intervene in setting rents.

(OLD) COMMON LAW DUTIES OF LANDLORD WITH RESPECT TO CONDITION OF LEASED PREMISES CAVEAT LESSEE = No implied duty/warranty by L re: condition of premises* (T had implied duty to repair) + Independence of covenants: L's breach of lease covenant did not excuse T's performance

EXCEPT IMPLIED COVENANT OF QUIET ENJOYMENT ---------------------------------------------------------------------------------------------------L's breach of Covenant of Quiet Enjoyment will excuse T's abandonment & non-payment of rent if T can show ...

Actual Eviction/ Physical Ouster

OR

Constructive Eviction

= Breach of Some Express or Implied Duty, i.e.:

Active Interference (breach of CQE)

or

Breach of Express or Lease Covenant

Exceptions/ Implied Covt*

that substantially & permanently deprives T of beneficial enjoyment of possession

38

& that causes T to abandon w/in reasonable time

*Implied Covenants/warranties of L under Common Law: warranty of habitability in short term lease for furnished premises duty to refrain from fraudulent misrepresentation duty to disclose latent material defects known to L duty to undertake promised repairs w/ reasonable care (non-negligently) duty to maintain & abate nuisances in common areas

39

3. Co-ops, Condos, & Common Interest Communities a. Overview i. Common areas owned collectively but persons retain individual possessory rights in a fee simple-type ownership interest. ii. Governance issues are more complicated than with leases. More like a democracy, where owners must organize collectively to manage the common areas and shared facilities, usually through a basic organizing document and an ongoing elected governing body. iii. In all common interest communities, owners rights to use & convey are restricted. iv. Co-ops A. Occupants lease their individual units, and collectively own the building by holding shares in a corporation that has title to the property. Tenants are their own LL. Mortgage financing obtained by the corp for the building as a whole. Leases are proprietary lease with perpetual occupancy. B. Can be sold at market price (lease & shares) maybe requires board approval. C. More leniency to refuse applicants b/c joint owners (most deference to decisions) v. Condos A. Occupants each own the individual units as fee simple more alienable than co-ops. B. Have better risk-sharing properties since occupants dont serve as sureties for each other. vi. Sources of costs A. Inefficient decisions: interests of members often diverge substantially, whereas LL or a rental bldg has incentive to select policies that are efficient to maximize total rents. B. Transaction costs of decision making: process of making collective decisions (time in meetings, etc) can be burdensome b. Governance Issues i. Two principle mechanisms: Articles of Incorporation, Board of Directors ii. Nahrstedt v. Lakeside Village Condo Assn (CA, 1994) [p. 782] A. P sued for declaration that she could keep her cats in her condo notwithstanding the restrictions imposed by the recorded covenants, conditions & restrictions (CCRs) that she signed on to. B. Florida precedent: (1) Restrictions in master deed strong presumption of validity; (2) Board rules subject to reasonableness test. C. Rule: CCRs have strong presumption of validity (uphold even if unreasonable). Enforce UNLESS restrictions viewed as a whole (not case by case) are (1) arbitrary; (2) impose burdens on land that substantially outweigh restrictions benefits; or (3) violates fundamental public policy. D. Reasons: Unanimous consent; Buyers relied; Buyers sought; Prevent litigation. E. Holding: Restrictions not arbitrary, rationally related to residents health, sanitation, & noise concerns. iii. 40 West 67th Street v. Pullman (2003) [p. 793] A. D has history of intolerable conduct; Coop evicts him. B. Precedent: Levanduskys business judgment rule: Defer to coop board discretion UNLESS: 1. Not for purposes of coop 2. Beyond scope of authority 3. Not in Good Faith C. Eviction requires competent evidence. (LL/T regulation.) D. Court holds boards judgment is presumed competent evidence, absent one of three factors. c. Private Communities Islands of Despotism? i. Assimilate/Distinguish from Marsh (more it mimics municipal govt, more subj to same stds) A. Look at degree of voluntariness (oppressive company towns, vs. chosen living situation) B. Access to alternate sources of information (TV, internet) C. How much do people leave the community ii. Democratic-like governance if worried about isolated islands of tyrrany A. Want to enforce democracy-enhancing things w/in community B. Squashing of internal dissent very suspect C. Only give leeway to set their own rules outside society if operating fairly, quasi-democratically iii. Free Speech A. If problem is being cut off from public discourse, attack through state action (Shelley) and 1st Amendment.

40

4.

B. Harm is both ways public discourse suffers, isolated residents dont receive messages C. Look to how much of population is tied up in these communities. d. Note: LL/T (by contrast) is autocratic by its natureno traction for ct to enforce democratic norms. Real Estate Transactions (Supp) a. Security Interests i. Security interest is a collateral property right in an asset. Purpose is to secure a loan; it makes the asset (collateral) available as a source of value if the debtor defaults on the loan. A. Mortgages are a type of security interest ii. Type of divided ownership: borrower holds a fee simple and enjoys possession, but rights are subject to the security interest (nonpossessory interest that ripens to possessory upon nonrepayment of the loan). iii. Two pieces of paper: Promissory note includes promise to repay principle with interest, schedule of due dates, and conditions. Mortgage secures the debt embodied in the promissory note, and grants lender a conditional property interest in the asset. A. Holders get a property right (gives right to take the property and sell it if debtor defaults) and a priority right (when collateral is sold to satisfy debt, the secured debt is satisfied out of the proceeds in its order of seniorityparty with the security interest has priority over unsecured parties). b. Title Records and the Transfer of Property i. By investigating state of title through title records, a potential purchaser can gain assurance at reasonable cost that he is acquiring what the seller claims to have to transfer. ii. Nemo Dat: no one can give that which he does not have. Also, first in time is first in right. iii. Recording Acts A. Race Statutes: First of two property claimants to file has the better claim (exception to nemo dat principle and partial exception to good faith purchaser doctrine, i.e. first party to record wins even if they had actual notice of prior conveyance). B. Notice Statutes: Subsequent bona fide purchaser wins unless he has notice (actual, constructive or inquiry) and a recorded interest gives constructive/record notice. Preserves good faith purchaser rule, and creates an incentive to record immediately to be protected from subsequent good faith purchasers. C. Race-Notice Statutes: Subsequent good faith purchaser wins only if he has no notice AND records before the prior instrument is recorded. iv. Title Search and Chain of Title A. Every recording office has a grantee index and grantor index. Sometimes also a tract index. B. Title searches involve tracing series of transactions from ones would-be transferor back to a root of title and then tracing forward. When tracing forward, have to look from the date of execution of the deed to person X until the date that the deed from person X to person Y was recorded (not executed). That period defines the chain of title v. Shelter Rule: If O transfers to both A and B, and B has no notice of A and records first, then B wins. If B transfers to C who was aware of the prior deed to A, the transfer to C is still valid, b/c B already has all attributes of ownership. But B cant transfer back to O (Original Owner Exception to Shelter Rule) since it could be collusive.

41

Law of Neighbors
1. Nuisance a. Basic Definition: Substantial non-trespassory invation of anothers use and enjoyment of property. b. Nuisance typically starts where trespass leaves off (intentional physical intrusions on land). c. Lesser intrusions (non-trespassory invasions) that only affect use and enjoyment. d. Need substantial/actual harm for nuisance not trivial or trifling. e. Only protects interest in land e.g., employees forced to work there dont have a CoA. f. Hendricks v. Stalnaker (@ beginning)well vs. septic system case. Nuisance deals with inconsistent land use. Court finds well reasonable: based mostly on first-in-time principle; also focuses on the literal seeping of the sewage as more invasive than a well merely drawing water. g. Nuisance requires: Intentional + Substantial + Unreasonable. i. Two tests for reasonableness: A. Threshold test (CL): Significant invasion. Utility of activity causing harm is NOT considered. More pro-P (easier to get injunction). May over-enjoin. 1. E.g., St. Helens Smelting; Hendricks; Boomer (ostensibly). 2. Boomer suggests harm > $100 enough. B. Balancing test: Looks at BOTH utility of activity and severity of the harm. Injunction requires harm > utitlity. Even if utility > harm, usually can award damages as long as harm is serious (unless will shut D downthen harm must be severe). Tendency to under-enjoin. ** better to err on this side ** 1. E.g., Boomer supreme court, Lucas takings analysis. ii. Two questions for any nuisance problem: A. Should the nuisance continue, or not? based on entirety of net utility (whole picture) B. Who should bear the costs of the injunction or not? based on fairness b/w the parties 1. If grant injunction, then flip Restatement test can P afford to compensate D? h. Quantifying Harm/Utility and Calculating Damages i. UTILITY: Company profits approximate social utility. Plus jobs, taxes, etc. ii. HARM: Courts look at diminution in FMV to land of the Ps. What is this missing? A. Other people harmed who are not parties to lawsuit (but note: D gets to capture other peoples utility) B. Psychological attachment to the land/comm. connections (not reflected in a new buyers FM price) C. Latent health risks that new buyer wouldnt know about (not reflected in price hell pay) i. Adams v. Cleveland-Cliffs Iron Company (1999) [p. 937] FUNCTIONAL NUISANCE TEST i. Ptfs in town complained of dust, noise, and vibrations from neighboring Mine Company. Court held the law of trespass (exclusion interest) doesnt cover these irritants, but the law of nuisance governs (interest in use/enjoyment). Dust merely part of ambient space. Nuisance requires proof of actual and substantial injury/harm resulting from defs unreasonable interference with the use/enjoyment of the property. ii. Holding: Law of trespass does not cover airborne particulates, noise, or vibrations use nuisance. iii. Reason: Dont dilute trespass law rt to exclude should not be subject to balancing test. j. Factors to distinguish b/w nuisance claim vs. trespass claim: i. Whether defs action that created the intrusion was committed on or off ptfs land ii. Whether harm to ptfs land was direct or indirect iii. Whether the invasion was committed by tangible matter or intangible substance iv. Whether the intrusion deprives the ptf of possession of land or just use/enjoyment of land v. Whether possible to negotiate for the right to invade beforehand (w/ dust, not possible). k. St. Helens Smelting Co. v. Tipping (1865) [p. 948] i. THRESHOLD approach (Court does not look at utility of factory). RULE 1 SOLUTION. ii. Ptf bought land near a copper smelting factory, which emitted gases, vapors, and noxious matter that killed the plants and made the animals sick. Ptf sued for being prevented use/enjoyment of his land. Jury found enjoyment diminished, business properly conducted but in wrong place. D argued appropriate locationwhole neighborhood industrial (plus hard to identify whose pollution is whose). iii. Holding: Affirmed. Location matters, but jury decides. No coming to the N defense -- P didnt know. iv. Note: Nuisance law denies recovery to hypersensitive P for irritations that wouldnt disturb an ordinary LO. l. Luensmann (Racetrack case) (2003) [p. 953] i. Nuisance per se: (1) Nuisance under any circumstances (not nec 24hrs); or (2) Violates a nuisance law.

42

ii. Nuisance per accidens (Normal Nuisance): Only a nuisance because of circumstances. iii. Here, not nuisance b/c lots of other noisy activities in neighborhood. And no N per se. RULE 3. m. Boomer v. Atlantic Cement Company (1970) [p. 956] i. BALANCING TEST RULE 2 SOLUTION (Ps entitlement only protected by liability rulegets $). ii. Cement plant emanating dirt, smoke, & vibrations, disturbing neighborhood. iii. NY required threshold test (no balancing) but Ds had HUGE investment; court couldnt stomach. iv. Rule: Essentially awards P permanent damages instead of granting an injunctionDs compensate Ps for their total economic loss (present & future) caused by Ds actions then D gets forced servitude. v. Note: Balancing is skewed toward Ds harm is hard to quantify, utility easy. vi. Note: Injunction would have led to bargainingbut holdout problems! ct wants to preserve utility. vii. Dissent: forced servitude for private benefit is unconstitutional. Prof: Not true--ok for private to get profit. n. Spur Industries v. Del Webb (1972) [p. 964] i. RULE 4 SOLUTION P gets injunction, but must pay $ to compensate D. ii. Ds cattle feed lot disturbed Ps housing development that grew out toward lot smell, flies, etc. iii. D has coming to the nuisance defense vis--vis Del Webbbut LOs who unwittingly bought are also being harmed by the public nuisance Thus, grant injunction (for public interest onlynot for Del Webb). iv. But b/c Spur is not a wrongdoer (injunction is for public interest only), Webb must compensate for the harm it has foreseeably caused (i.e., forcing Spur out). Spur gets entitlement, but liability rule only. v. Holding: Having brought people to the nuisance to the foreseeable detriment of Spur, Webb must indemnify Spur for a reasonable amount of the cost of moving or shutting down. 2. Servitudes a. Servitudes = Contracts that run with the land (i.e., bind successors in ownership). i. Alternative to nuisance law for conflicts among neighbors. b. Two main types: i. Easements waive right to exclude certain kinds of intrusions (ALWAYS run w/ the land) ii. Covenants Agree to use restrictions (SOMETIMES run w/ the landif conditions met) c. Easements i. Elements/Types of Easements: A. Generally: Affirmative right to use property of another w/o liability defense to trespass claim; also good against 3rd parties B. Irrevocable property right C. Conveys right to a particular use, NOT possession D. In rem aspect good against all the world beneficiary can sue strangers that interfere E. Four ways to create: Express, Implied (or Necessity), Prescription, Estoppel F. Express must be created by grant rather than contracti.e., requires written deed. Two options: Direct grant of easement from A to B; OR reservation of the easement in the grantor in a grant to B of possessory interest in land (NOT reservation in a 3rd partynotice problems). G. Run w/ the land if: (1) Intent (for express); (2) Notice (hard for negative, easy for affirmative) H. Easement appurtenant: Belongs to another parcel of land (i.e., attached to the land). 1. Benefits dominant tenant in U/E of land she is in possession of runs w/ the land I. Easement in gross: Belongs to a particular grantee (not attached to land). 1. Benefits dominant tenant is some other way, e.g., her business in personam only J. Affirmative easement: Permit action on servient tract that would otherwise be trespass/nuisance. K. Negative easement: Restricts owner of servient tract from certain actions he otherwise could do. 1. Rare. English CL only recognized four: blocking sunlight; interfering w/ flow of air; removing lateral support; interfering w/ flow of water in artificial stream. US courts more flexible. 2. Courts are wary of negative easements. Plus, hard to run w/ land, because invisible- no notice. 3. As rule: USE COVENANT to impose negative duty (not easement). L. Private easements: authorize specific names parties to use land for designated purpose. M. Public easements: authorize general public to use land for designated purpose.

e.g., neighbor not block sunlight, air, view 43

Affirm.

Appurtenant

e.g., "classic right of way" over land

Neg.

In Gross

e.g., conservation easements (legislature has had to do) = e.g., right to cross someones land to go fishing (not your neighbor)

ii. Baseball Publishing Co. v. Bruton (1938) [p. 972]

A. K for exclusive right and privilege to maintain advertising sign on wall of building. LO revoked. B. Lease: Conveys interest in land, requires writing, transfers possession. Here, not a lease leaves possession w/ owner for all purposes not forbidden by the K. C. License: K right, access by permission, REVOCABLE at will by possessor of land; Excuses acts on anothers land that otherwise would be trespass, conveys no interest in land, may be contracted for or given orally. 1. But revocation of a license may constitute a breach of K and give rise to damages (but not SP). D. Easement in Gross: interest in land, requires writing (deed) for creation (aside from prescription); does NOT convey right to possess. **Court found the K was EASEMENT non-revocable. iii. Creation of Easements A. Rescue Me Cases (DT seeking valuable property right w/o writing or express bargain) B. Dilemma: 1. Ex ante: Rescuing DT ex post undercuts incentive to bargain up front. (Schwab, Penn Bowling) 2. Ex post: Not rescuing DT can give ST huge power, verging on extortionist power. Sympethetic to equitable result. (Warsaw, Hollbrook) 3. Courts historically only consider Property Rules #1 and #3knowing its either/or can encourage bargain up front. Modern courts more willing to consider Liability Rules #2 and #4 for fairness. C. Schwab v. Timmons (1999) [p. 979] 1. Ptfs divided and sold land; remaining parcel land-locked, bordered water and bluff. Ps sued for a right of way to the south on private road. 2. Implied easements a. WI STATE RULE OF IMPLIED EASEMENT: prior to separation of DT and ST, there was prior use that was so long and was so obvious or manifest as to show that it was meant to be permanent, and it must appear that the easement is necessary to the beneficial enjoyment of the land granted or retained. Necessity must be clear and absolute. b. Prior use not satisfied here, b/c no obvious, manifest, or continuous use of road by Ps property when in common ownership by United States. c. TRADITIONAL RULE OF IMPLIED EASEMENTS (see n. 4): (1) common ownership followed by conveyance separating the unified ownership; (2) before severance, the common owner used part of the property for the benefits of the other part, a use that was apparent, obvious, continuous, and permanent; (3) the claimed easement is necessary and benefitcial to the enjoyment of the parcel previously benefited. 3. Easement of necessity a. Must show (1) common ownership of the two parcels prior to severance of the landlocked parcel; (2) that the owner of the now landlocked parcel cannot access a public roadway from his or her own property. b. Parcel must be landlocked at the time of severance for necessityhere, lot was not landlocked at the time United States conveyed it. Cliffs alone not enough to create necessity. c. Usually only the grantee can claim easement over grantor (latter expected to put in deed). 4. Ps not blameless a. They sold off their access! Not unwitting purchasers of landlocked parcel. b. Policy against encumbrances of land of unrelated third parties.

44

c.

Policy against hidden easementsbuyers should be able to rely on public records

D. Warsaw v. Chicago Metallic Ceilings (1984) [p. 986]

1. Ptf built narrow driveway that didnt allow their delivery trucks to turn around without trespassing on defs land, which went on for years. Then def constructed a building that blocked. 2. Prescriptive easements require a showing of use of the property that has been open, notorious, continuous, and adverse for an uninterrupted period of five years. Also must be shown by a definite and certain line of travel (not a shifting course). Per prof: also usu requires claim of rt. 3. Burdens: Ps must show continuous use w/o interference; then D can prove permission to defeat. 4. Holding: P acquired a prescriptive easement; D ordered to remove building at Ds expense! 5. Rule: Recipients of a prescriptive easement do not have to compensate the defs for it. Policy: helps to stabilize long continued property uses. Here Ds built building AFTER receiving notice of claimed easementfactor in making D bear the costs. (If innocent, P might have shared costs.) 6. Dissent: Ps received valuable easementshould pay FMV for it. E. Holbrook v. Taylor (1976) [p. 997] 1. Road use/reliance included (1) personal use; (2) construction trucks; (3) building $25,000 house; (4) improvements to house; (5) improvements/maintenance of roadway. H gave oral permission to use & repair roadway to get to their house. Use for about 20 years, b/f H tried to revoke. 2. Holding: Court found an irrevocable license by estoppel. Taylor had the express consent of Holbrook to improve the roadway and he had spent money improving it and then building the house and it was that reliance that created the easement. License cannot be revoked when there is reliance and improvement. 3. Easement by Estoppel: License becomes irrevocable (transforms into a grant by estoppel) when DT has exercised privilege of license and erected improvements or made substantial expenditures on faith or strength of the license. Note: Only continues so long as its nature calls for i.e., not as permanent as other easements. License by actual consent or tacit approval. 4. Factors: a. If improvement is made to the very land licensed, e.g., the roadway. b. ST stood by and watched as DT expended $ in construction day by day. c. St standing by and acquiescing as good as if affirmatively consented. d. Use can be for as little as 6 years (maybe even less). e. Note: Subsequent purchaser of ST succeeds to easement if fully aware of existing license. 5. RULE: One may acquire a license to use a passway or roadway where, with the knowledge of the licensor, he has in the exercise of the privilege spent money in improving the way or for other purposes connected with its use on the faith or strength of the license. Under such conditions the license becomes irrevocable and continues for so long a time as its nature calls for. This, in effect, becomes a grant through estoppel. P. 1000 F. Fontainebleau Hotel v. Forty-Five Twenty-Five (1959) [p. 1001] 1. Neighboring beach hotel builds addition blocking sunlight on Eden Rocs beach/pool. 2. Eden Roc sues for negative easement to sunlight. Note: no express easement, no nuisance (not an invasion of any sort). 3. Sic utere tuo: one must use his property so as not to injure the lawful rights of another. 4. Prescription requires wrongful act no wrongful act (plus: policy problem- everyone could claim). 5. Implied requires clear necessity at time of severance e.g., if solar panels had been in place. 6. Estoppel requires oral agreement that Eden Roc relied on none here. 7. Rule: where structure serves useful & beneficial purpose, it does not give COA under sic utere tuo, even though causes injury to another by cutting of light and air, regardless of the fact that the structure may have been erected partly for spite. 8. Note: motive of pure spite can lead to finding of nuisance. 9. In some jxs, can acquire easement by prescription to commit a nuisance, e.g., smelly fumes. But no way to obtain negative easement for sunlight by prescription. Difference in notice: Would-be ST is on NOTICE of smelly fumes; would-be ST not on notice of reliance on sunlight. 10. Note: Always balance first-in-time w/ wasteful inducement to race: if using solar access first creates easement, then wasteful race to build swimming pool first, etc. G. To bind successor ST, look for intent and notice (actual or constructive).

45

iv. Termination of Easements A. Four Ways to Terminate Easements: 1. Deed releasing or extinguishing the easement 2. Merger when DT and ST come under common ownership (as matter of law) 3. Adverse possession by ST (e.g., ST blocks easement and DT fails to object within the SOL) 4. Abandonment (inferred from prolonged nonuse) 5. Note: Changed circumstances NOT grounds to modify or terminate easement, unless easement stated in terms of a particular purpose that has become obsolete. v. Misuse of Easements A. General Rules: 1. Overuse of easement (but only for benefit of DT) reasonbleness std 2. Non-appurtenant use of easement strictly prohibited (bright line rule) 3. Misuse abandonment of easement. 4. All use may be enjoined until proper use distinguishable from improper use. B. Penn Bowling Rec Center v. Hot Shoppes (1949) p. 1009] 1. Penn Bowling had an easement on Hot Shoppes land for the benefit of their bowling alley, but was using it to carry in supplies to their adjoining restaurant. Court said they could only use their right of way to serve the DT, not the new tract. Enjoin all use until uses distinguishable. 2. Rule: If easement clearly appurtenant to one tract, cant use for benefit & enjoyment of a different tract. Bright-line rulenot subject to reasonableness std (even if overall use constant). 3. Misuse abandonment Easement still in effect for the DT. 4. Other expansions on use may be permissible: a. Subdivision: If DT is subdivided, all new tenants succeed to the easement. b. Expansions of use for appurtenant DT evaluated by reasonableness. vi. Conservation Easements [p. 1038] A. Negative easements in gross require legislation (b/c otherwise courts wont accept). Also classified as negative covenant in gross. Easement is held usually by a govt entity, who can oversee the lands use in perpetuity. Donors can reap tax benefits. B. These are servitudes that restrict future development of land. i.e. Prohibiting subdivision and commercial development but permitting existing agricultural and residential uses. Range from prohibitions on cutting timber to requiring preservation of historic building facades. d. Covenants i. Allows neighbors to restrict inconsistent land uses that dont count as nuisances (e.g., SFRs). ii. A covenant is a contract in which an owner agrees to abide by certain restrictions on the use of his or her land for the benefit of one or more others. Generally are about the right to insist on the use or nonuse of land; prescribe a system or governance rules. Covenants can be either affirmative or negative. iii. Difficulties arise when interests are transferred. Two theories that allow promises respecting the use of land to run with the land: A. Equitable servitude (used to obtain an injunction)** from Tulk this is our focus B. Real covenant (used to obtain damages) requirements more archane Any promise is both of these things, and you just call it one or the other depending on what relief is sought in suit. iv. More contract-like than easement. Covenants impose no duties of forbearance on 3rd parties. Covenants cant be acquired by prescription, implication, necessity, or estoppel. All covenants must be in writing. Promisor Promisee A -------------------(promise, e.g., SFR only) -------------------> B (sells to) C (sells to) D

Using K law only: B can enforce against A using K law (so long as written down)

D can enforce against A using K law if K was assigned to D-- privity of K); OR

46


v.

D can enforce against A as 3rd party beneficiary (if promise manifested intent to benefit successors) BUT: B cannot enforce against C using K law only no 3rd party obligators doctrine NEED EQUITABLE SERVITUDES (or real covenants)!

Real Covenants A. To run with the land, need: 1. Intent for burden to run 2. Horizontal privity b/w original promissor/promissee at least buyer/seller relationship 3. Vertical privity successor to the burden must hold entire interest that original promissor did (e.g., lease of term of years is insufficient) 4. Touch and concern the land B. Some of these strict requirements are eased by equitable servitudes doctrine C. Only entitled to damages vi. Equitable Servitudes A. Remedy: Only injunction (equitable remedy) B. Requirements to run w/ the land: 1. Intent 2. Touch and Concern the land 3. NOTICE this is the key requirement (only necessary for burden) a. Actual notice, inquiry notice (facts that would make a reasonable person inquire further and find the covenant), or constructive notice (recording acts). C. Tulk v. Moxhay (1848) [p. 1014] 1. Leicester Square in London to be kept as a garden. D had notice, but wants to build anyway. Court says that no one purchasing with notice of an equity attached to property can stand in a different situation from the party from whom he purchased. 2. Note: Not a real covenant b/c no horiz privity. Court creates doctrine of equitable servitude. vii. Third Restatement: takes a more contract-oriented approach to servitudes. Abolishes touch and concern and privity requirements. Enforceability is the default, subject to limitations of no writing or violation of public policy. viii. Notice Requirements and the Common Plan (Subdivisions) A. In subdivisions, covenants trace back to a deal between the developer and original purchasers. B. Sanborn v. McLean (1925) [p. 1034] 1. D wants to open gas station on her lot in a residential subdivision. SFR neighbors object. 2. Developer sold 12 lots w/ SFR restriction. Then sold Ds land w/o restriction. 3. Holding: SFR restriction attached to Ds land by IRRC b/f it was sold to D. Ps can enforce against D so long as NOTICE. Here, notice met b/c recorded in other lots deeds (constructive notice) and uniformity of neighborhood should have led D to inquire into restrictions (inquiry notice). C. IRRC (Implied Reciprocal Restrictive Covenant) 1. Common owner sells one lot, retains rest. Restrictions imposed on sold lot for benefit of retained lot become mutual. Benefits and burdens pass to subsequent purchasers Operative on any owner of land having notice thereof. Refers to existence of common plan. Cannot be implied retroactively; must fasten to land while in hands of common owner. 2. Must be implied from subdivision by common owner; cant imply out of thin air. 3. Rationale: Protect early buyers risk b/c they themselves made promise that only makes sense if retained land will be similarly restricted. 4. Basis of implied restriction must be making promise on expectation of uniform plan. 5. Technically, Sanborn applies even if only 1 lot has the restriction. 6. Early buyers must show their expectation was reasonable must show there was common plan. a. Uniformity/high proportion of express covenants in deeds b. Promotional literature, brochures showing common plan for whole lot (inc disputed lot) c. Subdivision plat map filed by developer d. Statements/documents developer showed to earlier buyers 7. Some courts will not impliy ICCR. Others require high proportion of lots to contain the restrictions; Others require high degree of uniformity across restrictions b/f willing to find common plan. Notice requirement definitely met if individual deed references a recorded subdivision map.

47

D. In a non-Sanborn jurisdiction, need to show that other common plan lot owners are 3rd party
beneficiaries of the promise the last lot buyer made to O. If not expressly beneficiaries, make out as implied (Os gone, must benefit us). Existence of a common plan defines scope of 3rd party beneficiaries. ix. Examples O -----> (O subdivides and sells successively to A through F.) A D B E C F

1. O sells to A w/ SFR covenant (both ways). Then O sells to B (no covt). B tries to build gas station. A can enforce against B. B succeeds to Os promise (both burden and benefit). A can block if: (1) intent; (2) notice. Notice met b/c covenant is recorded in As deed. 2. A makes SFR promise to O. Then O sells to E (no covt). A tries to build gas station. E can enforce against A, b/c E succeeds to benefit of Os promise. (No notice necessary.) 3. F makes SFR promise to O. Then F tries to build gas station. Can A (early buyer) enforce? F made last promisenone of A through E have succeeded to the benefit of the promise. A could claim 3rd party beneficiary of Fs promise to O (if deed said for benefit of neighborhood). OR: As O progressively sold lots burdened by the promise, O implicitly reciprocally promised that retained land would be similarly restricted. F bound by IRRC even w/o explicit promise. 4. D makes no promise at all. Then D tries to build. Can A (who made promise) enforce? IRRC already attached to land, burden passes to D. A can enforce even though no explicit promise. Inquiry notice if houses look alike, cul de sac, sign saying Elms St. Village Then D traces back to common granter, finds series of promises that O was beneficiary of potentially gives rise to IRRC. Note: 3rd party beneficiary no help hereonly expands # of people that can enforce an express promisehere, D didnt make any promise at all. 5. Can B enforce against C if neither made express promise???? (I dont know!!!) Per Prof: Interesting Q. Note first that A is the law's main concern, as he bought restricted land w/ the reas. belief that he was buying into a uniformly resid. neighborhood. A's expectations will be protected vs. B&C, as you note. As for B&C as between each other, we might conclude that, given record notice of the prior implied restrictions, each bought land on the assumption it would be part of a uniform neighborhood (even tho they didn't themselves make the requisite promises). Would we imply a promise by each of them to O -- reciprocal to the implied promise that O had made as to their lots to A? I really don't know the answer. It won't much matter unless the prior grantees who clearly can enforce the IRRC agst B or C don't care anymore. 6. If A made no promise at all, then B & C made promises, can B enforce against A? No! As land is completely unrestricted. Cannot imply promise retroactively. Note: Not very problematic, b/c B & C knew when they purchased that As land was unrestricted (record notice)IRRC is more about protecting the first purchasers when developer doesnt follow through on his plan. vi. Three questions to enforce a restrictive covenant: A. Is there a restriction? 1. Express 2. Implied depends on existence of common plan B. Against whom? 1. Express promissors 2. Successors to promissor: depends on notice only demonstrated by common plan C. Who can enforce? 1. Express promissees and their successors 2. 3rd party beneficiaries must be intended beneficiaries depends on common plan! vii. Termination of Covenants A. As law has made it easier to enter into servitudes, also easier to get out if unjust.

48

B. Ways to terminate covenants: 1. Equitable Defenses to servitudes: a. Equitable laches unreasonable delay to bring action (Peckham) b. Estoppel e.g., affirmative assurances you wouldnt enforce (Peckham) c. Unclean Hands violator cannot enforce against another violator d. Waiver express waiver not to enforce 2. Distinct defenses to servitudes: a. Abandonment violations must be habitual and substantial (Peckham) b. Public policy reasons (e.g., Shelly v. Kramer) 3. Notice: Over time, less likely successors will have notice so servitude may terminate 4. Changed conditions (Bolotin): require drastically changed conditions to avoid judicial zoning, judicial re-allocation of property rights that neighbors have already expressly bargained for. C. Bolotin v. Rindge (1964) [p. 1042] 1. Issue: Whether SFR deed restrictions have should be removed from Ps lots. 2. RULE: A court will declare deed restrictions to be unenforceable when, by reason of changed conditions, enforcement of the restrictions would be inequitable and oppressive, and would harass P w/o benefiting adjoining owners BUT: if the original purpose of the covenant can still be realized, it will be enforced even though the unrestricted use of the property would be more profitable to its owner. 3. Lower court found: (1) Ps lots have no value, except as commercial buildings; (2) relieving the restrictions on Ps lots would not reduce property values of the other lots. 4. Holding: Remanded. Trial court made no finding that the purposes of the restrictions are obsolete, or will no longer benefit the defendants. Finding that eliminating restrictions would not reduce property values restrictions provide no benefit at all to Ds. 5. Ps must prove that continuance of restriction would serve no further benefit to beneficiaries of restriction. D. Peckham v. Milroy (2001) [p. 1046] 1. Neighborhood covenant prohibits home businesses, and the Milroys had a home day care. 2. Issue: Whether covenant was abandoned or violated public policy. Court decided no to both, and enjoined the day care. 3. Abandonment requires proof that prior violations have eroded the general plan and enforcement is therefore inequitable habitual and substantial violations (a few violations do not count.) a. Here, only a few violations small % of subdivision no abandonment. 4. Laches requires 1. Knowledge or reasonable opportunity for P to discover his cause of action against D; 2. Unreasonable delay by P in commencing the action, and 3. Damage to D from the unreasonable delay. a. Here, damage (cost of construction) did not result from Ps delay in bringing action. Ds intended to remodel to make room for family daycare use came later. 5. Equitable estoppel (disfavored) requires 1. Admission, statement, or act inconsistent w/ the claim asserted afterward; 2. Action by other party in reasonable reliance on the statement; 3. Injury to second party if first party allowed to contradict or repudiate. 6. Note: Silence can lead to equitable estoppel where party knows what is occurring and would be expected to speak if he wished to protect his interest acquiescence manifests tacit consent.

Public Regulation of Land Use & Regulatory Takings

a. Regulatory Takings i. Govts power of eminent domain is distinct from its police power. When govt regulates (zoning, regulations, etc) property under police power (to protect health, safety, and welfare of public) then no constitutional requirement to compensate for losses. A. Certain regulations are so central to policy power as to never be takings: regulations of noxious uses of property, and regulation which tracks the common law. Issue of harm-preventing vs benefitconferring regulation.

49

ii.

How to distinguish between an eminent domain taking and a regulatory taking? If govt regulates property in an especially severe way, the regulation will be deemed to be a taking of private property, tantamount to eminent domain, and govt must pay just compensation. i.e. Inverse condemnation doctrine. iii. Liability rule rather than property rule. Proper remedy for a violation of the regulatory takings doctrine is an award of damages equal to the just compensation under eminent domain. iv. Foundations A. Pennsylvania Coal v. Mahon (1922) [p. 1259] 1. Mahon bought surface of land from Penn Coal; Penn Coal retained rights to mining estate and support estate contract allocated risk to M for damages that may result if all coal mined. 2. Kohler Act passed - forbids mining coal that would cause subsidence of any human dwelling. 3. Holding: This is a taking b/c (1) exceeds traditional police power of protecting safety; (2) entire interest in support estate is taken; (3) no reciprocity of advantage for Penn Coal from the law. 4. Holmes vis--vis Brandeis: a. Police Power (to prevent nuisance-like harm/to protect public health, safety, morals) i. Holmes narrow view (esp. where bargain for these rts has already occurred) ii. Brandeis broader view, more deference to legislature (reg is mere prohibition of noxious usestate does not appropriate or make any use of) b. DiV / Denominator: i. Holmes support estate only (extent of taking is great purports to abolish what is recognized in PA as an estate in land and what is declared to be a contract hitherto binding the Ps.) ii. Brandeis evaluate against the value of the whole property (the rights of an owner as against the public are not increased by dividing the interests in his property into surface and subsoil Why should sale of underground rights bar the states police power?) c. Average reciprocity of advantage: i. Holmes this very regulation must provide a reciprocal advantage. ii. Brandeis no reciprocity necessary if reg is to prevent harm (where the police power is exercised, not to confer benefits upon property owners but to protect the public from detriment and danger, there is no room for considering reciprocity of advantage); except the advantage of living and doing business in a civilized community. 5. Good Quotes: 6. Government hardly could go on if to some extent values incident to property could not be diminished w/o paying for every such change in the general law. But obviously the implied limitation must have its limits or the contract and due process clauses are gone. 7. The general rule is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. 8. A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change. 9. The question at bottom is upon whom the loss of the changes desired should fall. B. Penn Central Transportation Co. v. City of New York (1978) [p. 1. Issue: Historic preservation restrictions that limit ability to use airspace = taking? 2. Grand Central designated historic landmark; 2 plans to build office tower atop building rejected. 3. Holding: Takings analysis requires ad hoc factual determination of whether fairness and justice require society to bear burden as a whole. Factors to consider: a. Economic impact of regulation i. DiV based on parcel as a whole no post hoc severance allowed ii. If current/primary use unaffected, allowing reasonable return on investment = no taking b. Character of government action i. Physical invasion (more likely a taking) vs. adjustment of benefits and burdens of economic life to promote the common good. c. Purpose of government action i. Preventing harm vs. acting in enterprise capacity to exploit parcel for city purposes d. Singling out/concentration of burdens i. Landmark regulations part of comprehensive schemenot singled out e. Reciprocity of benefit

50

i.

Improved quality of life in New York City

4. Dissent (Rehnquist): No reciprocity of advantage Penn Central is paying individually for

enjoyment of the public. Anything that would be a servitude b/w private parties = taking. (Note: this proves too mucheven zoning could be considered a servitude.) v. Physical Invasions A. Kaiser-Aetna v. U.S. (1979) [p. Supp 26] 1. P dredged pond, spent lots of $, connected w/ navigable waters U.S. claims subject to navigational servitude (though Corps of Engineers approved the project w/o warning). 2. P lost its right to exclude/charge $. 3. Rule: Reasonable investment-backed reliance on govt acquiescence + actual physical invasion = taking under Penn Central balancing test. Plaintiffs have lost their right to exclude which is one of the most fundamental rights in the bundle of sticksgovernment required to compensate if they make the water public. Dissent argues its a mere diminution in value. B. Pruneyard Shopping Center v. Robins (1980) [p. Supp 33] 1. Cal. Sup. Ct. holds state constitution grants broader free speech rights than federal 1st Amend students have right to distribute Zionism pamphlets in shopping mall. 2. Ps lost right to exclude (actual physical invastion.) 3. Issue: Does this imposition on shopping mall amount to a taking? 4. Court applies Penn Central balancing test. Main factors: character of the government action, economic impact, and interference with reasonable investment expectations. 5. Here, NO TAKING, even though its an actual physical invasion: no unreasonable impairment of value; already open to the public; plus can adopt time, place, and manner restrictions to minimize interference w/ commercial functions. 6. Distinguish Kaiser-Aetna: a. Large RIBEs in K-A vs. no economic impact here b. Federal govt (unlike states) has no residual authority to define property in first instance 7. J. Marshall (Concurrence): Applauds decision, strongly supports states ability to revise and redefine property law. BUT: there is core beyond which cannot go sphere of autonomy/privacy. (Note: Property is more than positive lawserves human values.) Factors to determine if core rt to exclude is invaded: open to the public; reasonable restrictions allowed; interference w/ business; invasion of personal sanctuary; implications on privacy rights. C. Loretto v. Teleprompter Manhattan CATV Corp. (1982) [p. 1286] 1. NY law authorized TV cable on roof of apt; no impairment of use, value. 2. Per Se Rule: A permanent physical occupation is per se taking no matter now minor. No balancing test required. PPO destroys all property rights w/r/t that portion. 3. Lorettos compensation: $1 (actually, her apartment value probably went up). 4. Non-PPO physical invasions still only balancing test: K-A, Pruneyard merely temporary do not absolutely dispossess owner of his right to use, and exclude others from, property. 5. Note: Even here, not totally permanent (didnt apply if stopped using property as rental). 6. Other per se PPOs discussed by court: permanent flooding of property; frequent airplane overflights analogous to elevated railway (Causby). Not PPO: blocking access to property. 7. Blackmun dissent prefers multi-factor balancing tests than categorical test D. Nollan v. California Coastal Commission (1987) [p. Supp 49] 1. Holding: Requirement of permanent public easement over beach = PPO per se taking. 2. Real property may be continuously traversed, even though no particular individual is permitted to station himself permanently on the premises. 3. Classic right of way easement: marketable, bought and sold all the time. Distinguishable from Pruneyard (which allowed time, place and manner restriction; and already open to public); and Kaiser-Aetna (affected by traditional doctrines of navigational servitudes). vi. Regulation of Use A. Keystone Bituminous Coal Assn v. DeBenedictis (1987) [p. Supp 42] 1. In 1966, PA enacted legislation similar to the Kohler Actthe Subsidence Actdesigned to control subsidence from coal mining. The act required mine operators to keep up to 50% of coal

51

in place and to repair surface damage caused by subsidence even if the surface owners had waived their rights. 2. Effort to distinguish Mahon: Kohler Act conferred private benefit b/c did not apply when surface owned by coal owner. This law focuses more on public benefits. 3. True difference: Society cares more about environmental harms now! 4. Holding: Not a taking, both by nuisance exception and by Penn Central balancing test. a. Purpose of govt action: abating activity akin to public nuisance (changed circumstances can make something a public nuisance which before was not); tantamount to public nuisance. b. Reciprocity of advantage: general benefits of living in civilized society. c. Economic impact: denominator is the whole affects only 2% (does not turn on whether state law allowed the separate sale of the segment of property) B. Lucas v. South Carolina Coastal Council (1992) [p. 1299] 1. Lucas bought 2 residential beachfront lots on island off coast of SC to develop; 2 years later, SC commission extended hurricane critical area prohibiting construction to his lots. 2. Per se rule: Use regulation that eliminates all economically viable use is a per se taking. 3. Only exception: Background principles of state law that inhere in title itself. 4. Numerator: Law preventing all development will trigger Lucas rule. (Not true that land was valuelessjust cant build houses. If he bought w/ reasonable expectation of building house and paid appropriate prince, then not economically viable to just camp on it.) a. Note: n. 8 Really requires 100%; 95% deprivation would be subject to balancing test. 5. Denominator: Here, entire fee simple absolute. See n. 7: Answer may lie in how the owners reasonable expectations have been shaped by the States law of property; relegates Keystone & Penn Central to just inconsistent pronouncements invites litigants to try dividing up land again! vii. Palazzolo v. Rhode Island (2001) [p. Supp 50] A. Waterfront parcel in RI; title passed to him after already regulated as coastal wetlands. B. Taking title with notice of the limitation doesnt prevent a challenge. Preserves a right for future generations to challenge unreasonable limitations on the use and value of land. Dont want to put expiration date on takings claim. C. Blanket rule denying takings claim to anyone who purchased w/ notice of restriction would have capricious effect on old people, people who need to sell fast, people w/o resources. D. This case is not about capricious effect (could solve by just letting O1 retain her takings claim); it is about trying to hamstring over-reaching state legislatures. E. New owners receive full property rights of prior owner, including any takings claim. So now when you sell a regulated property, the value should reflect the land plus the opportunity to bring a suit challenging a restriction. F. A law does not become a background principle for subsequent owners by enactment itself. That claim is not barred by the mere fact that title was acquired after the effective date of the stateimposed restriction. G. Note: Lucas claim fails here, b/c Owner didnt conceptually sever in time 18 acres of useable property is more than token interest. Thus, subject to balancing test. 1. OConnor: Can consider O2s RIBEs in balancing test. 2. Scalia: Evaluate at time of takingcant consider O2s RIBEs. H. Stevens (Dissent): Rule will give huge one-time windfall to owners of restricted land. viii. Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2002) [p. 1335] A. Issue: 32-month moratorium on development that was temporary on its face = total taking under Lucas rule (by conceptually severing over time, finding no econ viable use for those months)? B. Holding: No. Total deprivation must be PERMANENT on its face. An interest in real property is defined by the metes & bounds that describe its geographic dimensions and the term of years that describes the temporal aspect of the owners interest. C. Here, LO had fee simple, so his interest was larger than the time period of the restriction. ix. Takings Gamemanship A. Tahoe Sierra plus Palazzolo could be trouble: speculative market in takings claims may try to tailor denominator of Os interest once know the regulation; takings claim not defeated by passage of title.

52

B. Arguments against: 1. Judge takings claim at time of regulation (O2s claim is merely derivative); Post-regulation severance cant create a taking. 2. OConnors view O2s RIBEs werent very reasonable weaker argument 3. Refuse opportunistic claims where no purpose whatsoever to the purchase but a takings claim. Bar opportunistic takings claim by one who buys 100%-restricted prop. segments w/ no explanation or purpose other than takings challenge; 4. Sometimes can argue regulation is inherent limitation on title anyway.

OVERALL POLICY CONSIDERATIONS

Rise of Contracts o Intent of parties paramount o Rules of contract, e.g., rules of interpretation (usually default), substantive rules (usually immutable), rules of remedies Property as relative to people and to purposes Endowment Effect/Personal attachment to land Legislatures as agent of change (better equipped? Hamstringed by Lucas. Need contingent to lobby.) Preventing free-riding Promoting efficiency Always balance first-in-time w/ wasteful inducement to race

53

TAKINGS AFTER LUCAS

Was anything taken? Did govt action take/impair a private property right that O had under [state] law? No taking No Yes Character of govt action

Physical Invasion Restr. on Rt. to Exclude

No physical invasion/ Regulation of Use

Same Question

Perm. Phys. Occupation (PPO) viable use remains (Loretto,Nollan) Lucas)

No PPO (K-A, Pruneyard )

Econ. viable use remains (Penn.Centr., Keystone)

No econ. (Mahon?,

Per se Taking se Taking

Balance (w/ thumb on scale for O)

Balance (w/ thumb on scale for gov't)

Per

Factors in Balance: Open to public Govt purpose (public harm) Econ. impact: Interference w/ use, value, RIBEs State vs. Federal Generality/recipr. ben. vs. singling out

54

Unless limitation inheres in title under background principles of state property law: Easements, privileges Statutes? Nuisance, covts

55

PROPERTY: A SEAMLESS WEB Professor Estlund, Fall 2006 Basic Property Rights Right to possess Action for Private Interference Ejectment Interest if severed/ Public limits/ Add'l limits based Interference on consent/rela. by Government--------------> Taking? Lease Full appropriation Perm.Phys.Occup. Eminent domain/T

Inherent Limits AP

Per se T (unless) (Loretto) ______________________________________________________________________________________ _ _ _ _ _ _ _ _ Right to exclude Trespass: Continuous/ repeated One-time/ Occasional Right to use & enjoy Passive: Nuisance Neighbors' rt. to Affirm. easement (Gov't "nuisance"?) ?? freedom from use & enjoy (to commit interference (up to nuisance) nuisance) by others ------------------------------------------------------------------------------------------------------Active: Nuisance Neg. easement; Regulation of use: right to make Restrictive cov't/ Elim. of viable use Per se T (unless active use Equitable serv. (Mahon, Lucas) inher. limit) [Conditional fees] Viable use remains Balance (w/ thumb (Keystone, Penn Centr.) on scale for govt) Right to convey System of estates & FI, Restrictive covt./ New legal limits Restraints on alien. on rt. to convey 56 (Can be T) Public trust, Custom Affirmative Easement (Nollan) Phys. invasion: Easement-like Balance access (K-A?) (w/ thumb on Occasional scale for O) (Pruneyard)

Common law privileges (Shack?)

RAP, etc.

[Conditional fees]

57

Cheat Sheet
Theories / Policy Considerations

1. 2. 3. 4. 5. 6.

Essentialist (Blackstone): property = sole and despotic dominion over a thing; in total exclusion of the right of any other in the universe; heavy emphasis on right to exclude: our interest is in the right to use, but exclusion is the way we protect this interest Legal realist: bundle of sticks, each of which defines relations among people with respect to things; emphasis on in personam rights, vary from person to person with respect to thing; property rights just like other legal relations Exclusion (gatekeeper): Trespass actions; Use when resource has multiple possible uses, best to let owner decide Governance: Use when particular uses of property are highly favored or disfavored Coase Theorem: W/o TCs assignments will reach most efficient outcome through bargainingonly distributional benefits are affected by the initial entitlement. Factors that increase TCs in the real world: (1) Bilateral monopoly; (2) Assembly problems (holdouts) (3) Diffuse effects on many people (4) Bad Blood (5) Wealth effects

Property vs. Liability Rules: Considerations: when determining which rule to apply, consider: (1) Economic efficiency (when TCs low property rule; when TCs high liability; (2) Distributional preferences; (3) Other justice considerations. Property rule Liability rule Plaintiff R1: P has entitlement protected by injunction (Pile) R2: P has entitlement protected by damages award (Golden Press) Defendant R3: D receives entitlement, no injunction (Hinman) R4: D receives entitlement but must pay damages to P (Del Webb) 7. Ex-ante: What kinds of incentives will ct set up if it adopts this rule? Prefer bright line rule 8. Ex-post: considerations of fairness, justice (e.g. reciprocity of benefit), reduce waste.

9.

Tragedy of the commons - Common resource if not privatized / regulated may be overused or depleted; Freerider problem a. Consider privatization v. governance, e.g. fishing industries

10. Holdouts? Is it likely parties will bargain? Would it be more efficient for court to make allocation itself? 11. Public choice theory & allocations: Consider where court is putting the entitlement and whether interest groups have power to change law through legislature.
12. Penalty Default Rule: Set rule against the party that has the power to trigger legislative change. Strategy: always ask 2 discrete questions Who should get the entitlement? b. What should protect the entitlement liability or property rule? ACQUISITION 1. Capture/Occupancy

a. a.

Generally: First in time to take occupancy is owner; What constitutes occupancy defined by local custom when it embraces and has been adhered to for a long time by entire industryGhen; What constitutes occupancy depends on contextGhen, Eads; Manifest notice importantEads; Dont want to encourage free-riding; **Even if P had no occupancy, consider whether unfair competitionKeeble Wild animals:

b.

i. ii.
iii.

Ferae naturae (wild animals) belong to no one first to take occupancy = owner Occupancy shown by certain controlPierson; Yet if one does everything possible to make animal his own, this is sufficient occupancy depends on context & what is physically possible in that contextGhen Hierarchy: (1) True owner (2) Landowner (3) Prior captor (4) Hunter (5) Malicious interferer - Keeble

c. d. e.
2.

Gas, water, minerals: treat like ferae naturae Hammonds (if escape, return to res nullius) Personal propertyEads: Occupancy = actual taking of property + intent to reduce it to possession. Yet manner of occupancy depends on context; in some contexts, its not necessary to actually physically take property in order to occupy it; yet there must be some manifest notice to others in order to occupy property; cant just be ones inner intention Relative title: consider who had better title between two parties in dispute; do not appeal to 3rd parties

Creation a. In personam (quasi) rightsgood against select few, not all the world: Attributes of distinctive features of ones identityMidler, Vanna White In rem rightsgood against all the world: Patent: for products of inventive facultyTrenton Industries iii. Trademark iv. Trade secrets Policy considerations: free-riding/commercial use, but no general principle of dont reap, dont sow; incentives to create; public interest Increase: offspring of domestic animals belong to owner of the mother Doctrine of accessionWetherbee: D must show good faith. Then:

i. ii. i. ii.

Right to pursue livelihood, be free from unfair competition (quasi property right)INS, Trenton

b.

Copyright: for limited times per ConstitutionEldred

c.

3.

Principle of Accession: acquisition of things that have close relationship with things you own

a. b.

i. c. d.
4. Finders

Article has been transformed into something substantially different, a different species: (1) how much property or labor has D contributed compared to P? (2) does the current value make value of original materials seem insignificant?- Wetherbee (3) Old Rule: How physicall/chemically transformed? (4) if D keeps goods, he must pay restitution to P (rule 4)

Ad coelum rule: Ad inferos: owner of surface also owner of land above and below the surfaceEdwards (cave) Accretion: soil, water, etc. that accumulates on LOs land becomes property of LOGoddard

Page 58

Cheat Sheet a. Generally: finder has title good against all the world except someone with superior title b. Relativity of title: dont need to show you are TO, just that you have better title than opposing party c. First-in-time rules: F1 > T Armory (jewel); F1 > F2; Clark (logs); T1 > T2 Anderson (more logs) d. Jus tertii: Cant bolster your own claim of title by pointing to a greater right in a 3 party that is not before the court 5. Conflicts a. Possession: prima facie (i.e. presumption of) ownership to strip D of possession, P bears the burden of proof b. F > LO unless i. Object is mislaid (or lost only for short time?) LO has constructive prior possessionPeel ii. F trespasser LO has constructive prior possession as to trespasserFisher (bee hive) iii. F is dishonestPeel seems to require commendable action iv. F is agent or employee of LO F finds on behalf of LOSouth Staffordshire Water v. Object is found UNDER ground ad inferosElwes (prehistoric boat), Goddard vi. Object is found in a private place (e.g. home) of which LO has had actual possessionPeel vii. LO was aware of object LO has constructive prior possessionPeel c. Abandonment: if X has abandoned good, F > A; Abandonment = intent to abandon + actually give up possession d. Non-derogation from grant: If A transfers ownership to B, A cant count her prior possession anymore as against the transferee (exception to first-in-time
rd

rule) Policy considerations: (1) Want to get good back to TO (2) Want to discourage stealing (3) Want to get product back into commerce, make productive use of it Adverse possession

e. f.

Employer-employee relationship: if F is agent or employee of A F finds on behalf of A

6.

a. b. c. d. e. f. g. h.

Basic idea: was AP acting as true owner? Conflicts: Remember: Possesion alone is good enough unless someone shows superior title! Privity: Requires reasonable connection between successive occupants so as to raise status above wrongdoer or trespasser, e.g. deedHoward v. Kunto (remember pureposes of AP here, e.g. psych attachment); Good faith privity: Some jurisdictions require successive occupants to also have good faith Elements see chart Color of Title e.g., deed turns out to be flawed. Gives constructive possession of all land in deed, even if not occupied, sometimes shorter SOL. In GF jx, usu nec for claim of right. Disability exceptions: If TO has certain kinds of disabilities at the time the AP takes possession, SOL tolled until TOs disability is removed (E.g. TO is under age, insane, legally incompetent, in prison) Govt: At CL, cannot assert AP against government

Policy considerations: (1) Encourage productive use of land; (2) If TO doesnt care about land enough to assert rights, why should law? (3) Transaction costs/SOL: allows you to determine title w/o going back hundreds of years (4) Protect reliance interest in 3rd parties (5) Psychological attachment: APs interest in land increases and TOs interest in land decreases as time goes on VALUES SUBJECT TO OWNERSHIP

1. 2.

Generally: some things are inherently not subject to ownership or only allow for limited property rights Personhood: whether something qualifies as property depends on context and right asserted

a.

Strategy:

i. ii. iii. b. c. d. e.

Step 1: Determine whether state statute, CL, or judicial decisions recognize any property rights (right to possess, exclude, transfer, use) Step 2: Consider whether these property rights are substantial with regard to right asserted Step 3: Consider implications & policy arguments of recognizing a property right in body

Moore: (doctor did not inform patient that cells from extracted spleen would be used for research conversion claim). Treats as sui generis. Admits that interest in removed cells could be propertybut dont want to extend law. Worried about conversion tortStrict Liability, everyone in possessory chain could be liable will squash valuable research. Newman: (state law allowed coroner to appropriate deceaseds corneas w/o notice to next of kin due process claim). State has right to determine which property rights to grant its citizens, but not DP. Rights to possess, use, dispose, transfer include power to exclude - add up to a property rt for purposes of DP. Hecht: (probate court asserted jurisdiction over sperm donated to sperm bank probate court control?). As a matter of CL, fundamental right to procreate gives person decision-making authority as to use of genetic material, which this is in the nature of ownership. Decision making authority adds up to property for probate court purposes. Also Less troublesome than Moore no holdout problems for research, no tort liability, limited effects Theories:

i. ii. iii.

Demsetz: property rights develop to internalize externalities when gains of internalization become larger than costs of internalization. Gains: avoid tragedy of commons; Costs: costs of exclusion, e.g. fences, adjudication. Ellickson: Private property ownership cheaper & easier than group ownership: Need only to exclude (& detect exclusion violations)e.g., fences, dogsthan to enforce group cooperation (& detect shirking). Radin: objects that become bound up in their personhood, in way in which we constitute ourselves. Continuum of protection: The more personal, the greater the protection of the property rt; The more fungible, the less protection. personhood requires liberty, which requires property; not property requires liberty

Page 59

Cheat Sheet
iv.
Radin again: Justifications for inalienability of certain property rights: (1)Prophylactic high chance sale is coerced ban them all (might over-protect); (2) Prohibition moral requirement against commodifying certain goods; (3) Domino allowing a commodified version of good ruins/degrades non-commodified version. Procedure: Determine if thing falls under domino theory. If so, prefer inalienability; but query whether poor/oppressed class will unduly suffer, and determine if justifiable.

3.

Navigational servitude: public has right of access up to mean high tide line over WATERS that are navigable in fact

a. b.

Arises from commerce clause authority, but self-executing (FEDERAL); Trumps state law and private property rights; May be extended to heretofore not navigable waters if waters become navigable (i.e. are connected to navigable waters) Question about whether Congress has the power to defeat navigational servitude (e.g. whether public could dam up a navigable waterway)

4. 5.

Air rights: Under fed statute, and Causby, general public has a right to navigable airspace/air commerce. Further limitation of Hinman owner of surface cannot interfere w/ air travel, even if wants to build a huge silo and thus occupy that air space; public has superior right/easement. Public trust: States (LAND) - State holds lands in trust for publics unobstructed enjoyment. Can apply to lands under navigable waters, adjacent beaches, public parks, state wilderness areas, maybe expired IP rights. Most often applies to land under & adjacent to navigable waters. Boundaries of public trust area: edge of nontidal waters; mean high tide line for tidal waters. a. Basic principles of public trust: 1) Courts should be critical of attempts by state to surrender public resources to private entity (no deference to legislature); 2) Public trust violated when primary purpose of grant is to benefit private interest (even if brings incidental public benefit); 3) Public trust violated if state relinquishes power over the public resource. Lake Michigan Federation Publics rights to use private propertyThornton

6.

a.

b. c. d. e.

Customary rights: Public may acquire right to use private property if custom was: (1) Ancient (2) exercised w/o interruption (3) peaceable (free from dispute) (4) reasonable (used in manner appropriate to land and usages of community (5) certain (clear boundaries circumscribe use) (6) obligatory (mandatory upon all owners) (7) not repugnant to or inconsistent with other customs or law. Remember that legislature has power to eliminate this customary right Implied dedication: requires intent to dedicate Prescriptive easement: (see section below on easements) Public trust: some states (e.g. NJ) have deemed land that is appurtenant to pub trust land to also be held in public trust since it is necessary for the fully and enjoyment and use of pub trust land Takings: Remains to be seen whether SupCt may find that it is a judicial taking for court to take away private ownership rights through any one of the above doctrines Market failure private hand cant guide resource to most efficient use Anti-holdout rationale where 1 person could hold up public benefit then treat it as inherently public to avoid destroying public benefit

7.

Theory: When are resources covered by PT Doctrine?

Inherently pub property = those resources that we find critical to socialization LIMITS OF THE RIGHT TO EXCLUDE

a. b. c. a. b.

1.

Generally: right to exclude is not absolute; property rights serve human values! Real property: Property rights serve human values!Shack -- Must balance owners interest in autonomy / privacy against invitees interests / well-being (migrant workers interest in necessary services). Personal property: Trespass to chattel requires injury to the chattel itself (or Os U/E of it)Hamidi Real property: Land-lord tenant relationshipBerg

2.

Self-help

a.

i. ii. b. i.

Traditional CL: LL may use self-help in ejectment where (1) LL entitled to possession, such as where T breaches / holds over (2) LLs means of reentry are peaceable (higher bar than for personal property) Berg rule: No self help allowed to dispossess T who claims rt to possession; forceful as matter of law

Personal property: Lender-borrower relationshipWilliams

3.

Standard for peaceable less strict -- allowed as long as no breach of peace (no force, threats of force, or risk of invoking violence) b/c personal prop more mobile, less valuable, quickly depreciates, affordable credit more dependent on right ii. If possessors resists repossession repossessor must retreat. Note: No due process issue b/c no state action Common law exceptions a. Necessity: Necessity will justify entry onto land that would otherwise have been a trespass; requires imminence / urgency and suddenness; applies with special force when human life in dangerPloof b. Custom: Because of historical usage and custom, public may have a right of access and usage (not possession!)McConico (hunting unenclosed lands)

c.

Public accommodations:

4.

Old CL (Blackstone): General duty of nondiscrimination; to refuse service, must have good reason; Must charge reasonable rates to customers; Historically restricted to innkeepers and common carriers. Modern CL: Can refuse service for any and all reasons. CRA of 1964: No discrim in public accommodation, broadened categories ii. New Jersey (min CL): Revives old CL rule: If generally open to public, No rt to exclude w/o compelling reason (e.g., dangerous or disruptive). Uston Constitutional exceptions (1) If state action (this is the TRESHOLD requirement) Marsh: Arrest & Criminal Prosecution (Trespass/Co Town) Shelley: Judicial enforcement of restrictive covenant Bell: Arrest & Criminal Prosecution (Trespass/Restaurant) Individual judges practice of forbidding non-white people from being jurors is state actionEx parte Commonwealth of Virginia, p.461 (Note: Need public place b/f trespass enforcement is state action)

i.

Page 60

Cheat Sheet
(2) Then balance the competing rights: Property right (vs.) (Constl) Access right Marsh: Company town/exclusion 1st Amend. free speech**(WINS!) Shelley: Right to restrict sale Equal protection**(WINS!) Bell: Private restaurant/Right to exclude Equal protection Hudgens: Rt to exclude/shopping mall Free speech a. Remember: The more an owner opens up property to public for his own advantage, the more his rights become circumscribed by statutes and constitutional limitsMarsh; You still have an absolute right to exclude from your home (most private space) b. Lastly, consider policy implications: Public access to uncensored information: Uncensored expression, religion; Segregation, racial discrimination d. Argument: There is only state action where have state enforcing a private analog of something declared unconstitutional in public context. i. Problems: Wide discretion to police officers; Complicates prosecution; States actual interference is indistinguishable b/w state action and non-state action cases; Question of state action might turn on historical biases of locality. ii. State constitution free speech does not require state action to enforce- go straight to balancing. (Schmid, Pruneyard) Note: To get right to of access to communicate on private property, must closely analogize yourself to Marsh to win on 1st Amendment grounds (Universities, Military base, Gated communities with shops and schools, Retirement homes, etc). Audience must have need for message, lack of other options, best place available, etc. Estates & future interests

iii.

1.
2. 3.

Freehold v. non-freehold: Non-freehold estate: anything legally smaller than freehold estate (e.g. tenancy) Conservation of Estates always ask whats left!! Answer Tree 1. Bracket off all interests. 2. If DEFEASIBLE FEE: Ask who gets future interest? Grantee or grantor.

a. b.

Freehold estate: a life estate or longer interest that is potentially infinite in duration or is measured by a life

3. 4.
5.

If grantee (3rd party), then present interest is subject to executory limitation-- Future interest is EXECUTORY INTEREST never vested until possessory. Ask if future executory interest violates R.A.P.! If grantor, then its either: (1) Determinable look for durational language (as long as), or intent for reversionary interest to be automatic. (2) Subj to Condition Subs look for rt of reentry language, or but if conditional language; if ambiguous, prefer this one. If LIFE ESTATE: Ask who gets future interest? If grantor, then future interest is REVERSION. If grantee, ask if future interest is a REMAINDER. Test for REMAINDER: (1) Capable of becoming possessory upon termination of previous estate; (2) Cannot divest a prior interest If remainder, ask if its VESTED or CONTINGENT: Vested remainder must be given to person already born and ascertainable, and not be subject to condition precedent. (Condition subsequent is okay.). Contingent remainder contains uncertainties: interest is subject to condition precedent, or grantee is not yet born, or not yet ascertainable. (e.g., subj. to co Rule: Cant end chain w/ a contingent remainder. If last interest is contingent remainder, then O has a technical reversion. Rule: Executory interest can never follow contingent remainder (b/c not vested). Rule: All reversionary interests are vested upon creation. APPLY RULE AGAINST PERPETUITIES all interests must vest w/in life in being + 21 yrs

6.
7. 8. 9. 10.

a. b.

For any interests subject to RAP (i.e., any executory interest), apply RAP Look for gifts to grandchildren of living people, or long-term limitations like using land for farming. If interest invalid, cross out entire clause defining the interest. Reread grant as edited: A preceding interest that ends automatically by its own terms (e.g., life estate or fee simple determinable) will still end. A preceding interest described in absolute terms (followed by an invalid divesting clause) will continue to exist. Rule: If exec interest is void, first grantee becomes absolute owner unless language makes clear interest should terminate then possibility of reverter. Klamath Falls

11. Note: Commercial conveyances that dont refer to individual people must vest within 21 years b/c corporations cannot be measuring lives 12. RAP applies to (1) Residential and commercial propertiesSymphony Space; (2) Inter vivos conveyances and willsSymphony Spaces; (3) Options to purchase
13. Symphony Space More sympathetic to charitiesRule of 2 charitiesif goes from one to another charity, dont void

14. Wait-and-see: some jurisdictions have employed wait-and-see approach to determine whether clause is valid 15. Justifications: Avoid Dead-hand control; Promote alienability; incentives to develop / invest in property
4. Rules

a. b. c. d. e. f. g. h.

Conservation of estates: all of what the grantor had must be accounted for. Inter vivos conveyance: transfer between living persons (e.g. sale, gift) - Fee simple may be freely conveyed; Life estate may be freely conveyed, though obviously you can only convey what you have, i.e. property for as long as you are alive; Possibility of reverter: majority of states allow conveyance, but some states do notKlamath Falls Devise: can be left by will to other living persons, will takes effect at death - Fee simple & poss of reverter may be freely devised; Life estate cannot be devised, obviously! Inheritance: passing of property to ones heirs w/o a will; heirs determined by law at the moment of your death - Fee simple may be inherited; Possibility of reverter: may be inheritedKlamath Falls; Life estate cannot be inherited, obviously! Interpretation generally: when language ambiguous about whether estate created is a fee simple determinable or fee simple subject to executory limitation, assume the latter (b/c avoids automatic forfeiture)Toscano Interpretation of wills: (1) Primary goal is to determine the intent of the grantor; (2) Presumption that will conveys the full estate that the testator owned, but may be rebutted by contrary intention; (3) Generally courts take lest formal approach to holographic (hand-written) wills - Williams Disclaimer: potential transferee can refuse to receive property interest Intestacy: If you die w/o leaving a will, state statutes will determine who shall inherit your estate

5.

Conflicts over time

Page 61

Cheat Sheet
a. b.
Why conflicts?: Life tenant will favor current consumptions, quick return-investments; future estate holders will want conservation of asset and longerterm investments Waste (nature of inheritance depends on intent of grantor, e.g., my residence Brokaw)

i. ii. iii.

Affirmative waste: life tenant takes affirmative action (malfeasance) that is unreasonable and causes damage in excess of what normal use would cause Permissive waste: life tenant unreasonably fails to act (misfeasance), which causes excess damage Ameliorative waste: significant change to property that results in increase of market value

1. 2.
iv. v.

Melms approach: if market value increases, may not be an injury to sustain action Brokaw approach: must consider nature and character of the property, not just market value

Note: waste action can be brought anytime successive estates (e.g. incl. LL/T relationship)

c.

Implications: life estates may be a bad idea; present possessor may be unable to make efficient decisions because constrained. Use trust unless property is ancestral home, truly unique. Restraints on alienation: general disfavor against restraintsLauderbaugh

i. ii. iii. iv.

Absolute restraints (even if for limited time & regardless of form) are voidLauderbaugh

1.

Includes forfeiture clauses in defeasible fees (if sold or transferred, then) Toscano

Limited and reasonable restraints may be valid, perpetual very disfavoredLauderbaugh Vague acceptance standards, restriction is perpetual considered absolute restraint--Lauderbaugh

Restraints on use are generally ok, even if they ultimately have the effect of restraining or completely prohibiting alienabilityToscano (but only for orgs, not for individuals) CONCURRENT ESTATES 1. Generally

a. b. c.

Presumption for Tenancy in Common: modern CL presumption in favor of tenancy in common; in order to create joint tenancy, must say joint tenancy with right of survivorship Possession: All tenants have right to the entire property OusterGillmor: Exclusive use is not enough. Co-tenant must make clear and unequivocal demand to use land in exclusive possession of another, and other co-tenant refuses to accommodate request. Remedies: If co-tenant has been ousted, she may collect her share of fair market rent and property from common property (whether or not actually rented to 3rd party). Note: regardless of ouster, if co-tenant rented property, all other co-tenants would be entitled to pro-rata share of actual rent; in ouster, entitled to pro-rata share of market rent Action to recover rent v. adverse possession: standard to establish ouster for right to recover rent is less stringent than ouster for purposes of adverse possession! Repairs / improvements: When cotenant makes repairs to or improves common property w/o consent no right of contribution. However, in action for rent for ouster, repair and maintenance costs may be deducted Formally, need 4 unities: Time; Title; (same title, or joint AP, cannot be acquired by intestate succession); Interest: All tenants have same estate (e.g. fee simple, life estate) but doesnt have to be equal share; Possession: all tenants have right to use and occupy the whole Functionally: many modern courts now looking to intention of parties to create (or sever!) joint tenancy, rather than pure functionalism of strictly considering 4 unities Right of survivorship: survivors automatically receives deceased joint tenants interest- cannot devise!; note: survivor does not inherit deceaseds interest; rather, deceased interest is extinguished and survivor automatically succeeds to interest in whole propertyHarms Severence:

d. e.

2.

Joint tenancy: 2 or more parties have single unified interest w/ right of survivorship

a. b. c. d.

i.

Joint tenancy may be severed by: conveyance; mortgage (in jx w/ title theory not lien theory)Harms; lease (in some jurisdictions); life estate maybe (depends on whether formal or functionalist perspective taken). Ouster does not server! When joint tenancy severed becomes tenancy in common. If one of multiple parties severs joint tenancy, becomes tenancy in common for everyone only with respect to that one tenant, not between other parties who did not sever

3.

Tenancy in common: 2 or more parties have separate undivided interest without right of survivorship

a. b. c.

Need 1 unity: Only unity required is all co-tenants have right to possess the whole Inheritance / devises: cotenants shares may be inherited or devised PartitionDelfino: Traditional presumption in favor of partition in kind (physical), but can have partition by sale if:

i. ii. iii.

Physical attributes of land are such that partition in kind is impracticable or inequitable; AND Interests of owners would be better promoted by partition by sale Note: Delfino actually applied as either/orpresumption is changing. Burden is on party requesting partition by sale to show sale would better promote owners interests

4.

Tenancy by the entirety: property held jointly by husband and wife

a. b. c. d.

No severance: not possible for wife / husband to sever property; stayed as joint property as long as both married, alive Right of survivorship: surviving spouse automatically deceased spouses Conveyance: no unilateral transfer; must have consent of both spouses Inheritance / devises: because automatic right of survivorship, cannot inherit / devise property Conveyance: both parties must consent in order for transfers to be valid

5.

Community property: for married couples, all property acquired during marriage automatically becomes community property

a.

Page 62

Cheat Sheet
b.
Individual property: property acquired before marriage is theoretically individual property, but may become community property by intermingling with community property

6.

Marital interests & divorce: upon divorce, marital property entitled to equal distribution; State law will determine what counts as marital property (to be divided upon divorce)OBrien; Professional licenses & other intangibles may constitute marital property if acquired during the course of marriageOBrien. a. Equal distribution forward-looking, not just a refund of what each spouses contribution wasOBrien (got 40%)

Equitable share will depend upon each spouses: Future financial prospective; Duration of marriage (9 yrs); Age/health of parties; Efforts, contribution, scope of sacrifice (OBrien- contributed 76%, plus moved to MX, diverted career) Entity property (leases, coops, condos, common interest communities)

b.

1.
2.

Generally: Governance v. exclusion: entity property is a governance strategy; traditional freehold estates is exclusion strategy Leases / Landlord-tenant

a. b.

Kinds of leases: (1) Term of years (2)Periodic tenancy (3) Tenancy at will: at CL (4) Tenancy at sufferance. Traditional CL = CAVEAT LESSEE independent covenants and no implied warranties

i. ii.

Independent covenants- Paradine E.g., T must pay rent regardless of whether he is deprived of propertyParadine; LLmust allow T possession regardless of whether he receives rent Exception: LL breach of implied CQE T excused from paying rent

1. 2. 3.
4.

Actual eviction (at least if willful and not de minimus)Smith (even if only partial) Constructive eviction: see chartBlackett (w/in LLs power to prevent) Express forfeiture clauses: Ts breach of lease LLs suspension of covenants Justifications: T gets the benefits of casual profits and runs the risk of casual losses-Paradine Exceptions: Warranty of habitability in short term lease for furnished premisesMarrable; see chart

iii. c. i.
ii.

No implied warranty: Generally: LL does not offer any implied warranty of condition of premises - Sutton

1.

Abandonment: Trad CL: LL had 3 remedies for abandonment Accept as surrender -- LL prefers if FMV has gone up; in absence of specific lease provision that LL has right to re-let and still collect for T, making of new lease constitutes acceptance of Ts surrenderKerr; Even when LL does have specific re-let provision, if LL makes new lease that is longer than term of Ts original lease, this is deemed acceptance of Ts surrenderKerr; Once LL accepts surrender, lease is over and T has no more obligations Re-entry and re-lett on behalf of T -- must be authorized in lease; since contractual, LL has duty to mitigate damages; T1 liable for difference in rents; if LL relets for longer than Ts term, deemed surrender (T off the hook)Kerr

d.

Do nothingSommer -- Trad CL allowed, but now (in maj of jurisdictions) L is under a duty to mitigate; Mitigation: make reasonable efforts to re-let apartment Burden on LL to show reasonable diligence: Consider whether LL has offered to show apt, advertised it, whether T located any suitable tenants who were rejected; T is responsible for costs of LLs reasonable efforts to re-let; If LL is able to re-let T released from lease; If LL does not make any reasonable efforts to re-let T released from lease Modern exceptions to caveat lessee:

iii.

i.

IWH nonwaivable duty, implied in residential leases, adopts housing code as baseline decency Javins 1. Most states have adopted; replaces illegal lease doctrine (Brown); Must cover patent defects at start, authorizes rent strike, T liability must be < FMV to ensure wont be contracted around.

e.

Remedies: Set-off/defense to action for rent; T may sue for injunction; T may get rescission of lease, vacating w/o further obligation to pay rent; T may sue in action for damages; T may withhold all or part of rent until LL corrects. 3. Justifications: Necessary for full enforcement of housing code; Prevent externalities slum housing affects whole community; Consumer protection. Ts have less bargaining power than Ls; Urban tenant does not have time to make repairs; Buildings are so complicated now that L best situated to make physical repairs; L has superior knowledge of defects & best situated to fix them ii. Retaliatory eviction: LL may not retaliate against tenant for reporting code violations Assignment and sublease

2.

i. ii. iii. iv. v. vi. vii.

Assignment: Asigneee steps into shoes of prime leaseholder; LL & T have privity of K; Assignee & LL have privity of estate; Bound by lease terms that run w/ the land Sublease: Carved out of lessors interest; LL & T have privity of K and estate; T & Sub-T have privity of K and estate. Privity of estate: one partys interest must be directly carved out of the others (nested) AND one party must currently be in possession of property only obligated to perform covenants that touch and concern the land (e.g. pay rent!, repair) Privity of contract: obligations arise from being party to contract obligated to perform convenants that are enumerated in contract Assumption: assignee expressly agrees to be bound by terms of original lease Novation: LL agrees to erase privity of contract liability of original tenant Restraints: disfavored though allowed; strictly construed, esp. when forfeiture restraintsKendall 1. Maj CL: lessor may arbitrarily refuse to approve assignee / sublessee 2. Min CL: lessor must have commercially reasonable objection to assignee / sublessee; a. May consider: financial responsibility, suitability of use for proprety, legality of use, need for alternation of premises, nature of occupancy. T gets the windfall, not LL inverse Paradine. 3. Based on K law of good faith and fair dealing; policy against restraints on alienation.

3.

Lease v. Easement v. License Baseball Publishing Lease Conveys right to possess Limits Os right to exclude Easement Conveys right to use Limits Os right to exclude, right to use & License Conveys right to use Limits Os right to exclude; also use?

Page 63

Cheat Sheet
Excuses trespass In rem Property right You have interest in land Only express Irrevocable Statute of Frauds applies Created by contract enjoy (aff. or neg.) Excuses trespass, nuisance In rem Property right You have interest in land Express, implied, prescriptive, estoppel easement Irrevocable Statute of Frauds applies only to express easements Created by conveyance (limited by CL) Excuses trespass; also nuisance? Possibly in personam Contract right Conveys no interest in land (but may ripen into one by estoppel) May be express or tacit Revocable at will ? Generally oral

COOPS, CONDOS, COMMON INTEREST COMMUNITIES a. Typology:

i.
ii. iii.

Coop: building owned by corporation; T owns shares and granted proprietary lease to apt. subject to rules and substantial maintenance fees. most co-depency most deference Condo: cond association owns common areas & T owns its own apartment CICs: Ts own title subject to (lots of) covenants

b.

Coops: Business-judgment rulePullman i. Defer to judgment of the coop unless evicted T can show that board acted (1) outside scope of its authority (did board follow its own procedures; do rules give board the authority to evict person for reason and in manner in which they did?); (2) in a way that did not legitimately further corporate purpose (connection b/w action and corporate welfare may be demonstrated by vast majority of members supporting decision); (3) OR in bad faith (arbitrariness, favoritism, discrimination, malice) ii. Note: LL/T tenants have more protection that cooperative tenants; why? (1) Coop tenants have voluntarily agreed to bylaws (presumption that coop tenants have more bargaining power); (2) Coops are somewhat more democratic, owners more represented in decision-making context; (3) Because of unitary mortgage, financial security of coop depends more on each tenant than with LL/T relationship

iii. c. i. ii.
iii. TRESPASS

Note: Refusal to sell in the first place: more concerns about discrimination & restraint on alienability less deference? Use restrictions in master deed / declaration (CCRs): very strong presumption of validity; only invalidate if: (1) arbitrary; (2) imposes burdens that substantially outweigh benefits to all; (3) in violation of pubic policy or some other constitutional right (consider in relation to community as a whole, not w/ reference to particular T) Use restrictions promulgated by governing board: subject to reasonableness standard consider against development as a whole Justifications: unanimous consent, buyers relied & sought, discourages lawsuits, promotes stability and predictability

Condos and CICs: Use restrictionsNahrstedt

1. 2.

Definition: any appreciable direct entry or immediate intrusion (invasion) by physical tangible object Remedies: no need to show any damage to pursue claim of trespassJacque InjunctionsBaker v. Howard County Hunt. General rule: no injunction for trespass; Exception: injunction for threat of continuing trespasses, b/c this continued interference w/ use and enjoyment means that damages are inadequate Encroachments a. Traditional rule: injunction for even unintentional encroachments; encroachment = continuing trespassPile v. Pedrick

a. b.

Punitive damages: even nominal compensatory damages may support an award for punitive damages Jacque

3.

b.

ExceptionsGolden Press: may issue damages instead of injunction when (1) Good faith encroachment (not originally intentional). Remember: presumption that men act in good faith unless contrary evidence; (2) Relative hardship weighs in favor of not granting injunction ct should not act oppressively. Hardship demonstrated by: (1) Encroachment is slight, will not affect Ps use; (2) Ps damages are small and fairly compensable; (3) Cost of removal is so great as to cause great hardship or make removal unconscionable Limits on ad inferosHinman - You only own as much space above the ground as you can occupy or make use of in connection with your enjoyment of land (as much as is within your constructive possession). No one can occupy above your land if it would interfere with your enjoyment / possession of land Navigable airspace: Ad inferos also subject to navigable airspace rights reserved for the public

4.

Ad coelum, ad inferos; Generally: whoever owns the soil owns to the heavens and to the depths

a. b.

5. 6. 1.

Dust, smoke, noise, vibrations: not considered a tangible object cant constitute trespassAdams

Justifications: why is the right to exclude so important? Protect LOs use; productive use of land; personal safety, security, privacy; autonomy, independence (from rest of world); self-determination of how to use land; prevent self-help PRIVATE NUISANCE Generally: Substantial and non-trespassory invasion of anothers use/enjoyment in land. (Trespass deals with right to exclude).

a.

Nuisance requires: Intentional + Substantial + Unreasonable.

i.

Two tests for reasonableness: (1) Threshold test (CL): Significant invasion. Utility of activity causing harm is NOT considered. More pro-P, may over-enjoin. E.g., St. Helens Smelting; Hendricks; Boomer (ostensibly). Note: Boomer suggests harm > $100 enough. (2) Balancing test: Looks at BOTH utility of activity and severity of the harm. Injunction requires harm > utitlity. Even if utility > harm, usually can award damages as long as harm is serious (unless will shut D downthen harm must be severe). Tendency to under-enjoin. ** better to err on this side ** E.g., Boomer supreme court.

2. 3.

Nuisance v. trespass: Functional Test (Adams): Consider (1) Whether Ds action was committed on Ps land; (2) Whether harm to Ps land was direct or indirect; (3) Whether invasion was committed by tangible or intangible matter; (4) Whether intrusion deprives P of possession or just use and enjoyment Nuisance per seLeunsmann (applied incorrect in that case!): (1) Activity would be a nuisance in any context, at any time; (2) Or activity is prohibited by legislature as a nuisance

Page 64

Cheat Sheet 4. Traditional common law approach: nuisance if substantial interference grant automatic injunction (+ past damages?) 5. Restatement approache.g. Hendricks? see chart 6. LocalityDell Webb, St. Helens jury to consider. Coming to the nuisance: residencial LO cant have relief if he knowingly came into a neighborhood reserved
7. for industrial or agricultural endeavors and was thereby damaged Exam strategy a. Should the activity continue? (use CL approach or Res.)

b.

Who should bear costs of injunction or lack thereof? (consider Dell Webb) (i.e. what is the remedy?)

i. ii. iii.
EASEMENTS

Might be for D to continue but internalize costs of the harmBoomer. Where must be enjoined b/c public harm but not wrongdoer, compensateDel Webb. Flip the Restatment test, ask if P can reimburse for value of injunction.

1.
2.

Generally: non-possessory in property that owner would not otherwise have; inheritable, transferable Terminology a. Affirmative easement: right to what would otherwise commit a nuisance, trespass b. Negative easement: right to stop servient tenant from doing something he would otherwise do c. Appurtenant: easement belongs to another parcel runs w/ the land d. In Gross: easement belongs to a particular grantee non-transferable Negative easements: modern trend towards replacement with covenants; only 4 traditionally recognized kinds: (1) blocking sunlight; (2) interfering with flow of air; (3) removing lateral support to a building; (4) interfering with flow of water in an artificial stream 4 ways of creating easements a. Express reservation / grant: Because of Statute of Frauds, must be written. By grant: O (ST) grants easement to A (DT). Or By reservation: O (DT) grants property to A (ST) but reserves easement for himself b. Implication: -- Schwab ( Step 1: common owner must have owned both parcels of land created easement at time of division; Step 2: implied in fact? (a) Prior use under common ownership that was apparent, obvious, continuous, and permanent AND easement necessary and beneficial to enjoyment of parcel (reasonably necessary); (b) Conforms to parties expectations at time of severance; Step 3: implied in law? By necessity landlocked property from which cannot access public roadway (strictly necessary!). Note: harder to get implied easement by reservation than by grant b/c prior owner should have remembered to leave himself an express easement if hed wanted it! c. PrescriptionWarsaw (1) Use of property must have been: open, notorious, continuous and adverse for SoL period; over clear path; (2) Must show that LL was actually aware of use (distinguish b/w AP, where TO doesnt need to know) (3) Greater presumption of permissibility than in AP; But WarsawBurden of proof on LL to show use was permissive; (4) If TO on notice of claim of easement before constructing building (e.g., lawsuit already filed), then TO alone bears cost of tearing it downWarsaw; otherwise, might share costs; (5) Use must constitute either trespass or nuisance (an actionable wrong) cannot acquire easements to sunlight access by prescription!Fontainebleu d. EstoppelHolbrook: General rule: where licensee has exercised privilege of license by erecting improvements or making substantial expenditures on faith of license becomes irrevocable b/c of estoppel; Duration: as long as nature of license calls for. Original consent: License may be express consent OR tacit approval (i.e., watching day by day). Four ways to Terminate easements: (1) By deed that releases easement; (2) Merger-Terminated when properties come under same ownership as a matter of law (3) Adverse possession (ST blocks use of DT) (4) Abandonment (inferred from prolonged nonuse) Misuse of easementsPenn Bowling a. Increased/overuse of easement (but only for benefit of DT) reasonbleness standard b. Non-appurtenant use of easement strictly prohibited (bright line rule) c. Misuse abandonment of easement. d. All use may be enjoined until proper use distinguishable from improper use.

3.
4.

5. 6.

7. 2.

Easements that run with the land: (1) Intent - look at conveyance; (2) Notice: actual, constructive (inc. record), or inquiry notice COVENANTS 1. Covenants: Contract right, not enforceable against strangers, must be written down (except IRRC) When do covenants run with the land? (i.e. when are they conveyed to subsequent owners of land?) a. Contract theory: 3rd party beneficiaries may enforce contracts that were intended for their benefit b. Trad CL equitable servitudes: enforceable at equity (with injunction) (1) Intent for burden to run (look at contract or infer from situation); (2)Promise much touch and concern the land; (3) Notice (record, actual, or inquiry)only for burden Tulk c. Real covenants: enforceable at law (with damages) (1) Intent for burden to run (look at contract or infer from situation); (2) Horizontal privity: relationship between original promisee/promisor must be at least buyer-seller relationship (neighbors not enough!)only for burden (3) Vertical privity: successors must receive the same estate (same duration) (4) Promise must touch and concern the land d. ICCR/Common plan Sanborn: Step 1: is land subject to a restriction at all? Was a reciprocal servitude/covenant implied?; Step 2: who can enforce restriction assuming it exists? Must show that, if parties are not successors to promise, they were intended beneficiaries (of common plan); Step 3: against whom can restriction be enforced? Did owner have notice (actual, constructive, or inquiry)? Defenses to enforcement of equitable servitudes a. Changed conditions: if changed conditions have rendered the purpose of restrictions obsolete and enforcement would be inequitable and oppressive do not enforceBolotin (Ps must prove that continuance of restriction would serve no further benefit to beneficiaries of restriction more than just FMV) b. Abandonment: covenant has been habitually and substantially violated (not just few violations)Peckham c. Public policy: if covenant against public policy, court can refuse to enforce covenantShelley v. Kraemer d. LachesPeckham: (1) P had knowledge or reasonable opportunity to discover cause of action, (2) Unreasonable delay in commencing action, (3) Damage to D resulting from unreasonable delay e. EstoppelPeckham: (1) P knows whats occurring and would be expected to speak to protect his interest yet stays silent OR P actually gives consent (2) This tacit or express acquiescence was relied upon (3) Reliance caused damage Consent cannot be revoked f. Unclean hands: if you have violated the covenant yourself, you cannot enforce it against someone else g. Waiver: if you have explicitly or implicitly waived your right to enforce, you cant h. No Notice: Over time, less likely successors will have notice so servitude may terminate

3.

Page 65

Cheat Sheet
REGULATORY TAKINGS

1.

Step 1: Was a property interest literally taken? a. Identify the property interest! (exclude, use/enjoy passive & active, possess, convey, destroy) b. Is this right a limitation that inheres under background principles of state property law which O had no right to in the first place? c. If nothing was literally taken then NO taking d. If something was taken (even if you may find it was an inherent limit later on), continue Step 2: Was this taking unconstitutional? a. Was it a physical invasion? i. Was there permanent physical occupation (PPO) by 3rd party? Loretto, Nollan

2.

ii. iii.

Permanent: indefinite or permanent on its face If PPO per se taking UNLESS the limitation imposed inheres in title under a background principle of law (see below) If no PPO Penn Central balancing test, but with thumb on the scale of finding a taking

1. 2. 3. 4. 1. 2. 1. 2. 3.
4.

Occupation: actual occupationLorettoor permanent, classic right of way public easement)Nollan Is PPO controlled by 3rd party or by LL?possible exception for LL control per Loretto n.19 Had owner already opened up to public & are there limitations on access?possible exception per Nollan

Kaiser Aetna taking (big RIBEs, govt acquiescence)

b.

Pruneyard no taking (no DiV, no interference w/ RIBEs, time/place/manner control) Was it regulation of use? i. Did regulation eliminate all economically viable use? This probably means econ/developmental use, not market valueLucas Must have had reasonable expectation & paid appropriate price for use to countLucas May be contextual, given what makes the property valuableMahon?? Consider denominator question! (see below)

ii. iii.

5. May be total taking even if token interest remainsPalazollo dicta If no economically viable use remains per se taking UNLESS the limitation imposed inheres in title under a background principle of law If not a per se taking Penn Central balancing test (see below), but with thumb on the scale for govt 1. 2. 1. 2.
Penn Central no taking (current use preserved, allows reas return on investment)

c.

Keystone no taking (only 2% of value, akin to nuisance prevention) Does the regulation go too far under Penn Central balancing test? i. Do fairness and justice require the public, not a few, to bear the burden?Penn Central ii. Requires ad hoc factual inquiryPenn Central. Consider: Character of the govt action physical invasion more likely than mere regulation of use (Yet if physical invasion has limitations on time, place, and manner of invasion may not be a takingPruneyard) Govt purpose regulation/prevention of public harm (akin to nuisance)Stevens (Keystone) v. merely improving the public conditionHolmes (Mahon). But see Scalia (Lucas) harm/benefit just 2 sides of same coinmanipulatable.

3. Degree of economic impact consider denominator (see below), interference w/ RIBEs 4. State vs. federal actor state gets more flexibility w/ prop rightsPruneyard (vs. K-A) 5. Singling outPenn Central (concentration of burdens can make it a taking) 6. Average reciprocity of advantage Brandeis & Holmes dispute in Mahon 7. Whether property was already open to publicPruneyard 8. Whether the property could have been used in any other wayK-A vs. Nollan 9. Whether any kind of compensation was provided development rights in Penn Central 10. Duration of regulationTahoe-Sierra
d. How do you determine the denominator? i. Conceptual Severance allowed

1. 2. 3. 4. 5. 1. 2. 3.

Mahon Holmes (majority): denominator was pillars of coal that had to remain in place Keystone Rehnquist (dissent): support estate = denominator, recognized by state law Lucas Scalia (majority) (dicta, n. 7): court has made inconsistent pronouncements; may turn on how owners reasonable expectations have been shaped by state law recognition of particular interest in property (but see Keystone state law recognition of separate estate not dispositive; merely legalistic distinction) Palazollo Kennedy (majority) (dicta): discomfort w/ logic of this rule (of using the whole)

ii.

Tahoe Thomas (dissent): denominator may be temporal slice Only evaluate as a whole Mahon Brandeis (dissent): denominator should be all the property of the coal company Penn Central Brennan (majority): denominator is parcel as a whole: Post hoc conceptual severance not allowed ; Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. Keystone Stevens (majority): parcel as a whole (does not turn on legalistic distinction of whether state law allowed separate sale of the segment of property, i.e., support estate)

Page 66

Cheat Sheet
e. Tahoe Stevens (majority): must consider parcel as a whole, measured in metes and bounds and term of years rejects temporal conceptual severance Is this an inherent limitation on title, such that no literal taking at all? (logically antecedent inquiry) i. Baseline: Any limitation must inhere in the title itself, in the restrictions that background principles of the States law of property and nuisance already place upon ownership. (Lucas) Whats included?

4. 1. 2. 1.

common, shared understandings of permissible limitations derived from a states legal tradition (Palazzolo)

ii.

f.

CL nuisance (public or private) Restatement balancing test (Lucas) (2) Prescriptive easement; (3) Implied easement; (4) Customary rights e.g., custom-created public easement (e.g. Oregon); (5) Public trust; (6) Navigational servitude; (7) Necessity (e.g. govt destroying house to save town from fire); (8) Some statutes (e.g. zoning laws?); (9) Immutable core of privacy rights? for liberals: privacy/autonomy; for conservs: economic J. Marshall (Pruneyard Concurrence) (10) Also inherent limitations on right to possess (AP), convey (system of estates), constitutional rights, etc.see chart! 1. In other words, the law or decree must do no more than duplicate the result that could have been achieved in the courts under the States law of private nuisance, or by the State under its complementary power to abate nuisances that affect the public generally, or [necessity cases]. --Lucas iii. Statute doesnt become baseline just by passage of title to new ownerPalazzolo Post-regulation gamemanship to manipulate denominator i. Claim: Bldg setback eliminates all econ. viable use of 10-ft strip, which is all D owns & therefore denominator; fact that setback was in place before Ds purchase doesnt nec. bar challenge (Palazzolo). ii. Arguments against: (1) Judge takings claim at time of regulation (O2s claim is merely derivative); Post-regulation severance cant create a taking; (2) OConnors view O2s RIBEs werent very reasonable weaker argument; (3) Refuse opportunistic claims where no purpose whatsoever to the purchase but a takings claim. Bar opportunistic takings claim by one who buys 100%-restricted prop. segments w/ no explanation or purpose other than takings challenge; (4) Sometimes can argue regulation is inherent limitation on title anyway.

Page 67