Property Law Outline
Constructive Possession - All but reducing to possession is not the same as possession. A judge would infer based on the facts that there was possession if there was no physical possession. This gives someone rights to minerals/resources beneath the surface ofproperty owned.
Occupancy - The second element of possession which requires that there is actual controlling or holding of the property to be called the possessor.
Possession - Two elements are required, intent to possess and occupancy.
Real Property - Land and improvements
Personal Property - Moveable property.
Doctrine of Misappropriation - When a plaintiff has by substantial investment created an intangible thing of value not protected by patent, copyright, or other intellectual property law, and the defendant appropriates the intangible at little cost so that the plaintiff is injured and plaintiff's continued use of the intangible is jeopardized, an action for misappropriation would lie.
Quasi Property - Property which is property for some purposes, but not for others. For purposes of burial and death, organs can be considered quasi property
Conversion - The act of changing from one form to another inconsistent with another's right whereby that other person is deprived of the use and possession of the property. Using one's property as your own.
Bailment - the relation created through the transfer of possession of goods or chattels, by a person called the bailor to a person called the bailee, without a transfer of ownership, for the accomplishment of a certain purpose, whereupon the goods or chattels are to be dealt with according to the instruction of the bailor.
Replevin - The true owner or rightful possessor can recover the property itself plus money damages for any injury to the asset.
Trover - The action or monetary compensation conversion of personal property.
Subrogation - Succession to another's right or claim. If sued for conversion, and you pay for the cost of the item taken, you then have the rights to the item.
Lost Property - Property the true owner unintentionally and unknowingly drops or loses, and if found goes to the finder as right below the true owner.
Mislaid Property - Property the true owner intentionally placed in a given location and then left, or intentionally left intending to return for it later. If found belongs to the owner or possessor of the premises as right below the true owner.
Abandoned Property - Property the true owner intentionally and voluntarily relinquished with the intent no longer to own the object and without transferring his rights to another person. Goes to the finder
Treasure Trove - Gold, Silver, some jurisdictions currency, intentionally concealed for so long that the true owner has since died. Goes to the finder.
Constructive bailment - A bailment that arises when the law imposes an obligation on a possessor of personal property to return the property to its rightful owner as with involuntary owner.
Ø Possession
Elements
1) An intent to possess on the part of the possessor
2) Actual controlling or holding of the property (Dominion or Control)
a. This does not necessarily constitute ownership.
b. Possession does not always require physical possession.
c. Dominion or Control may be manifested by keeping others away
ü Acquisition of Property by Discovery, Capture, Creation
vDiscovery
Johnson v. M'Intosh
FACTS: This case involved who had the rightful title to land habitated by Native Americans such that the land could be sold. One man bought a title from the US Government, another man bought from the natives.
REASONING: The general idea of the case is that the US Supreme Court justified the taking over of land from the Natives originally on the land because not only was labor put into the land, but that the Natives were treated as a conquered people. Natives were allowed to habitate on the land, but were never considered the owners of any land they lived on. Native Americans believe in community land while the European system which we adopted was exclusionary.
vCapture
Pierson v. Post
FACTS: This case was about Post, a hunter, who chased and shot a wolf in the woods which were unowned. Pierson happened to see the fox still alive, mortally shot the wolf and captured it. Post sued because he felt the fox should have been his. The question was how much effort must be put into a fox and who has rightful possession over wild animals?
REASONING: The ruling was that in order to have possession of the fox you must have occupancy - Corporal Possession. Pursuit alone vests no property or right in the huntsman; and that even pursuit accompanied with wounding, is equally ineffectual for that purpose, unless the animal actually be taken. Since the second element of possession was not present, no fox.
DISSENTING OPINION: Post's pursuing the fox put him in possession of the fox due to the time, labor, and energy invested in the capture. The law however says that there is no minimum or maximum limit on any of those three and thus, Post doesn't get the fox.
Ghen v. Rich
FACTS: A whaler uses a harpoon to inflict a fatal blow upon a whale in Cape Cod. The whale usually sinks and then eventually floats and washes ashore where someone on the beach can find the whale and receive a finders fee. In this case, the man who found the whale sold it to Rich who then used it to process the oil for heating lamps.
REASONING: The court found for Ghen and gave him the value of the oil sold minus cost of processing the oil. The court used a ruling based on custom here.
DIFFERENT FORMS OF CAPTURE
Capture through chase - physical grabbing of the beast without losing control. Chasing alone is simply not enough. Even if time, effort, and labor have been spent.
Mortal wounding - the wild animal is dead, or will not survive with the injury sustained. Trapping is insufficient here, the physical possession is still required. There must be a "manifest intention" to seize the animal - that the pursuer planned to capture and kill the animal, not just for fun.
Custom - As seen in Ghen v. Rich, judges will look at the particular custom to decide who has rightful possession. Although, the judge in Pierson did not use custom to decide the rightful owner of the fox in Pierson v. Post.
WHEN TO USE CUSTOM
1) When its application is limited to the industry and those working in it
2) When the custom is recognized by the whole industry
3) When the custom required in the first taker the only act of appropriation that is possible.
4) When the custom is necessary to the survival of the industry
5) When the custom works well in practice
WILD ANIMALS
1. As seen in Pierson v. Post and Ghen v. Rich, wild animals are generally held that since no one owns them, whoever acquires possession of a wild animal is entitled to the rights of the animal. In Ghen, it was the whale oil, in another case it might possibly be the meat.
2. Possession ratione soli - the owner of the land has sufficient possession of the wild animals on the land to start a hunt for them, as well as the right to pursue them while on land.
3. If the animal is marked and then escapes, it is still property of whomever marked the animal so long as the owner makes every effort to recapture the animal.
vCreation
If you create something - if in that sense you are first in time - then that something is most certainly yours to exploit.
International News v. Associated Press
FACTS: International News was taking news that Associated Press was reporting on bulletin boards and selling it to its vendors and taking in a profit.
REASONING: While news itself is meant to be free, the court ruled that while the news was "hot news," it was sufficient to justify an injunction against INS until the commercial value of the stories dissipated. This was under the doctrine of misappropriation. There is a property interest, the right to sell the news, the right to "bring the whale to the beach" is bring interfered with.
ü Property of Ones Person
Property Interests
1) Name
2) Likeness
3) Right to Exclude
Moore v. Regents of California
FACTS: This case dealt with Moore who had to lose his spleen which if not removed would have been fatal. The doctors then used the spleen to create cures for diseases estimated to be worth billions of dollars. Moore felt he was entitled to some of the money and filed suit saying this was his spleen and that the doctor's actions were conversion.
REASONING: The court ruled that once the spleen left his body, he no longer had possession over the spleen. While the doctor was at some fault for not telling Moore the future intention of the spleen, Moore's only connection to the spleen after it leaves his body sans a contract is that he may dictate whether he does not want the spleen to be used for future medical testing.
Traditional Rule: One does not have property in excised body parts. Moore put no effort or labor into creating the cure, the only significance is that his spleen was used.
The Right to Exclude - Generally deals with not letting one onto your land, or limiting their rights while on your land.
Jacque v. Steenberg Homes Inc.
FACTS: Steenberg needed to deliver a mobile home and the option was either to drive it up this road in snow which would take many days, or straight through a neighbor's property. The neighbors said NO and Steenberg did this anyway.
REASONING: The US Supreme Court recognized the private landowner's right to exclude others from his or her land as one of the most essential property rights we have. The piece of property that consists at a corner will exist there, won't exist anywhere else. The uniqueness of that property extends to the notion that if there's a physical interference, it might alter the uniqueness.
State v. Shack
FACTS: Defendants work for a non-profit organization and entered on private property to aid migrant farmworkers employed and housed there. Defendants wants to speak to a couple of migrant workers, the landowner would allow entrance to the land, but required that any conversations done with migrants be done in land owners presence as well. Defendants were convicted of trespassing after refusing to leave at the request of the land owner.
REASONING: The court ruled that the ownership of real property does not include the right to bar access to governmental services available to migrant workers. Title to real property cannot include dominion over the destiny of persons the owner permits to come onto the premises. Human interests supersede property interests. Both cases show that we receive our rights of property from the government. They are not ours that we created, but rather are granted them because of the laws.
Ø Acquisition of Property by Find, Adverse Possession, and Gifts
Compensation
Replevin – Return property
Trover – Cash value of property
ü Find
A finder of lost property has greater rights to the found property than all the world except the true owner.
1) First takes control of the lost property with
2) An intent to maintain possession of the property
3) The finder of lost property is considered to be a bailee for the true owner.
Difference between “Lost” and “Mislaid” and “Abandoned”
1) Where it is found – would a reasonable person conclude that the owner had accidentally and involuntarily parted with possession of it and does not know where to find it? (LOST)
2) Was it intentionally placed there and forgotten? (MISLAID)
Property May Be Claimed By: (Except against true owner)
Mislaid - kept by owner/possessor of premises
Lost - kept by finder who exercises possession
Abandoned - kept by finder who exercises possession, previous owner has no title rights,
Treasure Trove - kept by finder
Who May Claim (EXCEPTIONS)
1) A person who trespasses and finds lost/abandoned/treasure trove cannot claim the property.
2) If the lost article was found in a private place, (a home), the owner owns everything in there.
3) If the lost article was found in a public place (the yard), the finder gets it.
4) A finder on property for limited purpose must relinquish any found property to the landowner.
5) Property buried in the soil is considered to be property of the owner, not of the finder.
6) In the master-servant relationship, if lost property is found by the servant in the course of work for the master, the master is entitled to the property.
Armory v. Delamirie
FACTS: Plaintiff is a chimneysweep who finds a ring and brings it to a jeweler's shop. The jeweler's apprentice looks at the ring and after weighing the ring took the stones out and returned just the ring. The chimneysweep filed suit asking for trover, or the value of the stones in the ring.
REASONING: The court ruled that the plaintiff was the rightful keeper over everyone except the true owner. The judge also required that since the stones were gone, the most value of the most expensive possible stones were to be given to the plaintiff.
NOTE: Establishes the first-in-time doctrine. A few courts hold that an action in trover is only allowed if the plaintiff shows either that he had title or that his possession was rightful.
Hannah v. Peel
FACTS: While being stationed in Major Peel's home, Sergeant Hannah discovered a brooch on top of a window frame. He later informed his commanding officer of the find.
REASONING: The question of whether this property could be considered lost or mislaid was settled by the fact that it was so well hidden and not in a place that a reasonable person would expect to leave it. The brooch was awarded to Hannah as well as to promote social responsibility, that people who find things should report the findings. Had the court given Peel the brooch, it would promote people hiding items they find. Another reason given was that Peel did not use the house as a residence, therefore the mislaid property argument still would not work. Peel did not use the house as a residence either. This was also an example of constructive bailment.
McAvoy v. Medina
FACTS: A pocketbook is left on a table in a barbershop and is picked up by another customer. He leaves it with the owner, the defendant, and if no one claims it, he wants the money.
REASONING: The court ruled that the property was accidentally left behind and it was the duty of the defendant to care for the lost article until the owner returned. Had it been placed on the floor, the plaintiff would have property rights.
ü Bailment
BAILMENT – A bailment is the transfer and delivery by an owner or prior possessor of possession of personal property to another
1) whose purpose in holding possession is often for safekeeping or for some other purpose more limited than dealing with the object or chattel as would its owner and
2) where the return of the object or chattel in the same or substantially the same undamaged condition is contemplated
Notes:
- It is the duty of the bailee to go forward with proof that the loss or injury is excusable.
- If a person who is entrusted with the goods of another for a particular purpose puts them into the hands of a third person contrary to orders it is a conversion.
- If something is concealed within the bailed property, then the bailee is not responsible for that property unless they are made aware of what is in that property.
Elements:
1) Delivery of possession (Or by find/mislaid)
2) Actual Delivery (Constructive delivery is allowed when actual delivery is physically unreasonable, symbolic delivery usually by a written instrument)
3) Acceptance by bailee of the goods
Constructive Bailment – without actual delivery/acceptance, a constructive bailment arises when possession of personal property is acquired and retained under circumstances in which the recipient should keep it safely and return it to its owner.
Park and Lock Cases (PARKING) – “Lease” versus “Bailment”
1) If you only park in a spot, leave your car and pay money, this is a lease. Although, the owner is still responsible for damages to the car where the attendant was on notice.
2) Does the owner of the car give up all possessory rights (keys)?
3) Does the owner give up access to the car? (Valet perhaps?) (Gated Entrance?)
4) Is there a ticket given at an entrance booth along with a time/date or Identification of the car?
5) Is the risk of harm to the vehicles and contents foreseeable (Previous History?)?
6) To be included within the bailment, the contents had to be plainly visible or of a kind normally kept in a car.
Safe Deposit Boxes – If the bank has absolute control of the safe deposit box, it is a bailment. For example, in order to enter you need the bank’s key along with your key as well.
Damaged During Bailment
The general rule is that where goods bailed for a fee are damaged or destroyed, presumption of negligence is imposed on bailee once bailor proves fact of bailment and damage to bailed goods. Burden of going forward with evidence shifts to the bailee to show that he was not negligent or to explain that his conduct was not the proximate cause of the accident. If factual preconditions are met, bailee must then shoulder burden of showing lack of fault.
Misdelivery – Why Burden of Proof of Negligence on Bailee – Assuming Bailment is proven
1) The bailee knows the history of the bailment
2) The bailee has the right to sue thieves and converters of the chattel
3) The bailee is in the best position to take steps to secure the recovery of the chattel
4) The risk of damage or misdelivery is best borne by the bailee since it can spread the risk in its charges to its customers.
5) The assignment serves to prevent the bailee from engaging in fraudulent misdeliveries or other acts.
Standard of Care Expected During A Bailment
1) gratuitous/involuntary-responsible for gross negligence
2) non-gratuitous/express-reasonable person standard of care
3) sole benefit of bailee-extraordinary care (borrowing car)
4) sole benefit of the bailor-ordinary care
Peet v. Roth Hotel Co.
FACTS: The defendant operates the St. Paul Hotel in Minnesota. Mr. Ferdinand Hotz is a manufacturing jeweler who makes seasonal trips to the St. Paul Hotel. While there, plaintiff's engagement ring was made to order by Mr. Hotz. Upon inquiring about a repair, the plaintiff left the ring with a cashier at the hotel to be picked up by Mr. Hotz. The cashier took the ring and put it in an envelope and labeled it for Mr. Hotz. It is conceded that it was immediately lost, doubtless stolen, probably by an outsider. The loss was not reported until the plaintiff inquired about the ring.
REASONING: Error is assigned upon the supposition that there was at a least a question of fact whether the evidence showed the mutual assent prerequisite to the contract of bailment which is the sine qua non of a plaintiff's case. In this case, the plaintiff delivered and the defendant accepted the ring with its identity and at least its outward character perfectly obvious, that the ring was worth a good deal of money. The mutual assent necessary to a contract may be expressed as well by conduct. Defendant's liability is for negligence.
Staheli v. Farmers’ Cooperative of Southern Utah
FACTS: The Stahelis hired the defendant, Farmers' Coop. to store barley pursuant to an oral contract of bailment. Fire of an unknown origin destroyed the warehouse and a large part of the stored grain. The Coop is engaged in the business of providing grain storage for local farmers. Generally it stores the grain in steel facilities, but in the fall of 1976, the Coop's warehouses were full. They leased half of a potato cellar, the other half was retained by the owner. There was no wall or partition between the two halves of the pit and on the owners' side of the pit were burlap bags and a smudge pot containing oil left by a prior user of the pit. The farmer whose grain was stored in the potato pit knew that the Coop was using that facility for their grain. The potato pit was made primarily of wood and was surrounded by grass all of which could be engulfed in flames. The doors to that part of the cellar were opened and closed by an electric motor which was not operating, so the doors were frequently left open.
REASONING: The Stahelis knew that their grain would be stored in the potato pit and that the owner of the pit retained possession of half the facility. Defendant exercised the care that could reasonably have been expected under the circumstances and that no negligence on the part of the Defendant was shown by the Plaintiffs, and without a showing of negligence on the part of the defendant, defendant is not responsible for the fire of unknown origin which caused the loss. Furthermore, all of the parties were aware of the easy access to all parts of the potato pit at all times crucial herein; and most if not all, along with the third-party owner of the potato pit and others, were in and out of the premises as they desired or as their business dictated. Little or no concern was expressed by anyone concerning the other stored equipment or materials, which plaintiffs would now have this court find constituted an unreasonable risk of loss that actually occurred or that the defendant has a responsibility under the law to control transients at or near the premises, which plaintiffs allege may have caused the fire. The burden of proof remains with the bailor, but the burden of going forward with the evidence shifts to the bailee to show he was not negligent or to explain that his conduct was not negligent or to explain that his conduct was not the proximate cause of the accident.
McGlynn/Backer v. Newark Parking Authority
FACTS: McGlynn and Backer parked their cars in the Military Park Garage owned by the defendant. While the cars were parked, vandals damaged their cars and stole property as well. At this garage, drivers receive a printed ticket upon entering, park in any available space, lock their automobiles, and retain the keys. To exit, a driver must stop the car at a toll booth, present the ticket, and pay the parking fee. McGlynn locked his car and retained his keys. When he returned later that day, he noticed someone had slashed his convertible top and stolen his portable cassette recorder along with forty cassettes. The recorder had been located in the cradle between the two front seats and the cassettes were stored in a plastic container on the floor behind the front seat. Backer parked his car overnight and when he returned the next morning, his antenna was broken and four hubcaps were missing. The supervisor later conceded that there had been prior incidents of theft and vandalism. Supposedly garage attendants and local police patrol the garage.
REASONING: The Authority knew of prior incidents of vandalism; the Authority also controlled access to the parked cars. The prior incidents of vandalism indicated the foreseeability of the risk that criminal acts of others would cause harm to the automobiles and their contents. This foreseeable risk of harm extended not only to the parked cars, but to all items that the garage operator would reasonably expect to find in the cars. The operator of an enclosed garage is under a duty to exercise reasonable care to protect the parked cars and those items one would expect reasonably to find within them. The Authority as the owner and operator of a garage controlled the premises. It had a duty to take reasonable measures to protect the parked vehicles and their reasonably expected contents from the criminal activity of others. The Authority here was obliged to come forward with proof that its negligence did not cause the loss or that it exercised due care. In McGlynn, the verdict is not against weight of the evidence and there was not rebuttal of the presumption in Backer.
Shamrock Hilton Hotel v. Caranas
FACTS: Caranas were guests in the Shamrock Hilton Hotel. The couple had dinner in the hotel in which they were staying. Following dinner the couple left the table, but Mrs. Caranas left her purse behind. The busboy picked up the purse and gave it to the cashier. The cashier gave the purse to a man other than Mr. Caranas who came to claim it. There was no testimony over whether or not identification was sought by the cashier. The purse contained $5 in cash and $13,062 worth of jewelry.
REASONING: The delivery and acceptance were evidenced of a constructive bailment of the purse in the acts of Mrs. Caranas' unintentionally leaving her purse behind in the restaurant and the bus boy taking it to the cashier who accepted the purse as lost or misplaced. The delivery need not be a knowingly intended act on the part of Mrs. Caranas if it is apparent she should have desired the person finding the article to have kept it safely for its subsequent return to her. The bailment was one for the mutual benefit of both parties. Mrs. Caranas gets her purse back, the indirect benefit to the hotel is the continued patronage of the hotel by customers who have lost chattels and have been able to claim them from management. The appellants owed the appellees the duty of reasonable care in the return of the purse and jewelry, and the hotel is therefore liable for its ordinary negligence.
ü Adverse Possession
Adverse Possession – Process through which a person who uses property for a statutorily determined period of time becomes the owner of the property and defeats all rights of the person with legal or record. As soon as a statute of limitations has passed, the adverse possessor can eject the rightful owner. In order to get title, they must go to court, however. This does not work for public, government owned land.
Elements “OCEAN”
1) Open
2) Continuous
3) Exclusive and Actual Use
4) Adverse or Hostile
5) Notorious
Extra Elements (NOT REQUIRED but are PERSUASIVE)
6) Claim of Title or Claim of Right
7) Good Faith or Bad Faith
8) Improvement, Cultivation, Enclosure
9) Payment of Property Taxes
Color of Title – When one claims ownership pursuant to a written document (deed) which is usually defective in some manner. The adverse possessor in good faith generally believes they own the land they are possessing.
Claim of Right – Court needs proof that each of the following conditions were met:
Open and Notorious – Use of the property is so visible and apparent it gives notice to the legal owner that someone may be asserting an adverse claim to the land.
Continuous – Intermittent uses usually do not constitute continuous possession but may be continuous in some circumstances such as a hunting cabin during hunting season or cutting timber when appropriate. Possessor must use property as a true owner would.
Exclusive and Actual Use – Gives notice to the legal owner and others who come to the property that the adverse possessor is using the property. Exclusion also shows that the adverse possessor holds the land to the exclusion of the true owner. An adverse possessor can also oust other adverse possessors so long as he or she was there before the other adverse possessor.
Adverse or Hostile – The adverse possessor uses the occupied property without the true owner’s permission and inconsistent with the true owner’s legal rights. ** This is key because a tenant or someone with permission to be on the land cannot claim adverse possession. Intent is irrelevant too.
Difference between Claim of Right and Color of Title
1) Claim of Right does not require Color of Title (Knowingly entering property)
2) Color of Title requires Claim of Right (Mistakenly entering property)
Privity and Tacking – An adverse possessor may eject other trespassers before the S/L runs, as long as the adverse possessor entered first. An adverse possessor may also SELL or GIFT his interest to another person. Adding of time is called TACKING. The relationship is called PRIVITY. Privity occurs by contract of sale, gift or inheritance. Tacking is not allowed without color of title.
Disability (EXCEPTION) – When the owner of property is under disability, the statute does not begin running until the disability has ended. This is under the assumption that the disability existed before the adverse possession began. Once adverse possession begins, and new disabilities (PRISON, MENTAL INCOMPETENCE, MINOR) cannot be used as an exception.
For example, a 12 year old owns property and is being adversely possessed. Once the kid hits 18, even if he is sentenced to prison at age 17, the statute starts to run.
Other exceptions include being out of the jurisdiction and the Adverse Possessor concealing himself.
Van Valkenburgh v. Lutz
FACTS: In 1912, Lutz own two lots, 14 and 15 in some New York Town. To the west is a triangular tract consisting of lots 19-22. Instead of climbing up a steep grade to reach their lots, the Lutz's built a path from lot 19 to reach their lot. By 1920, a partially cleared tract with a one room structure was built on lot 19. In 1928, Lutz lost his job and began selling vegetables and doing odd jobs for neighbors. The garden was on the triangular property. In 1937, the VV's bought the lots west of Gibson Place and built a new home there. In 1946, bad blood grew between the two parties. A year later, the VV's bought the lots 19-22. On the following July 6th, the VV's visited the triangular tract and took possession of it. At this moment, Lutaz agreed to remove his sheds, junk, and garden within thirty days, but he claimed a prescriptive right to use the path. Then the VV's erected a fence across the traveled way that Lutz claimed a right to use.
REASONING: The court held that the possession in this case was not exclusive and continuous because Lutz agreed to remove the shed and junk off the property and did not back down when VV told him to leave. There was no actual possession.
Manillo v. Gorsky
FACTS: Defendant entered into possession of land under an agreement to purchase in 1946. In 1946, defendant’s son build addition onto the house, raised the house, and made improvements. The land encroached onto plaintiff’s land by 15 inches.
REASONING: Intent to encroach is irrelevant, knowledge is what is important. The adverse possessor must be aware of the encroachment, and that is enough. Generally where possession of a land is clear and unequivocal to such an extent to be visible, the true owner is aware of the adverse possession. In this case the encroachment was a very small area that would require the plaintiff to higher a surveyor to make certain that D was on his land.
Howard v. Kunto
FACTS: D’s deed describes a 50 ft wide tract of land but it was not the land that was sold to D. The land sold to D, which D occupied, was the lot adjacent to the lot described in the deed. P surveyed their land to prepare for a sale and discovered that they actually owned the land where the Moyer’s lived and the Moyer’s actually owned the land where D lived.
REASONING: The court rules that the technical requirement of privity should not be applied in this situation b/c it would upset the long periods of occupancy of those who in good faith received an erroneous deed description b/c D’s claim of right is no less persuasive than the purchaser who believes he is purchasing more land than his deed. The technical requirement of privity should not be applied in this case b/c the successive occupants were on land that they in good faith received erroneous deed description. The argument is that there is no privity but that they were occupying the land on their deed it is sufficient color of title. (side-stepping the privity rule).
O’Keefe v. Snyder
FACTS: P claims that the 3 paintings were stolen in 1946 but no report of the theft. P mentioned the theft to the director of the art institute of Chicago. In 1972, P authorized Bry to report the theft to the Art Dealers Assoc of America, which maintains a registry of stolen paintings. In 1975 P learned that the paintings were in a gallery in NYC. In 1976 P learned that Frank had sold the paintings to Snyder (D) and then P demanded that the paintings be retuned. Frank claims continuous possession of the paintings for over 30 years before he sold them to D.
REASONING: The pivotal factor in the outcome is the statue of limitations, which provides that an action for replevin of goods or chattels must be, commenced within 6 yrs after the accrual of the cause of action. Court feels that there should be another condition added to the discovery rule that P should have exercised due diligence in locating and reporting the loss of the paintings.
Discovery Rule - The statute does not start to run until she discovers the location of personal property because personal property is movable and it is unfair to start the statute of limitations until the owner can locate them.
They use the discovery rule, but they have a precondition for using the discovery rule.
They have to be looking for it, diligently
In order to get the benefit for the delay in the start of the statute of limitations, you have to prove that you diligently looked for the property.
distinctions btw real and personal property:
PERSONAL
--movable and concealable - elements of OCEAN are harder and more difficult to apply
--impact on the statute of limitations-different approaches:
1. NJ-starts running from the date the item is missing
NY-starts running from the date of discovery or demand
REAL
--generally know where the land is
--statute of limitations starts to run when the person enters he land
Note: Depending on the state statute, the S/L will begin either when the property is taken, when it is demanded in return, or when it is discovered that it has been taken.
Ewing v. Burnet
FACTS: Plaintiff asserted title to a plot of land on June 11, 1798 through many other contacts. The defendant assumed title to the lot on May 21, 1803. The lot was not fenced, nor had any building or improvement erected on it. The defendant paid taxes on this land from 1810 until 1834. During this time, he also claimed the exclusive right of digging and removing sand and gravel from the lot; giving permission to some, refusing it to others. There was no evidence that from 1803 to 1825, the defendant ever made entry upon, demanded possession, or exercised or assumed any exercise of ownership over it.
REASONING: To constitute adverse possession, there need not be a fence, building or other improvement made; it suffices for this purpose that visible and notorious acts of ownership are exercised over the premises in controversy, for twenty-one years, after an entry under claim and color of title. Where acts of ownership have been done upon land, which indicates a notorious claim in it, and are continued for 21 years with the knowledge of an adverse claimant, without interruption, or an adverse entry by him for 21 years, such acts are evidence of an ouster of a former owner, and an adverse possession against him.
Medonca v. Cities Service Oil Company of Pennsylvania
FACTS: The parties own adjacent lots in New Bedford. It is undisputed that record title has been in the defendant since 1936 and that taxes on the whole parcel have been assessed to it and paid by it to the city since 1936. Since 1936 the defendant has operated a gasoline station on the property. Plaintiffs hold title as tenants by the entirety to the lot adjoining the defendant's. None of them purported to convey the disputed strip to the grantee. The plaintiffs contend that they and their predecessors in title have occupied a strip between their properties for more than twenty years now. There is no doubt the defendant erected and maintained a fence parallel to and more than twenty four feet from its ninety foot west boundary until 1951. There is also no doubt that the plaintiffs made use of the strip for various purposes without objection. There was also a chain link fence erected in 1941. In 1951, the defendant rebuilt the gas station, and during this work the contractor used the disputed area for storage of building materials and equipment for a period of three to four weeks without protest.
REASONING: Plaintiffs and their predecessors had open, continuous possession of the disputed area under a claim of right or title for a period of over 20 years. The only problem is that in 1951, the use of the defendant broke the requisite element for continuity of possession. The removal of the fences and the use of the strip during the remodeling of the station were acts of dominion by the defendant consistent with its title of record.
Remedies of Possessor (Bailee or Finder)
· 3rd party defense: once a wrongdoer responds to claims for property damage by the possessor, the wrongdoer has a defense against a subsequent claim brought by the true owner é basically the 3rd party should not have to pay twice--once to the possessor (bailee) and once to the true owner) – In Armory v. Delmirie – the jeweler wouldn’t have to pay true owner along with the sweep.
· general rule: possessor/finder/bailee can bring action against the wrongdoer b/c otherwise if you do not allow the possessor to bring action and wait for the thru owner, the wrongdoer could escape. Only the bailee can do so though, not the bailor. The bailor can do so only when the bailment has ended.
4 problem? wrongdoer may pay a value that the bailee accepts which may not be the full value and the owner suffers a loss
ü Gifts
Gift – A gift is a noncontractual, gratuitous transfer of property.
· legatee: beneficiary of personal property under will
· donatee: beneficiary of real property
Testamentary Devise – Not a gift. A worthless piece of paper until the creator of the will dies.
Two Types of Gifts
1) Inter Vivos Gift
2) Gift Causa Mortis
Inter Vivos Gift – A gift between living persons
1) There is a clear convincing intent in the donor to transfer the TITLE of the object to the donee
2) The donor in most cases must actually accept the gift
3) There must be delivery.
Gift Causa Mortos – A gift made in the apprehension of death (w/ Mental Capacity)
1) This is a gift inter vivos with the exception that survival annuls the gift, or death of the donee.
2) Control becomes absolute only upon death of the donor.
3) The threat of death must be present – illness, disease
The Following are NOT ENOUGH for threat of death
ü Fear of assassination is not enough
ü Minor Surgery
ü Perilous journey
ü Perilous enterprise undertaken voluntarily
4) Cannot be used to escape creditors
5) Although it isn’t required to be the sole cause of death, the donee must die from the illness, disease, or peril that causes them to make the gift cuasa mortis. This is changing however in most courts so that as long as the person is in apprehension of death, then a gift causa mortis can be made and is effective regardless of how someone dies. (Someone in an accident dies in another accident en route to the hospital)
6) REAL ESTATE CANNOT BE MADE CAUSA MORTIS. Personal Property Only.
Real Property - Land and improvements
Personal Property – Movable objects
Intent to make a Gift
Cannot be subject to a condition precedent (If you do this then you’ll get this). That would be a contract, and you know how much we love contracts.
Delivery - Actual physical delivery when possible.
Constructive Delivery – A big, immovable object can be constructively delivered when physical delivery is impossible or impractical. Keys to a car or safe. Access to the property is transferred.
Symbolic Delivery – A deed to land. A list of items. Whatever delivered stands for the actual property begin given. It is the equivalent, but for purposes of size, the actual item cannot be given.
Acceptance – Usually presumed from the benefit received by the donee.
Exceptions to the Rules of Delivery
1) Checks are not considered proper deliverable instruments because they simply order the bank to perform the delivery of the actual gift, the money. There is no delivery until the bank makes the payment. Therefore, death could cause a problem here. A transferred check does, however, if transferred from a 3d party.
2) Promissory notes are the same as checks
3) Delivery of stock certificates IS a valid gift, even if the donor continues to receive the dividends.
4) Life Insurance Policy is the same as a stock certificate
5) A savings book IS a valid gift if delivered w/ Intent
Intent is not proof of delivery nor all is delivery proof of intent é they are separate element but sometimes they are somewhat connected
Hypo: Irons and Smallpiece case
· Father owns farm and there are horses on the farm. Father says to the son who does not live on the farm that these horses are yours. Father lives for 6 more mos. and the horses stay on the farm and son brings hay to the horses. Father dies and the horses are still on the farm. Father has other kids from 2nd wife. Son goes to the farm to get the horses and wife says no
· Do the horses go to the sons or to the estate?
Answer: There was intent but there is no delivery
Hypo: In re Totten
· A woman sets up a bank account as a trust for the account and lists herself as the trustee. Throughout her lifetime, she deposits and takes money out of the account. When she dies, the trustor tries to collect on the account and other family members try to block this.
· Does he get the money?
Answer: Yes. He gets the account. The gift wasn’t the money, but rather the bank account. There could have been 40 dollars or 40 million.
Factors courts consider when determining whether there is a gift or not:
1. relationship btw the donor and donee
2. oral statements made by the donor to a 3rd party
3. degree to which donee has provided comfort to donor before death
4. mental competence of donor
5. fraud or under influence by the donee
Newman v. Bost
FACTS: On his deathbed, Van Pelt gives Newman a bunch of keys and told her to take and keep them. He desired her to have them and everything in the house. He pointed to a bureau, a clock and other articles of furniture in the house and also everything in the direction of the hall and repeated that everything in the house was hers. The key given to Newman was the only one that opened the bureau drawer which contained a life insurance policy.
REASONING: Where it plainly appears that constructive delivery occurred, for the furniture, that is fine. The problem is that the policy could have been easily attainable by simple request. It is a light document, and the deceased could have mentioned this when describing the gifts given. Therefore, there was no gift, and no life insurance policy.
Gruen v. Gruen
FACTS: Plaintiff seeks a painting which his father promised him upon his death. He concedes that he never had possession of the painting, but that he was given a valid gift of title reserving a life estate for himself. The defendant is the plaintiff's stepmother and denies this. There were three letters written. One promising the painting, another saying that the first letter should be destroyed so that no inheritance tax will have to be paid, and another giving the painting as a gift, but not until after the donor dies. Plaintiff never took possession of the painting.
REASONING: The evidence is all but conclusive that Victor intended to transfer ownership of the painting to the plaintiff when the letter was written, but to maintain possession until he died. The correct test is whether the maker intended the gift to have no effect until the maker's death or whether he intended to transfer some present interest. The delivery necessary here was in title of the painting and acceptance was clearly seen because the gift was of tremendous value to the donee. He made many statements acknowledging the gift to friends and retained the two letters for 17 years.
Newell v. National Bank
FACTS: Decedent sent for plaintiff and gave him a diamond ring. He caused the ring to be delivered to the plaintiff. This was during a time of illness when decedent was expected to die. Mr. Reynolds recovered from his illness and continued to live for four more years. The gift was viewed causa mortis, but the gift cannot be established since a gift causa mortis requires that recovery of health leads to a revocation of the gift.
REASONING: The test for inter vivos is whether the donor intended the gift to take effect irrevocably and unconditionally whether he lives or dies. There is evidence that the decedent wanted the plaintiff to have the ring whether he lived or died while on his apparent deathbed. Plaintiff did not want to wear the ring and was willing to return it to the testator as long as he lived. Because the plaintiff when not accepting the ring, accepted the title to the ring. Therefore, possession by the decedent was a bailment.
In re Estate of Arthur Evans
FACTS: Appellant is the niece of Evans' deceased wife, and cooked for the deceased. The deceased even moved into the appellant's home. Months later, the deceased went to the bank and after working there for an hour, gave the keys to the box to the appellant. Various witnesses presented statements by Mr. Evans to the effect that the contents of the safe had been gifted to the appellant. Reverend Cummings even visited Mr. Evans and was told that the keys and possession of the deposit box were for the appellant.
REASONING: There must be evidence of intent to make a gift and an actual or constructive delivery. The donor from this delivery must have sole dominion over the property with complete control. In this case, the appellant did not have dominion and control over the box even though she was given the keys to it. The box remained registered in Mr. Evans' name and she could not have gained access to it even with the keys. The deceased was a shrewd investor, familiar with banking policies, and could have made a delivery in a number of simple ways such as changing the title of the box.
Scherer v. Hyland
FACTS: Catherine Wagner and the plaintiff, Robert Scherer lived together for 15 years prior to Wagner's suicide in January 1974. Before the suicide, Wagner received a check for a settlement for an accident she and the plaintiff were involved in. Wagner, who had previously and recently attempted suicide, endorsed the check in blank, left this on the kitchen table along with letters expressing love for Scherer and also a request that the plaintiff take the check and all of her possessions. The door was locked behind her before she jumped from the top of her building.
REASONING: Constructive delivery would be adequate in a gift "causa mortis" when the evidence of donative intent is concrete and undisputed. Steps taken by the donor must have been deemed by the donor as sufficient to pass the donor's interest to the donee. There were multiple reasons in this case. First, the check being endorsed, the decedent locked the door, to which Robert Scherer was the only other person with routine access, and that the check was left out plainly clear for him to see. When she left the apartment, she completed constructive delivery. Death is no less impending because of a resolve to commit suicide. The only question of whether the donee should have accepted the gift before death can be answered that he cannot be expected to unless he learns of the gift offer. Before the donee is informed, it is presumed that he will accept.
ü Bona Fide Purchaser (Good Faith Purchaser)
The Bona Fide Purchaser – A person who purchases (Payment required) honestly and without notice of any conflicting claim on the property bought, whether or not the purchaser is negligent.
Owner --------------------à Middle Man ----------------àBona Fide 3d party Purchaser
Owner tries to make a claim against the 3d party purchaser
General Rule of Purchases: No one acquires any greater title than the previous person they buy from (or steal).
Exceptions to the General Rule
1) Entrustments
2) Good Faith Purchasers
UCC §2-403 [BONA FIDE PURCHASERS]
· a purchaser acquires title to the same extent as the seller’s title-void title remains void titles
· a seller w/ voidable title can transfer good title to a bona fide purchaser
· middle man still has voidable title even though:
(a) Original owner was deceived as to the identity of the middle man - FRAUD
(b) The delivery was in exchange for a bad check
(c) It was agreed that the transaction was to be cash but before original owner gets the $$$, it is sold to a 3rd party
(d) Even though the fraud is punishable as a crime it is not a theft in terms of title (voidable not void)
(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him the power to transfer all rights of the entruster to a buyer in ordinary course of business.
(3) “Entrusting” includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under crim law.
A Bona Fide Purchaser is a person who acquires title in:
(1) In a transaction in which a fair market value of the object is the consideration
àDonee does not qualify as a BFP – it must be a purchase
(2) With an honest belief that he was acquiring title to the object
àHe must not know that there is a true owner
(3) Under circumstances that would not lead him to think otherwise.
àHe must investigate with due diligence
UCC 1-201 There are certain circumstances were the title is not void and actually voidable and can become good title to the bona fide purchaser and the original owner will be denied recovery from the 3rd party:
(1) apparent authority-owner willingly participated in the authority or ownership which would render the middle man’s interests voidable and not void b/c the middle man does not steal the item (O’Connor case)
(2) fraud-where the middle man has got the property by fraud not theft (Phelps case)
(3) entrustment
Apparent Authority - BE CAREFUL!!
Difference between apparent agency and apparent authority
· Apparent Agency-makes is look like you are working for the owner and the $$$ from the sale would go to the owner and there is no transfer of title to the agent, therefore no voidable title ie. In O’Connor case if Tracy said he was an agent of owner, the bona fide purchasers are not protected
· Not all agents have apparent authority, it depends on the amount of power that the owner gives to the agent
Under Entrustment, the Sale is legit when:
1) Done in the ordinary course of business
2) The buyer in the ordinary course of business acts in good faith and does not know that the property does not belong to the merchant.
3) The more unique a piece of personal property becomes, the less it fits into the exceptions. The purpose of the entrustment exception is to support the particular economic and commercial model.
O’Connor’s Adm’x v Clark
FACTS: P had a wagon built and directed the builder to print “George Tracy, Piano Mover” on the side. Later Tracy attempted to sell the wagon. He ran into D who agreed to buy both the horse and wagon for $125. But before he paid, D went to the police station to verify that Tracy was the George Tracy on the wagon. P claimed that the wagon belonged to him and that he was the owner of the wagon and Tracy did not have permission to sell it.
REASONING: D had good title over P b/c the title from the middleman was voidable and not simply void. The court points out that there are 2 things that must occur to create an estoppel by which an owner is prevented from asserting title and is deprived of his property by the act of a 3rd person. 1. The owner must have given the person assuming to dispose of the property the apparent title to or authority to dispose of it. 2. the person alleging the estoppel must have acted and parted with value upon the faith of such apparent ownership or authority so that he will be the loser if the circumstances are not as how he perceived
Phelps v McQuade
FACTS: Gwynne represented himself to P as a Baldwin Gwynne, when in fact he was Walter Gwynne. Relying on this info and thinking the Gwynne they were dealing with was a man of a certain financial responsibility, P delivered jewelry to Gwynne on credit. Gwynne then sold the jewelry to D who bought it without any notice of defect in the title and for value.
REASONING: The court ruled that P does not retain title to the property b/c it was his intention to sell the property and the middleman received voidable title, which can be transferred to a bona fide person. The court held that if a person obtains the property by larceny then titled has not passed. It is a void title. But if there is no larceny and it is obtained by fraud, a voidable title has passed. The appeals court expands on that statement of the law to examine the intention of the plaintiff. If the vendor intends to sell the property with the person he is dealing with, face-to-face, then title passes even though the buyer misrepresents who he is. Exception # 2 fraud: In spite of the deception on the part of the buyer, the vendor’s primary intention is to sell to the person in front of him who he negotiates with. There is a difference if letter conducts the transaction. In these cases, the parties are not negotiating face to face and voidable title does not pass.
A Possessory Estates and Future Interests Primer – Thanks to Florie Knauf – and how about a round of applause for me finally fucking spelling her name right???
(Little Blue Book) – as opposed to the Little Black Book……[that was lame]
Chapter One: Introduction:
The study of temporal division of property interests is the study of possessory estates and future interests.
Both possessory estates and future interest are present rights in that the holder presently has the right to possess the land. That right to possess the land may be immediate, in which case the interest is a possessory interest, or it may be the right to possess the land in the future, in which case the interest is a future interest; in either case the holder presently owns that right. It is not a mere hope, it is a right. In the case of future interest, full enjoyment of the right is delayed, but the right to possess the land in the future is still a present right.
Possessory Estate – the party who holds the right to possess the property right now.
Future Interests – the party who holds the right to possess the property in the future (when the possessory estate ends).
EX: O à A for life, then to B and her heirs
A – possessory estate (right to possess right now)
B – future interest (upon A’s death)
*In construing conveyances, remember that for each conveyance there can be only ONE possessory estate, but there can be more than one future interest. .
Analyzing the possessory estate –
First, identify WHO holds the possessory estate
Second, classify the possessory estate based upon its duration (key is to focus on the express language).
Analyzing the future interest(s) –
First, identify WHO holds the future interest.
Second, classify the future interest based upon the possessory estate which it follows.
Third, indicate the duration of the future interest.
Chapter Two: The 6 Basic Possessory Estates and their Future Interests Pre-1536
Focus on the DURATION of the estate!!!
Fee Simple Absolute – in theory, O has the right to possess the property in question forever, thus there is no future interest. This is the largest, most complete estate a person can hold. It is freely alienable, inheritable, and devisable. There are no conditions on O’s right to use the property. Every possessory estate other than a fee simple absolute is coupled with a future interest.
Words of Purchase – the words in the conveyance which indicate to whom the property is being transferred (“to A”)
Words of Limitation – words which indicate the duration of the estate being transferred. (for FSA these words are “and her heirs”)
Upon O’s death, he can either devise the property as he chooses, or his heirs will get it. But this is not a future interest, it is merely an expectancy.
Fee Simple Defeasibles
Here, the words of purchase and words of limitation are the same, but there are conditions/restrictions that qualify the possessory estate. Because the fee simple interest may end, these two possessory estates are collectively known as Fee Simple Defeasible Estates.
The Fee Simple Determinable – EX: O àA and her heirs as long as A does not sell alcohol on the land
Terminates immediately and automaticalliy upon the occurrence of the express condition.
Language – “as long as/so long as”; “until…”; “during…”; “while…”
The FSD is coupled with only one future interest: possibility of reverter – and this only is coupled with FSD.
The Fee Simple Subject to a Condition Subsequent – EX: OàA and her heirs, but if A sells alcohol on the land, O may reenter and retake the land.
Doesn’t terminate automatically but rather if the subsequent condition occurs, O has the right to re-enter and reclaim possessions, thereby terminating the estate.
Language – “but if…”; “however if…”; “provided that…”
Right of Entry Clause – the express clause in the conveyance giving O the right to reenter and retake the land. The estate does not end until O actually exercises that right and enters the property.
The FSSCS is coupled with only one future interest – right of re-entry and this is only coupled with FSSCS.
Analysis –
Identify to whom the future interest is granted. (Focus on express words of purchase)
Identify the name of the future interest. (unlike possessory estates, whose names are directly related to, and indicate, the duration of the possessory estates, the names of the future interest are not related to their duration but rather depend exclusively upon the duration of the preceding estate which they follow). Focus on what estate does the future interest follow.
Identify the duration of the future interest. (Focus on the express words of limitation in the clause creating the future interest).
Rule: Only the grantor (O) can hold the future interest following each of these two fee simple defeasible estates.
Rule: The duration of the future interest can only be in fee simple absolute.
The future interest for each will always be held by the original grantor (O) and it will always be in fee simple absolute duration.
The Finite Estates – The Life Estate, the Fee Tail, and the Term of Years
None of these estates includes “fee simple” in its name; none of the three includes the phrase “and his heirs” in its words of limitation. These estates MUST end!!
Distinguishing trait is in their duration.
The Life Estate
Typically lasts for the duration of the grantee’s life.
EX: O à A for life.
Words of limitation – “for life”
At common law, the life estate was also a default estate. The default estate is the estate which results if the grantor fails to draft properly one of the other possessory estates. (O à A). But the modern trend is to presume that the grantor intends to convey all that he has in the absence of express words of limitation indicating an intent to limit the estate – thus the modern day default estate is fee simple absolute.
Nature of the life estate is such that the interest is not deviseable or inheritable b/c it expires upon the death of the life tenant (a party to whom a life estate is granted).
Life estate is transferable by the grantee, but only for as long as grantee shall live.
The Fee Tail
In theory, this is a series of life estates in a family blood line.
EX: O à A and the heirs of her body, then to B and his heirs.
Necessary words of limitation: “and the heirs of his/her body”
Grantor can limit eligible heirs of the body of the immediate grantee. (O à A and the male heirs of her body). This can be any characteristic.
Not devisable b/c that would be inconsistent with the idea that the series of life estates remain within the immediate grantee’s bloodline.
Trasnferable to the extent that one can transfer a life estate.
Term of Years
EX: O à A for 6 years/ from January 1, 1995 until December 31, 2000.
Words of limitation: “for (some finite time period)”; “from (a certain date) to (another certain date).
Possible Future Interests to Finite Estates
These future interests can be held by either the grantor or a third party.
Reversion – if the grantor holds the future interest
Remainder – if the third party holds the future interest.
These future interests go hand in hand with the possessory estates!
Chapter Three – Vested and Contingent Remainders
Remember – a remainder is the future interest following a finite estate- life estate, fee tail or term of years – if the future interest is held by a third party (someone other than the grantor, O).
To determine whether a remainder is vested or contingent, you must analyze
(1) the express words creating the remainder
(2) in light of the facts at the time of the conveyance and/or the time of analysis.
Section A – The Test for Vested Remainders
A remainder is vested if the holder of the remainder (the remainderman) is
(1) born
(2) ascertainable (i.e. you can identify the holder by his or her name)
(3) there is no express condition precedent to the holder of the remainder being able to take possession upon the termination of the preceding estate (*Remember to read comma to comma! The express condition precedent HAS to be set forth in the clause creating the remainder or in a preceding clause. The express condition precedent cannot be set forth in a subsequent clause!)
EX #1 – O à A for 10 years, then to whomever is then President of the United States and his or her heirs.
Title – A holds term of years. “Whomever is then President of the United States” – holds future interest, and that interest is a third party, so there is a remainder.
What kind of remainder – b/c we cannot identify him or her by their personal name at the time of the conveyance or at the time of analysis (i.e. right now), it must be a contingent remainder. The person will obviously be born, but since they are not ascertainable at time of reading the will, then it fails one of the requirements for vested remainders and therefore must be contingent
Third prong of the vested/contingent remainder analysis – that there must be NO express condition precedent to the holder being able to take possession of the property upon the termination of the preceding estate.
Must be express – there must be a condition set forth in the words of the conveyance which must be satisfied before the holder can claim the right to possess the property.
EX #2 – The question is whether there is an express condition precedent in the language of the conveyance, either in the same clause creating the remainder or in a preceding clause, which MUST be satisfied before B can claim the right to possess the property at the end of A’s possessory estate.
O à A for life then to B and her heirs
Title – A has life estate, B holds vested remainder (no condition precedent) in FSA.
Because B holds a vested remainder in FSA (as opposed to a finite estate such as a life estate), B does NOT have to survive A to have possessory rights at the end of A’s life. If B were deceased at the time A’s life estate ends, the property would pass into B’s estate and be distributed based on whether B died intestate or not.
O à A for life then to B and her heirs if B survives A.
Title – A has life estate. There is an express condition precedent here (“if B survives A”) – B can only get the land if he survives A. Therefore, for B’s life estate to be worth anything, B must survive A. This is a contingent remainder – the condition precedent must be express, not implicit in the remainder of the estate.
Pre 1536 – if a party held a vested remainder, the party could not lose the right to possession before taking possession!
O à A for life then to B for life.
Title – A has life estate, B has remainder in life estate.
EX #3 – Pre-1536, if a party held a vested remainder, the party could not lose the right to possession before taking possession. That is why the express condition precedent must be EITHER in the same clause creating the remainder or the precedeing clause.
O à A for life, then if A graduates from law school, to B and her heirs.
Title – A has life estate, B has contingent remainder in FSA
O à A for life, then to B and her heirs if A graduates from law school.
Title – A has life estate, B has contingent remainder in FSA.
O à A for life, then to B and her heirs, but if A fails to graduate from law school, the to C and her heirs.
Title – A has life estate.
Here, B has a vested remainder in fee simple absolute. However, the following language tries to condition B’s vested remainder, attempting to deprive B of her vested remainder if A doesn’t graduate from law school. This doesn’t work! If a remainder is vested (pre-1536) the conveyance could not condition the party’s right to possess the property under the vested remainder. Therefore, the clause stating “but if A fails to graduate from law school” after the vested remainder has been established is invalid.
EX #4 – The express condition must be a condition precedent; that is, the condition must be one that has to be satisfied prior to the remainderman having the right to take possession (i.e. prior to end of life estate, fee tail, term of years). Don’t confuse this with the condition subsequent in fee simple determinable and fee simple subject to a condition subsequent!
O à A and her heirs as long as she organically farms the land.
Title – A has fee simple determinable.
O à A and her heirs, but if A fails to farm the land organically, then O has the right to re-enter and reclaim the land.
Title – A has fee simple subject to condition subsequent.
O à A for life, then to B and her heirs if A farm the land organically.
Title – A has life estate, B has contingent remainder (expressly conditioned on A farming land organically). This is a condition precedent, a condition which must be satisfied BEFORE B can be entitled to possessory rights (This is EX #5 in the book on p. 35).
Section B – The Significance of a Contingent Remainder
Rule of Destructibility of Contingent Remainders – contingent remainders must vest at or prior to the end of the preceding estate or at common law they were deemed to have been destroyed by operation of law.
EX: O à A for life, then to B and her heirs if B survives A.
Title – A has life estate, B has contingent remainder (contingent of B surviving A). If B dies before A, the contingent remainder is destroyed – B loses all interest in property b/c B’s remainder was destroyed before it ever became possessory.
Anytime there is a contingent remainder, there must be someone to take the property if the contingent remainder fails to vest in time and is destroyed. When there is no express party to take in case the contingent remainder fails to vest, the default taker is always the original grantor, O.
EX: O à A for life, then to B and her heirs if B survives A.
Title – A has life estate; B has contingent remainder in fee simple; O has reversion in fee simple.
If, however, the contingent remainder were one which could vest prior to the end of the preceding estate, the analysis is slightly different:
EX: O à A for life, then to B and her heirs if B graduates from law school.
Title – A has life estate; B holds contingent remainder (contingent on B graduating from law school).
If the express condition precedent is not satisfied either prior to or at the time A’s life estate ends, the contingent reminder is destroyed pursuant to rule of destructibility.
However, two years after this conveyance if A is still alive, the condition precedent has been satisfied – therefore since B is born, ascertainable and there is now no condition precedent, it is now a vested remainder. Then, O’s reversion is wiped out since there is no longer a need for a default taker.
Section C – Premature Termination of Finite Estate
The common law rule of destructibility of contingent remainders, i.e. that that contingent remainder must vest at or prior to the end of the preceding estate or it is deemed destroyed by operation of law, applies with equal for to the three ways in which a life estate may end prematurely – forfeiture, renunciation, and merger.
Forfeiture – terminates life tenant’s life estate interest in the property. If the contingent remainder had not vested prior to or at the moment of forfeiture, the contingent remainder was destroyed and the grantor’s reversion becomes possessory. (*Doctrine of forfeiture no longer acknowledged).
Renunciation – a life tenant can voluntary renounce his interest in the life estate at any time during the life estate. If the contingent remainder has not vested by the time or at the moment of renunciation, the contingent remainder will be destroyed.
Merger – Doctrine of Merger – if the same party holds successive vested interests, the interest should be merged and re-identified based upon the largest estate created by the merger.
This applies ONLY to vested interest.
To apply, the vested interests must be successive and held by the same party.
EX on Merger Rule – O à A for life, then to B for life, then to C and her heirs.
Title – A has a life estate; B has a vested remainder in life estate; C has a vested remainder in fee simple absolute; O has nothing.
If A transfers her life estate to C, merger does NOT apply. Although C holds two vested interests (vested remainder in fee simple absolute and a life estate), the interests are not successive b/c B’s vested remainder in life estate is between them).
Merger is relevant to contingent remainder b/c the effect of merger is to terminate the life estate (or other finite estate). Coupling the merger doctrine with the rule of destructibility of contingent remainders, when a supporting life estate ends prematurely through merger, if the contingent remainder has not vested prior to or at the moment the life estate ends, the contingent remainder is destroyed.
EX: O à A for life, then to B and her heirs if B graduates from law school.
Title – A has life estate, B has contingent remainder in fee simple; O has reversion in fee simple absolute.
Any time you have a contingent remainder, think about a default reversion in the grantor.
Any time you see an interest being transferred to a party who already holds an interest, check to see if merger applies.
Section D – Alternative Contingent Remainders
EX: O à A for life, then to B and her heirs if B graduates from law school, but if B fails to graduate from law school, then to C and her heirs.
Title – A has life estate; B has contingent remainder in fee simple.
C’s Title – C’s interest is a future interest which, if it were to become possessory, would follow A’s life estate. Therefore, C’s interest is a remainder. Express words of limitation “and her heirs” indicates it’s a remainder in fee simple absolute.
Contingent or vested? There is an express condition precedent (“only if” B fails to graduate from law school), there is an express condition precedent which much be satisfied before C’s interest can become possessory. Thus, C has an alternative contingent remainder in fee simple absolute.
TWIST: as long as the first contingent remainder has not vested, both contingent remainders are subject to the rule of destructibility of contingent remainders through either merger, renunciation or forfeiture.
Analyzing alternative contingent remainders: focus on how the preceding finite estate ends.
If it ends prematurely – only the reversion or the first possessory estate can become possessory. If the first contingent remainder has not vested prior to or at the moment the finite estate ends prematurely, both the contingent remainders are destroyed and the reversion becomes possessory. If the first contingent remainder HAS vested by the premature termination of the preceding finite estate, upon that vesting the alternative contingent remainder and the reversion are destroyed.
If finite estate ends naturally – and you have an alternative contingent remainder, there is no chance that the default reversion will become necessary. The only issue is whether the first contingent remainder has vested or not. If it has, the firs finite estate will become possessory and the alternative contingent remainder and reversion in O are destroyed. If it ends naturally and the first alternative contingent remainder has NOT been vested, the first contingent remainder will be destroyed and the alternative one will become possessory.
Up until now, all of our contingent reminder examples have involved contingent remainders in fee simple. If that is NOT the case, there can be an express gift over to a third party in fee simple which eliminates any need for a default reversion in the grantor.
EX: O à A for life, then to B for life if B graduates from law school, then to C and her heirs.
Title – A has life estate. B has contingent remainder but ONLY in life estate. C’s interest will follow either A or B’s life estate so it is a remainder. Express words of limitation “and her heirs” say that it is fee simple and there is no contingent remainder. Therefore, C has a vested remainder and there is no default reversion in O.
Chapter Four – Suggested Instructions for Analyzing Conveyances
FIRST, analyze the possessory interest –
(1) identify WHO holds the possessory interest (focus on words of purchase).
(2) identify WHICH possessory estate the party holds (focus on the words of limitation in the clause creating the possessory estate).
For each FUTURE INTEREST –
(1) identify the future interest
(2) state the duration of the future interest (focus on words of limitation).
You can also identify all of the parties names in the conveyance who could have a property interest in the conveyance (including the grantor) and to list them.
EX: O à A for life, then to B for life, then to C and the heirs of her body.
Four parties could hold an interest:
A – holds a life estate
B – holds a vested remainder in life estate
C – holds a vested remainder in fee tail
O – depends! (*See pp. 48-50)
Chapter Five – Transferability of the Pre-1536 Possessory Estates and Future Interests
There are three different ways to convey property interest:
Transferability – a property interest is transferable if, while the owner of the property interest is alive, the owner of the property interest can freely transfer it to any third party.
Devisability – a property interest is devisable if, upon the death of the owner of the property interest the owner of the property interest can feely will it to any party.
Inheritability – a property interest is inheritable if the heirs of the owner of the property interest can inherit the property interest if the owner dies without a will (or with a will but it does cover the property interest.)
In looking at whether pre-1536 possessory estates and future interests are transferable, devisable and inheritable, focus on:
The nature of certain possessory estates prevent them from being devisable or inheritable. (EX – a person’s interest in a life estate and fee tail, by definition, terminates upon the party’s death. Therefore, the nature of the estate prevents the interest from being devisable or inheritable. Other than that, there is nothing inherent in the possessory estates and future interests which prevents them from being transferable, devisable or inheritable.
Common law courts created rules to limit the transferability and devisability of some of the estates.
Remember: if a fee simple were to be cut short (i.e. fee simple determinable or fee simple subject to condition subsequent), the future interest had to be in the grantor.
If the future interest were freely transferable or devisable, the grantor could easily circumvent this rule. Accordingly, the common law courts deemed that the possibility of reverter and right of re-entry were only inheritable and not transferable or devisable.
Also, common law courts viewed the contingent remainder with disfavor b/c they viewed it as uncertain. Therefore, they deemed that contingent remainders were not transferable.
Recap – pre-1536, all of the possessory estates and future interests were transferable, devisable and inheritable, to the extent permitted by the nature of the estate with the exception of:
(1) the possibility of reverter and the right of re-entry, which were not transferable or devisable.
(2) the contingent remainder, which was not transferable.
Chapter 6 – The Three Golden Rules and the Post-1536 Estates
These three golden rules prohibited certain estates pre-1536.
In 1536, Parliament passed the Statute of Uses, whose ultimate effect was to permit that which was previously prohibited under the three golden rules, but new terminology was developed to describe the new post-1536 estates.
The key to recognizing the new estates permitted post-1536, and knowing when to use new terminology, is to know that which was prohibited pre-1536 under the three golden rules.
Section A – The First Golden Rule
PRE-1536 – if a fee simple may end early (the fee simple defeasible [fee simple determinable/fee simple subject to condition subsequent], the future interest must be in the grantor.
Distinguishing characteristic of these fee simple defeasibles is that although each contains express words of limitation “and his heirs”, there is additional language implying that the fee simple may end.
In these fee simple defeasibles, only the grantor could hold the future interest!
EX: O à A and her heirs as long as not hunting is permitted on the land, then to B and his heirs.
Pre-1536 – A has fee simple determinable. B cannot have any future interest.
The attempt to create a future interest in B was null and void b/c only the grantor could hold the future interest following a fee simple determinable.
Here, you would strike the offending clause, and would have possibility of reverter in O.
EX: O à A and her heirs, but if she stops farming the land organically, then to B and his heirs.
Pre-1536 – A has fee simple subject to condition subsequent.
Again, there is an attempt to give the future interest following the FSSCS to a subsequent third party – this was NOT allowed!
Here, you would strike the offending clause, and would have right of reentry for O.
Pre-1536, if a fee simple were to be cut short (a fee simple defeasible, be it fee simple determinable or FSSCS), the future interest MUST be held by the grantor.
Section B – The Fee Simple Subject to an Executory Limitation
Post-1536 – A fee simple may be cut short (same words of limitation as the fee simple defeasible) and the future interest may be held by a third party (anyone other than the grantor), but the possessory estate is a FEE SIMPLE SUBJECT TO AN EXECUTORY LIMITATION, and the future interest is an executory interest.
New names: fee simple defeasible = FEE SIMPLE SUBJECT TO EXECUTORY LIMITATION; future interest = EXECUTORY INTEREST.
EX: O à A and her heirs as long as no hunting is permitted on the land, then to B and her heirs.
Pre-1536 – A has fee simple determinable; O has possibility of reverter (nothing for B).
Post-1536 – A holds fee simple subject to executory limitation, B has executory interest in FSA.
Two Types of Executory Interest –
“Springing” executory interests – an interest which springs from the grantor (i.e. if the estate preceding the executory interest is held by the grantor, the executory interest is a springing one)
“Shifting” executory interest – if the estate preceding the executory interest is held by anyone other than the grantor, the executory interest is a shifting one (right to possession simply being shifted from one third party to another).
EX: O à A and her heirs as long as no hunting is permitted on the land, then to B and his heirs
A – holds a fee simple subject to an executory limitation
B – holds a shifting executory interest in fee simple absolute.
The full state of the title should indicate which type it is.
EX: O à A and her heirs, but if she permits hunting on the land, then to B and his heirs.
Pre-1536 – A has FSSCS; B has nothing, O has right of reentry
Post-1536 – A has fee simple subject to executory limitation, B has shifting executory interest in FSA.
When there is no express reference to right of reclaiming or reentry – key is (1) fee simple words of limitation (“and her heirs”), (2) followed by further words of limitation indicating the estate is not a fee simple absolute but rather may end, and (3) the future interest is in a third party. Since this last point was not permitted pre-1536 under the first golden rule, we have to resort to post-1536 terminology.
Remember – the new possessory estate and future interest permitted post-1536 do not eliminate the pre-1536 estates or terminology, rather it is simply an addition to the already existing scheme.
EX: O à B and her heirs as long as she maintains the house on the property.
Here, B has FSDeterminable. Do we change the terminology? NO.
We only change our terminology if the estate in question violated the pre-1536 rule that the future interest had to be in the grantor if the fee simple could be cut short. Otherwise, stick with pre-1536 terminology.
So, post-1536, B would still have a FSDeterminable and reverter in O.
Fee simple subject to executory limitation possessory estate also need not be the first estate.
EX:
O à A to life, then to B and her heirs as long as B farms the land, then to C and her heirs.
O à A for life, then to B and her heirs, but if B fails to live on the land, then to C and her heirs.
Both – B has a vested remainder in Fee simple subject to executory limitation, C has shifting executory interest in FSA.
With the fee simple subject to executory limitation, the first express estate in the conveyance need not be the possessory estate.
EX: O à A and her heirs if she graduates from law school
O still holds possessory estate! A does not have the right to possess the land until A graduates from law school. O has a fee simple that may end, if A graduates from law school.
Pre-1536 – O has FSDeterminable or FSSCS.
Post-1536 – O holds fee simple subject to an executory limitation, A holds a springing executory interest in FSA.
Section C – The Second Golden Rule
Pre-1536 – A party holding a vested remainder cannot lose the right to take possession prior to taking possession
A vested remainder gives the holder the right to take possession of the property at some point in the future, and this right cannot be taken away before the vested remainder becomes possessory.
EX: O à A for life, then to B and her heirs, but if A fails to maintain the wetlands on the property, then to C and her heirs.
A has life estate; B has a vested remainder – for a remainder to be contingent, the contingency MUST be expressed in the same clause creating the remainder or the preceding clause.
The condition affecting the vested remainder can only take affect AFTER the party subject to the condition takes possession of the property.
This condition is attempting to divest (destroy, take away) B’s vested remainder BEFORE B ever has the right to take actual possession of the property. If the condition occurs, B loses her right to possess the property before she ever took possession of the propery.
Pre-1536, this was not permitted since the golden rule was that a vested remainder cannot lose the right to take possession before taking possession. Therefore, prior to 1536, we would strike the offending clause and B would have a vested remainder in FSA.
Section D – The Vested Remainder Subject to Divestment
Post-1536 – A vested remainder may be divested before it becomes possessory. The new estate is a VESTED REMAINDER SUBJECT TO DIVESTMENT, and the future interest which follows it is a SHIFTING EXECUTORY INTEREST IN FEE SIMPLE. (This is the only future interest that can follow).
EX: O à A for life, then to B and her heirs, but if A fails to maintain the wetlands on the property, then to C and her heirs.
A – life estate
B – vested remainder subject to divestment in fee simple
C – shifting executory interest in fee simple absolute.
You need only to worry about this new estate if a vested remainder is there.
That means the first possessory estate in the conveyance must be a finite possessory estate; if there is not a preceding finite estate, the condition cannot be one which could occur before the party could take possession.
EX: O à B and her heirs, but if B fails to maintain the wetlands on the property, then to C and her heirs.
B’s interest becomes the possessory interest.
Subject to divestment component must be the result of an express condition in the conveyance, not merely b/c of the nature of the estate
EX: O à A for life, then to B for life, then to C and her heirs.
A – life estate; B – life estate; C – vested remainder in fee simple absolute.
The vested remainder is subject to divestment only if the vested remainder may not become possessory b/c of an express condition in the conveyance which may occur prior to the vested remainder becoming possessory.
Moreover, the express condition must be in the clause following the clause creating the remainder. If the express condition were in the clause creating the remainder or the preceding clause, the remainder would be a contingent remainder. (EX #15 p. 75).
The vested remainder subject to divestment analysis requires (1) that you find there is a vested remainder; (2) that there is an express condition in the following clause which may divest the remainder of the right to possession before the remainder becomes possessory.
Important point – what if the express condition is one which could occur either before or after the remainder becomes possessory?
EX: O à A for life, then to B and her heirs, but if C graduates from law school, then to C and her heirs.
Note: since the express condition is NOT tied to the land in question, in theory the express condition could occur during A’s lifetime (in which case it would divest the vested remainder). Or it could occur after A’s death, in which case B would have FSSEL and C a shifting executory interest in FSA.
The key is that as long as it is possible that the express condition could occur before the vested remainder takes possession, the vested remainder subject to divestment analysis applies.
Section E – The Third Golden Rule
Pre-1536 – If a remainder is going to become possessory, it must become possessory the instant the preceding estate ends (be it naturally or through merger, forfeiture or renunciation), not a moment after.
Pre-1536 – there could not be a gap between the end of the preceding finite estate and the remainder becoming possessory. This principle applied regardless of how the estate ended – naturally or prematurely through merger, etc.
EX: O à A for life, then one day after A’s death, to B and her heirs.
Notice the gap – at common law somebody had to have the right to possess the property at every point in time.
Default taker – O (reversion)
If we were to give effect to this, we would be cutting short O’s fee simple absolute and the future interest would be in a third party (violation of Golden Rule #1).
Prei-1536 – we strike the offending clause – A has life estate, reversion in O, B gets nothing.
Section F – The “Gap” Scenario – The Reversion in Fee Simple Subject to an Executory Limitation
Post-1536 – If there appears to be a ‘gap’ between the end of the preceding finite estate and a remainder becoming possessory, give the gap to the grantor as a REVERSION IN FEE SIMPLE SUBJECT TO AN EXECUTORY LIMITATION and the future interest will be a SPRINGING EXECUTORY INTEREST.
Sometimes, you have to read the condition carefully to realize that there is a ‘gap’ involved!
EX: O à A for life, then to B and her heirs if B attends A’s funeral.
Condition is contingent on B attending A’s funeral – but this condition can only occur after the end of the life estate.
Chapter 7 – The Bermuda Triangle of Possessory Estates and Future Interests: Distinguishing the Condition Precedent from the Condition Subsequent from the Divesting Condition
RECAP
Condition subsequent – a condition which affects a grantee’s right to retain possession of the property after the grantee has taken possession of the property.
The condition subsequent is the defining characteristic of the fee simple defeasibles – the fee simple determinable and the fee simple subject to a condition subsequent, and fee simple subject to an executory limitation.
The difference between FSD/FSSCS and FSSEL is who holds the future interest following the estate – FSD/FSSCS – grantor; FSSEL – third party.
Only difference between an FSD and a FSSCS is whether the condition subsequent terminates the estate (the case in FSD) or whether the condition subsequent gives the grantor a right to re-enter and termintate the estate (the case with FSSCS).
Condition Precedent – a condition which affects a grantee’s right to take possession of the property before the grantee has taken possession of the property.
The condition precedent is the defining characteristic of the contingent remainder.
EX: O à A for life, then to B and her heirs if she graduates from law school.
O à A for life, then if B graduates from law school, to B and her heirs.
Both of these are examples of contingent remainders – in both the condition concerning B graduating from law school is a condition precedent in that it affects B’s (the grantee’s) right to take possession of the property before B has taken possession of the property.
Typical words of limitation introducing a condition precedent – “if”
Reading comma to comma, the condition precedent introducing a contingent remainder is either in the same clause creating the estate or the immediately preceding clause.
Divesting Condition –
EX: O à A for life, then to B and her heirs, but if A fails to graduate from law school, then to C and her heirs.
Vested remainder subject to divestment. The divesting condition is the condition precedent: B’s right to take possession is dependent upon whether A graduates from law school or not, an event which must occur (or not occur as the case may be) during the life estate prior to B’s remainder becoming possessory. If A fails to graduate from law school, B’s vested right to take possession of the property will be divested. The divesting condition is a condition precedent because it affects the grantee’s right to take possession of the property before the grantee has taken possession of the proprety.
What’s the distinction? In the contingent remainder, the condition precedent is in the SAME clause creating the remainder or the PRECEDING clause and is typically introduced by the word IF.
In contrast, a vested remainder subject to divestment, the condition precedent is in the clause IMMEDIATELY FOLLOWING the clause creating the remainder and is typically introduced by the words BUT IF.
The key is in which clause the condition is expressed! (See EX #4 on page 93 – excellent example)
The key to distinguishing the vested remainder subject to an executory limitation from the vested remainder subject to divestment is when may the condition occur: if the condition may occur before the remainder becomes possessory, the estate is a vested remainder subject to divestment; if the condition may occur only after the remainder becomes possessory, the estate is a vested remainder subject to an executory limitation.
EX: Oà A for life, then to B and her heirs, but if C graduates from law school, then to C and her heirs.
A – life estate
B – vested remainder subject to divestment. But if A died and B and C were still alive, it would be vested remainder subject to executory limitation.
Read example 9 on pp. 96-97
Chapter 8 – One Last Set of Estates – Cutting Short a Life Estate
Since a life estate by definition must end, if a life estate must be cut short, there are two contingencies that must be dealt with:
Who is going to get the life estate if it ends naturally
Who is going to get the life estate if it ends prematurely.
EX: O à A for life, but if A marries B, then to C and her heirs.
Consider TWO points in time – (1) if the condition cutting the life estate short occurs; (2) if the condition cutting short the life estate does not occur but the life estate ends naturally.
The key is to determine if the express words of limitation cutting short the life estate are determinable words of limitation or condition subsequent words of limitation.
Section A – the life estate being cut short by determinable words of limitation.
Classic determinable words of limitation – “as long as…”.
If determinable words of limitation are used to cut short the life estate, the same party will hold the future interest whether the condition occurs or not. The only question then is whether that future interest is held by the original grantor, O, or a third party.
If the future interest is held by the ORIGINAL GRANTOR – A holds a life estate determinable and O holds a reversion in fee simple.
EX: O à A for life as long as she remains unmarried.
A – life estate determinable; O – reversion in fee simple
If the express words of limitation “as long as” are used to cut short the estate and there is an express reference to a third party holding the future interest, the common law deemed that the third party was to receive the future interest whether the condition occurred or not.
EX: O à A for life as long as she remains unmarried, then to B and his heirs.
A – life estate determinable; B – vested remainder in fee simple absolute. (Using the term “remainder” to designate interest to a third party instead of “determinable” for O).
Section B – The Life Estate Being Cut short by Condition Subsequent words of limitation.
If the express words of limitation introducing the condition which may cut short the life estate are “BUT IF”, the key again is who holds the future interest.
If the condition subsequent words of limitation are used to cut short the life estate and the future interest is held by the grantor, either expressly or by default, whether the condition occurs or not, the life estate would be dominated a life estate subject to a condition subsequent, and O would hold a reversion in fee simple.
EX: O à A for life, but if she marries then the estate ends –OR- O à A for life, but if she remarries, then to O and her heirs.
A has life estate subject to condition subsequent, O has reversion in fee simple.
If condition subsequent words of limitation were used and the express future interest is held by a third party – different analysis.
EX: O à A for life, but if she marries, then to B and her heirs.
The key to understanding how to analyze such conveyances is to remember that where the express words of limitation used to cut short the life estate are condition subsequent words of limitations, the common law courts generally construed such language as indicating that the third party was entitled to possession of the property ONLY if the express condition occurred.
Life estate would be life estate subject to executory limitation; third party holds a shifting executory interest.
Chapter Nine – Transferability of the Post-1536 Estates
§ As the above materials demonstrate, the effect of the Statute of Uses was to permit a number of new possessory estates and future interests. As was the case with the pre-1536 possessory estates, the general rule is that the new property interests are all transferable, devisable and inheritable with one notable exception. The common law courts analogized the executory interest to the contingent remainder and deemed it non-transferable.
§ Thus, the contingent remainder and executory interests were non-transferable. The possibility of reverter and right of reentry were non-transferable and not devisable. All of the other possessory estates and future interests were transferable, devisable and/or inheritable to the extent permitted by the nature of the estate (the nature of the life estate and fee tail are the estates where the nature of the estate limits the ability to convey it.)
Chapter Ten – Miscellaneous Rules
Ways to avoid paying the inheritance tax. The common law courts created these rules to eliminate the loopholes in the system.
Section A – The Rule in Shelley’s Case –
Rule in Shelley’s case – if, in the same instrument, a REMAINDER is given to a life tenant’s HEIRS, give the remainder to the life tenant (and check for merger).
EX: O à A for life, then to the heirs of A and their heirs.
State the title: A – life estate, heirs of A – contingent remainder in fee simple; O – reversion in fee simple.
Applying Shelley’s rule – Give A the remainder. Since A is born, ascertainable and there are no express condition precedents, A holds a vested remainder. Since vested remainder is in fee simple, O’s reversion is destroyed. A now holds two interests – merge them to give a fee simple absolute.
The rule only applies if the remainder in the heirs of the life tenant is created IN THE SAME INSTRUMENT as the clause creating the life estate.
The rule applies only if a REMAINDER is given to a life tenant’s heirs (it does not apply if an executory interest is given to a life tenant’s heirs).
EX: O à A for life, then one day after A’s death to A’s heirs and their heirs.
Rule does not apply here, A’s heirs have a springing executory interest.
The rule only applies if the life tenant’s HEIRS hold the remainder.
EX: O à A for life, then to A’s children and their heirs.
Rule does not apply here b/c remainder is held by A’s children, not A’s heirs.
If the rule in Shelley’s case does apply, the merger doctrine often applies but not always.
Section B – The Doctrine of Worthier Title
Doctrine of Worthier Title – if, in the same instrument, any future interest (be it a remainder or executory interest) is given to the grantor’s HEIRS, give the future interest to the grantor (and check for merger). If a will devises to a person a freehold estate of the same quality and quantity which such person would have taken by descent if the testator had died intestate, then such estate passes by descent and not by devise.
EX: O à A for life, then to the heirs of O and their heirs.
State the title: A has life estate, O has reversion in fee simple absolute, O’s heirs have contingent remainder in fee simple.
Give the remainder to O and merge into fee simple.
DOWT applies only if the party holding the interest are the original grantor’s heirs.
DOWT does not apply to grantor’s children, nieces/nephews, etc.
DOWT applies only where the avoidance is attempted in a single conveyance. (Therefore if O conveys a life estate to A, and thereafter O transfers intervivos O’s reversion to O’s apparent heirs, DOWT does not apply).
Section C – The Rule in Purefoy’s Case
Rule in Purefoy’s case – if an interest can be characterized as either a contingent remainder or an executory interest (b/c the condition was such that it could occur during the prior life estate or it could occur after), the interest would be deemed a contingent remainder subject to the destructibility of contingent remainders.
EX: O à A for life, then to B and her heirs if B graduates from law school.
A clearly has life estate.
B – is it a contingent remainder in fee simple (which would give O reversion) or a springing executory interest (which would give O a reversion in fee simple subject to an executory limitation).
Chapter Eleven – Class Gifts
Where there is a conveyance of a remainder to a class, is the remainder a vested or contingent remainder?
Where there is a remainder to a class, once at least one class member vests, the remainder becomes vested. But if the class is such that more individuals can enter the class and vest in the property, the remainder is classified as a vested remainder subject to open (partial divestment).
As each new member enters the class and vests, the shares of each vested member is re-calculated so that each vested member holds an equal share.
There are two ways that a vested remainder subject to open can close.
Naturally (upon parent death)
Rule of convenience – once one member of the class is entitled to take actual possession of the property, the class closes.
EX: O à A for life, then to B’s children and their heirs.
If A is still alive, B is still alive, B has two children X and Y – X and Y have vested remainder subject to open. Assume A dies, but B is still alive.
B can still have more children, but they will not be entitled to the property.
Mahrenholz v. County Board of School Trustees
FACTS: The Huttons conveyed an acre of their farm to the school district under an ambiguous grant “this land to be used for school purpose only; otherwise to revert to Grantors” and the school district build the Hutton School on the land. Later the Huttons conveyed their farm and whatever interest they had to the Jacqmains who then conveyed to Mahrenholz. Now, the school is using the land for storage space and the plaintiff wants the land.
REASONING: Under Illinois law, there is neither a possibility of reverter nor a right of entry which may be conveyed during life or pass by will; such interests may only be inherited. Thus, when the Huttons died, their interest in the School’s land passed to their son. Even though the son conveyed his interest to Mahrenholz, which was a possibility of reverter. In this case this cannot be done because it was a fee simple determinable and the reversionary interest cannot be transferred, only inherited. Had the school violated the condition at the time of the transfer then this would have been OK.
NOTES: This case shows the difference between a fee simple determinable which becomes possessory as soon as the condition is violated, and a fee simple subject to a condition subsequent which requires the grantor to come in and re take the property. The rule preventing a transfer of the possibility of reverter or right of reentry is not followed in many jurisdictions.
Ink v. City of Canton
FACTS: Ink conveyed land to the city of Canton, Ohio so long as it was used for a public park. The state took most of the park by eminent domain to construct a highway, which led to this suit between the city of Canton and those who had Ink’s possibility of reverter.
REASONING: The city needs to pay the holders of the right of reverter for the value of which the land exceeds its value for the specific use for which the park was conveyed.
White v. Brown
FACTS: Jessie Lide’s handwritten will stated “I wish Evelyn White to have my home to live in and not be sold.”
REASONING: The question here is whether this was a life estate or a fee simple absolute. The old common law rule was that it would be a life estate, but Tennessee is going to reverse that and say that unless the words and context clearly evidence an intention to convey only a life estate, the will should be construed as passing the home to Mrs. White in fee. The court then interpreted the “no sale” provision as an invalid attempt to restrain alienation of a fee simple absolute rather than clear evidence of a life estate.
Baker v. Weedon
FACTS: John Weedon devised Oakland Farm to his wife, Anna, for life, remainder to his grandchildren. Over time, Oakland Farm became valuable for development, but produced almost no income to the elderly and impoverished Anna. Anna and the remaindermen could not agree on sale.
REASONING: There were two problems here. First, selling all the property would impinge on the remainderman’s vested rights. Second, it was hard to tell what Anna’s “needs were.”
NOTES: This concerns economic waste. When a life tenant holder takes more from the property than her economic interest, she is said to commit waste. She is said to undermine the permanent value of the property. The remainder person is the holder of the permanent interest of the property.
Future Interests Briefs: Note: See Brendan Greally’s outline for a more comprehensive FUTURE INTERESTS notes
City Bank & Trust Co. v. Morrissey
FACTS: In the will of Margaret Tyne, she left 1/3 her property to each of her three children. Then, at the death of William Tyne, all assets were to be converted into cash and given to the heirs of William Tyne. On November 13, 1980, William Tyne died intestate. This is a suit decide who gets what.
REASONING: Appellants contend that the third element necessary for the application of the Rule in Shelley's case is missing since the estate conveyed to William Tyne and the estate conveyed to his heirs are not of the same quality (legal and equitable). They contend that the interest of William Tyne was in quality and the heirs' interest was in personalty. The appellants argue that the title to real property was vested in the heirs immediately upon the death of William Tyne since the Trustee's legal title ended upon the death of William Tyne and the immediate vesting makes their interest legal, not equitable. In this case, however, it is apparent that the will gave the trustee the power to convey, manage and sell, which powers lasted after the life of William Tyne, as such the heirs' interest in the Trust was equitable as was that of the life tenant. Therefore, the Rule in Shelly's case applies and William Tyne received a fee simple interest in the realty of the Trust at the time of its original conveyance and that interest continued even though the realty may later have been converted into personalty.
Estate of Annie I. Kern
FACTS: Annie Kern's husband died and left everything to his son Richard with Annie Kern as the testatrix. Then Richard died right before Annie did, so the question then is, does Annie's family get an any of the goods left for Richard, or does it stay with Annie's husband's family, or both splitting equally?
REASONING: In support of the worthier title doctrine, testatrix' heirs argue that since testatrix outlived Ralph, she would likely have desired to have her property remain with her side of the house, rather than go half to her side and half to her deceased husband's side. The testatrix' heirs are really arguing against the policy of the antilapse statute. In reading into the Worthier Title Doctrine, the devise happens to be the same as the inheritance, that the will is clear and explicit that the testator intended the predeceased devisee's heirs not to take. We are no longer able to make that long leap successfully. The worthier title doctrine is now abrogated in antilapse statute situations.
ü Co-Ownership and Marital Interests
Ø Common Law Concurrent Interests
Types and Creation
1) Tenancy in Common
2) Joint Tenancy with right of survivorship
3) Tenancy by the Entirety
Tenancy in Common:
1. There may be differences in terms of who owns what percentage, but each owns an equal right of possession
2. Can arise by intestate succession
Joint Tenancy with Right of Survivorship
1. When each person dies, the right of property is then re-distributed to each remaining possessor. The joint tenancy cannot be willed to anyone since upon death, the interest is destroyed.
2. A joint tenant could destroy the joint tenancy by destroying any of the four unities. This is historically
Elements:
1) Unity of Time – Interests must vest at the same time
2) Unity of Title – Must acquire title in the same deed or will ** Abolished
3) Unity of Interest – Each joint tenant must own equal shares of the same estate
4) Unity of Possession – Each joint tenant has a right to possession of the whole property.
3. Unity of title was essentially abolished since people used to use strawmen to circumvent this
4. If any of the four unities of a joint tenancy is destroyed, the joint tenancy is said to be severed and the joint tenancy becomes a tenancy in common.
ü A lease will NOT sever a joint tenancy, however if only one joint tenant signs the lease, when he dies, the lease ends. A lessee should make sure all joint tenants sign the lease
ü For Mortgages, in LIEN theory states, title remains with the debtor, thus keeping the joint tenancy in tact. In TITLE theory states, the mortgage conveys legal title to the creditor. Depending on the jurisdiction, this may sever the joint tenancy. As in leases, the mortgagee should make all tenants sign a mortgage. Massachusetts is a Title Theory State.
ü Some states will require a public severance with notice given to the other joint tenants to prevent any kind of fraud.
Tenancy by the Entirety
1. This is a joint tenancy with one other unity, that being a husband and wife
2. When the tenancy by the entirety ends, it becomes a tenancy in common
3. One spouse cannot unilaterally sever the tenancy.
4. Any debt requires that both the husband and wife be liable.
5. If there is a debt, the creditor can attach to the husband or wife, but not to the total interest. If the person who the creditor attaches its debt to dies, then the debt disappears.
Rights Among ALL The Tenants
1. In a majority of states where the tenant owes no rent to his co-tenants for using the property, he does if he ousts the other co-tenants. Ouster is completed by preventing the other co-tenants from using the property. Generally a requirement is for other tenants to make a demand for access to the property and to be denied access. (Similar to Adverse Possession)
2. A co-tenant may seek a contribution in the form of reimbursement for improvements made to the property. Assuming no one is using the property, taxes and other assessments or interest on Principal Payment mortgages may be sought. The principal payment must be past due or due.
3. A co-tenant cannot get contribution for repairs, even necessary repair. No co-tenant has the duty to make repairs. The same thing goes with improvements.
4. During rental, a co-tenant rents to a third party, and although the rent must be evenly split, portions may be taken out for expenses such as taxes, interest, mortgage principal, insurance, advertising, management fees, ACTUAL amounts spent on repairs or maintenance and utilities. This can only be done to the actual amount received. Improvements must be traceable to the increased rental received because of the improvements but no more.
5. On the final settlement of sale, the co tenant who expended money and has not been reimbursed for taxes, interest, mortgage principal, repairs, maintenance, insurance and other expenses will be reimbursed out of sale proceeds. Improvements as mentioned above are attributable to the value added by the improvements.
6. If the property is up for sale at a foreclosure, a majority of states say that a bid by a co-tenant is acting in her capacity and that the purchase in sale revives all interest, however the remaining co-tenants have their option of contributing their share or the purchasing co-tenant owns the property outright
7. Adverse possession can be done by a co-tenant but must give notice in writing. Mere ouster will not suffice.
Partition
Partition in Kind
Courts disfavor this where they divide the property into parcels of equal value. If the courts cannot determine an exact equal share than an owelty or money payment may be required.
Partition in Sale
The property is sold and the proceeds are split among the parties in proportion to how much they owned
When both joint tenants die at the same time: We spoke about a fantastic titled statute called "Uniform Simultaneous Debt Act" - tries to deal with the situation where property is held by joint tenants or tenants by entirety, and one of them suffers a common fatality. Plane crash, or something where it is unclear who died first. You could probably get experts to determine who lived longer, the but statute tries to avoid doing that. Where there is a common fatality, and there is no intent expressed to the contrary by the decedents, the J/T or T/E ends and they'll be treated as tenants in common
Joint Bank Accounts
most are covered by contracts btw the bank but they are primarily for the protection of the bank and not btw the joint bank account holders
who has the right to withdraw at anytime and who gets the balance when one dies
the agreement needs to dictate who has access and whether there is survivorship
joint tenant bank account-survivorship
what happens when survivorship is not the goal of the joint tenants? have to look at intention of the person who is dead and it may not be that survivorship was the goal
but survivorship is presumptive in joint tenants and the other party has to meet the burden of proof to show otherwise
Riddle v. Harmon
FACTS: Frances Riddle conveyed her interest from herself as joint tenant to herself as tenant in common. The courts are wondering wither this is allowed and whether this then severed a joint tenancy. More importantly, whether a strawman was required here.
REASONING: The court allowed this based on the clear intention of the grantor. There was the possibility of some injustice to Jack, the husband. He probably never knew the joint tenancy was severed. Also, there was another fear that Frances could create the deed, give it to a beneficiary of her will and wait to see who dies first. This then led to the requirement that all these conveyances be RECORDED.
Harms v. Sprague
FACTS: Harms owned a farm with his brother as joint tenants. John mortgaged his interest to the Simmons in order to secure a loan made by them to John’s friend, Sprague. Later John died while the loan went unpaid.
REASONING: The court held there was no severance and that John’s brother owned the farm entirely free of the mortgage to the Simmons’. The court reasoned that the mortgage burdened only John’s interest and that because John’s interest died with him, leaving only the previously unencumbered interest of William as the surviving title, the mortgage had died with John.
Delfino v. Vealencis
FACTS: The plaintiff owns 99/144 interest in a property as a tenant in common, but does not use the land at all. The defendant owns 45/144 in the property and uses the property as her home, as well as business operation of loading/hauling garbage. The plaintiff wishes to sell the entire lot so that she can turn it into a real estate development, and seeks to partition this.
REASONING: In this case, the trial court found a partition in kind to be impracticable, and the interests of the owners would be better promoted by a partition of sale. In this case, however, there are only two parties as tenants in common, the land is rectangular, and also a partition by sale would destroy the defendant's home and business. The trial court had found the use of the business by the defendant to be against zoning regulations, but this is not true. There is no indication that the practice will not continue in the future either. Therefore, and since courts favor a partition in kind, the land is to be divided this way. The interests of all owners will better be promoted if a partition in kind is ordered.
Spiller v. Mackereth
FACTS: The two parties hold a building as tenants in common. The tenant renting the property, Auto-Rite vacated, and Spiller began storing things in the property and put locks on the doors. Mackereth wrote a letter demanding that Spiller then pay rent or vacate half of the building.
REASONING: In absence of an agreement to pay rent or an ouster of a cotenant, a cotenant in possession is not liable to his cotenants for the value of his use and occupation of the property. In this case, the defendant must show that there was a proper ouster by Mackareth. Simply requesting the cotenant to vacate is not sufficient because the cotenant holds title to the whole and may rightfully occupy the whole unless the other cotenants assert their possessory rights. The only other evidence is that Spiller put locks on the building. This can be justified that Spiller had put a lot of merchandise in the building and wanted to keep it secure since when Auto-Rite moved out, they took the locks off the doors. Therefore, there was no ouster by anyone.
Statute of Anne - where one tenant takes rents from a third party or profits beyond his/her interests, that cotenant owes the different between her percentage interest and others' interests
Swartzbaugh v. Sampson
FACTS: Plaintiff was a cotenant, and his JOINT cotenant leased property to the defendant against plaintiff's wishes. Plaintiff then tried to file suit to remove Sampson and negate the lease.
REASONING: Basically, for plaintiff to have this right, he should've also signed the lease. The lessee in this case gets the rights that the lessor had, and therefore you might consider him for the time being until the lease ends, the cotenant.
Ø Marital Interests
Dower – At common law, a wife had a claim in the form of a life estate to a one-third share of all of the real property of which the husband was solely and beneficially seised in fee simple at any time during the marriage
Inchoate Dower – before a husband’s death, the wife’s dower interests were called this, not yet a legal estate in the husband’s real property.
Consummate Dower – after the husband’s death this is what the dower is called. When the will provided for the wife less than the dower would, she had the right to have the will surveyed and set aside one-third of each parcel of his land for her life.
Severance: A spouse cannot defeat his spouse’s dower by selling or mortgaging the property. Purchasers and lenders are thus advised to get the dower-owning spouse’s signature releasing her dower in the property.
Elements:
1) Valid marriage
2) Sole and Beneficial seisin (property acquired before or after marriage ends cannot be dower)
3) Seisin is the person holding the possessory freehold estate.
4) Dower does not apply to remainders and executory interests since the husband never had seisin, however a right of reentry exercised or exercisable by the time of death is subject to dower.
5) Fee Simple determinables and subject to a condition subsequent.
6) Property acquired through adverse possession
DOES NOT APPLY WHEN:
1) Term of years
2) Life Estates
3) Joint Tenancy
4) Putting property into a trust prior to marriage – equitable interests
5) Giving the deceased spouse a life estate in property
Curtesy – At common law, a husband received a lie estate in all, not just 1/3 of his wife’s real property of which she was seised. This estate arose at the time of marriage and lasted until either the husband or wife died. Curtesy applied to both legal and equitable interests. This has been abolished.
Curtesy initiate – At the birth of issue born alive to husband and wife, the husband acquired a life estate measured by his life (the baby’s???) This estate lasted so long as the marriage did, and was followed by a reversion in the wife should she outlive her husband.
Elective Shares – If a spouse is not provided for through the will or if the spouse doesn't feel that he is not adequately provided for, she has the right to waive the will. The waiver of the will, or if there is no will, the ability to take his intestate share provides her with (and it varies) and this is where the whole property concept comes in, today a surviving spouse, not divorced can take usually 1/2 of the estate of which the decedent was seised (personal property and real estate) at death. 1/2 of the estate of which the decedent was seised if there are no children. If there were children, it would be 1/3, it's a full interest not a life interest
MASSACHUSETTS: In MA, the creditor can enter into a court proceeding to allow a creditor to attach. What the creditor cannot do is seize or execute the attachment, force a sale to satisfy the debt. If this was a tenancy by the entirety and the party who you have the attachment on dies, then the debt disappears. Tough *#IT
Sawada v. Endo
FACTS: Endo inflicted personal injuries on the Sawadas through negligent operation of his car. Kokichi owned a home in tenancy by the entirety with his wife. After the auto accident but before the Sawadas brought suit, Kokichi and his wife conveyed their home to their sons.
REASONING: This conveyance would be a fraud on all creditors, including the Sawadas, if Kokichi’s creditors could have seized an interest in the tenancy to satisfy claims. The court held that the property in the tenancy may not be subjected to claims of creditors against only one spouse. The rationale for this view was partly the fiction of one person (the estate is owned by the couple, not by either individual), partly the view that contract creditors have ample opportunity to insist on both spouses pledging property as security for credit, and partly that tort credtiros of a single spouse ought not to be permitted to seize a portion of the family residence with dangerous consequences to the innocent spouse. Hawaii court preferred protecting the family unit.
NOTE: In Massachusetts, the Sawadas could attach onto the husband’s interest and wait til one of them croaked.
United States v. 1500 Lincoln Avenue
FACTS: Leonard Bernstein, a pharmacist, was convicted of selling prescription drugs without a prescription and the US sought civil forfeiture of the building in which his pharmacy was located. Bernstein owned the building by tenancy by the entirety with his wife.
REASONING: The court of appeals held that the government could seize Leonard’s separate interest in the property, his survivorship right, and any rights he might have on divorce or voluntary conveyance. His wife was entitled to possession and her survivorship right and was protected against involuntary transfer. This turned the property into a tenancy in common with the US and Linda with an indestructible survivorship right in Linda. Basically when Linda dies, the US gets the land if Linda survives the husband, then she gets the full interest and the US gets nothing.
ü The Land Transaction
Ø Introduction
Broker and Seller – The broker is the agent of the seller. The broker generally enters into a listing agreement and under Tristram’s Landing, receives a commission when the broker introduces a buyer who is ready, willing and able to buy and has signed the Purchase and Sale Agreement. Usually if the buyer defaults there is no commission, however if the seller refuses to sell or defaults, the broker gets commission.
General Listing: General listing agreement - puts the fact of the potential sale of property out to the world, there's no specific contractual relationship with any broker upon general listing. The seller is relying upon, or allowing for the contractual relationship to arise, not at the inception of the listing, but at the point of time when the transference takes place.
Exclusive Listing: The exclusive agreement - agreement with the broker in advance of or contemporaneously with the listing of the property that picks the named broker as the exclusive broker for the sale of the real estate. The apparent downside to that is that during the term of the exclusive if the property is sold and the agreement is unchanged as to this provision, the exclusive broker will receive commission for the sale regardless of who sells the property.
Exclusive Agency Listing - Seller decides which type of classifications the broker may sell to earn a commission. Usually prior dealings where the seller has already talked to a particular buyer and commission on that sale would not be part of the broker agreement.
Ø The Contract of Sale
Offer to Purchase Forms – The standard Massachusetts OTP form is considered a valid contract and is enforceable. Mass SJC - said that the only provision in the standard form that would not make this a purchase agreement is 3 and the way it is written, it doesn't change the view - this is a purchase agreement.
Purchase and Sale Agreement – This form better protects the buyer a little better than the seller. In this agreement generally the seller is agreeing to deliver good, clear, marketable title free from encumbrances for consideration (money). There is nothing completely formal required, but it must have price, description, parties’ signatures.
Good Title: I seller am promising you that the title is good in me. That I have the ability to be the seller. If he doesn't that's another reason to walk away. THIS IS NOT IMPLIED. IT MUST BE INCLUDED.
Clear Title: there is no (buyer protected) - If I go to the registry of deeds and examine the property from 1950 - 2004 to see who owned it. I don't find in the history of that property any interference in the title (mortgage, easement). If I do find a mortgage or easement, the record isn't clear. If it isn't clear, then the buyer can walk away. THIS IS NOT IMPLIED. IT MUST BE INCLUDED.
Conklin v. Davi
FACTS: The buyer of a residence under a sales contract refused to perform, alleging that the seller had failed to deliver marketable title by reason of defects in the recorded chain of title. The seller sought specific performance and a NJ trial court ruled in his favor. This was property being sold based on having adversely possessed it for sufficiently long enough to have title.
REASONING: In order to establish that there is title, the seller must have gone to court and established that he now has title. This was not done here. The NJ court remanded the trial to decide whether the seller could establish that the title was marketable even though founded on a claim of adverse possession never before adjudicated. The seller in this case only asserted that it COULD prove facts sufficient to enable the buyer to perfect the adverse possession claim. A careful buyer will require the seller to deliver good and clear title meaning it will require the seller to go to court and prove this himself. There was no requirement of GOOD title, so the buyer cannot walk away. This is not a majority decision.
Hickey v. Green
FACTS: Mrs. Green orally agreed to sell Hickey a building lot for $15,000 and accepted but did not deposit Hickey’s check for part payment. Hickey then sold his house, expecting to build a new house on the lot. Mrs. Green refused to complete the sale.
REASONING: Hickey’s reliance was reasonable and that equity required specific performance. This can only be done when the it is within the contemplation and understanding of the parties and foreseeable by the seller.
Marketability of Title: To render the title to real estate unmarketable, the defect of which the purchaser complains must be of a substantial character and one from which he may suffer injury. Ones which do not diminish in quantity quality or value the property contracted for constituted no ground upon which the purchaser may reject the title. A title which exposes itself to the hazards of litigation is considered unmarketable. A title of marketability is expressed or implied unless specifically stated otherwise.
Substantial Defects: The defect cannot be one of value. Having no access from your lot to a main road because it is landlocked is sometimes considered an encumbrance, however; it is one that affects VALUE.
Easements Must Be Noted or Obvious for Seller to Escape Liability: Every buyer is expected to have a quick inspection of the property. If the easement is obvious (tripping over a railroad track) or is noted on the contract, then the seller can escape any liability. And the title is more importantly marketable.
Hypothetical: A person comes to see you and is interested in purchasing a house and shows you a title for a house that she is looking at purchasing.
there are 3 issues with the house:
1) a porch is 17’ from the property line and zoning laws requires 20’
§ A violation of a law or ordinance can make the title unmarketable BUT zoning variances do not defeat the marketability of the title, there must be a violation to effect marketability rather than the future intent
2) driveway crosses the property line by 1’ onto the neighbor’s property
§ does title by adverse by possession ≠ marketability?
-- In NJ this does not defeat marketability because privity would allow for possession to be transferred and should add a clause guaranteeing title
-- the title is not marketable if the buyer is buying a lawsuit b/c even if it is highly likely that the buyer would succeed there are cost associated with this that the buyer should not have to pay
-- if the jurisdiction weighs the de minus rule of AP then there would be no claim-tiny little bit
3) NSTAR has the right to run lines to the lot behind
§ utility easements were generally not considered to effect marketability
Lohmeyer v. Bower
FACTS: Bower and Lohmeyer entered into a written agreement by which Bower agreed to sell and Lohmeyer agreed to purchase a one-story wood frame house in Kansas. The lot was burdened by a covenant requiring all residences constructed on the land to be two stories tall.
REASONING: The Kansas Supreme Court held that the mere existence of a covenant restricting use is an encumbrance making title unmarketable. Only because Lohmeyer agreed to take the title subject to all encumbrances of record, the mere existence of the coveant did not make title unmarketable; however, Lohmeyer had not agreed to accept existing violations of the covenant. Those violations made the title unmarketable. There are two exceptions to this rule. 1) An easement that benefitis the property so long as that easement is known to the buyer before entry into contract and 2) Covenants restricting use are encumbrances. The fact that the house was 18 inches from the property line in violation of a zoning ordinance did not make title unmarketable, but the possibility of the buyer being subject to litigation DID make title unmarketable.
NOTES: In this case, there was a public (distance from boundary) and private (height minimum) covenant. The private covenant is a restriction, which is considered an encumbrance. Encumbrances are generally things which affect marketability Private restrictions affect marketability
Equitable Conversion: At some point in the contract process, the seller's interest becomes a monetary interest. At some point - buyer ceases monetary and becomes a real estate interest. This basically determines during the executory period, who is responsible for the property and who is responsible for the money, so if a fire burnt the house down, who would be out of luck, the buyer pr seller. In MA, the risk of loss is on the SELLER.
Risk Of Loss
Buyer: A majority of jurisdictions hold the risk on the buyer
Seller: MASS. Is clearly not one of those jurisdictions.
Paragraph 9 - premises shall be in the same condition and buyer has right to inspect the premises - contractually, this agreement will protect buyer against a house which has been damaged.
What if seller wanted to cancel the contract and sale
Paragraph 12 - The buyer has the option of taking any form of title the seller can offer. It's the buyer's option, and in addition, the buyer can accept property with consideration for the damage that occurred. THIS IS FAVORABLE TO THE BUYER
The Hybrid of Massachusetts:
Making things even more complicated, if the damage to a property is SUBSTANTIAL, then the buyer has the option of walking away. If the damage is just partial, the buyer is required to perform but with a reduction in the purchase price or repair by the seller. There is no absolute definition on a distinction between the two.
Duty to Disclose Defects: Traditionally the broker owed no duty to disclose defects. A broker can be liable for intentional misrepresentations or affirmative acts to conceal facts or to mislead purchasers about material facts. Negligent misrepresentation is also a possibility. In states where Caveat Emptor is not the rule, a broker must disclose latent and material defects that the broker either knew or could have discovered upon reasonable inspection. In order to hold the broker liable, the defect must be latent and material and not observable by a reasonably prudently buyer with care. If the buyer has the right or duty to inspect, it usually comes at sellers warranties of property
Latent Defects: (Emerging Rule)
1) Materially affecting value of property
2) Known to Seller
3) Neither known to or within the reach of diligent attention and observation of the buyer.
Builder’s Rule: Builders have a affirmative duty to disclose any defects b/c they are in a better position to know about such defects
Stambovsky v. Ackley
FACTS: Ackley owned a home in NY and repeated publicized various ghosts that had been seen in the house, encouraging the reputation of the house as haunted by ghosts. Stambovsky agreed to buy the house and then learned that the house was widely reputed to be possessed by poltergeists. He sought to rescind.
REASONING: The court held that Caveat Emptor did not apply. The seller had promoted the property’s reputation as haunted and that reputation was not likely to be discovered by a reasonably prudent buyer. The court concluded without discussion of the evidence, that the haunted reputation of the house materially impaired the value of the contract.
Johnson v. Davis
FACTS: The Davises purchased Johnson’s house, moved in, and learned within a few days that water leaked in around the windows and from the ceiling in two rooms. The Davises sued to rescind.
REASONING: The court ruled for the Davises on two separate grounds. First, because Johnson had told the Davises that “the roof was sound” Johnson was liable for fraud. Second, and quite apart from fraud, the court concluded that Johnson was obligated to disclose any facts known to him or accessible only by him that materially affects the value or desirability of the property and which are either unknown ot the buyer or cannot be learned by a diligent search.
Considerations and Liability
held liablemisfeasance-actively misleading, intentional misrepresentations
malfeasance-purposefully trying to screw over the buyer
· nonfeasance-passively misleading-not liable for defect of the property
onsite vs. offsite-if the defect if offsite it is less likely to result in seller liability
In an increasing number of jurisdictions, the seller has the duty to disclose material defects.
Lemple v. Dagenais
FACTS: Dagenais built a garage for owners of property who then sold the property to the Lempkes. Shortly after the Lempkes took possession they noticed severe structural problems with the roof of the garage. After some fruitless attempts to persuade Dagenais to repair the garage, the Lempkes sued Dagenais for negligence and breach of an implied warranty of quality.
REASONING: When a builder sells his structures a warranty of workmanlike quality is implied by law and runs for the benefit of subsequent purchasers with respect to latent defects that become apparent after the remote purchaser has acquired title and which could not have been discovered prior to the remote purchaser’s acquisition. The court thought that abandonment of privity of contract was appropriate here because in our mobile society, defects often become apparent after a structure has changed hands. Remote buyers should be protected.
Economic Loss Doctrine: someone is not entitled to damage unless there was actual damage-Lempke overrides this concept and allowed recovery prior to actual physical damage
Fixtures: Sold with the land. Included in Paragraph 3. Something that was personal property, but because of its physical description or custom - it is sold with the property
1. Ease of removal
2. Application to the particular property
In general, the definition of what is a fixture varies on the jurisdiction – in MASS, a storm window is a fixture, but not in Florida.
Ø The Deed
Requirements for a Deed: In Writing, Description of the tract. Consideration (customary), Seal, Delivery (Requirement of a changing in possession)
Delivery: There are certain rules in regard to escrow/third parties
If a deed is delivered to a third party to hold, it will depend on whether the escrow can be terminated by either the seller or the buyer
If the seller has the right to get the escrow terminated, it has not been delivered
If the seller once having delivered the deed to the escrow only has the right to get the money but not the deed back, the presumption is that it has been delivered
** If a seller has possession of the deed, it is presumed there was delivery
Sweeney Administratrix v. Sweeney
FACTS: Maurice Sweeney, estranged from his wife Maria, wished to ensure that upon his death his brother John would take Maurice’s farm and tavern rather than Maria. Maurice executed and recorded a deed of the property to John and John executed a deed of the property to Maurice, which has not been recorded. Both deeds were prepared at the same time by the town clerk who gave the originals to Maurice. Later, Maurice gave both deeds to John. When Maurice died, Maria contended that the unrecorded but fully executed deed from J to M had been delivered to Maurice and operated to vest title in Maurice. She wants the money.
REASONING: Because the John to Maurice deed had been manually delivered to Maurice, there arose a presumption of delivery which was not rebutted by the fact that the motivation of J and M was to defeat Maria’s elective share by ensuring that the title to farm was in John at Maurice’s death.
Types of Deeds
1. General Warranty Deed - I promise that I didn't do anything to undermine the title during the period of my ownership, day bought to day sold, that I have examined title back to colonial times and there is nothing wrong with the title. I promise for my period and for the backtitle (every period before then). Covers all periods from the day the land was granted by the government up to closing and that should anyone come along in the future, the promisor will be responsible. The general warranty includes all 6 covenants listed below
2. Specific Warranty Deed - Promise only for the condition of title from the day they bought the property to the day they sold it, no love for the backtitle. Also doesn’t warrant encumbrances or covenants created before the grantor took title. (In MA and MAINE this is called a quitclaim deed) The grantor is basically saying that he has not created or suffered a defect to occur during his ownership period.
3. Quit Claim Deed – Good Luck – seriously, I warrant nothing. (In MA this is a RELEASE deed)
Warranties (Covenants) –
Present Covenants – Statute of limitations begins running at closing and can only be brought by the grantee
1. Covenant of Seisin – The grantor warrants that he owns the estate he purports to convey. Breach = return purchase price
2. Covenant of Right to Convey – The grantor warrants that he has the right to convey the property. Breach = return of purchase price
3. Covenant Against Encumbrances – The grantor warrants that there are no encumbrances on the property including mortgages, liens, easements, and covenants. Breach = cost to remove encumbrance or damage or the difference between the unencumbered fair market value and the encumbered fair market value at the time of conveyance.
Future Covenants – Statute of limitations begins running from the moment of EJECTMENT (20 years in some states) and may be brought up by any grantee or subsequent grantee
4. Covenant of General Warranty – The grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title. Should the grantee win in the claim, the grantor owes NOTHING though.
5. Covenant of Quiet Enjoyment – The grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title. This covenant is very similar to the General Warranty Covenant
6. Covenant of Further Assurances – The grantor promises that he will execute any other documents required to perfect the title conveyed.
Under MA statute (Mass. Gen. Laws ch. 183. §10) without any specific covenants listed, a warranty deed means:
a) grantor was lawfully seized in fee simple of granted premises,
b) that the granted premises were free from all encumbrances
c) that grantor had good right to sell and convey the same to the grantee and his heirs and assigns,
d) that grantor will and his heirs, executors and administrators shall warrant and defend the same to the grantee and his heirs and assigns against the lawful claims and demand of all persons
Brown v. Lober
FACTS: Bost conveyed 80 acres to Brown under general warranty deed containing no exceptions, even though Bost only owned one-third of the mineral rights. After the statute of limitations on the present covenants had passed, Brown agreed to sell the mineral rights to another party for $6,000. Then they were forced to accept only $2,000 since the company learned that Brown owned only 1/3 of the rights.
REASONING: Brown had not been constructively evicted because the mere existence of a paramount title does not constitute the breach of the covenant of “quiet enjoyment.” If the owner of the 2/3 started mining, then Brown would be actually evicted. The future covenants can only be breached when the grantee’s possession has been disturbed by someone holding superior title.
Frimberger v. Anzellotti
FACTS: DiLoreto owned property abutting a tidal marsh. He constructed a bulkhead, filled a portion of the marsh in, build a house, and sold to Anzellotti by quitclaim deed. Two years after Anzellotti conveyed the property to Frimberger under a general warranty deed. When Frimberger sought to repair the bulkhead, he learned of the unlawful encroachment on protected wetlands. Rather than seeking a variance from the use, Frimberger sued Anzellotti on the covenant against encumbrances.
REASONING: Latent violations of governmental land use regulations that do not appear on the land records and are unknown to the seller, and no official action requiring compliance has been taken at the time the deed was executed and have not ripened into an interest that can be recorded do not constitute encumbrances. The difference between this and Lohmeyer is that the closing has taken place and it is harder to undo the contract. If Frimberger can remove the encumbrance with money, then Anzellotti will have to pay it. Otherwise, if the encumbrance then decreases the value, Anzellotti will be responsible for that.
Rockafellor v. Gray
FACTS: Connelly acquired title to 80 acres at a foreclosure sale, then conveyed the property by general warranty deed to Dixon who then conveyed by special warranty deed to Hansen and Gregerson. The foreclosure sale was invalid so Connelly never owned the 80 acres and thus breached the covenant of seisin given to Dixon, but because Dixon had conveyed by special warranty deed he had not breached the covenant of seisin he gave to H&G. H&G sued Connelly on the covenant of seisin.
REASONING: This was all upheld based on the Iowa law which is a bit different having the covenant of seisin run with the land.
Estoppel by Deed: The legal title to the property passes to the grantee as soon as the grantor gets her title. Sometimes a person conveys property or an interest in property without having legal title in anticipation of gaining it later. This doctrine applies only where the grantor warranted that she had title. If the grantor quitclaimed the property to the grantee, the grantee acquires no interest if the grantor later acquires the property.
Ø The Mortgage
Mechanics: Generally one person signs a promissory note obligating himself to payment (IOU) and the person also signs a mortgage which gives collateral such that if the mortgagor defaults, the mortgagee can bring action to sell the home and reclaim its loan. The mortgage usually has the amount borrowed, the interest rate and the term in which it is to be repaid.
Requirements: A lender should record the mortgage in the local deed records office to protect its status as having first priority to the property. Mortgages are repaid during foreclosures in the rank in which they were recorded.
Obligations of borrower: Insurance – generally the house must be insured up to the value of the mortgage. Taxes are paid – since the government is always a higher primary than any mortgagee, the taxes must be paid or the lender loses its investment.
Installment Sales Contract (Contract for Deed) (Alternative to Mortgage)- In this case, the seller retains legal title and the buyer takes possession. There is no executory interval. The purchaser has an equitable interest in the property, but unless the purchaser records the installment sales contract or a memorandum of contract in the local deed records, the purchaser risks losing the property to the seller’s creditors or a bona fide purchaser. The seller can still foreclose if there is no payment.
Deed of Trust (Alternative to Mortgage) – The borrower delivers the deed of trust to a third party, often the lender’s attorney, instead of directly to the lender. If the borrower defaults, the trustee can foreclose on the mortgaged property. Allows mortgagees to sell the collateral more quickly and cheaply than under the traditional foreclosure process.
Debt Satisfaction and Assumptions – Once a mortgage is repaid, it is released. This should be recorded at the local deeds office.
DUE-ON-SALE Clause – Many mortgages require the entire note balance be paid before the seller can deed the property to a new purchaser. Some mortgages allow subsequent purchasers to continue making payments. The subsequent purchaser can ASSUME the note. If the underlying property cannot be sold for an amount great enough to require the mortgage, the lender has RECOURSE to the subsequent purchaser’s other assets. A subsequent purchaser may also take a property SUBJECT TO a note and mortgage. In this situation, the lender is limited to taking the proceeds from the sale of property and cannot go after the subsequent purchaser’s nonpledged assets. Generally the original owner remains secondarily liable to the mortgagee for any unpaid amounts.
Foreclosure – If the mortgagor defaults by not making a payment, the mortgagee has many options. There could be strict foreclosure where the lender gets title. Or judicial foreclosure where the land is sold at an auction and the bank gets the proceeds, or enough to satisfy the debt.
Redemptive Right - in common law even if the court awarded the mortgagee the right of foreclosure the mortgagor had a right of redemption in equity for a period of time after court’s judgment (buyer can go into a court of equity and say I have all the money and I want to redeem my equity) essentially undue the foreclosure-lenders did not like this
Modern Approach: allows lenders to complete foreclosure without redemption periods unless states had enacted statutory right of redemption to protect mortgagors (mostly the farm states)
Murphy v. Financial Development Corp.
FACTS: The Murphys refinanced their home in 1980, executing a promissory note secured by a first mortgage in favor of FDC. FDC then sold the mortgage to Colonial Deposit. By September of 1981, the Murphys were 7 months in arrears on their payments and the lender gave notice of its intent to foreclose. Although the Murphys then paid the overdue payments, the failed to pay additional costs which had come due as a result of the foreclosure notice. The lenders scheduled a foreclosure sale. Present at the sale were the Murphys, a lawyer retained by the lender, and a representative of the lender. The lender made the only bid at $27,000, the amount of the mortgage left outstanding. Two days later, the lender sold the home to a realtor for $38,000. The Murphy’s filed suit to set aside the sale.
REASONING: The lender was a fiduciary in conducting a foreclosure sale, and thus owed a duty of good faith and due diligence to exert commercially reasonable efforts to obtain a fair and reasonable price, but the court ruled that the lender did not act in bad faith. The lender did not advertise or use any other commercially reasonable methods to generate interest in the property. The damages should have been the difference between foreclosure price and FAIR price – not fair market, just fair. The lender must act diligently to generate a fair price.
NOTES: The foreclosure requires good faith and due diligence in NH. In MASS it is just Good Faith and proving Bad Faith is a VERY hard thing to do.
Bean v. Walker
FACTS: Buyer agreed to purchase Seller’s home under an installment sale contract for $15,000. The contract required Buyer to pay the $15,000 over 15 years at 5% interest. The contract provided that if buyer defaulted and failed to cure the default in 30 days, Seller could terminate the contract, take possession and retain all payments paid. Eight years into this deal, the Buyer defaulted, having paid half the purchase price. Seller sought to eject buyer.
REASONING: The principle of equitable title or equitable conversion applies here, causing title to vest in the buyer at the moment the contract was executed, placing the buyer in the same place as the mortgagor.
Hypothetical (Thank You Mr. Greally) Buyer needs 500k. Bank grants 400k loan. Buyer and Seller enter into a P&S with a mortgage clause. Seller gives deed to buyer and seller gets 100k from buyer and 400k from bank. Bank executes a mortgage and is delivered to the registry with the deed (deed recorded 1st, then buyer’s mortgage) é tells the world that this property is encumbered by this mortgage of 400k. Also on the deed is the purchase price of 500k é this is the loan to value ratio = 80%.
buyer has 100k worth of equity on the day of the closing
mortgage states several obligations:
4 to pay on the note
4 not to let the property deteriorate
4 to pay taxes-so the lender is not next inline to pay taxes
4 keep the property insured in at least the amount of the loan-bank is protected if the property is destroyed
4 cannot sell or transfer the property interest without the approval of the bank-bank wants to approve the credit of the new buyer
if there is a breach of the any of the previous provisions = default and once there is a default the mortgagee has the following options:
1) give notice of default
2) or accelerates the debt = buyer has to pay the entire balance
after notice of default or acceleration
4 notice of foreclosure is authorized by power of sale statutes:
§ eliminates strict foreclosure by stating that if the lender has sent notice of default or notice of acceleration to mortgagor, the lender may send notice to the court and conduct an auction and the lender reports the result of the auction to the court and issues a deed as if the lender was the owner of the property and can sell to a 3rd party
4 if the buyer doesn’t bid on the house she loses her equity
4 no bidders then bank takes title
while the mortgage amount is constant the equity is a variable (purchase price vs. value of the property which can change depending on the market.
4 good deal-her equity realization for resale could be higher than 100k
4 bad deal-equity realization for resale could be lower
Hypothetical Part II: same as 1st but buyer adds a plasma TV and needs to have it installed but needs money to pay for it so she gets a 2nd mortgage from LB Lender. It is filed at the registry as a junior encumbrance. 1st mortgage to bank for 400k and a 2nd mortgage of 25k to LB.
2nd mortgage means that the lender is willing to loan money on the borrowers equity (100k) but they are taking a higher risk than the 1st mortgage b/c they are 2nd one paid, the market value could drop and that risk means higher interest rates and terms
what if buyer misses a payment to LB-they want to foreclose the 2nd loan, send a notice of default.
4 who shows up at the foreclosure of the 2nd mortgage? the bank and that means the 2nd foreclosure turns into a foreclosure of the 1st b/c the opening bid is 400k (LB borrowed against the house-the buyer’s equity) and LB needs to bid more than 400k to protect its interest and against 3rd parties
4 if a 3rd party bids over 425k-LB can say ok and take the money after 400k is paid to bank and settle their loan or they can keep bidding to get the house
bank cannot roll the 2nd mortgage into the 1st
ü Title Assurances
Ø The Recording System
Why Have a Recording System?
1) Give notice to the world who owns the property
2) Give notice to subsequent purchasers of defects in the title
Common Law Rules: First in time, first in right.
Today’s Rule: Puts a premium on whoever records first under some jurisdictions
Ø Recordings – Chapter 28 in Supplement
Grantor-Grantee Index – This is the index listing all transfers each year by grantor and grantee. Generally a Title Examiner had to search backwards among grantees and forwards among grantors.
Negative: Sometimes it won’t list when an original grantor conveyed the same property to a second person.
Tract Index – This lists property by its location. You can find out who owned plot 1 or whatever.
Negative: Subdivisions make this a real bitch.
Jurisdictions (Who has the right over whom)
NOTICE JURISDICTION: Includes Massachusetts – A subsequent bona fide purchaser or creditor for value prevails over prior claimants as long ast he subsequent purchaser acquires the interest without notice of the prior claim. A subsequent bona fide purchaser qithout notice prevails IMMEDIATELY UPON CLOSING He does not have to be the first to record. In fact, there is no requirement to record, however, that doesn’t stop the seller from conveying another deed to a later party.
RACE-NOTICE JURISDICTION: A subsequent bona fide purchaser or creditor who first records prevails against a person claiming a prior, unrecorded interest as long as the subsequent purchaser did not have notice of the preceding interest when she acquired her interest. This is only required at the time of purchase.
RACE JURISDICTION: Refers to who first officially recorded. Under this statute, when two persons hold competing claims to real property, the first person to actually record prevails. Even if they know about a previously unrecorded conveyance. This one is a bit antiquated, hardly used (See North Carolina and of course … ass backwards Louisiana)
PERIOD OF GRACE: Not really used anymore, but it was basically a Race-Notice but with some time to record. This was used in times when transportation to the registry was worse than a Saigon Whore in the middle of Full Metal Jacket.
What is Notice?
ACTUAL NOTICE: The subsequent purchaser or her agent ahd actual notice of a prior claim which came from knowledge or personal observations, a document in deed records or hearing about it during negotiations or conversations.
CONSTRUCTIVE NOTICE: AKA Record notice, refers to knowledge or notice a purchaser could gain by searching deed records. This is not usually needed for race-notice, because if you found the document through constructive notice and searching in the registry, that means it has been recorded and you’re SOL.
INQUIRY NOTICE: When the purchaser hears or observes something that would cause an ordinarily prudent person to inquire further. The most important source of this is from visiting the property. The second most is from documents and matters identified in recorded documents whether or not the subsequent purchaser read those documents.
Who is a Purchaser for Value? - Anyone who gives VALUE for any interest in the property
NOT:
1) Gift
2) Devise
3) Inheritance
4) Anyone who had a pre-existing debt to be settled – something NEW must be given.
Earle v. Fisk - MASS
4/14/1864 - Waite gives to Ben Fiske NOT RECORDED until 7/19/65
4/21/64 - BF transfers to MOM
4/22/64 - Mom transfers to Ben and Elizabeth Fiske for life remainder to Mary Fiske NOT RECORDED until 2/13/67
2/7/66 - Ben Fiske conveys to Earle
Appears to have no connection to above chain of title
Basically in this case, Ben Fiske knowingly gave a wrongful deed to Earle and Earle was a bona fide purchaser. In Massachusetts, we put blinders to everything else, including whether or not the seller was acting in bad faith which was happening here. Earle gets the land.
Hill v. Meeker - CT
We don't care what they do in MASS. You cannot buy from an heir who has knowledge of a transaction which could undermine the title. Do whatever you want, but come to CT, and buy from BF in CT, you are not a bona-fide purchaser. Essentially says they would rule against Earle.
Note: Many more states follow this doctrine.
Morse v. Curtis – MASS
If the examiner finds conveyance from the owner of the land to his grantor which gives a perfect record title, he is entitle dto rely upon such record title and is not obliged to search the records afterwards in order to see if there has been any prior unrecorded deed from the original owner. Search backwards for grantors and forwards for grantees.
NOTE: With estoppel by deed, this case may have been overruled in that you need to search every year for the grantee to make sure there was no second conveyance. The MASS rule is now that you need to check every year for the grantor to grantee to perfect the chain of title.
Chain of title - primary chain of title running back to root title and doesn't include and information or interests that are outside of the chain of title. Not on notice of those. A deed recorded prior to grantor obtaining interest or selling interest is not in the chain of title.
Ayer v. Philadelphia Brick Co. - MASS
Be careful with recording and whatnot – if you deed off your property but the sale is only enough to cover one mortgage, and then that person deeds back to you, you have REVIVED the second mortgage.
Buffalo Academy of the Sacred Heart v. Boehm Brothers NY
FACTS: Farmer buys property and decides to give to a developer to subdivide it. The developer then subdivides the lot and gives one lot such that it will be the only one where a gas station is allowed. Then a restriction is put on the other 11 sub-lots that they have to be for residential purposes only. A buyer comes along and then later finds out there is a restriction that there can be no gas stations besides the one already granted and wants to back out of a P&S agreement.
REASONING: The court in this case held there was no uniform building plan recorded. However, if there had been mention in one deed to another set of deeds and restrictions, then it would place the purchaser on notice of this. The other issue with this case, though, is that the deed to the gas station owner said only that the grantor would not allow anyone else to sell, no mention of subsequent purchasers.
NOTE: Forcing an examiner to check backwards and forwards is not required in NY. If put on notice, that’s another story. Requiring title searchers to locate and read all deeds out of a common grantor is unreasonable.
Guillette v. Daly Dry Wall, Inc. MASS
Even if the restriction isn't in your chain of title if there you have to look at subsequent deeds and determine if there was a restriction. The key in MASS is are you on notice you're part of a subdivision and HOW are you on notice? There has to be a plan, but there has to be a reference in your chain of title to a plan or other instrument that indicates you were once part of a common grant. Some words that indicate that lot 9 was part of a larger piece.
Sanborn v. McLean MICHIGAN
A buyer is not on notice in NY unless the restriction is contained in a subsidiary chain of title in her proposed deed or one of the deeds leading to her but in that subsidiary chain of title. Massachusetts in the Guillette case takes a less protective view, MA says that you don't have to have the actual restriction, but if there is a reference in that chain of title to the fact that the land which you are purchasing is part of a subdivision, either because it's contained in a recorded plan or there's reference to other lots. In the subsidiary chain of title, that's enough in MA to put you on notice of the other chains of title. The other chains of title are all of those coming out from the subdivision of Smith Farm. Michigan takes the same view as MASS. In MA - a buyer is on notice of language in his deed that indicates reference to a common plan (property) deed restrictions, language that indicates that this property was part of other property and then divided by a common grantor. In Michigan, the statement would be that, but it would also say that a prospective buyer is on notice of those facts which would give a reasonable person knowledge that the property may be bound by restrictions. We call these states INQUIRY NOTICE states.
Reciprocal Negative Easement - if you portion off a property to another with a restriction, it applies to your property as well. It's a limit on the ability to utilize property for the benefit of other property. The word reciprocal means that a group of properties are bound by the restriction. You may be prevented from building more than 2 stories, I'm bound too. The word easement is used because "if I being benefitted by restriction on your property have an interest on your property (not freehold) but an interest to prevent you from doing something on your property" the word easement means my right to do things on your property. Negative easement means " if the own
Galley v. Ward – NH – Adverse Possession – Other people living on the land
A third party was in open, actual and notorious possession of the land. The purchasers basically lost out and the reason why was because they didn’t physically inspect the land. The purchaser neglected an apparent duty and therefore is screwed.
Toupin v. Peabody – MASS – Restrictive Covenants
The lessee in the original lease document - there was a paragraph in the document that the tenant could extend the lease for an additional 5 years. It didn't require mutual agreement - it was a unilateral right. How long is this lease for 5 years with a 5 year option? - In Massachusetts, this lease is a 10 year lease and this is material - Mass requires that anything for over 7 years has to be on record to give the owner notice. Leases for more than 7 years in order for tenant's rights to be protected must be recorded, otherwise, the lease is only good against the original grantor and those others who had a relationship with the title at the time it was created. Massachusetts does not acknowledge Inquiry Notice, they only care about what is on the actual record.
ü Private Land-Use Controls: The Law of Servitudes
Ø Easements
Easement: An irrevocable right to use another person’s land for a specific purpose
(a) entitles the owner of such interest to a limited use or enjoyment of the land in which the interest exists
(b) entitles him to protection as against third persons from interference in such use or enjoyment
(c) is not subject to the will of the possessor of the land
(d) is not a normal incident of the possession of any land possessed by the owner of the interest
(e) is capable of creation by conveyance
Please Note – you cannot possess an easement over your own land – unless you’re a dumbass.
Easement in Gross: one benefiting the PERSON whether that person owns any property at all and unless assignable, ends at the grantee’s death
Easement Appurtenant: Benefits the owner of a particular parcel of land, and passes with the property it benefits. This is the preferred construction by the courts.
Property Burdened: The servient estate
Property Benefited: The dominant estate.
Other types of nonpossessory interests exist which may look like easements, but they’re not
Leasehold interests: contractual rights between a landlord and tenant – term of years
Profit: right to enter another’s land without liability for trespass and remove
natural parts of the land
License: Right o com on the land and use the property, revocable at the landowner’s will.
Affirmative Easements: Give the holder the right to go onto the servient estate for a specific purpose.
Negative Easements: Gives the holder the right to prevent the possessor of the servient estate from doing some act on the servient estate.
1) right of airflow
2) right of light
3) right to channeled water flow
4) right to lateral support
5) view easements
6) solar easements
7) conservation easements
How an Easement is Recorded:
1) Express easement – in the deed – in writing
Reservation: Grant of the property to a purchaser and a regrant of the easement back to the original grantor
Exception: Statement that the property may be subject to an outstanding easement.
2) Easement by estoppel – if a licensor grants a license on which the licensee reasonably relies to make substantial improvements to property. IRREVOCABLE LICENSE
3) Implied Easements
Prior Use
1) The unity of ownership is severed from a common owner
2) The use was in place before the parcel was severed
3) The use must have been visible or apparent at the time of severance - Note – this is under a reasonable inspection of the grounds test – so sewer lines are visible.
4) The easement is necessary for the enjoyment of the dominant estate (necessity)
Implied Grant - reasonable necessity – if the common owner keeps the servient part
Implied Reservation – strict necessity – if the common owner keeps the dominant part
4) Easements implied by necessity – if the easement is strictly necessary for the enjoyment of a parcel of land (LANDLOCKED property)
Elements
1. The common owner severed the property
2. The necessity for egress and regress existed at the tiem of the severance (the severance caused the necessity)
3. The easement is strictly necessary for egress from and ingress to the lanclocked parcel.
5) Prescriptive Easements – ADVERSE POSSESSION style
Elements
1. Acutal
2. Open and Notorious
3. Hostile (Adverse use, claim of right)
4. Continuous and uninterrupted
5. Exclusive Use
6. For the statutory Perior
Easement or Profit?
E) the extent of necessity, G) The manner in which the land was used prior to the conveyance. H) The extent to which the manner of prior use was or might have been known to the parties
Willard v. First Church of Christ, Scientist
FACTS: McGuigan conveyed lot 20 to Petersen by a deed that purported to reserve an easement for parking during church hours for the benefit of an adjacent church. Petersen conveyed lot 20 to Willard under a deed that made no mention of the putative parking easement. After learning of this easement, Willard sought quiet title to Lot 20.
REASONING: This was an easement created in a third party and this is allowed.
Van Sandt v. Royster
FACTS: Bailey owned three adjoining lots in Kansas. She built a house on one of the lots and ran an underground sewer line across the other two lots to a municipal sewer. Lather she sold all three lots to separate owners under deeds making no mention of the sewer line. Later owners built a house on each of the two vacant lots ,and connected the plumbing to the original Bailey sewer line. One owner then awoke to find an upstream sewer pumping into his basement.
REASONING: An easement by reservation implied from prior use had been validly created by Bailey when she conveyed title to the two downstream lots. An easement implied from prior use can only be appurtenant
Othen v. Rosier
FACTS: Hill owned a large parcel of land in Texas which he sold in bits and pieces over time. One of those parcels was landlocked and title to that parcel was eventually acquired by Othen, who habitually used a roadway crossing Rosier’s land to reach a public road. To prevent erosion, Rosier built a levee that impounded water, making the roadway impassable at times.
REASONING: No easement by necessity had been proven across Rosier’s land because there was no proof that when Hill, the common owner, had conveyed the property to Rosier’s predecessor, that it landlocked Othen’s property. It appears at the time Hill conveyed the Rosier parcel, Hill owned other land that was contiguous to both the Othen parcel and a public roadway. Othen had an easement by necessity, but not across Rosier’s property.
Matthews v. Bay Head Improvement Association
FACTS: Dry sand beaches were owned by a non-profit corporation that controlled the beaches and restricted access to residents of Bay Head.
REASONING: Quasi-public entities must give the general public access to and use of privately owned dry sand areas as reasonably necessary.
Ø Covenants
Can be affirmative or negative just like Easements
Benefit and burden land just like Easements
Elements:
1) Intent to bind successors
2) Touch and Concern
3) Horizontal and Vertical Privity
Intent: The original parties must intend for the benefit to run with the land. Usually to write that they agree for himself, his heirs and assigns.
Touch and Concern: Analyzed separately for benefited and burdened parties
Burdened: Covenants requiring property to pay a homeowner’s association, management of property, etc.
Benefitted: Same, usually with some more covenants
Although nor a rule, generally if a covenant doesn’t benefit a property, it won’t be allowed to burden one either.
Horizontal Privity: If the covenant is created when one original party transfers an interest in land to another original party, in a grant of a fee estate, life estate, easement, or leasehold. In MASS it’s only easement or leasehold. This is only required for the BURDEN to run.
Vertical Privity: The entire etate or ownership interest must be transferred. For the burden to run it must be ownership only (NO LEASES). For burdens, leases can run. The rule of vertical privity says that each of the parties have to receive an interest which is the equivalent interest of what was transferred.
The question is - is the covenant affirmative or negative. In the US, there is a hesitancy to allow affirmative covenants to burden future owners. A negative covenant says "I wont' do this " An affirmative says "I'll clean up your driveway or Ill pay you money"
Ø Equitable Servitudes
The difference between a covenant and an ES is that in ES you can only go to a court of equity for an injunction and cannot claim damages. Therefore the elements are lighter:
1) Intent
2) Touch/Concern
3) NOTICE
Notice: The purchaser must have notice when buying the burdened property. Not to benefited parties though.
Tulk v. Moxhay
FACTS: Tulk sold Leicester Square to Elms who promised for himself and his assigns not to build on Leicester Square. With knowledge of the covenant, Moxhay purchased Leicester Square form Elms and proposed to build on the square. There was no horizontal privity since there was no sale with a covenant enclosed. Tulk sought an injunction
REASONING: It was highly unfair for Moxhay to purchase Leicseter Square knowing of the covenant only to ignore it. Because the covenant was intended to bind successors, its substance touched and concerned the land, and Moxhay had notice of it, it was enforceable in equity.
Neponsit Property Owners’ Assn. v. Emigrant Industrial Savings Bank
The covenant to pay a fee to maintain common facilities touched and concerned the burdened property because the effect of the covenant was to impose burdens and advantages on estate holders in their unique capacity as landowners rather than as members of the general public. Furthermore, third party beneficiaries may sue under the covenant.
This is a common Property Law Outline for University Law School classes at:
AKRON ALABAMA ALBANY UNION AMERICANAPPALACHIAN *ARIZONAARIZONA STATE ARKANSAS-FAYETTEVILLE ARKANSAS-LITTLE ROCKAVE MARIA SCHOOL OF LAW
BALTIMORE BARRY UNIVERSITY *BAYLOR BOSTON COLLEGE BOSTON UNIVERSITY BRIGHAM YOUNG BROOKLYN
CALIFORNIA - BERKELEY CALIFORNIA - DAVIS CALIFORNIA - HASTINGS CALIFORNIA - LOS ANGELES CALIFORNIA WESTERN CAMPBELL CAPITAL CASE WESTERN RESERVE CATHOLIC UNIVERSITY OF AMERICA CHAPMAN CHICAGO CINCINNATI CITY UNIVERSITY OF NEW YORK CLEVELAND STATE COLORADO COLUMBIA CONNECTICUT CORNELL CREIGHTON
DAYTONDENVER DePAUL DETROIT MERCY DISTRICT OF COLUMBIA DRAKEDUKE DUQUESNE
EMORY FLORIDAFLORIDA A&M*FLORIDA COASTALFLORIDA INTERNATIONAL*FLORIDA STATEFORDHAM FRANKLIN PIERCE LAW CENTER
GEORGE MASONGEORGETOWN GEORGE WASHINGTON GEORGIA GEORGIA STATE GOLDEN GATE +GONZAGA
HAMLINE HARVARD HAWAIIHOFSTRAHOUSTONHOWARD
IDAHO ILLINOIS ILLINOIS INSTITUTE OF TECHNOLOGY INDIANA - BLOOMINGTONINDIANA - INDIANA POLISINTER-AMERICAN IOWA
THE JOHN MARSHALLJOHN MARSHALL (ATLANTA)*JUDGE ADVOCATE GENERAL'S SCHOOL
KANSASKENTUCKY
LAVERNE*LIBERTY*LEWIS AND CLARKLOUISIANA STATE LOUISVILLELOYOLA - CHICAGO LOYOLA MARYMOUNT - L.A. LOYOLA - NEW ORLEANS
MAINE MARQUETTE MARYLAND MCGEORGE MEMPHIS MERCER MIAMI MICHIGAN STATE MICHIGAN, UNIVERSITY OF MINNESOTA MISSISSIPPI COLLEGE MISSISSIPPI, UNIVERSITY OFMISSOURI-COLUMBIA MISSOURI-KANSAS CITYMONTANA
NEBRASKANEVADA-Las Vegas NEW ENGLAND NEW MEXICO NEW YORK Law School NEW YORK UNIVERSITYNORTH CAROLINA NORTH CAROLINA CENTRALNORTH DAKOTA NORTHEASTERN NORTHERN ILLINOIS NORTHERN KENTUCKY NORTHWESTERN NOTRE DAME NOVA SOUTHEASTERN
OHIO NORTHERN OHIO STATE OKLAHOMA OKLAHOMA CITY OREGON
PACE PENNSYLVANIA PENNSYLVANIA STATE PEPPERDINE PITTSBURGHPONTIFICAL CATHOLIC OF P. R.PUERTO RICO
QUINNIPIAC REGENT RICHMOND ROGER WILLIAMS RUTGERS - CAMDEN RUTGERS - NEWARK ST. JOHN'S SAINT LOUIS ST. MARY'S ST. THOMAS (FLORIDA) ST. THOMAS (MINNESOTA) SAMFORD SAN DIEGO SAN FRANCISCO SANTA CLARA SEATTLE SETON HALL SOUTH CAROLINA SOUTH DAKOTA SOUTHERN UNIVERSITYSOUTHERN CALIFORNIASOUTHERN ILLINOIS - CARBONDALE SOUTHERN METHODIST SOUTH TEXAS SOUTHWESTERN STANFORD STATE UNIVERSITY OF NEW YORK STETSON SUFFOLK SYRACUSE
TEMPLE TENNESSEETEXAS AT AUSTINTEXAS SOUTHERN TEXAS TECH TEXAS WESLEYANTHOMAS JEFFERSON THOMAS M. COOLEYTOLEDOTOURO TULANETULSA
UTAH
VALPARAISO VANDERBILT VERMONTVILLANOVAVIRGINIA
WAKE FORESTWASHBURN WASHINGTON AND LEE WASHINGTON WASHINGTON UNIVERSITYWAYNE STATEWESTERN NEW ENGLAND WESTERN STATE*WEST VIRGINIA WHITTIER +WIDENER WILLAMETTE WILLIAM AND MARY WILLIAM MITCHELL WISCONSIN WYOMING YALE YESHIVA
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