PROPERTY OUTLINE - Introductory Note: The word...

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Unformatted text preview: Introductory Note: The word "property" is used sometimes to denote the thing with respect to which legal relations between persons exist and sometimes to denote the legal relations. The word "property" is used in this Restatement to denote legal relations between persons with respect to a thing. The thing may be an object having physical existence or it may be any kind of an intangible such as a patent right or a chose in action. The broader meanings of the word "property," which include any relationship having an exchange value, are not used. Possession – domain and control over property; asserting ownership over something no one owns. Priority of possession – first in time, first in right; gives legal possessor stronger right to someone who comes after Constructive possession – possession not actual, but assumed to exist. Ratione soli – soil and everything in real property that belongs to the owner of the property. Alienate the land – to transfer the land. Manucaption - "actual bodily possession." Legal justice = when the person has been provided the process which is due – procedural justice. Positive law – the law that has been established by the state through predesigned mechanisms (legislation) Utilitarianism (what is the greatest good for the greatest number?) Social Contract Theory: Ind. Rights are surrendered to a Government to accomplish certain common ends. Property – bundle of rights that you can disaggregate, alienate, exclude, exercise dominion….; system that exists to allow persons to make claims against other persons over valuable resources. Rights to use, to possess, to transfer (alienate), to exclude others from their use of the property,,, System of property is about the rights in the light of the law (statutes, common law rules) Property can also be about membership (characteristics) Johnson v. M’Intosh Facts: An Indian tribe sold a plot of land to Johnson. Thirty years later, the U.S. gave M’Intosh the same piece of land. Johnson was thrown off the land. Johnson sued M’Intosh for a ejectment cause of action. Issues: Whether the title given by the Indians can be recognized in the Courts of the US. Rule: The decree of 1763 stated that no one could purchase land from an Indian because the land was not theirs, it belonged to the government. Application: Either because of the state of conquering of the decree of 1763, the Indian government, could not sell the land to the Johnson therefore it was like the sale never took place. Conclusion/Holding: Judgment for Defendant Ejectment cause for action. (gets trespassers off) Decree of 1763 gave no right to Indians to sell property Tee-Hit-Ton Indians v. United States Facts: The tribe wanted compensation for the taking of certain timber by the United States from Alaskan lands allegedly belonging to the group. Issues: Whether the tribe has the right to unrestricted possession, occupation and use. Application: There has been no recognition by Congress of any legal rights in petitioner to the land in question. Indian occupation of land without government recognition of ownership creates no rights against taking or extinction by the United States. Conclusion/Holding: Indian occupancy may be extinguished without compensation. Escheat - if person dies intestate with no heirs, goes to state Term “res nullius” refers specifically to such things as wild game and fish which are originally without owner and term “res derelictae” refers to things voluntarily abandoned by their owner with the intention to have them go to the first person taking possession. Intent to abandon res derelictae must include intent to let first person who comes along acquire them. LABOR AND INVESTMENT International News Service v. Associated Press - news and the law of unfair competition Facts: INS waits for AP to release its stories on a community bulletin board or a newspaper, then steals the idea and sells it to other newspapers. From a judgment for AP, INS appeals. Issues: Whether defendant may lawfully be restrained from appropriating news taken from or from newspapers published by them, for the purpose of selling it to defendant’s clients. Rule: Upon the publication of news, property right is lost and may be regarded as public knowledge. Each party is under a duty so to conduct its own business as not unnecessarily or unfairly to injure that of another. Application: AP remains the owner of the stories after they are published as far as their competition is concerned. This is unfair competition in business Conclusion/Holding: Affirmed. Dissent #1: Property does not arise from value. The defendant should be enjoined from publishing news obtained from the AP for hours after publication by the plaintiff unless it gives express credit to the AP. Dissent #2: An essential element of individual property is the legal right to exclude others from enjoying it. They are merely using its product without making compensation. That they have a legal right to do, because the product is not property. INS should be able to use stories only if they do not credit AP. Legislatures should deal with this problem and create laws. Moore v. Regents of the University of California – patents in human genes Facts: Doctors, who were treating Moore for leukemia, used his blood, semen, bone marrow, and spleen unknown to Moore to come up with the lucrative “Mo cell line.” Moore found out and now wants compensation. Issues: Whether it was a breach of fiduciary duty to disclose facts material to the patient’s consent. Whether defendants’ unauthorized use of Moore’s cells constituted a conversion Rule: Conversion. Application: The complaint does not satisfy the established requirements of a conversion cause of action. The cell line was new and different from the plaintiff’s cells. Conclusion/Holding: Should be left to Legislature. Dissent: The complaint fully satisfies the established requirements for a conversion cause of action. - - Moore’s allegations that he owns the cell line and the products derived from it are inconsistent with the patent, which constitutes an authoritative determination that the cell line is the product of invention. The Court in this case also considered policy issues. “To expand liability by extending conversion law into this area would have a broad impact.” The Court argued that this would hinder researchers and developers. There was also a CA statute that drastically limited a patient’s control over excised cells by regulating disposal of human tissue to protect public health and safety. Court was considering whether you have a right to patent your cells, or do you have a property interest in your cells? Court finds that the statute extinguished whatever property interest he may have had. If there were no statute, then you could assume that people COULD have a property interest in their cells. If there’s no property interest in cells because of the statute, then how were the doctors able to use the cells to make money? If Moore didn’t have a property interest in his cells, then why were the doctors allow to patent the cell line and then claim that as their property. Under this opinion, the statute prevents Moore from having a property interest in his cells, but lets the doctors have a property interest in them. Both the majority and the dissent make public policy arguments. What happens in cases where a new and different breed (or type) of “thing” is created from an already existing breed (or type) of thing? The court in these types of cases will consider the policy consideration of letting the market flourish and to allow for further development to occur. Once you sell something to someone, without any conditions, then normally alienations are considered to be complete, the seller retains no rights. In cases where there a patent, and you sell your product, then the buyer cannot reproduce your product without incurring some liability. If they make improvements and come out with a different product, then the law is different. The investment of time and interest, in some cases, if substantial enough, may provide a property interest. PROPERTY CREATED BY RELATIONSHIP Babbitt v. Youpee (1997) In re Marriage of King GIFTS A gift is a transfer of property from one person to another w/o payment. Law of gifts requires: 1. intent to transfer title 2. delivery of the property (constructive delivery is recognized by the Ct-s if physical delivery is inconvenient or impossible) Delivery requirement may be accomplished by a writing. 3. acceptance by the donee POSSESSION Rights in land ultimately derive from the Gov-t and then can be transferred to others. Actual possession often creates a presumption of a right to possess that may be rebutted by evidence of a superior claim. Pierson v. Post – wild animals Facts: While Post was hunting and pursuing a fox with dogs, Pierson intercepted the fox, killed it, and carried it off. From a trial court decision for the plaintiff, the defendant appealed. Issues: Whether Post, by his pursuit, acquired such a right to, or property in, the fox. Rule: Property in such animals is acquired by occupancy only. Pursuit alone vests no property or right in the huntsman unless the animal is actually taken. Application: Mere pursuit gave Post no legal right to the fox. Conclusion/Holding: Judgment reversed Dissent: Kill all foxes. If hunted professionally, it should go to pursuer. NOTES: Form of action - trespass on the case (deals with personal property with a specific remedy (money) Elliff v. Texon Drilling Co Facts: Both parties owned property over a huge gas reservoir in which drilling rigs were established. The defendant’s rig blew out and destroyed property of the plaintiff. Issues: Whether the law of capture absolves respondents of any liability for the negligent waste or destruction of petitioners’ gas and distillate. Rule: The landowner is regarded as having absolute title in severalty to the oil and gas in place beneath his land. Under the law of capture, there is no liability for reasonable and legitimate drainage from the common pool. Application: The negligent waste and destruction of petitioners’ gas was neither a legitimate drainage of the minerals from beneath their lands nor a lawful or reasonable appropriation of them. Consequently, the petitions did not lose their right, title, and interest in them under the law of capture Conclusion/Holding: Judgment reversed NOTES: Surface owner is the owner of the land and also the absolute owner of the oil and gas below. The law of capture modifies by allowing a producer to become the owner of the oil; not trespasser. Can’t use injurious capture/drilling - liable if do so That rule modified by negligence - must capture - if not - just waste - no law of capture. Water: natural situation prevails - surface water system streams/groundwater - prior appropriation/use - 1st user owns permit system - state/organizations gives permits riparian owner reasonable use - balance rights of all correlative rights - defined water for each user free use/absolute ownership - creates conflicts • • • • Groundwater. Tests the courts use: Free use or absolute ownership; majority rule Reasonable use: majority each owner must accommodate the interests of neighboring owners; Correlative rights: minority rule - each owner can withdraw a specified portion of the water in proportion to what percentage of the aquifer underlies their property; Prior appropriation: minority rulegranting rights to the property owner that first invested in withdrawing the water. Streams: Reasonable use (majority) and the prior appropriation (minority rule) Lock: mixed labor w/ land – gives you right over the land: benefit productive over nonproductive uses of the land. FINDERS Charrier v. Bell Facts: P excavated two tons of Indian artifacts. The TC denied relief under the theory of unjust enrichment. P appealed. Issues: The adequacy of proof that the Tunica-Biloxi tribe are descendants of the inhabitants of the burial grounds, the ownership of the artifacts, and the applicability of the theory of unjust enrichment. Application: The descendants of former Tunica Indians have adequately satisfied the proof of descent. The fact that the descendants resolved to bury certain items along with the bodies of the deceased, does not result in a conclusion that the goods were abandoned. As for the unjust enrichment; plaintiff has failed to prove that he has sustained the type of impoverishment needed. Conclusion/Holding: Judgment affirmed. NOTES: Declamatory relief Grave robbing case He claims he dug up buried treasure. The items were not gold and silver or stolen goods and therefore distinctive. Mr. Hoshman did not have the authority to allow access to the property, therefore the defendant was a trespasser. Property lost – when the owner accidentally misplaced it; Property mislaid – when the owner intentionally left it somewhere and then forgets where she put it; Property abandoned – when the owner forms intent to relinquish all rights to the property. TRESPASS This tort protects the right to exclude others from the property; this right is not absolute. Legal rules limit the possessor’s right to exclude nonowners from the property. Rights of access are created by different sources of law: common law, federal and state public accommodations statutes, labor relations statutes fed. and state constitutional guaratees of freedom of speech. State v. Shack Facts: Tedesco, a farmer who hires migrant workers, called police when defendants, Tejeras and Shack walked onto his property to check on a injured worker and a worker who needed legal advise. Issues: Whether the migrant worker should be deemed to be a tenant and thus entitled to the tenant’s right to receive visitors or whether his residence on the employer’s property should be deemed to be merely incidental and in the aid of his employment. Rule: Representatives from charities may enter upon the premises to seek out the worker at his living quarters. Application: The migrant worker must be allowed to receive visitors there of his own choice, so long as there is no behavior hurtful to others. The farmer is entitled to pursue his farming activities without interference but he cannot assert a right to isolate the migrant worker in any respect significant for the worker’s well being. Conclusion/Holding: The defendants did not violate the trespassing statue. Judgment reversed. Notes: $100,000 in attorney’s fee in a NJ appeal. Property rights serve human values. Human rights are higher than property rights in NJ. (liberal) The key is communication to the farmworkers. Most justices say that property rights have changed over time. Desnick v. ABC Issue: If there is consent and it was fraudulently obtained did the tort of trespass take place under the given facts? Holding: plaintiffs cannot have a claim under the law of trespass. the defendants entered the clinic of the plaintiffs acting like patients. The clinic was open to anyone who wanted to get the eyes checked. The defendants did not reveal any personal information of the plaintiffs. They only revealed the professional conduct of the plaintiffs. No work was disturbed, no embarrassingly intimate details were revealed, no trade secrets were stolen, etc. Rule: It is often held that consent to an entry is legal even though the entrant has intentions that if revealed to the owner, make the owner revoke this consent. NOTES: Mistaken entry on the land of another does not relieve the trespasser of liability. Trespass is privileged if: 1. the entry is done w/ the consent of the owner; 2. the entry is justified by the necessity to prevent more serious harm to persons or property; 3. the entry is otherwise encouraged by public policy. Trespass remedies: nominal damges; compensatory damages measured either by the cost of restoring the property to its previous condition or by the diminution in its market value; declaratory judgment punitive damages injunction; ejectment Criminal trespass: crim. Proceedings are generally initiated by gov-t officials, not private parties, and their purpose is to deter wrongful activities and to punish. Punishment: fine, probation or incarceration, and even death penalty. Uston v. Resort Intl Hotel Facts: The defendant excluded plaintiff from the blackjack tables in its casino because the plaintiff is an expert card counter. Issue: Can the defendant exclude the plaintiff from its casino just because the plaintiff is an expert card counter? Rule: When property owners open their premises to the general public in the pursuit of their property interests, they have no right to exclude people unreasonably. Holding: Such owners do have the right and duty to exclude those who disrupt the ‘regular and essential’ operations of the premises. The plaintiff in this case does not fit that category. He was not disruptive in the casino and in no way interfered with the regular functioning of the casino. Therefore, the plaintiff possesses the usual right of reasonable access to the defendant’s casino. Dale v. Boy Scouts of America – Discrimination in the place of public accommodation – right to exclude vs. right of reasonable access. Facts: assistant scoutmaster, was expelled solely because of the Boy Scouts' policy of excluding avowed homosexuals from membership. Rule: The place of public accommodation has the right to exclude others, but this right isn’t absolute, it’s limited by the Government – the statute lists a number of reasons, based on which it cannon exclude: race, color, religion, sexuality… To be a place of public accommodation it’s not necessary to be a physical, fixed ‘place’. Holding: Here, homosexuality is not statutorily protected class, therefore, the court engaged in the 1sr amendment analysis. Where, the race is involved (suspect class) – it’s protected under Constitution and Civil Rights Act. Age is not included in the statute, however, it’s protected by the Constitution. BS is a place of accommodation. BS doesn’t fall w/I the exception of the rule. Lloyd Corp., Ltd. V. Tanner - free speech rights of access to private property Facts: Lloyd Corp., owner, made the D stop distributing handbills. The DC found the Center was equivalent to a public business district and that their rules violated First Amendment rights. The Court of Appeals affirmed. Issues: Whether respondents, in the exercise of asserted First Amendment rights, may distribute handbills on Lloyd’s private property contrary to its wishes and contrary to a policy enforced against all handbilling. Rule: The Constitution does not require private property to be used for public use, nor does it lose its private character because the public is invited to use it. Application: Marsh v. Alabama involved a company-owned town that had the full spectrum of powers of a State municipality. There is no such dedication of Lloyd’s privately owned and operated shopping center to public use as to entitle respondents to exercise therein the asserted First Amendment rights. Conclusion/Holding: Judgment reversed. DISSENTING: In Marsh, “the more an owner, for his advantage, opens up his property for use by the public in general, the more so his rights of those who use it”. It is a balance we are striking between freedom of speech and freedom of private property. ADVERSE POSSESSION – 6 elements (Grobble) Brown v. Gobble Facts: D purchased their property by deed and were informed that there property ran up to a fence, when, in actuality, the two-foot-wide tract of land belonged to the P. The D took care of the P and refused to let the P build on the property once the truth was known. The P sued and won and the D appealed based on tacking. Rule: Where one by mistake occupies land up to a line beyond his actual boundary, believing it to be the true line, such belief will not defeat his right to claim that he holds such land adversely or hostility under the doctrine of AP. Holding: The land appeared to be part of the defendant’s property. They contend that they have established adverse possession by tacking on the time periods that their predecessors in title claimed the two-feet-wide tract. Standard of review is clear and convincing evidence standard, not the mere preponderance of evidence, which is usual to all civil cases. 1. That the possession was adverse or hostile – without the permission of the true owner. If the P never mentions anything, complaining, then there’s a presumption that the possession is not permissive. In some instances the permission can be implied form the established custom of a community. Written authorization and leases establish permissive uses, however, the continued possession of property after express revocation, termination of such permission constitutes a hostile possession. Written and other expressions denying permission can also establish the hostility of a non owner’s possession (e.g., no trespassing signs or notices of intent to sue for trespass or ejection) 2. That the possession has been actual : must be physical, it must take place in the ordinary way an average owner would use the property. Generally the tending of land through faming, clearing, planting shrubs and other means establishes actual possession. It may be established by showing that the use of the land conformed to the typical uses of land in the area and uses for which the land is suited. Boundary fences raise the presumption of actual possession. An AP who has a deed that purports to transfer the land in question but is ineffective to transfer title b/c of a defect in the deed (such as lack of signature) or a defect in the process by which the deed was issued (lack of notice to the owner when the property is sold for failure to pay property taxes, for example) has “color of title” to the property. Under color of title occupancy of any portion of the land described in the deed is deemed to be actual possession of the entire lot described in the defective title. 3. That it has been open and notorious : must be sufficiently visible and obvious, to place a reasonable owner on notice that their property is being occupied by a non-owner. AP merely need to show that the owner’s reasonable inspection would have revealed the occupation, not that the owner had actual knowledge. For example, clearing the land, building the structure, using a land for gardening, planting the crops, paving the land, parking, storage, picnicking and use of the land for garbage removal. 4. That possession has been exclusive : that the possession was of a type that would be expected of a true owner and that the possession cannot be shared with the true owner. This may require showing that the true owner was effectively excluded from the property. 5. That possession has been continuous : the possession must continue throughout the statutory period. Seasonal and periodic possession are considered continuous when consistent with typical property use (typical in this area or the type of property) Tacking – allows non owners in privity with preceding AP to add together uninterrupted periods of use. 6. that possession has been under claim of title or color of title. Romero v. Garcia Facts: The plaintiff and her deceased husband had bought 13 acres of land from the defendants (fatherin-law and mother-in-law of the plaintiff). This land was part of 160 acres of land that belonged to the defendants. The plaintiff and her husband built a house on the land and lived there until the husband died. Plaintiff moved to Colorado and remarried. Now defendants claim that the deed was inadequate for color of title and the deed’s description was inadequate for adverse possession because it failed to describe a specific piece of property. Holding: As to the first argument, the court ruled that a deed is sufficient for the purpose of color of title even though it is void because it lacks the signature of a member of the community. As to the second argument of the defendants, the court stated that a deed is not void for want of proper description if, with the deed and with extrinsic evidence on the ground, a surveyor can ascertain the boundaries. In the current case, the subsequent acts of the parties in erecting a house and pointing to the land were sufficient to ascertain the boundaries. Nome 2000 v. Fagerstrom p.136 Alaska Facts: From 1944 to 1978 D used, staked, and improved a cabin. From a denial for P’s directed verdict, P appealed. Issues: Whether the jury could reasonably conclude that the Fagerstroms adversely possessed the parcel. Rule: For the statutory period ‘his use of the land was continuous, open and notorious, exclusive and hostile to the true owner.’ Application: The defendants cared for the parcel as if they owned it. A quick investigation of the premises would have been sufficient to place a reasonably diligent landowner on notice that someone may have been exercising dominion and control over their property. Conclusion/Holding: We conclude that the defendants adversely possessed property. Where, as in the present case, the land is rural, a lesser exercise of dominion and control may be reasonable. Where physical visibility is established, community repute is also relevant evidence that the true owner was put on notice. Good faith/bad faith statutes. Majority jurisdictions use an objective test to assess the adverse possessor’s intention to possess the property in dispute. Accordingly, the state of mind and character of adverse possessor’s is generally irrelevant. Minority jurisdictions have several subjective tests: • Claim of Right statutes: adverse possessor must allege a claim of right – his intention to appropriate and use the land as his own to the exclusion of all others. HE should ac toward the land as an average landowner would from which the intention to claim the land is implied. F.S. §1.01, §95.16 – Florida uses color of title claim. You can get AP w/o color of title in some circumstances. Some state allow a presumption of a claim of right through acts of possession to be defeated through evidence that the AP did not intend to claim property that was not her own. • • Bad Faith Statutes – intentional dispossession: the landowners intend to take over property that was not their own through dispossession; however, this is generally limited to border disputes. Good Faith Statutes: the landowners innocently take over property that was not their own through mistake. Claims against the government: general rule – adverse possession claims cannot prevail against government property. BUT: many state have statutes limiting or abolishing governmental immunity from AP; others allow AP claims against government if the property is not held for public use or is dedicated to commercial purposes or is otherwise not open to the public (exception to a common law rule). A fed. statute allows AP of federal lands in certain instances if a claimant has occupied the property for 20 years in good faith reliance on a claim or color of title and has either cultivated the land or constructed improvements 43 U.S.C. §1098 Policy justifications: To provide a degree of certainty of ownership to possessors of land by eliminating the possibility of state claims to land title; To encourage maximum utilization of land Reasons for AP: 1. Land development 2. Distribution of wealth. 3. Keep land claims alive Burden of proof belongs to the AP Standard of proof is clear and convincing evidence (preponderance of the evidence is commonly the same but the court distinguishes here) Fungible vs. Personal Objects: Fungible if it is perfectly replaceable w/ money; personal if it has become bound up w/ the personhood of the holder and is no longer commensurate w/ money. Rural land. Majority – there’s no special rule regarding an extent of use of rural land; some Cts say that greater acts should be required in rural areas to ensure that a reasonable owner would be on notice of the occupation of her land. PRESCRIPTIVE EASEMENTS – same elements but there must be use, not possession. When a prescriptive easement is claimed, the extent of the user must be proved not with absolute precision, but only as to the general outlines consistent with the pattern of use throughout the prescriptive period. Where a claimant adduces enough evidence to prove those general outlines with reasonable certainty, it has met its burden on that issue. Community Feed Store, Inc. v. Northeastern Culvert Corp. p.169 Vt Facts: P sought a prescriptive easement for a parcel of land 60 X 90 feet owned by the D. Vehicles would use the gravel lot for turning and backing while delivering goods to both the P and D. Finding for the D, P appealed. Issues: Whether the court erred in making two findings of fact. First, if the plaintiff failed to prove the size of the easement, and secondly, the use of the area was made with the permission of the fee owner. Rule: Slight deviations from the accustomed route will not defeat an easement, only substantial changes which break the continuity of the course to travel. A party claiming prescriptive easement must establish open, notorious, exclusive, adverse, continuous and uninterrupted use of the claimed easement for the statutory period. Application: The traveling of trucks entering the easement had only slight deviations. Plaintiff met its burden by establishing the general outlines of the easement with reasonable certainty. Acquiescence - acting like you have possession as the owner (mindset of actual owner), different from permissive The requirements for easements are generally the same but are more lapse in most states. Prescriptive easement – adverse use, not possession. When a prescriptive easement is claimed, the extent of the user must be proved not with absolute precision, but only as to the general outlines consistent with the pattern of use throughout the prescriptive period. Where a claimant adduces enough evidence to prove those general outlines with reasonable certainty, it has met its burden on that issue. Presumption as to permission: Majority rule: use by a non-owner of one’s land is nonpermissive, as for AP; Minority: use, unlike possession, is presumptively permissive rather than adverse. No negative easements. Acquisition by the public: Traditional rule – the public cannot acquire an easement by prescription b/c there’s a presumption that public use of private property is permissive. Modern trend: public may acquire prescriptive easement. Some states have statutes regulating use of property by public. Removal of Encroaching structure: Traditional view is that the true owner can file a claim for removal of the structure on his land. New majority rule – relative hardship doctrine: if the encroachment is innocent the harm minimal, the interference in the true owner’s property interests small, and the costs of removal substantial, the Cts often refuse to grant an injunction ordering removal of the structure. Instead, they will either order to pay damages to compensate for the decrease in market value or order a forced sale of the property from the landowner to the owner of the encroaching structure w/ damages equal to the value of the land taken and possibly a premium to compensate for the involuntary nature of the transfer in ownership. If the cost of removal is not substantial or the interference w/ the neighbor’s ability to use its property is substantial, removal may well be ordered. When a builder mistakenly constructs an entire structure on land belonging to another, the Ct-s generally rule that the landowner becomes the owner of the structure built on her by another. Majority: trespassers cannot have the advantage of any benefits they have made to the property, such improvement belong to the owner, w/o compensation to trespassers for labor or materials. Minority (Somerville): an innocent trespasser who improves property in the good faith has a right to compensation for the value of improvements when those improvements increase the value of the property. SOMERVILLE v. JACOBS The neighbors brought the action for equitable relief against the property owners, on whose land the neighbors mistakenly constructed a warehouse building. The property owners asserted entitlement to the building under the doctrine of annexation and refused to pay the neighbors the value of the improvements. RULE: Equity has jurisdiction to, and will, grant relief to one who, through a reasonable mistake of fact and in good faith, places permanent improvements upon land of another, with reason to believe that the land so improved is that of the one who makes the improvements. An improver of land owned by another, who through a reasonable mistake of fact and in good faith erects a building entirely upon the land of the owner, with reasonable belief that such land was owned by the improver, is entitled to recover the value of the improvements from the landowner and to a lien upon such property which may be sold to enforce the payment of such lien, or, in the alternative, to purchase the land so improved upon payment to the landowner of the value of the land less the improvements and such landowner, even though free from any inequitable conduct in connection with the construction of the building upon his land, who, however, retains but refuses to pay for the improvements, must, within a reasonable time, either pay the improver the amount by which the value of his land has been improved or convey such land to the improver upon the payment by the improver to the landowner of the value of the land without the improvements. NUISANCE – substantial and unreasonable interference with the use or enjoyment of another’s property interests. Ex.: offensive, physically, to the senses and which by such offensiveness makes life uncomfortable such as noise, odor, smoke, dust, or even flies. A lessee has a right to use the property, and he can file a claim for nuisance even though he is not an owner. Generally, land use is unreasonable when the gravity of the harm outweighs the utility of the actor’s conduct. Rest. 2 of Torts. Ct-s must weigh the costs and benefits of prohibiting versus allowing the complained of activity. The goal of bringing the case is to stop future interference. 1. 2. 3. 4. 5. Gravity of Harm: the extent of the harm (the scope, the degree, the limit of the harm, the duration – how far reaching, how long); the character of the harm; the social value of the use and enjoyment interfered with; the suitability of the use and enjoyment interfered with to the character of the locality – is the P’s activity appropriate to the locality of the property; the burden placed on the person harmed by the interference of avoiding it – how difficult is it for the P to try to mitigate the harm. These are factors which should be seen together; so one of them can so outweigh the others as to negate the great gravity of harm or it can decrease the gravity of the harm. Trespass is any intentional invasion of the P’s interest in the exclusive possession of his property → right to exclude vs. right to use and enjoy. Negligence vs. Nuisance. Negligence law prohibits and provides remedies for unreasonable conduct; this implies that a reasonable person would have foreseen the harm and prevented it. Nuisance focuses on the result of the conduct rather than conduct itself. Enjoining Nuisances Generally injunctions will be granted to stop activities that the court determines cause more harm than good in a way that places an unfair and substantial burden on the P. Nuisance Damages When the benefits of an activity outweigh the harm it produces but harm unfairly burdens the P, P will be awarded damages even though injunction requests will be denied. Coming to the Nuisance When Ps “come to the nuisance” and D’s activity is found to cause an unreasonable interference that produces substantial harm, Ps who are willing to compensate the D for the costs of ceasing her operations and relocating may obtain an injunction against D’s activities. It doesn’t mean that the P will not be compensated; the P is just in less favorable position to get damages. Even if there’s more harm than good, Ct is hesitant to decide for injunction if the P himself came to nuisance and was knowledgeable about the nuisance going on the property. If the P who came to nuisance is willing to compensate the D, the Ct may decide to issue injunction How do courts determine whether interference is unreasonable? 1. What interests are encompassed by the right to the use and enjoyment of the land? – freedom from pollution, noise, odor, and smoke… 2. How serious must the interference be for a nuisance to be present? – the courts require substantial harm 3. If D has substantially interfered in one’s use and enjoyment of land, how do we determine whether the harm is unreasonable? • Rights and fairness: harm is nuisance b/c the type or amount of harm is one that owners should not have to bear for the good of society, at least in the absence of compensation. • Social utility or welfare: comparing costs and benefits of providing a remedy: a nuisance when the gravity of the harm outweighs the social utility of the harmful conduct. Rights analysis focuses on the parties themselves, asking whether the P’s right to security should prevail over the D’s right to freedom of action. Social welfare analysis focuses on society as a whole, asking whether society in general is better off if the activity goes forward despite the harm. Fairness factors: 1. the character of the harm 2. distributive considerations 3. fault Welfare factors: 1. costs and benefits 2. incentives 3. lowest cost avoider Remedies: Property rules – injunctive relief; Liability rules – damages; Inalienabilty rules Public nuisance is an unreasonable interference with a right common to the general public. Under the traditional view only public officials may enjoin public nuisances and private landowners could only obtain damages if they suffered harms distinct from that generally suffered by the public as a whole. Current trends and the R 2 T establish that any member of the public affected by an activity should be able to bring a suit to enjoin a nuisance; however, special damages are still required by the majority of the courts. In some jurisdictions Legislature enacts statutes to authorize private individuals to bring claims against public nuisances. Ex.; Environmental Departments regulate the use of public properties based on public safety – they can act on nuisance when the businesses don’t comply w/ the regulations. When the owner has permission for pollution from those Environmental Agencies, no one can bring a claim against them for nuisance. When there are harms that are caused by accident, leakage, owners can be punished. Encroaching Trees. Some Ct-s deny compensation b/c you could reasonably avoid damages by cutting the branch. Criminal Activity and Per Se Nuisances Highly disfavored activities and criminal engagements may be considered nuisances as a matter of law. A possessor of land upon which a third party carries on an activity that causes a nuisance is subject to liability for the nuisance if: 1. the possessor knows or has reason to know of the activity; and 2. she consents to the activity or fails to exercise reasonable care to prevent the nuisance. Some courts have allowed suits against gun-manufacturers or dealers who have designed and marketed guns for criminal use, or distributed guns in a manner intended to facilitate their flow into the illegal market to persons not legally entitled to purchase them. Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc. (Fla. 1959) p.336 Facts: P brought suit because D started to build an addition to their hotel that would have shadowed the P’s resort hotel. Issues: Plaintiff claims right to negative easement Rule: The landowner had no legal right, in the absence of an easement, to unobstructed light and air from the enjoining land. Application: Where a structure serves a useful and beneficial purpose, it does not give rise to a cause of action, either for damages or for an injunction, even though it causes injury to another by cutting off the light and air and interfering with the view that would otherwise be available. NUISANCE HYPO Andrea runs a perfume factory that is near 3 large apartment complexes and a local elementary school. The school has over 2000 children almost all of whom walk from the nearby apartment complexes. Andrea introduces a new and popular perfume line that creates a sweet fragrance that permeates the entire neighborhood seven days a week from morning till evening. Soon school children begin to complain about the smell getting on their clothes and in their hair as they walk to school. While some of the children like the smell many of the boys complain about it. Parents complain to Andrea who has also laid off a number of workers due to automation at the plant. Andrea only employs a few workers from the community for janitorial services and security work but nets $5,000,000 per year from the plant. In addition to federal, state, and local taxes, Andrea gives $1000 per year to the nearby elementary school. If a group of parents bring suit against Andrea for nuisance will they prevail? What if parents allege that their children suffer headaches as a result? Does it matter if Andrea was their before the apartment complexes and school were built? Who will prevail if she was? SERVITUDES – legal device that creates a right or an obligation that runs with the land or with an interest in land. License – permission which is informal and revocable at will by the owner of the land. Licenses are not classified as servitudes – they are not transferable, can not be inherited or left by will. Permission is often limited to specific purposes. No writing is required to create a license; many licenses are implied by the circumstances. 1. 2. 3. 4. Licenses cannot be freely revoked in 4 circumstances: License coupled w/ interest: when the owner who sells personal property to another that is located on her own land gives permission to the buyer to enter her land to remove the licensee’s personal property, the owner of real property cannot exclude the licensee who reasonably exercises his license to recover personal property (such as car.) Promise to grant license – theatre ticket Easement by estoppel Constructive trusts Easement (is a servitude, otherwise called “right of way”) – permission which is intended to be permanent or irrevocable. Burdened land – the servient estate; Benefited land – the dominant estate. Personal (irrevocable license only for this owner, which is not transferable) vs. appurtenant easement Affirmative easement – right to do something on someone’s land. Restrictive servitudes: 1. negative easements 2. restrictive covenants 3. equitable servitudes COVENANTS – contractual agreements by which the landowners agreed to restrict the use of their own land for the benefit of either landlord or neighboring owners. Profit – right to remove materials (minerals, oil, gas or trees) from another’s property. Affirmative covenant – an obligation to do something for the benefit of another owner or owners. 4 issues in the law of servitude: 1. What are the formal requirements to create a right or obligation? 2. 3. • • When the meaning of the servitude is unclear, how should ambiguities be interpreted? What are the substantive requirements for validity of servitudes? Determining when land use restrictions are immediately void as against public policy When the rights or obligations, although valid as contracts b/w the parties who agreed to them, will not be allowed to run w/ the land binding and/or benefiting future owners. 4. How can servitudes be modified or terminated? Trust (created by a trust document or a will) – property agreement in which an owner, called a settler, transfers property to another person, called trustee, w/ instructions to manage the property for benefit of a third person, called beneficiary. The trustee has legal title to the property, while the beneficiary has equitable or beneficial title. Constructive trust – one which exists by operation of law or by construction of the Ct, regardless of any lack of express agreement b/w or intent on the part of the parties. When one party has been wrongfully deprived wither by mistake, fraud, or some other breach of faith or confidence, of some right, benefit, or title to the property, a Ct may impose upon the present holder of legal title a constructive trust for the benefit of that party. Rase v. Castle Mountain Ranch, Inc. (Mont. 1981) p.385 Facts: The P owned homes around lake purchased by D who wants to kick them out. P had a license agreement with the prior owner. The court entered judgment for a constructive trust. Both sides appeal. Issues: Whether the agreement between the cabin owners and Tavenner entitled the owners to an irrevocable license. Application: Tavenner misled the cabin owners into believing they did not have to fear the loss of their investment and so allowed them to act to their detriment. Conclusion/Holding: Judgment affirmed. Payment or ingress and egress. A-----------à------B--------à-----------C (equitable owner) title beneift NOTES: license coupled with an interest Irrevocable license terminates when the use terminates An easement does not terminate from nonuse. Constructive trusts are not required in writing. Rule: A purchaser of lands with actual knowledge of an intervening contract for purchase from the same owner is not an innocent purchaser without notice, and is subject to the prior contract holder's rights. When someone purchases land under circumstances which suggest outstanding equities in third parties, there is imposed on the purchaser a duty to make a reasonable investigation as to the existence of outstanding claims against the property, and one who fails to use due diligence to ascertain the facts within his reach is not an innocent purchaser. When there appears possession of land by persons other than the record holder, which possession is inconsistent with the record title, there is a duty of inquiry imposed upon a purchaser of that land. Statute of Frauds requires a writing to transfer most interests in real property. Deeds are normally signed only by the grantor. Exceptions: • Easements by estoppel; • Easements by prescription; • Implication from prior use; • Necessity; • Constructive trust. Minority Ct-s would grant easement by estoppel only when doing so would avoid fraud. When conveying an easement does not comply with the requisite formalities: • If an easement is granted orally; • In a writing that does not comply w/ the specific requirements of the local statute of frauds • In the case of an ambiguous deed reference When owners open their property to others, they may create reasonable expectations of continued access to the property; the owner may be held to have waived the legal power to revoke that access. Majority jurisdictions apply Objective test: if the grantee reasonably relies on the license and invests substantially on the basis of it even if the grantor never intended to grant permanent rights; detrimental reliance must be shown. It’s true b/c the Ct-s believe that the grantor should have known that a reasonable grantee would have understood the rights being granted to be more than temporary. Other Ct-s require writing under statute of Frauds. IMPLIED EASEMENTS are created despite absence of express K to create an easement: Easements Implied from Prior Use, quasi-easements - arises when an owner of an entire tract of land or of two or more adjoining parcels, after employing a part thereof so that one part of the tract or one parcel derives from another a benefit or advantage of an apparent, continuous, and permanent nature, conveys or transfers part of the property without mention being made of these incidental uses. May be recognized when an owner divides her property and sells one parcel, retaining the other for herself. If grantor intends to retain an easement over the property conveyed to the buyer, the property burdened by the easement (servient estate) is subject to an easement by reservation (because the seller reserved for herself an easement across the property being conveyed). If the grantor intends to grant the buyer an easement over the property retained by the grantor, then the property benefited by the easement (dominant estate) is attached to an easement by grant (b/c the buyer has been granted an easement benefiting the land he has purchased). These easements are granted if: a) 2 parcels were previously owned by a common grantor; b) One parcel was previously used for the benefit of the other parcel in a manner that was visible and continuous; c) The use is reasonably necessary or convenient for enjoyment of the dominant estate. Easements by necessity arises when an owner of land conveys to another an inner portion thereof, which is entirely surrounded by lands owned either by the grantor or the grantor plus strangers. Unless a contrary intent is manifested, the grantee is found to have a right-of-way across the retained land of the grantor for ingress to, and egress from, the landlocked parcel. Similarly, an easement is implied by way of necessity in the deed when the owner of lands retains the inner portion, conveying to another the balance. A right or obligation runs with the land if it passes automatically to successive owners or occupiers of the land or the interest in land with which the right or obligation runs. Where an easement by necessity is claimed, however, there is no requirement of proof of a known existing use from which to draw the inference of intention Policy reasons: • to effectuate the intent of the parties; • To promote the efficient utilization of property Holbrook v. Taylor (Ky. 1976) p.382 Facts: The A gave permission to D to use the road for eight years. The right to the use of this easement was not established by prescription. The appellee came to the Taylors and offered the easement for sale for $500. The Taylor rejected the offer. The appellee then blocked the road to discontinue use to the appellants. Issues: Whether an easement by estoppel (Irrevocable License) could be established. Application: There is no other location over which a roadway could reasonably be built to provide an outlet for appellees. D used to road to get to their home, construction of the residence, and improvement of the road. The rule here is- that where a license is not a bare, naked right of entry, but includes the right to erect structures and acquire an interest in the land in the nature of an easement by the construction of improvements thereon, the licensor may not revoke the license and restore his premises to their former condition after the licensee has exercised the privilege given by the license and erected the improvements at considerable expense…We use an estoppel because the plaintiff’s relied on this promise to use the road. Granite Property Limited Partnership v. Manns (Ill.1987) p.396 Facts: D bought a parcel from the P who maintains two easements for access purposes. The D admitted that he saw the two easements before he purchased the property. Form a judgment for the P, D appealed. Issues: Did the plaintiff acquire an easement by implied reservation over the driveways of the defendant? Rule: There are two types of easements - easement by necessity and the easement implied from a preexisting use. An easement implied from pre-existing use has three elements: 1. common ownership of parcel then a transfer separating the ownership 2. before separation, the common owner used part of the parcel for the benefit of another part, and the use was apparent, obvious, continuous, and permanent and 3. the claimed easement is necessary and beneficial to the enjoyment of the parcel conveyed by the grantor. Application: Easements were apparent, permanent, and subject to continuous, uninterrupted, and actual use and reasonably necessary for the beneficial use and enjoyment of the shopping center and the apartment complex. Eight "important circumstances" from which the inference of intention may be drawn: • whether the claimant is the conveyor or the conveyee; • the terms of the conveyance; • the consideration given for it; • whether the claim is made against a simultaneous conveyee; • the extent of necessity of the easement to the claimant; • whether reciprocal benefits result to the conveyor and the conveyee; • the manner in which the land was used prior to its conveyance; • and the extent to which the manner of prior use was or might have been known to the parties Three things are essential to the creation of an easement upon the severance of an estate, upon the ground that the owner before the severance made use of an improvement in one part of the estate for the benefit of another: 1. first, there must be a separation of the title, for, so long as there is unity of ownership, there can be no easement; 2. second, it must appear that before the separation took place the use which gives rise to the easement shall have been so long continued and so obvious or manifest as to show that it was meant to be permanent; and, 3. third, the easement shall be necessary to the proper enjoyment of the land or to its reasonable, convenient or beneficial enjoyment, "reasonably necessary" to its enjoyment or use, "convenient use," or "clearly necessary" to its beneficial use. Finn v. Williams (Ill.1941) p.403 Facts: Ps charge that the nearest and only available means of egress from and ingress to their land to a highway is by means of a right of way over D’s tract. Ps must now walk, with their livestock, to the nearest road Issues: Whether P has an easement by necessity over the defendant. Rule: Where an owner of land conveys a parcel thereof which has no outlet to a highway except over the remaining lands of the grantor or over the land of strangers, a way by necessity exists over the remaining lands of the grantor. Requirements for the Burden to Run w/ the land An easement that runs w/ the land is treated as if it were attached to that parcel so that any future owner of the parcel is benefited or burdened by the easement. Easements created by implication, necessity or estoppel generally are held to run w/ the land if they were intended to do so and are reasonably necessary for the benefit of the dominant estate. Easements run w/ the land if: a) the easement is in writing: • interest in property →property rights flow from →right of use and enjoyment; b) the original grantor who created the easement intended the easement to run w/ the land c) subsequent owners of the servient estate had notice of the easement at the time of purchase of the servient estate. 3 types of notice: • actual notice – if the subsequent owners in fact know about the existence of an easement; • inquiry notice – if there are visible signs of use by non-owners: telephone poles, utility lines, path across the property – a reasonable buyer would do further investigation to discover whether an easement exists. • constructive notice – if the deed conveying the easement is recorded in the proper registry and if it’s in the chain of title – a title search of prior owners of the property would lead to discovery of the deed. A reasonable buyer would conduct a title search and discover the existence of the easement. Requirements for the Benefit to Run w/ the Land If the benefit runs w/ the land it is treated as if it were attached to that particular parcel of land and is called an appurtenant easement. If it doesn’t, it is not attached to the land and there is no dominant estate – easement in gross. NEGATIVE EASEMENTS – limited by law to certain types: 1) the right to lateral support of one’s building 2) rights to prevent both light and air from being blocked by construction on neighboring land 3) the right to prevent interference w/ the flow of an artificial stream such as an aqueduct. New types of negative easement: • conservation easement – to prevent development of land for environmental purposes; • historic preservation – preventing destruction or alteration of buildings that have historical or architectural importance; • solar easement – to protect access to sunlight for solar energy In these cases we’re talking about relationship to an actual state of the land rather than any potential use that the party wants to prevent (covenant). When you’re talking about negative easements, you’re talking about the way another land’s owner uses your land (physical relationship w/ the land); restrictive covenant has to do w/ how one landowner uses his own property, even if there’s no effect on other owner’s land (thee can be no physical relationship b/w the parcels of the land, no adjacent land or neighboring more intangible relationship, less physical) Easement in Gross – belong to the owner independently of his ownership or possession of other land, lacking a dominant tenement; one that would be useful separate form ownership of neighboring land, such as a utility easement. Appurtenant easement - if the easement has little or no utility from ownership of neighboring land, and is useful to anyone who owns the parcel of land benefited by the easement – such as the right of way. There is a presumption against personal easement. Appurtenant easements are transferable by definition; when the dominant estate is sold or given away, the new owner also owns the appurtenant easement attached to the land. AE cannot be severed from the land. Easements in gross traditionally not transferable, especially if there are commercial in nature, such as utility easements. Appurtenant easements are about the relationship to the land, in gross – parties’ ability to deal w/ the land. Grantors retain whatever rights they do not give away. AE benefits the entire dominant estate and is apportionable among subsequent owners if the dominant estate is divided. Easement vs. Right of way – type of way related to passage through the land vs. easements that are related to withdrawing something from the land (removing minerals…) – merely ability to pass over the land by any reasonable means for any reasonable purpose (which should be consistent w/ the original intent of the owner), through wires, cables depending what right of way it is… Exclusive vs. Non-exclusive easement vs. Apportionability When an easement in gross is non-exclusive- the grantor or owner of the servient estate has reserved for herself the right to use the easement in conjunction w/ the grantee – the easement is nonapportionable. When the easement is exclusive – the grantor has no right to use the easement in conjunction w/ the grantee – the easement is apportionable. As a general matter, if the dominate estate is subdivided, then all owners of subdivisions will have an easement… Scope – in determining whether the owner of an easement is misusing it by going beyond the scope of activities contemplated by the grantor: • whether the use is of a kind contemplated by the grantor; • whether the use is so heavy that it constitutes an unreasonable burden on the servient estate not contemplated by the grantor; • whether the easement can be subdivided. Green v. Lupo (Wash. Ct. App. 1982) p.415 Facts: The D purchased parcel from Ps. The P agreed to a deed release to a small section in return for the promise of an easement along the southern border of their land. P used the easement as a practice runway for their motorcycles. The court ordered the plaintiff’s use to be limited to ingress and egress for their own home and prohibited the passage of motorcycles. Plaintiffs appeal. Application: In this case the easement was appurtenant. A servient owner is entitled to impose reasonable restraints on a right of way to avoid a greater burden on the servient owner’s estate so long as such restraints do not unreasonably interfere with the dominant owner’s use. Conclusion/Holding: Reversed and remanded so not to create a dangerous nuisance. Parol evidence may always be used to explain ambiguities in written instruments and to ascertain the intent of the parties. A grant of an easement for ingress, egress and utilities to the owners of adjacent land is evidence of intent that the easement benefits the grantees' adjacent land. An easement is not in gross when there is anything in the deed or the situation of the property which indicates that it was intended to be appurtenant to land retained or conveyed by the grantor. Easements appurtenant become part of the realty which they benefit. Unless limited by the terms of creation or transfer, appurtenant easements follow possession of the dominant estate through successive transfers. The rule applies even when the dominant estate is subdivided into parcels, with each parcel continuing to enjoy the use of the servient tenement. Such easement is appurtenant to the property and assignable to future owners of that property. Cox v. Glenbrook Company (Nev. 1962) p.420 Facts: P bought the property to subdivide into 40 - 60 lots with an easement for ingress and egress. The road was a single lane dirt road and the plaintiff wanted to expand it. Issues: Whether P can expand the road to make room for his expansion. Rule: As a general rule, the owner of an easement may prepare, maintain, improve or repair the way in a manner and to an extent reasonably calculated to promote the purposes for which it was created. The owner may not, however, by such action, cause an undue burden upon the servient estate, nor an unwarranted interference with the independent rights of others who have a similar right of use. When the width is not specified, the conveying instrument must be construed in the light of the facts and circumstances existing at its date and affecting the property, the intention of the parties being the object of inquiry. Henley v. Continental Cabelvision of St. Louis County, Inc. (Mo. Ct. App. 1985) p.426 Facts: Ps were expressly granted the right to construct and maintain electric, telephone, and telegraphic in a subdivision. They granted easements to other parties to perform these duties. Those parties granted D a license to enter upon their easements and erect cable. P filed a trespass action. Issues: Whether the easements in gross are exclusive and therefore apportionable by the utilities to the defendant. Rule: One who grants to another the right to use the grantor’s land in a particular manner for a specified purpose but who retains no interest in exercising a similar right himself, sustains no loss if the use is shared by the grantee with others. Application: The easements granted were exclusive as to the grantors thereof and therefore apportionable. It is in the public interest to let cable be installed even if it could not be foreseen 50 years ago when the easement was granted. Easements in gross are easements which belong to the owner independently of his ownership or possession of other land, and thus lack a dominant tenement. Where a servient owner retains the privilege of sharing the benefit conferred by an easement, it is said to be "common" or non-exclusive and therefore not subject to apportionment by the easement owner. Conversely, if the rights granted are exclusive of the servient owners' participation therein, divided utilization of the rights granted are presumptively allowable. Thus, insofar as it relates to the apportionability of an easement in gross, the term "exclusive" refers to the exclusion of the owner and possessor of the servient tenement from participation in the rights granted, not to the number of different easements in and over the same land. Unreasonable burden: the grantor’s intent will determine whether a particular use of an easement creates an unreasonable burden on a servient estate beyond that contemplated at the easements creation – look at the actual deed which can be the evidence of the intent in writing. When the grantor’s intention is ambiguous the property right of the easement holder to use and developed the easement to fulfill the easements initial purpose must be balanced against the servient estate owner’s right to protect their property from overly burdensome uses that were not readily foreseen or anticipated at the easements creation. Termination of easements: 1. by agreement in writing – release of the easement by the holder (dominate estate) regardless of whether it is personal or appurtenant. It must be recorded as well as an original easement is recorded. If it’s not, there can be a problem → adverse possession or prescriptive easement. 2. by their own terms – deed includes statement how long the easement would last or when it’s to be terminated 3. by merger – when the holder of the servient estate becomes the owner of the dominant estate. Servient estate buys the land back from the dominant, easement is eliminated, b/c there is only one owner now. Traditionally when the 2 different owner become the same individual, a merger will take place. But the rule is not absolute, some Ct-s will look at the use of the land, whether it’s changed or not. 4. by abandonment – if the owner of the easement by her conduct indicated intent to abandon the easement 5. by adverse possession or prescription by the owner of the servient estate or by the third party 6. frustration of purpose – when the purpose of the easement has become impossible to accomplish or the easement no longer serves its intended purpose. Restatement 3 of Property – modifying rule: “Easements can be modified if changed conditions have made it impossible as a practical matter to accomplish the easement’s purpose and may be terminated if modification is not practicable.” COVENANTS Real Covenant rule – more restrictive rule. The affirmative covenant would be binding on the successor in interest if it was: 1. in writing; 2. it was intended to be binding on future tenants; 3. it touched and concerned the land (is this really about the land itself rather than relationship b/w the parties); Covenants not to compete generally do touch and concern the land. In noncompetition cases the burden factor of the T&C test is easily satisfied regardless of the definition chosen b/c the covenant restricts the actual use of the land. 4. there was privity of estate b/w the covenanting parties – legally binding relationship b/w original parties (horizontal privity) or b/w a party and the successor (vertical privity) that will allow them to enforce the obligations. Davidson Bros v Katz & Sons Pl, Davidson co-owned George Street property where it operated a grocery store, Df also operated another grocery store on Elizabeth Street. B/c of competing business Df sold the George Street store to Katz, subject to a covenant not to operate a supermarket thereupon for 40 years, and it was attached to and ran w/ the land. Dfs Authority and City, were requested to attract a new food retailer by the residence who suffered from the closure. They purchased the property from Df Katz and leased to C-Store in order to open a grocery store. All had notice. The deed was recorded and the K for sale (K & Auth) included reference to the restriction. Legal Issue(s): Whether a restrictive covenant in a deed, providing that the property shall not be used as a supermarket, or grocery store, is enforceable against the original covenantor’s successor, a subsequent purchaser w/ actual notice of the covenant? Law or Rule(s): Two criteria must be met for the enforcement of covenants against successors: 1) The original covenanting parties must intend that the covenant runs; 2) the covenant must touch and concern the land. Reasonableness Factors : 1. - The intention of the parties when executed, whether viable purpose exists, or contrary to law/public policy; 2. - Whether the covenant had an impact on the consideration exchanged; 3. - Whether the covenant clearly/expressly sets forth the restrictions; 4. - Whether the covenant was in writing, recorded, and whether subsequent had Notice; 5. - If the covenant is reasonable concerning area, time of duration and not extended into perpetuity; 6. - If the covenant imposes an unreasonable restraint on trade or secures a monopoly; 7. - Whether the covenant interferes w/ the public interest; - Whether, even if reasonable at the time, b/c of changed circumstances, the covenant is now unreasonable. Equitable Servitudes rule – replaced real covenant rule by omitting privity requirement :the current owner had purchased w/ notice of the restriction and thus was bound by good conscience to protect the expectations of the owner of the dominant estate. Writing is required under Statute of Fraud. However, in a case of fraud or misrepresentation this requirement can be avoided if the party had detrimentally relied on the promise – Ct-s make an exception for oral agreements under equitable estoppel doctrine. Other Ct-s allow oral agreement only when the promisor engaged in fraud. Other Ct-s refuse to enforce oral promises. Notice: actual, inquiry and constructive Intent to run w/ the land: TheCt-s generally hold that a covenant enefiting the owner of neighboring land is presumptively intended to run w/ the land so long as it touches and concerns the land. Majority of jurisdictions will not find the neighbors which are outside the chain of title to be intended beneficiaries unless the doc-t creating the covenant mentions their names or otherwise clearly designates their parcels as dominant estates intended to benefit from the covenant. Touch and Concern Rule: On the burdened side, an obligation touches and concerns the burdened estate if it relates to the use of the land and the obligation is intended to benefit current and future owners of the dominant estate. On the benefit side, an obligation touches and concerns the dominant estate if it improves enjoyment of that land or increases its market value. Restrictive covenants will almost certainly t&c both the dominant and servient estates. They t&c R3P abolished T&C test. Privity of Estate and Real Covenants The majority of jurisdictions no longer follow the law of real covenants. In those jurisdictions that do maintain the law of real covenants, 2 approaches describe the privity of estate requirements for the covenanting parties: Horizontal Privity Mutual Privity (traditional view required by a minority of jurisdictions): Mutual privity refers tit e shared property interests/rights b/w covenanting parties. When a property transaction resulted in a set of shared or mutual property rights then mutual privity existed. Three transactions traditionally created mutual privity when a covenant was contained in the written doc-s referenced below: 1. execution of a lease agreement providing possession to a tenant; 2. transfer of a deed from property owner that provided present use rights for a limited period (during a person’s lifetime) to another party but retained ownership and future use rights; 3. transfer of a deed conveying ownership of land when either or both parties owns an easement burdening the other’s land. Instantaneous privity (contemporary view followed by the majority of jurisdictions) When a land was sold w/o the retention of any future rights most American courts recognized a fleeting simultaneous property interest (privity) b/w the seller and the buyer as the moment when the deed was passed from the seller’s hand to that of the buyer. In the majority of jurisdictions that retain real covenants, instantaneous privity occurs in the typical sale of land when a seller transfers their entire bundle of rights to the buyer. Caveat: Under this approach, a grantor may sell a apportion of the land they own to a buyer w/ the promise (a covenant) that they (the grantor) will restrict the use of the remaining land for the benefit of the land just sold. Likewise, a grantor may sell a portion of the land they own to a buyer w/ the promise (a covenant) that they (the buyer) will restrict the use of the newly acquired land for the benefit of the land retained by the grantor/seller. Summation: Under the law of real covenants Horizontal Privity can only be established by showing that the covenanting parties had privity of estate that was either mutual or instantaneous. In a minority of the jurisdictions recognizing real covenants, a showing of either mutual or instantaneous privity will suffice. However, in a minority of jurisdictions mutual privity is still required. Accordingly, written covenants b/w neighbors or other landowners that do not take place pursuant to some transfer of land use rights (lease, easement, or conveyance) fail for the lack of privity of estate b/w the parties. Hypo: John and Jamaal are next door neighbors and good friends. They both recorded a covenant not to put up fences b/w the houses b/s their kids play together and they want to remain close friends. Does privity of estate exist? No. If no land use rights are being transferred, there’s no privity; the agreement had to be associated w/ the property transaction. It is enforceable under equitable servitudes but not under real covenant. What if Jamaal sold the land next door to him to John and the 2 families hit it off so well that they decided 2 weeks later to record a covenant not to put p fences b/w the houses so their kids can always play together – No, b/c written covenants b/w neighbors are not enforceable if they were not contained at the same time as the property transaction took place. Vertical Privity When a covenanting parties transfer some or all of their property interests to succeeding parties then the covenants of the original parties may still be enforced against the servient estate holder if they are in vertical privity w/ the covenanter. Vertical privity exists when the succeeding estate holder receives the complete estate (the full bundle of rights) of the previous owner. Accordingly, servient estate holders who receive less than the complete set of the covenanter’s rights are not bound to honor the covenant. Therefore, a tenant is not bound to honor a promise made by the landlord in a covenant w another property owner. However, in most jurisdictions that recognize real covenants, if there’s a relaxed vertical privity a lesser (beneficiary of the covenant) can enforce a covenant against original covenanter or a successor in interest in vertical privity w/ the covenanter, if he can be burdened by not enforcing a covenant. MODIFYING AND TERMINATING COVENANTS: Changed Conditions El Di, Inc. v. Town of Bethany Beach (Del. 1984) p.505 Facts: A restaurant in Bethany Beach wanted to serve alcoholic beverages by request of brown bagging customers. Restrictive covenants prohibited the sale of alcohol in the town. From a permanent injunction against P, P appeals. Issue: Whether the covenant can be enforced against the sale of alcohol by D. Rule: A court will not enforce a restrictive covenant where a fundamental change has occurred in the intended character of the neighborhood that renders the benefits underlying imposition of the restrictions incapable of enjoyment. Changed conditions rendered the restrictive covenants unreasonable and therefore unenforceable. Despite the current restrictions, commercial development has developed. Conclusion: The change of conditions was sufficient to negate the restrictive covenant. Dissent: The beach remain a quiet, family-oriented resort when no liquor is sold. R3p altered “changed conditions doctrine”: - extends the doctrine to easements; - uses termination rules to substitute for controls that had traditionally been applied through the T&C test; - suggests modification of the covenant in lieu of termination if modification will allow the covenant to serve its original purpose. Relative Hardship Doctrine focuses on a servient estate. A covenant will not be enforced if the harm caused by enforcement, the hardship to the owner of the servient estate, will be greater by a considerable magnitude than the benefit to the owner of the dominant estate. Some amounts of damages are probably appropriate to compensate the servitude beneficiary for the loss of the benefit of the covenant, small as it may be. A mere change in economic conditions rendering it unprofitable to continue the restrictive use is not alone sufficient to justify abrogating the restrictive easement. Other Equitable Defenses (CB 417-418): • Acquiescence, abandonment, or unclean hands • Estoppel • Laches – covenant has been ignored for a substantial period of time. • Marketable title acts: many states have such statutes that terminate restrictive easements if they are not recorded after a specified period of time. Blakeley v. Gorin (Mass. 1974) p.518 Facts: P wanted to construct a bridge over alley connecting two hotels. D owned a hotel next door and the claim the building would violate a restrictive covenant. TC held restrictions are unenforceable and awarded no damages. Rule: Mass. Statute: No restriction shall be enforced or declared to be enforceable unless it is determined that the restriction is, at the time of the proceeding, of actual and substantial benefit to a person claiming rights of enforcement. Even if a restriction is found to be of such benefit, it shall not be enforced except by award of money damages if any of several enumerated conditions are found to exist. Application: Restrictions are unenforceable, however, the bridge will occupy most of the space between the two buildings for a height of 12 stories. Conclusion: Damages are to awarded to D for loss of light and air. Implied Reciprocal Negative Servitudes Refers to the lots in different subdivisions, when some of the lots are covered by the covenant, and some are not. Will the implied servitude be enforced? Majority: Covenants restricting land in a subdivision are mutually enforceable by and against all owners if the properties were all intended to be part of a common scheme. Common Scheme or General Plan can be shown by various factors: 1. presence of restrictions in all or most deeds to property in the area; 2. recorded plat (map) showing the restrictions, 3. the presence of restrictions in the last deed (since the grantor retains no land left to the benefited, the suggestion is that the intended beneficiaries of the promise are the other lots in the neighborhood): 4. observance by owners of similar development of their land and conformity to the written restrictions; 5. language stating that the covenants are intended to be mutually enforceable. Where too many lots in the subdivision are sold w/o restrictions, the Ct may find that no common scheme was in fact established, freeing the unrestricted lots from the duty to comply w/ the covenants in the neighbors’ deeds. The grantor’s intent is determinative. A buyer is deemed to be on inquiry notice. Parcels w/I the common scheme are restricted. The grantor cannot come later and make a part of his land free from the restriction. If in the original declaration it was one lot of land, and there was nothing saying that one part of it will be excluded from the common scheme, then all those parcel will be deemed to be covered by the covenants according to developer’s intention. If specified through the original declaration or recorded plat intent of the grantor, the lot will not be included in the common scheme, then the developer can develop it differently. Minority: if the deed states, or report contains the restriction Evans v. Pollock Facts: A subdivision was plotted into lots A though G with restrictive covenants. The dispute occurred when two blocks were sold to D to build a marina, condos, etc. that violated the covenants. P brought suit seeking relief and injunction. Trial court stated block F was not intended to have the restrictions in the general scheme but block G was. Appellant court reversed stating none of the retained lots were restricted. Issue: Whether all the tracts in the development must be intended to be subject to the restrictions Rule: The doctrine of implied reciprocal negative easements applies when an owner of real property subdivides it into lots and sells a substantial number of those lots with restrictive covenants designed to further the owner’s general plan or scheme of development. Application: There is a general scheme of development furthered by the restrictive covenants. It was reasonable for the trial court to conclude that the restrictions were meant to apply only to the lakefront lots. NOTES: The general scheme or plan of restriction need not apply to the entire subdivision in order to imply reciprocal negative easements. If you subdivide land and create covenants you can apply the covenants to every lot if notice is given. Homeowners Association: As a majority rule, they have the right to enforce restrictions, and to bring suits if these restrictions are written in the declaration. If there’re some lots that are restricted, and those who bought later the unrestricted lots…The latter party if agreed to comply w/ the restriction even if the lot is not covered by the restriction. Then they will be estopped form refusing to comply later (equitable estoppel doctrine – detrimental reliance of the homeowner’s association). The statement must not be written. Majority of courts find, that buyers of unrestricted lots are on constructive notice of covenants in other deeds of the lots in the same subdivision – there must be the lots from one developer. But if all houses in the neighborhood are painted one color, the buyer can be on inquiry notice of the restriction. The Ct can, however, hold for the buyer, if the buyer relied on the statement that the lot was not on restriction. But only if the buyer had no notice of the covenant: actual, constructive or inquiry. APPEL v. PRESLEY COMPANIES The owner recorded a set of restrictive covenants. The covenants regulated the land use, building type, quality, and size of the residential single-family dwellings that were to be placed on the subdivision property. The homeowners alleged that the restrictive covenants were used as a sales tool, which they relied on in purchasing a lot and constructing their home. The owner's employees or officers amended the restrictive covenants. The amendment deleted nine lots from the effect of the restrictive covenants. RULES: Provisions allowing amendment of subdivision restrictions are subject to a requirement of reasonableness. A court of equity will not enforce restrictions where there are circumstances that render their enforcement inequitable. A clause allowing the owners the right to alter, amend, repeal, or modify restrictions at any time in its sole discretion is a valid clause so long as it is exercised in a reasonable manner so as not to destroy the general scheme or plan of development. Factors for the trial court to consider when issueing injunctive relief include: (1) the character of the interest to be protected, (2) the relative adequacy to the plaintiff of injunction in comparison with other remedies, (3) the delay, if any, in bringing suit, (4) the misconduct of the plaintiff if any, (5) the interest of third persons, (6) the practicability of granting and enforcing the order or judgment, and (7) the relative hardship likely to result to the defendant if an injunction is granted and to the plaintiff if it is denied. RACIALLY DISCRIMINATORY COVENANTS are unenforceable under constitutional, statutory, and common law and may even subject those who enter into them to monetary liability under civil rights statutes. Shelley v Kraemer US 622 Facts: Black Ps bought land that D neighbors claimed had a restrictive covenant for whites only. TC invalidated covenant. State Supreme Court reversed and title go back to seller. Issue: Whether the covenant was valid and did it violate Ps 14th amendment rights. Rule: Covenant is valid only if action is taken by private party and NOT by government. Application: There was no common ownership here. Today, it is illegal to discriminate privately AND publicly. Evans v. Abney US 629 Facts: Senator willed a property to town as trustee to a white-only park. Application: The construction of wills is essentially a state-law question, an in this case the GA SC interpreted senator’s will as embodying a preference for termination of the park rather than its integration. The Ct had no choice but to end the trust and return the property to senator’s heirs. Conclusion: Trust failed and can go back to estate. DISENT: The closing of the park is unfair His seven grandchildren were declared owners of property who sold the property to developers who shut the park down and build commercial and residential buildings. RESTRAINTS ON ALIENATION There is a strong presumption that home owners should be able to transfer their interests. The greatest ownership interest one can have in land is a “fee simple” or a “fee simple absolute” (the owner has the whole bundle of property rights). Traditionally, restraints on alienation of fee simple interests in land were held to be absolutely void on the formalistic ground that they were repugnant to the fee. Modern trend is to view restraints on alienation as subject to a general test of reasonableness, upholding restraints deemed to be reasonable, while striking down those unreasonable. Reasonable restraints are valid even if they’re attached to a fee simple interest. 3 types of restraints: a) Disabling restraint directly forbids the owner from transferring her interext in the property – traditionally not valid; In DR the buer will never transfer the property. b) Promissory restraint is a covenant by which the grantee promises not to alienate his interest in the property. Who has the ability to abandon the promise? – Only beneficiary. May be valid c) Forfeiture restraint provides for a future interest that will vest if the owner attempts to transfer her interest in the property. May be valid. In FR the property actually gets transferred even if the owner decides to sell it in prohibition of the promise, it will be alienated by original seller to other person. 1. 2. 3. 4. 5. Restraints: direct restraints on transfer; servitudes requiring the consent of either the grantor or the association to transfer a property rights of first refusal (preemptive rights); leasing restrictions; restraints designed to keep housing affordable by low- and moderate-income families. Consent to sell clauses and preemptive rights. Policy reasons: - to promote dispersal of ownership of property and prevent concentration of land in passive family dynasties; - encourage individual autonomy by vesting control of resources in current owners - promote social utility and efficiency by allowing property to be transferred to its most valued use. Traditionally, covenants that require owners to obtain the consent of the grantor or developer of the subdivision or condo are struck down as unreasonable restraints on alienation. In contrast, covenant that grant such powers to a homeowner or condominium association are ordinarily upheld wither if they: a) require the association to act reasonably or; b) are in the form of preemptive rights that ensure that the owner can transfer the unit for its fair market value to the association or its members or that require the holder of the preemptive right to match any bona fide offers made by a third party. Rights of first refusal are likely to be struck down unless the Ct reads a reasonableness requirement into a covenant. Restraints on alienation to keep the lots for low-income persons are generally held to be reasonable and valid restraints. Restraints on Life Estates. Majority Cts uphold restraints on life estate if they are in the form of forfeiture or promissory restraint. Minority view is that such restraints are invalid. Restraints on beneficiary (equitable) interests are generally upheld. Ex. Prof. Waterhouse trusts 2,000 and a car to his daughter (beneficiary), but she cannot sell the car. Such restraint usually is upheld. Horse Pond Fish & Game Club, Inc. v. Cormier (N.H. 1990) p.569 Facts:. P deeded a property to two of its members who conveyed it back the same day with restrictions stating the parcel shall not be alienated unless a 100% vote from members or the club is dissolved. P conveyed a meeting to approve a land swap where D voted against it. P filed suit seeking a declaration that the restriction in the deed was void as an unreasonable restraint against alienation. P’s motion for summary judgment granted. D appeals. Rule: The rule of "reasonable restraints," generally does not apply in the case of a gift to a charitable trust or charitable corporation. In other words, an express provision or condition against alienation contained in a gift made to a charitable trust or charitable corporation may constitute a valid restraint. The rule of reasonable restraints however, generally does not apply in the case of a gift to a charitable trust or charitable corporation. Application: The P’s organization was established as a non-profit. Northwest Real Estate Co. v. Serio (Md. 1929) p.567 Facts: Grantees contracted to sell to D but P rejected the sale based upon restrictions to the property that the grantee could not sell or rent the land without P’s consent. Issue: Whether the restraint to be imposed is void as being repugnant to the granted estate. Rule: It is difficult to conceive of a condition more clearly repugnant to the interest created by the grant of an estate in fee simple than the condition that the grantees shall not alienate the same without the consent of the grantor. With such a condition, if valid, annexed to the grant, it would be neither a fee simple nor any other estate known to the law. Application: On the theory that the quoted covenant is void, the averment was arbitrary and unreasonable. Riste v. Eastern Washington Bible Camp, Inc. (Wash. Ct. App. 1980) p. 561 Facts: D subdivided and lots sold only to people who agreed to subscribe to the church. D issued the deed to P that contained restrictions on resale. P tried to sell the property contrary to restrictions. Issue: Whether the restrictions are against public policy and thus void. Rule: A clause in a deed prohibiting the grantee from conveying land to another without the approval of the grantor, when the grantor transferred a fee simple estate to the grantee, is void as repugnant to the nature of an estate in fee. AQUARIAN v. SHOLOM HOUSE – consent of the Association Appellee condominium association sought to set aside a conveyance of a unit to appellant condominium purchaser, dispossess appellant, and recover damages, claiming that the sale to appellant was in disregard of a provision in the declaration of condominium that required appellee's written consent to the sale. Appellee claimed that the declaration contained a reverter clause which was the functional equivalent of a preemptive right and that made the restraint on alienation lawful. RULES: the board's actions must be reasonably related to the promotion of the health, happiness and peace of mind of the unit owners. Where the restriction constitutes a restraint on alienation, condominium associations are not immune from the requirement that the restraint be reasonable. Where a restraint on alienation, no matter how absolute and encompassing, is conditioned upon the restrainer's obligation to purchase the property at the then fair market value, the restraint is valid. If an association is empowered to act arbitrarily, capriciously, and unreasonably in rejecting a unit owner's prospective purchaser, it must in turn be accountable to the unit owner by offering payment or a substitute market for the property. When this accountability exists, even an absolute and perpetual restraint on the unit owner's ability to select a purchaser is lawful Wolinsky v. Kadison – right of first refusal or preemptive right Facts: P who already owns a unit, wants to move into another unit. Condo D exercises right of first refusal. P yells invalid restraint on alienation, a vote of less than 2/3, and discrimination Application: The board owns a duty to the members to act in a reasonable manner Conclusion: The ordinance may have been violated Rule: A board of directors of a condominium association must exercise a right of first refusal reasonably upon consideration of the prospective purchaser's qualifications in light of the economic and social reasons which justify the restraint itself. Thus, a requirement that the right of first refusal be exercised reasonably must be implied. The criteria for testing the reasonableness of an exercise of this power by a condominium association are (1) whether the reason for exercising the right of first refusal is rationally related to the protection, preservation or proper operation of the property and the purposes of the association as set forth in its governing instruments and (2) whether the power was exercised in a fair and nondiscriminatory manner. NOTES: Florida condo owners have the most rights in the US WOODSIDE VILLAGE CONDO v. JAHREN – restriction on leasing The condominium association adopted an amendment to the declaration of condominium limiting all owners' ability to lease their units. The owners were notified two of their units did not comply with these limitations. The owners purchased these units before the amendment. The leasing restriction prevented a corporation which obtained federal financing to purchase units and lease them to handicapped persons from obtaining such financing, and it sued the association. In settlement, an amendment to the declaration exempted six units from the leasing restriction. The owners knew when they purchased their units they were subject to properly adopted amendments to the declaration, and the leasing restriction was such an amendment. Holding: The distinction between the owners and the corporation owning exempted units was not an arbitrary or discriminatory creation of two classes of owners, but was related to providing handicapped persons an equal opportunity to enjoy a unit in the complex. O’Buck v. Cottonwood Village Condos Alaska 750 Facts: $155,000 in roof damages to condo which adopting a rule prohibiting antennas. P had four TVs and antennas and did not want to pay for cable. Application: In order to preserve a uniform exterior appearance and enhance marketability, the board was justified in prohibiting antenna. NEUMAN v. GRANDVIEW – if the condo association decided to restrain religion procession in condo, they can do it reasonably. PRESENT ESTATES AND FUTURE INTERESTS Feudal incidents - first taxes (paid to higher land owner) aids - paying of captures (ex lionheart) shaped modern property system as people tried to aviod payment the lord from whom you held has the right to take over the land if you die and leave a son under 21, and the right to marry off sons or daughters and collect the money from it. Transfer of land have to aproved by the lord from whom you held and generally required a payment. O to A and his heirs (these words defined who owned the property) - had to get permission from LWH and heirs to transfer ownership to B. Starting in 13th century, the words defined something different (fee simple absolute), “and his heirs” did not include heirs in the desicion to sell. Estate of Coparceny - women inherited fee simple absolute as a group History of the Transfer of Property Feoffment with livery of seison (Feoffment - the act of giving the property) (livery - status of ownership) (seison -concepts of ownership, possession, and social status as associated with land) Transfer of ownership had to be on the property or within sight of it problems with proof needed witnesses (no females before 1800) (young boys made a business out of it) (beat boys so that they would remember the day) ESTATES SYSTEM ESTATE Nonfreehold • • Freehold ↓ ↓ Fee Simple Life ↓ Fee Tail Landowners own property concurrently by divvying up ownership rights over time, w/ one owning the present right to possess the property and the other a future power to take possession from the present owner in specified circumstances Present estate holder has the right to possess the property while her property rights last; the future interest holder will obtain the right to possess the property when and if the present interest terminates. The creation of future interests may constitute direct or indirect attempt to control the future uses of real property. Present and future interests may be created by sale, lease, will or trust. Future interests may be certain or contingent. No future interest: fee simple I. Fee simple absolute – property ownership w/o an associated future interest. The owner has the entire bundle of rights (it does not exclude possibility of easements or covenants) Freehold interests divided mainly into interests held for life and those held until the happening of some stated event (other than the present owner’s death) II. Defeasible fee – present interests that terminate at the happening of a specified event, other than the death of the current owner. A. Future interest in grantor or her heirs 1. Automatic transfer a) Current interest: fee simple determinable – If the limiting event takes place the property automatically passes back to the grantor or her heirs • under common law, was inheritable but not transferable, divisible) changed by most states). But the grantee can sell or otherwise transfer the property as long as the condition is met. Anyway, it is really hard to sell such a property that is subject to a condition (decreases the value of the property) • words of duration normally are associated w/ FSD interest • not subject to the rule against perpetuities • Majority Cts - alienable, inheritable, divisible “O to A unless as used for church purposes; if used for non-church purpose, the property shall automatically revert to O. • Marketable Title Acts state the possibility of reverter may only last a certain period of time, ex 50 years b) Future interest: possibility of reverter – the grantor exercises the right of reverter once the condition articulated in the deed occurs. What if grantee dies? – A to O (and his heirs) as long as he lives in South Florida. “And his heirs” implied – means the grantor gives a fee simple interest. It indicates that the interest should last beyond O’s lifetime. If he dies, the property does NOT go to back A; it may go to his heirs if he had a will. . If the condition is one that can be fulfilled by the grantee, the reverter is destroyed when O passes away. As long as the person fulfills the condition, then it’s destroyed. His heirs can move, and the property won’t return to A. State the Title → FSD w/ possibility of reverter in A. The condition doesn’t have to be that the grantee has to fulfill… the interest can be lost regardless of the grantees actions. If the condition is outside of the grantee’s control, the condition is still in place, it’s not destroyed until the condition event occurs. The heirs can negotiate w/ the grantor about the removal of condition (buying the possibility of reverter from the grantor). Once the Future interest and the present estate merge in one owner, the interest becomes a fee simple absolute in original grantee. What if the grantor does not exercise his ownership rights of reverter the conditions are not met, then the grantee can acquire the property on adverse possession theory if he can prove the elements of AP. 2. Transfer only if future interest owner asserts her interest i. Current interest: fee simple subject to condition subsequent – if the condition subsequent takes place the grantor or her heirs gain the right to reclaim the land • Created w/ words of condition • It’s not automatic; the grantor has the right to reclaim the property • only if grantor asserts her interest • fully transferable and divisible in most states (Common law is opposite) O to A, but if used for nonresidential purposes, O shall have a right of entry • statue of limitations on FSSCS runs from date of offense • Adverse possession does not start until grantor exercises interest • because is a future interest in grantor, there is no perpetuities • MTAs define time period rest: right of entry (power of termination) As apposed to fee simple determinable, here the grantee does not have to adversely possess the property once the condition is not met; b/c the grantor can decide not to exercise his right to entry. Bilbo to Frodo, however if Frodo should destroy my ring, then to Gollum. Future interest Bilbo has the right of reentry; present interest – fee simple subject to condition subsequent in Frodo; “then to Gollum” changes who is going to be a future holder of the property. With regards to Gollum (3rd party) – fee simple subject to executory limitation; future interest - executory interest in Gollum. The person the property goes to changes, and the transfer becomes automatic (gift to a 3rd party). If Frodo does not destroy, but dies, then he has fee simple absolute (his heirs). If there’s a conflict of whether the words signify an easement or a limitation as regards to a future interest; the Ct is likely to interpret the language as meaning the easement rather than future interest due to strong policy against future interests. B. Future interest in third party 1. Current interest: fee simple subject to executory limitation • only by cutting short the present estate • always transferable and divisible O to A so long as used for residential purposes, then to B • transfers immediately when violated - automatic • some states allow to set up so that a third party must assert the interest • never vested therefore it is always subject to the rule of perpetuities 2. Future interest: executory interest The interpretation of the condition/restriction (what future interest was created) depends on the grantor’s intent; whether the words are of duration or condition… Executory interest follows fee; remainder follows life estate. III. Life estates A. Current interest: life estate • can use it while alive • not divisible or inheritable A to B for life (unstated reversion ***test question***) • never subject to the rule of perpetuities A to B for the life of C - life estate for the life of another • is divisible and inheritable for B • C is measuring life (must be human being) • remainders may be subject to the rule of perpetrates A to B for life , provided it be used for residential purposes, if not so used, then to C • defeasible life estate • right to invade the corpus A to B for life, then to C, however, B shall have right to invade the corpus B has the right to sell part or all of the property in fee simple absolute O to A for life. Life estate in A, Reverter in O. If A to B: B has an estae per autre vie (for life of A), with reversion in O. O to A for life, then to B – remainder in B. O to A for life unless A gets divorced then to B. Life estate in A, possibility of reverter in O, contingent remainder in B(if B gets it B gets fee simple) • power of appointment - can grant a greater property interest than he owns B. Future interest 1. In grantor: reversion (automatic), possibility of reverter, right of reentry 2. In third party: remainder vested remainders – follow terms of years, life estates, fee tails but not fee simple (no condition that has to take place before the beneficiary receives the estate; given to an ascertained person) O to A for life then to B. Present estate – life estate in A; future interest – vested remainder in B. A can sell property to X, but X (life estate per autre vie – for life of A) will get it to B when A dies. • absolutely vested remainder (indefeasibly)- it can’t be lost X to A for life, remainder to B if A outlives B, it goes to B’s heirs must be living to be absolutely vested • vested remainder subject to open - subject to being reduced by more people entering the category, class of beneficiaries can be enlarged; subject to division among future born persons. O to A for life, then to the children of B. B should have at least one child at the time, otherwise it would be a contingent remainder. if a child dies before the end of A’s life, benefit is inheritable b/c the children get fee simple… - most states close the class when A dies – “rule of convenience” - in ½ the states, it is subject to the rule of perpetuities • vested remainder subject to divestment vested remainder that can be destroyed by a future occurrence. O to A for life, then to B, but if B has flunked out of law school, the property shall then revert to O. B has vested remainder subject to divestment b/c B can lose it. a vest remainder with a condition. Here, the condition is subsequent, B gets the property anyways, condition defines for how long B will keep the property. O to A for life, then to B, but if B does not survive A, then to C (vested remainder because the condition is separate) O to A for life, then to B if she survives A, otherwise to C (contingent remainder because it is in the statement ) contingent remainders follow estates that are subject to executory limitations • condition precedent (condition that must take place before the estate is transfered) in close cases some states prefer vested remainder O to A for life, then to B if B has graduated from law school person is not known moves to VR when person is born OR • unascertained person don’t know exactly who it is all CR subject to rule of perpetuities are subject to be destroyed therefore, all are accompanied by an unstated reversion merger can destroy in a state that allows destructibility Majority Rule – Indestructible Formerly, contingent remainders had to vest prior to the death of the preceding life estates holder or they would be destroyed-upon reversion to the grantor or their heirs the remainder ended. O to A for life then to the children of B: Life estate in A, contingent remainder in B’s children with possibility of reverter in O. Remainder will be destroyed if B doesn’t have children – reverts back to O. Today, a contingent remainder that doe not vest prior to the end of the preceding estate can vest at a future date and spring form the grantor to the remainder holder. The estate ownership will revert to O, but f the children are born, then interest will shift to the children, subject to open. O cannot sell it, b/c children can still be born. If O sells, then once the child is born to B, the property goes to the child. Therefore if one child sells the property, he sells the interest open to condition of the future children. He will then have to share benefits with born later children. Indestructibility rule trumps the rule of convenience if they are in conflict. Doctrine of Worthier Title O to A for life, remainder in the heirs of O is read O to A for life, remainder in O →ultimately we have O to A for life, reversion in O – striping A’s heirs form any rights to the property. Under common law the doctrine has been eliminated with the statute. abolished in the majority states Rule in Shelley’s case it was more noble to inherit rather than getting it as a gift Life estate + remainder = fee simple O to A for life, remainder in A’s heirs is the same as O to A and his heirs therefore leaving a life estate to A – becomes O to A in fee simple absolute. this rule is not used in most states Fee Tail – abolishes mostly; kept in 4 states: DE, Maine, Mass, RI – an estate whose purpose is to keep the property in a family dynasty. Freehold Interests Word often used Future interest To create the Interest In Grantor In Third Person Fee simple absolute “to A” “and her heirs” Fee simple “so long as” “while” determinable “during” “until” Possibility of reverter “unless” Fee simple subject to “provided that” Right to entry for condition subsequent “on condition” condition broken (or “but if” “however” power of termination) Fee simple subject to “until (or unless) …, then Executory interest executory limitation to…,” “but if …, then to…, ” Life estate “for life” reversion remainder Present Interest Fee Simple vs. Defeasible Fee Wood v. Broad of County Commissioners of Fremont County (Wyo. 1988) Facts: P conveyed deed to D stating the land had to be used for a hospital. After 40 years, D sold the land to a private company who tore the hospital down. From summary judgment for D, P appeals alleging that the deed provided a future interest in the form of fee simple determinable or fee simple subject to a condition subsequent with the with of reversion. Issue: Whether cessation of D’s hospital operation constituted the occurrence of an event which divested D of its estate in property conditionally conveyed by P. Holding: TC found that P retained no interest in the land. The language does not clearly state that the estate conveyed will expire automatically if the land is not used for the stated purpose nor does it clearly state an intent of the grantors to retain a discretionary power to reenter the land if the land ceased to be used for the stated purpose. Special limitation language – precatory language (language creating future interest) - is required. Cathedral v. Garden City Co. Facts: Stewart heirs conveyed 2 parcels of land to Cathedral and a land to Company. After Cathedral filed for bankruptcy, the Ct ordered its property to be sold. Cathedral commenced a suit to modify or extinguish the restrictions in the deed so that they could sell the property. Co. counter-claimed alleging that the Cathedral’s deed created either a condition subsequent or a conditional limitation and, therefore, Co. should assert ownership of the property upon the Cathedral’s cessation of use for religious purposes. Issue: 1. Whether the deed created a possibility of reverter. 2. Whether Co. is entitled for damages under NY statute by reason of extinguishment or modification or restriction in Cathedral’s deed; 3. Constitutionality of Real. Prop. Act Holding: The deed created a right of reentry, not a possibility of reverter. And this right of reentry should remain in Stewart’s heirs, not in Company. There was nothing in the language of the deed nor in the record as a whole to support the conclusion that the grantor's heirs intended the cathedral's estate to terminate automatically if the land were used for other than church purposes. Fee Simple vs. Life Estate Edwards v. Bradley Facts: Issue: whether by certain provisions in her will a testatrix had devised a fee simple estate or a life estate in real property therein described. Whether life estate or fee simple was created by Lilliston will. Holding: The court found that the testatrix intended the beneficiary to have the use and benefit of the real estate free of the claims of her creditors. Although the will did not expressly designate the beneficiary's children as remaindermen, the conditional limitation to them indicated that they were intended to take the farm when their mother's interest terminated, whether by violation of the conditions or otherwise. The court concluded, therefore, that the beneficiary acquired a life estate in the property with remainder at her death in fee simple to her six children. Rule: Generally, a condition totally prohibiting the alienation of a vested fee simple estate or requiring a forfeiture upon alienation is void. Exception: charity, homeowner’s or condo association (need to provide for compensation). A conditional limitation imposed upon a life estate is valid. REGULATORY RULES Against creation of new estates; Against unreasonable restraints on alienation – see restraints on alienation; Against perpetuities; Interpretive rule prohibiting “waste” of the present estate; The prohibition on invalid racial conditions; Against unreasonable restraints on marriage Rule Against Creation of New Estates A conveyance that does not fit w/I any of the established categories (fee simple absolute, Defeasible fees, life estate, leaseholds fee tail) must be interpretedto create the most closely analogous estate. Johnston v. Whiton Facts: Plaintiff paid a deposit to purchase land from defendant's grandchildren. A deed was executed and conveyed to plaintiff, but plaintiff refused on the ground that one of the grandchildren could not convey a fee simple absolute because her conveyance of the land from defendant also included her relatives on her father's side. The lower court ruled in favor of defendant Issue: Whether the words “and her heirs on her father’s side” in the will are words of limitation giving Whiton a qualified fee rather than fee simple. Holding: the court determined that the clause did not prevent conveyance of an unqualified fee because it would be contrary to public policy. A man cannot create a new kind of inheritance. These words do not affect the purpose intended, they are to be rejected, leaving the estate a fee simple. Rule against perpetuities Invalidates future interest that may vest too far into the future. Future interests are invalid unless they are certain to vest or fail to vest w/i the lifetime of someone who is alive at the creation of the interest or no later than 21 years after her death. Rule: no interest is good unless it must vest, if at all, no later than 21 years after the death of some life in being at the creation of the interest. Purpose: it’s designed to prevent remoteness of vesting and thereby leave control of the wealth of the world more in the hands of the l,iving than in the hands of the dead. Application of the rule: What future interests have been created? It applies only to nonvested interests. If it is a possibility of reverter, right of entry, reversion, or vested remainder (absolute or subject to divestment), the rule does not apply. If it is an executory interest, contingent remainder or vested remainder subject to open, the interest is subject to the rule and must be tested against the rule to see if the interest is valid. Whether the future interest in question is valid or invalid under this rule. If there;’s any possibility the interest can vest more than 21 years after the death of everyone alive at the creation of the interest, it is invalid. What interests remain by striking out the invalid interest and seeing what is left. Whatever is left must comply w/ the rule as well. Exception: - options to purchase; exclusively contractual transactions (when it concerns no specific land); preemptive rights held by condominiums and homeowners’ associations (traditionally preemptive rights are subject to the RAP)(, charity to cherity Options to purchase CENTRAL DELAWARE COUNTY AUTHORITY v. GREYHOUND CORP. – options to purchase Facts: X conveyed to P a option to repurchase for public purposes only. P used the property for 26 years and ceased operations for public use. Appellant brought an action to quiet title in two parcels of land, alleging that the conveyance deeds' public use, ownership and repurchase restrictions were void as violative of the rule against perpetuities. The trial court found that the restrictions of the deed did not violate the rule and were not an unreasonable restraint upon alienation. The superior court held that the restriction in the deed was an option to purchase, not an interest subject to a condition subsequent, and did violate the rule. The superior court determined that the restrictions were not invalid, however, on public policy grounds. Issue: Whether the interst in the case was a repurchase option or a fee simple subject to a condition subsequent. Whether the RAP does not apply to repurchase option because of public policy. Rule: An option to repurchase is normally subject to the RAP. if there’s an ambiguity as to what interest was created: a possibility of reverter or an option to repurchase, the latter is preferred. Holding: The Supreme Court determined that the deeds were ambiguous, but concluded that the interest created was a repurchase option. The repurchase option was void, and that the lower court was not correct in determining that the rule against perpetuities did not apply to the repurchase option. Public policy does not void the rule of perpetuities. Texaco Refining and Marketing, Inc. Facts: P executed a 15 year renewable lease with option to purchase to D. After 23 years, D exercised his option but P refused. The trial court entered judgment for the lessee. Issue: Do options in long-term leases fall w/I the jurisdiction of the RAP? Whether the RAP invalidates the option to repurchase. Rule: The rule against perpetuities applies to an unrestricted option to purchase real property but not to an option to renew the term of a real property lease (purchase in a commercial lease) Application: Does not apply to a commercial lease with these terms. Every renewal is a new lease. An option to purchase contained in a commercial lease, at least if the option had to be exercised within the leasehold term, was valid without regard to the rule against perpetuities. This decision is consistent w/ the purpose of the RAP – public policy in favor of free alienability of property and against restricting its marketability over long periods if time by restraints on its alienation. Conclusion: option enforceable Preemptive Rights Cambridge Co. v. East Slope Investment Corp. Facts: Under the terms of the condominium declaration, existing owners of condo units had a right of preemption or the first right to purchase another condo unit. The owner was timely notified that the partnership wanted to purchase the unit on the same terms as the buyer but sold the unit to the buyer. The partnership filed suit to reverse the sale and recover damages. Issue: Whether the RAP invalidates the right to purchase clause in the condo’s declaration. Rule: The rule does not serve the purpose for which it was designed (preventing restraint on alienation or improvements of the property). Application: ROP does not apply since the sale price is the same as the biding price. The court held that: (1) a mechanical application of the rule against perpetuities voided the right of preemption in this case; (2) the reasons for a mechanical application of the rule were not appropriate in this case because the public policies promoted by the rule did not outweigh the policies served by the preemptive right; (3) because the preemptive right in this case posed no threat to the free alienability of the condo unit, there was no reason for the rule against perpetuities to invalidate the preemptive right; and (4) there was no legislative intent under Colo. Rev. Stat. § 38-33-105(1) to subject the rule against perpetuities to all preemptive rights in the condominium context. Conclusion: Clause valid. NOTE: Court have split 50/50 in ROP case such as Cambridge. Waste Moore v. Phillips Facts: Claim of waste of heir to a life estate. P waits until mother died before stating claim. D appeals judgment for P. Issue: Whether remainder, by waiting 11 years, is barred by laches or estoppel. Rule: 1. Permissive waste is the failure of the tenant to exercise the ordinary care of a prudent man for the preservation and protection of the estate. 2. Laches is a failure to act to prevent waste 3. Estoppel may involve an affirmative act Conclusion: Affirmed A person who has a future interest in a property has the right to visit the property to make sure it is being maintained properly. 2. If waste is found, courts will demand repair. Voluntary waste (commissive, active) - tenant deliberately caused harm to the property. Ameliorating waste (ameliorative) - tear down non-profit-making building to build a profit-making one. Permissive waste (passive) - failure to keep the property in repair. 1. LEASEHOLD ESTATES LANDLORD - TENANT RELATIONS 4 TYPES Term for years – for a specific period of time determined by the parties: any lease with a definite starting date and a definite ending date (SOF limitations) - no notice is required to terminate after term, must re-contract for new term; but may be terminated before the end of the fixed period on the happening of some event or condition state in the lease agreement. - future interest in the landlord – reversion; future interest in the 3rd party, if any –remainder. - landlord is not entitled to evict the tenant before the end of the term unless the tenant is breaching a material term of the lease, ex. Covenant to pay rent. - 99 year leases are often named a fee simple with a reversion - death of either party does not end the tenancy - Periodic tenancy - defined period that automatically renews unless broken by leasee or leaser. - had to give a month notice in common law in many states - to raise rent, had to notify and stop old lease then notify and start new one a day later - death of either party does not terminate tenancy Tenancy At-will - no defined dates or periods - requires no notice - terminate upon death of tenant or landowner - terminates if land is sold - Uniform Landlord-Tenant Act - states there must be a 30-day notice to terminate and tenant must pay rent. (Adopted by some states) - NJ has three month notice Tenancy At Sufferance - held over after the termination of a lease – a tenant rightfully in possession who wrongfully stays after the leasehold has terminated – different form trespasser who never had a right to possess the property tenant may be bound for a new term or treated as a month-to-month tenant if landlord accepts checks after the termination of the lease physical ejection of trespasser (self-help) vs. eviction proceeding and a Ct judgment required to evict a holdover tenant. RULES - courts are looking at leases more as contracts than property conveniences - American rule - landlord only has to give the legal right to possess - English rule - landlord must give actual possession Procedural regulations impose formal requirements for creating the landlord-tenant relationship; procedures to terminate, notice and eviction proceeding, summary process. Substantive regulations define the parties’ obligations to each other. Ex.: admin. Agencies pass housing codes. Common law rules impose implied terms of the contract: - Common Law rule - landlord has no obligation to protect tenant against third parties - landlord gives implied Covenant for Quiet enjoyment - stating landlord, agent of landlord, or anyone with superior title cannot bother tenant cannot enjoy his enjoyment of the property - Common Law rule stated there was no Covenant for Fitness - no obligation to repair in commercial leases Summary process vs. self-help: in Majority jurisdictions the landlord is statutorily obligated to use ct procedures and to engage in self-help to regain possession when the tenant has breached material lease terms or has wrongfully held over after the termination of the tenancy. State laws regulating this area – forced entry and detainer or summary process laws. - Eviction: a violation of a covenant of a lease by a landlord dependent on the obligation of the tenant Actual - physical, changing of locks, force Total - tenant physically barred from property, eliminates future duty from tenant - may have tort against landlord (forcibly entry or detained) Partial - landlord has taken a part of the property - no duty to pay rent - some states proportion the rent Constructive - taking action which causes the tenant to feel insecure but no physical act - letting band or dynamite factory rent one of the landlord’s apartment - tenant is free from all future obligations - Common Law states tenant must move out VERY promptly Total - as above Partial - NY leads the way - air conditioner that leaked green goo 1. 2. 3. • • a) b) • CONFLICTS ABOUT RENT Landlord’s rights: to receive the agreed-upon rent; to have the premises intact and not damaged, subject to normal wear and tear (tenant’s duty not to commit waste) landlord’s reversion, the right to regain possession at the end of the lease term Remedy for Landlords when Tenant breaches and refuses to leave: Possession and back rent The holdover tenant and the renewal of the tenancy Majority: the new tenancy is a periodic tenancy based on the rent payment; if the landlord accepts a rent check for one’s month rent, a new month-to-month tenancy is established. Minority: a new term is created if the landlord accepts rent form a holdover tenant who was originally occupying under a term of years – another term of years tenancy is formed. Another option – to treat this as a holdover tenancy and sue for possession. Some Cts will consider a new term (by acceptance of rent) as a separate tenancy, and the landlord will have to follow eviction proceeding to dispossess the tenant, initially providing him with the notice. A landlord can: Refuse to accept the check or Cash the check while writing on the back that the landlord is not agreeing to renew the tenancy (generally, will not be accepted by the Ct-s) As a general manner, the holdover tenant is not required to give notice when living. However, landlord is required to give a notice of eviction. Self-help. Majority Cts rule that landlord may not use self-help, at least in residential context. In regards to the residential tenancies self-help is sometimes upheld. • Summary process - Eviction Procedure – relatively fast judicial determination. Ct also can issue an immediate temporary restraining order while case is pending in order to prevent the tenant form destroying the property. Landlord’s remedies when tenant breaches and leaves: Landlord’s Duty to mitigate damages Offer to surrender: Landlord can: 1. Accept the tenant’s surrender- tenant has no obligation 2. Refuse, Sit and do nothing - most states say there is duty to mitigate 3. Re-let on the tenant’s account - Refuse, Seek replacement - tenant pays any decrease in rental income Vasquez v. Glassboro Service Association, Inc. Facts: P and other Puerto Ricans signed a contract with defendant, agreeing to harvest crops for six months in exchange for free living quarters and wages. The contract did not provide for transportation back to Puerto Rico unless plaintiff fulfilled the contract. After plaintiff was fired for poor job performance, defendant immediately ejected plaintiff from the barracks. Application: Defendant farm labor service challenged the trial court's decision in favor of plaintiff migrant farm worker in an equitable action seeking to enjoin defendant from ejecting plaintiff from communal housing that defendant provided for its farm laborers. On appeal, the state's highest court held that plaintiff was not a tenant; therefore, state law (NJ anti-eviction statute) ejectment procedures were inapplicable. However, the court found that the parties' bargaining power was inherently unequal; thus, their agreement was a contract of adhesion and unenforceable as against public policy. The court devised an equitable remedy, ordering that disputes concerning the dispossession of migrant farm workers upon job termination be addressed in summary judicial proceedings. SOMMER v. KRIDEL Facts: Case 1: DF entered into a two year lease with PL, never took possession and bailed out a couple of days into the lease by a letter to PL, who did not respond. A third party was ready, willing and able to take possession of and lease that same apt., but PL refused. PL did not show apt. to anyone from 5-1-72 until 8-173, and took in a new T 9-1-73. PL brought this suit 8-72, prior to re-letting. Case 2: PL Riverview entered into lease with DF 12/27/72 for two years from 2-1-73 till 1-31-75. DF paid rent through 1-31-74, and vacated in 2-74. PL filed complaint for back rent 10-31-74 for rent from 2-74 through 10-31-74. Issue(s): Under NJ property law, is a landlord bound to mitigate damages much like standard contract law, by making reasonable efforts to re-let an apartment wrongfully vacated by a tenant when the tenant also defaults? Holding: Yes. LL's do have an obligation to make a reasonable effort to mitigate damages when a tenant abandons. LL's in this case relied on the traditional doctrine and sued for the entire rent. The court said that an ordinary residential lease (particularly where it is for an apt) is more of a lease for goods and service than a lease for land and so should be treated more like a K and so the K doctrine of mitigation applies to it. LL thus had the obligation of showing that he mitigated before he could recover damages. LL had an inventory of apts so he could establish he was a lost volume seller, but LL here had to show that they were not unique to do so. Conflicts about Occupancy 1. Landlord's Duty to Deliver Possession: -under current MAJORITY rule, the landlord has the duty to deliver possession of the rented premises to the tenant at the beginning of the leasehold.-(Rest. 2d Property §6.2). -if a prior tenant wrongfully holds over after his lease term expires, the landlord has an obligation in most jurisdictions to remove the prior tenant w/in a reasonable period of time by either instituting eviction proceedings or convincing the holdover tenant to leave. -Failure to deliver actual possession of the premises to the new tenant constitutes a breach of the lease by the L. -The tenant who has been shut-out may: (1)-terminate the lease & recover damages as compensation for having to find another place to live or affirm the lease (2) withhold rent for the period during which she could not occupy the premises & recover damages for the cost of temporarily renting alternative housing while the landlord undertakes eviction proceedings to remove the prior tenant. Minority: follow traditional rule-under which the L has only a duty to deliver the right to possession, but NO duty to deliver actual possession. -it is the new tenant's responsibility to evict the holdover tenant by bringing ejectment or other appropriate proceedings. -since L is not in default under minority rule-the new tenant is legally obligated to pay the rent even though she is not in possession. -New tenant's remedy is to go after the holdover tenant for damages 2. Transfor by Either Lessor or Lessee: Unless the parties to a lease agree otherwise, either may transfer his interest. Thus, a L may sell his reversion in the property & tenant may assign or sublet his right to occupy. 1. SOF: there is no blanket requirement that an assignment or sublease be in writing; BUT if the duration of the assignment or sublease is such that an original lease of the same duration would have to be in writing, the transfer must be in writing. 2. Privity of Estate: principal significance of an assignment is that it establishes a new landlord-tenantrelationship between the assignee & the original party who did not assign.-These 2 people are now said to be in privity of estate. a. Significance of Privity of Estate: since an assignee is in privity of estate with the non-assigning original party-the assignee obtains the benefit & bears the burden of any covenants running with the land. b. Sublease Distinguished: a Sublease by a tenant does not establish privity of estate between sublessee & lessor==> sublessee is not liable to the lessor on covenants running with the land.--Instead, lessee & sublessees become in privity of estate; sublessee is liable to lessee on covenants running with the land. 3. Privity of Contract: this exists between 2 parties to a K. Such privity can serve as a basis for a lawsuiteven where privity of estate is absent. 4. Original Parties to Lease: original parties to a lease are both in privity of estate & privity of K. If one of them assigns his interest, the privity of estate between them is ended, but not the privity of K. -privity of estate or K can serve as basis for a lawsuit- a party to the original lease will not normally be able to escape liability by assigning his interest. B. Distinguishing Sublease from Assignment: -important distinction to be made: 1. Assignment is transfer for balance: an assignment is the transfer by the lessee of his entire interest in the leased premises-thus-he must transfer for the entire remaining length of the term of his lease with the lessor. If he transfers something less than that-in nearly all courts he will be held to have made a subleasenot an assignment. a. Right of re-entry: most courts hold that a right of re-entry is not a true reversion when instrument of transfer gives the lessee the right to re-enter the premises if transferee fails to pay rent. (thus transfer still an assignment even though the lessee could regain possession if default occurs. b. Intent of parties: some courts look to actual intent of parties. c. Part of Premises transfered: if lessee transfers only part of the physical premises-but for the entire remaining term, this is generally considered to be a partial assignment. 2. Effect of Sublease: creates new landlord-tenant relationship between lessee & sublessee.-Thus no privity of estate between lessor & sublessee.-thus, ordinarily no privity of K between the 2--> lessor CANNOT sue sublessee for rent or any other covenant running with the land. a. Right to terminate: if the lessee does not pay rent, or otherwise permit a breach of the lease, the lessor may terminate the lease, & evict the sublessee. It is only the right to hold the sublessee personally liable for rent or breach of K that the lessor loses. i. Special statutes: a few states have special statutes allowing lessor to recover rent directly from a sublessee. ii. Lessee remains liable: Lessee continues to be liable to the lessor following a sublease, both under privity of K & privity of estate-since the landlord-tenant relationship between the 2 original parties remains. b. No suit by sublessee against lessor: sublessee canNOT bring a suit directly against the lessor if the lessor breaches a term of the lease. 3. Effect of assignment: Where lessee assigns, rather than subleases, privity of estate is created between the lessor & the assignee-this means that the assignee will have the benefit & the burden of any covenants which were made by the original lessee & which run with the land. C. Covenants running with the land: any promise has 2 sides: a burden(someone must perform the promise) & a benefit (someone will gain fromt he performance by the other). Burden-of a promise made in a lease will run with the land (thus-be enforceable against an assignee of the promisor) if that promise "touches & conerns" the promisor's assignee's interest in the land. Similarly, the benefit of a promise will run with the land (be enforceable by an assignee of the promisee) if it "touches & concerns" the promisee's assignee's interest in the property. *Note: these are not always bilateral promises1. Meaning of "touches & concerns": there is no precise definition of "touches & concerns". The burden of a promise affects an interest in the property if the burden relates specifically to that property & diminishes or limits the promisor's use or enjoyment of it. 2. Promises to pay $$: if lease contains a promise to pay $, & payment relates directly to the land, the promise probably runs with the land, both as to benefit & burden. a. Covenant to pay rent: -a PROMISE to pay RENT is treated by all courts as running with the land-both as to benefit & burden. c. Security Deposit: where the landlord has collected a security deposit, there is either an express or implied duty on his part to return it to the tenant at end of term-less any damages caused.-the benefit of such a promise runs with the land-so that an assignee of the tenant will have the right to get the security back. *but, courts are split as to whether burden runs with land-so that only some courts require an assignee of a landlord who has not actually received the deposit, to account to the tenant. 3. Promise to Make Repairs: a promise to make repairs on property runs with land as to benefit & burden to both parties; implied warranty of habitability upon a L, is also binding upon subsequent L's. 4. Covenant not to Compete: a promise by T not to compete with the L's use of the property runs as to the burden(directly affects tenant's use of the leased property) BUT does not run as to benefit (so that an assignee from the L cannot enforce it) HOWEVER- a promise by L not to use other property to compete with T's use of the leased property usually runs as to benefit-but not as to burden. 5. Promises Relating to Duration of Lease: Promises relating to duration of lease will generally run with the land-both as to benefit & burden. i. renewal clause: clause giving lessee right to renew lease for another term runs both as to benefit & burden. It is thus exercisable by the lessee's assignee & enforceable against the lessor's assignee. D. Rights of Parties after Assignment: 1. Liability of Tenant: original tenant, when he makes promise in lease that relates to leased premises, is bound to keep that promise both by privity of estate & by privity of K. If he assigns his interest-his privity of estate terminates-BUT his PRIVITY of K remains-therefore, the lessor may still sue him if the promise is not kept. a. Rent: Where a lease sets forth a duty to pay rent, the T may not escape his personal K liability for that rent by assigning. IF L does not receive rent after assignment-he has choice between suing T(privity of K) or T's assignee (on privity of estate) *Novation: 2. Tenant's rights against their assignee: tenant remains with privity of K liability after an assignment, but his relationship vis a vis the assignee becomes one of suretyship-the assignee is primarily liable for the obligation, & the tenant is only secondarily liable.-thus, if L chooses to sue tenant rather than assignee, the tenant can recover whatever he has to pay from assignee, even if assignee does not Xpressly assume the lease duties when the assignment is made. 3. Tenant's right to sue on L's promise: where a L has made a promise whose burden runs with the land, the T will LOSE the right to sue on that promise if he assigns to someone else, & the breach occurs after the assignment. 4. Liability of assignee: assuming there are no specific promises of performance when assignee takes the assignment, his liability to the lessor is based upon privity of estate.-thus, during the time he is in possession of the premises-he is liable for performance of promises made by the lessee whose burden runs with the land. a. Assignment by Assignee: since the assignee's liability is founded upon privity of estate-that liability applies only for the period when the assignee is actually in possession-he has no liability for breaches by the principal tenant or prior assignees & he has no liability for breaches by subsequent assignees. 5. Assumption by assignee: if there is an express assumption by assignee made to either L or T the assignee is then bound by privity of K as well as privity of estate. a. Promise made to tenant: if promise is made to tenant-there is a privity of K between T assignee. 2 consequences: Tenant may sue assignee: tenant may sue the assignee if the covenants are not performed.-if he has made explicit promise-his privity of K liability to T remains after further assignment. 3rd party beneficiary rights in L: in most states L is 3rd party beneficiary of the assumption agreement between T & assignee. This means that L & assignee are in privity of K A. Transfor of Landlord's Reversion: -L may sell his property & the new owner receives what the original L was able to sell-a reversion in property. B. Agreements by Parties about transfer: Most leases contain a promise by T that he will not assign or sublease his interest without the L's consent. 1. When Lease is Silent about Sublease or Assignment: General Rule: Tenant is entitled to transfer her possessory interests in the premises by assignment or sublease (rationale is public policy of promoting alienability) i. subtenant if x-pressly agrees to pay L directly: may be sued by L as 3rd party beneficiary if subtenant fails to pay rent ii. subtenant usually bound even if he has not seen original lease & lease is not recorded: courts likely to find subtenant on inquiry notice of covenants in original lease-reasonable subtenant would inquire whether the tenant had made promises to the L restricting use of premises. 2. Requirement by Lease of L's Consent: is generally enforced in most jurisdictions-even if landlord is completely unreasonable in refusing to consent to the transfer; rationale being L has made a personal choice in selecting particular tenant & should not be forced to settle for substitute-however objectively reasonable. a. traditional rule of being strictly construed: anti-transfer clauses, traditionally have been strictly construed against the L.-thus if clause only prohibits assignment it will not bar a sublease & vice versa. b. Modern trend: to focus on intent of parties-thus could be construed to mean both sublet & lease is prohibited w/out L's consent. c. Waiver: L may by his words or conduct waive the benefit of the anti-transfer clause. (L knowingly accepts rent directly from sublettor) d. Consent May not be unreasonably withheld: growing majority of states now hold either by statute or case law-that even where the lease prohibits assignment or sublease w/out L's consent-the consent may not be unreasonably withheld. Kendall v. Ernest Pestana Inc: -L leased aircraft hanger space to T1, lease provided that written consent by L is required before T may assign or sublet his interest. T1 wants to assign the lease to T2. T2 in all respects is a more suitable tenant, but L refuses to give consent, solely because he wants higher rents than provided in original lease. Rule: Minority - L is entitled to withhold consent only if L has a commercially reasonable objection to the assignment Holding: L is not entitled to withhold consent merely because property values had increased & lease was now below market value, (unless lease had expressly provided that L could unreasonably withhold his consent); here-lease was silent about unreasonable withholding of consent-which must be resolved against L. Factors to consider in applying reasonableness standard: Financial responsibility of the proposed assignee; Suitability of the use for the particular property; Legality of the proposal use; Need for alteration of the premises; Nature of the occupancy Slavin v. Rent Control Plaintiff landlord sought to evict a tenant for violating an obligation of his tenancy. Defendant Rent Control Board found that the tenant had allowed another person to occupy his apartment without first obtaining plaintiff's written consent. Nonetheless, defendant refused to issue the eviction certificate, observing that plaintiff had not acted reasonably in categorically refusing to allow the tenant to bring in someone new after his original co-tenant moved out. Plaintiff sued, and the trial court annulled defendant's decision and ordered the certificate's issuance. The appellate court affirmed, and finding defendant lacked authority to make determinations of law, imposed double costs and counsel fees. Defendant appealed. Rule: a lease provision requiring L's consent to assignment or sublease permits the L to arbitrarily refuse or unreasonably refuse to sub-let. Minority rule, requiring reasonableness impose this requirement only in commercial context, not in case of residential lease. Holding: The court found that imposition of an obligation for a landlord to act reasonably was a public policy matter for the legislature. However, the appellate court lacked authority to impose costs and fees on parties, such as defendant, who litigated in good faith. -Court said must have commercially reasonable basis for being able to overturn unreasonableness. -reasonableness to residential leases is different-defined by fair housing & anti-discrimination statutes & regs.-thus, -as long as not using illegal criteria to deny subleasors & assignees right to property-court usually will allow residential lessor to discriminate a. Restatement: 2nd Restatement = minority rule, providing L may not unreasonably withhold consent to any transfer (whether sublease or assignment/whether residential or commercial)R2d 15.2-Rule does not apply where equal bargaining power & freely negotiated provision in lease explicitly gives L an absolute right to withhold consent. b. Duty to mitigate: in states placing duty on L to mitigate damages, if the T abandons premises, this duty amounts to same thing as prohibition on unreasonable withholding of consent-thus if T proposes sulessor/assignee & L refuses to consent-the T can simply abandon premises.-->if L refuses to accept new reasonable tenant, L must bear his own damages. c. L can make deal directly with proposed assignee: in jurisdictions prohibiting L from unreasonably withholding consent to a transfer, the L can attack problem by obtaining a lease provision giving him the right to make his own deal directly with proposed assignee or subtenant-thus terminating original lease & starting new lease. 4. Waiver by L: in situations where L would have right to consent to assignment or sublease, his failure to take prompt action when he learns of attempted assignment ro sublease will constitute waiver by L of his rights to block it. Tenant's Rights to Habitable Premises Minjak Co. v. Randolph , NY 1988 The tenants occupied a loft pursuant to a commercial lease. The counterclaims comprised claims of a breach of the warranty of habitability and constructive eviction related to certain dangerous construction work and other conduct interfering with the tenants' ability to use and enjoy possession of their loft. The appellate court had found that the doctrine of constructive eviction did not provide a defense for the nonpayment of rent because the tenants had not abandoned the premises. The court held that (1) the tenants were allowed to assert the doctrine of constructive eviction as a defense to the nonpayment of rent when the abandoned a portion of the demised premises due the landlord's improper acts; (2) the record supported an award of punitive damages for the landlord's breach of the warranty of habitability; (3) the jury's award of an abatement of rent was improper as to the months in which the tenants had paid rent when the constructive eviction claim was asserted as a defense to the nonpayment of rent and the tenants did not request an abatement for any months other than those in which they did not pay rent; and (4) the award of attorney's fees under § 234 was proper. Covenant of Quiet Enjoyment-every lease has this covenant as well as most leases have IWH Tenant's Right to Quiet Enjoyment: -tenant has what is called the right to quiet enjoyment of the leased premises. This principal may be interfered with in 2 principal ways: 1) by a 3rd person's assertion of a title superior to that of the L-used to evict the tenant ("paramount title") & 2) by acts of teh L or persons claiming under him which interfere with the tenant's possession or use of the premises. *(some jurisdictions consider L's failure to maintain the property in habitable condition & the destruction of the premises by fire or other cause, are sometimes considered violations of the right of quiet enjoyment) A. Interference by L or 3rd person: If L himself intereferes with tenant's use of premises, or aids someone else in doing so, this will be a breach of covenant of quiet enjoyment. 1. Acts by L: clearest breach exists when L himself interferes with tenant's use of premises. If L takes possession of all or part of the leased premises (ej: he dumps his trash on it or stores his furniture)-it is called actual eviction.-If by contrast-he merely interferes with tenant's use or enjoyment of the propertythere is a constructive eviction. a. Tenant's remedies: tenant's remedies depend in part upon whether interference amounted to an actual or just a constructive eviction b. L breaches non-competition clause: a tenant who plans to use the leased property to run a particular trade or business sometimes obtains a promise from L that latter will not rent or use any of his nearby property for a purpose competing with tenant's proposed use.-aka-NON-competition clause: if L breaches this promise,-tenant is entitled to sue for damages or to move out & terminate lease. 2. Persons Holding under L: where T's use of the premises is interfered with by a person holding under LL may be deemed to have breached covenant of quiet enjoyment. a. Conduct of other tenants: most common issue is whether behavior by other tenants in the same building violates L's covenant of quiet enjoyment to T. i. NO general duty: most courts have held there is no general duty imposed on landlord to control conduct of other residential tenants. ii. Exceptions: 2 situations where conduct of other tenants will be attributable to L: 1) other tenants use their portion of the premises for immoral or lewd purposes or 2) objectionable conduct takes place in common areas under L's control. iii. Modern tendency where right of control exists: recent trend is to impute acts of other tenants to L where these acts are in violation of relevant leases. & L could have prevented the conduct by eviction or otherwise. (R2d 6.1). -particularly where L had reason to know before making a lease with the misbehaving tenant-that a significant chance of inconvenience to others existed. Blackett v. Olanoff: L rented apartment to T & rented next-door premises to X to run cocktail lounge. Lease with X explicitly provided that noise level in the lounge could not disturb neighboring tenants. Held: court held that particular potential for annoyance to residential tenants & L's contractual right to control the noise-justified holding L liable for constructive eviction of T. -L would have to imply 3 separate terms in the lease: 1)implied covenant that T’s will not disturb quiet enjoyment of other tenants, 2) implied duty on L to actually evict offending tenant or otherwise control her behavior, 3) a power in the victimized tenant to abandon lease early if L fails to control behavior of other tenants-R2d adopts doctrine, but NOT all courts. Either breach of warranty of habitability, or breach of the right to quiet enjoyment can be the basis for constructive eviction. 3. Actual v. Constructive Eviction: if tenant's possession of all or part of premises is literally taken away from him, the eviction is actual. If it is merely his use or enjoyment of the property that has been substantially impaired(ej: excessive noise, terrible odors, nearby premises used for immoral purposes, etc.)eviction is constructive. a. Complete v Partial Actual Eviction: where eviction is actual, it can be either total or partial. Partial eviction might, for instance-occur if the L ousted the tenant from a geographical portion of the premises (ej: knocks down one of several buildings on leased property) i. Remedies: tenant who has been totally evicted may regard the lease as terminated & may refuse to pay any rent. -Most courts allow a tenant who has suffered only partial actual eviction to also refuse to pay rent, even though he remains in possession of the rest of the premises. Rationale: landlord cannot apportion his own wrong -tenant remains on premises: he is entitled only to compensatory damages-R2d 6.1 b. Constructive Eviction: where the eviction is constructive rather than actual: tenant is not entitled to terminate lease-or to stop paying rent-unless he abandons the premises. If he stays on the premises-his only remedy is to sue for damages.*Abandonment must occur within a reasonable time following alleged constructive eviction.-interference with right to quiet enjoyment *i. Little use in habitability cases: defense of constructive eviction has also been used where the tenant claims that the premises were rendered uninhabitable due to L's failure to keep them in repair-BUT requirement that tenant promptly leave the premises makes the defenses unusable for many tenants particularly residential slum-dwellers, who lack the funds to find alternative housing. 4. Destruction of Premises: if premises are destroyed by act of nature-common law disfavored tenant & disfavored violation of right to quiet enjoyment. 2. Retaliatory Eviction-illegal 3. Condition of Premises: -common law applied principle of caveat emptor to L-T relationships. Unless parties explicitly agreed otherwise-Tenant took premises as is. -L was not deemed to have made any implied warranty that premises were fit or habitable-even in case of residential property. -nor did L have any duty to repair defects arising during course of lease-unless such a duty was explicitly provided for. Implied Warranty of Habitability: -impairs health differs from constructive eviction because tenant allowed to remain in premises & w/hold rent -traditional common law: L made no implied warranties that the premises were fit for habitation or for any particular purpose. 1. Exceptions: there were however-several exceptions-in which a warranty to condition of the premises might be found: a) furnished room-where leased premises are furnished & lease is for a short period-courts have found that L made an implied warranty that premises & furniture are fit for use. b) uncompleted building-similarly if lease is made for building that has not yet been completed-there will be an implied warranty that it will be suitable for tenant's use. c) Fraud: if L fraudulently conceals defects from tenant-latter has always been able to get relief-either through rescission or damages 2. General warranty of habitability: in 1960's abrupt reversal of general common law caveat emptor position. State after state changed its position either through case law or statute. Over 40 states impose some sort of warranty. Javins v. 1st National Realty Case: perhaps most important of these cases (DC 1970): Facts: Ts were residential tenants, whom L was seeking to evict on grounds that they had defaulted in their rent. T's conceded lack of payment-BUT asserted that building contained hundreds of violations of DC Housing Regs. a. Implied Warranty Found: Court concluded that at least in cases of residential property-L makes an implied warranty that premises are habitable. Housing Regulations imply a warranty of habitability, measured by the standard which they set out, into leases of all housing that they cover. i. Old assumptions unwarranted: 1)-common law duty to repair was based on agrarian society. 2) modernmost lessees reside in apartments & have neither know-how, $, nor economic incentive to make repairs to living quarters. ii. Consumer Protection: other kinds of K situations(ej: car purchase)-modern courts have given the consumer substantial protection. T is an amateur & L is typically a businessman in business of selling housing-T must rely on skill & good faith of L just as much as consumer must rely on manufacturer of a product he buys-->thus T is entitled to be protected by implied promise that L will keep premises in same condition they were in at beginning of lease term. iii. Housing shortage: there is severe shortage of adequate housing & combined with well-known unequal bargaining power between L & tenant means that T has little ability to negotiate with L for an X-press promise that L will keep premises in repair. iv. Housing code: DC has enacted Housing Regs-requiring that L keep premises in repair. b. Standard in Housing Regs: Javis court concluded that, as to any dwelling covered by Housing Regs-the L gives an implied warranty of habitability-which can be fulfilled only if duty is made contractually binding upon L. c. Suspension of rent: as procedural matter-court said-trial court may & probably should order T's to pay rents coming due in future into the court-if T's prove that violations existed during the period at issue-they will be entitled to a reduction or a complete elimination of rent for relevant period. d. Covenants no longer independents: this decision made 2 covenants-1) T's duty to pay rent & L's duty to make repairs-dependent rather than independent.-thus-if L fails to make repairs-T is relieved of the duty to pay rent for the time in ? (converse would also seem to flow logically) Commercial leases: Traditional rule: commercial leases have no implied warranties unless they state so explicitly. Tennant’s Remedies in breach of IWH cases: 1) termination/rescission-(move out & stop paying rent-must be “material breach in some courts), 2)Rent withholding-(entitled to w/hold rent until landlord fixes problem, while still living in the dwelling); notice to the L of the problem before withholding is often requred 3)rent abatement-,if L sues to evict tenant for non-payment court may reduce rent owed during the period of the violation. Most courts: reduce the rent by a percentage amount that reflects the seriousness of violation and he amount of discomfort. Some courts use fair market value test. 4)compensatory and criminal damages-some amount of past rent paid + any personal injury damages, & possibly cost of “substituted premises”, 5)injunction or specific performance, may sue for court order requiring L to fix problems 6)repair & deduct-by statute or common law may be required to make certain repairs & deduct from rent paid to L the cost it took to make the repairs. 7) administrative remedies: local housing code remedies-if code is in effect-may be required to call on a local housing inspector to order L to fix problems. *Landlords may not retaliatory evict for tenants who assert IWH-case: Edwards v. Habib (court refused to allow L to evict a Month to Month tenant when L’s eviction notice followed tenant’s complaining to public authorities about housing code violations. RETALIATORY EVICTION HILLVIEW ASSOCIATES v. BLOOMQUIST Due to concerns over the physical condition of the mobile home park and rent increases, a number of tenants formed a tenants' association and met to discuss the problems. One such meeting resulted in an altercation between the tenants and the regional manager of the park. The park then evicted the tenants after the forcible entry and detainer trial. The lower court ordered the tenants removed. On appeal, the court reversed as to six tenants and affirmed as to two tenants. Issue(s): Whether the tenants established a defense of retaliatory eviction. Whether there must be a specific intent to retaliate on the part of the P Holding: The court held that six of the tenants offered substantial evidence of retaliatory termination. They were active, vocal members of a newly formed tenants' association. They made good faith complaints about the mobile home park and, though they participated in the meeting where the regional manager was allegedly attacked, they did not encourage or participate in it. The tenant who did the attacking of the regional manager did not establish the affirmative defense of retaliatory termination. Rules: Factors to establish landlord’s motivation to retaliate – not general rule: 1. the L’s decision was a reasonable exercise of business judgment; 2. L in good faith desires to dispose of the entire leased property free of all tenants; 3. L in good faith desires to make a different use of the leased property; 4. L lacks the financial ability to repair the leased property and therefore, in good faith, wishes to have it free of any tenant; 5. L was unaware of the T’s activities which were protected by statute; 6. L did not act at the first opportunity after he learned of the T’s conduct; 7. L’s act was not discriminatory. To require specific intent by the general partner of a multi-state real estate business would frustrate the intention of Iowa legislature. IMPERIAL COLLIERY COMPANY v. FOUT Facts: The tenant was employed as a coal miner and rented a house trailer from the landlord, which was allegedly interrelated with the tenant's employer. When the landlord filed suit for possession of the premises, the tenant asserted that the suit was brought in retaliation for his involvement in a strike by union mine workers. The tenant claimed that the alleged retaliatory motive was violative of his First Amendment rights of free speech and assembly, and of the National Labor Relations Act. Issues: whether a residential tenant who is sued for possession of rental property may assert retaliation by the L as a defense; Whether the retaliation motive must relate to te tenant’s exercise of a right incidental to the tenancy. Holding: On appeal, the court affirmed the summary judgment in favor of the landlord. The court held that retaliation could be asserted as a defense to a summary eviction proceeding only if the landlord's conduct was in retaliation for the tenant's exercise of a right incidental to the tenancy. The tenant's First Amendment rights that were allegedly violated were unrelated to his property interest and did not arise from the tenancy relationship. Therefore, those rights were not protected under the retaliatory eviction defense. FAIR HOUSING LAW Discrimination by Housing Providers ASBURY v. BROUGHAM Facts: Plaintiff potential tenant filed an action under 42 U.S.C.S. § 1982 and the Fair Housing Act (FHA), 42 U.S.C.S. § 3601 , alleging discrimination by defendants, apartment complex owner, the apartment complex business and the apartment complex's employee. The jury returned a verdict in favor of plaintiff, awarding plaintiff $ 7,500 in compensatory damages and $ 50,000 in punitive damages from defendant apartment complex owner. Holding: The court affirmed the judgment. The court held that plaintiff had sustained a prima facie case by showing that she was a minority that was qualified to rent from defendant apartment complex, that she was denied the opportunity to rent or negotiate for a rental, and that the housing opportunity remained available. Defendants were not able to prove a legitimate, non-discriminatory reason for the rejection. The court held that statistical data offered by defendant was relevant but not conclusive. The court held that punitive damages against defendant apartment complex owner were appropriate because of defendant apartment complex owner's own discriminatory policies and his ratification of defendant employee's discriminatory procedures. Warranty of habitability does not require any action of the part of the landlord…However, claim for breach of warranty of quiet enjoyment, where the landlord actively interferes with quiet enjoyment, or the landlord can be liable for actions of the 3rd parties the lease explicitly includes a provision for this or when the landlord can exercise control over the situation and should’ve prevented interference(minority – modern trend) As a traditional rule, the landlord is not responsible for other tenant’s breach. Concurrent Ownership and Family Property Types of Common Owners: - tenancy in common : both tenants have a whole bundle, tenants don’t have to own equal portions of property. - joint tenancy: - tenancy by the entirety - common ownership of business - Partnership 1)Tenancy in Common: (does not have right of survivorship)-an estate shared by 2 or more people in the same property at the same time. But whereas in a joint tenancy each party has an equal interest in the whole, each tenant in common has a separate “undivided” fractional interest & NO right of survivorship. i. Only 1 unity required: unity of Possession-each tenant is entitled to whole property, subject to same rights in the other tenants, (thus tenants may receive interests at different times & by different conveyances) Each tenant has to have the right to go and possess the entire parcel. Interest is fractional, but the possessory interest is undivided. a-may have unequal shares: 1 tenant could have ¾ interest, while other could have 1/4.-if conveyance does not state size of interest-it is presumed they are equal shares. a. no right of survivorship: each tenant in common takes his share as an individual - thus they can convey their interest – goes to his heirs, not to a co-tenant. 1. Right to transfer or lease: tenant in common may convey his undivided interest, or lease it to a 3rd party. If he leases it, he may have the duty to share the rents w/his co-tenants. A co-tenant can’t sell the land, unless there’s an agreement or partition; but can sell the interest to 3rd party without consent of the other co-tenant, who will become a new tenant in common. b. presumption favoring tenancy in common: most states now have either a statutory or case law presumption in favor of tenancies in common rather than joint tenancies, (as longe as co-tenants not husband & wife). c.heirs: tenancy in common can-be created by action of the parties or by operation of law through intestacy statute Case: Kresha: tenants in common who divorced an attained land from X-husband which was held in co-tenancy & partially leased to her son-thus she must take the entire lands w/the preceding leases attached to them. Kresha v. Kresha Neb 725 Facts: Husband and wife were tenants in common. Co-owner, husband, leased property to the son, without consent from the other co-owner, wife (P), before diorce. Wife brought suit for divorce. She learned about the lease before the divorce. Dissolution decree awarded the land to P and P brought forcible entry and detainer action. Issue: Whether P’s land was subject to the D’s leasehold interest Rule: One of several tenants in common can lease his own interest to third persons Conclusion: P acquires the property subject to the lease Mortgages: title theory vs. lien theory. Lien theory: there’s a not a severance when there’s a mortgage: mortgages do not sever joint tenancy. If the owner gives away his property for mortgage (Ex.: 150 out of 350), if the property is sold, mortgage company will get its 150. Title: title is held by the mortgage company, if there’s a sale, they are considered to be a holder of the property. If the property is sold, mortgage severs the joint tenancy. After repaying the mortgage, the company gives you the title back, and if you want to be a joint tenant again, you have to transfer the property to a 3rd party, then she sells it to you in joint tenancy. d. Management of Property: Case: Olivas: (ouster) property was held as community property prior to divorce, but separation occurred and court held: that where a spouse departs a residence held as community property due to marital friction-a constructive ouster is effectuated & spouse in property can pay the ousted spouse-in this case husband could not prove he left due to friction. Olivas v. Olivas N.M 715 Facts: Couple got divorced. Husband wanted court to state he was ousted so he could collect rent. Issue: Whether there was a constructive ouster Rule: The character of the property must be such as to make such joint occupancy impossible or impracticable. P. 577 Application: There was substantial evidence that the husband's purpose in leaving the community residence was to live with a girlfriend and his departure was the reason that the wife filed for a divorce. Notes: Constructive ouster recognized with divorces when it would be unreasonable to the couple to live together. Rights and Obligations of Co-Owners • Right to possess the entire property • Transfer the individual fractional interest • To share rents earned by the property in proportion to their ownership interest • Duty to share maintenance and upkeep expences 1. Normally no duty to account: 2. Ouster-if the occupying tenant refuses to permit the other tenant equal occupancy-then he must account to his co-tenant for the latter’s share of the fair market value of the premises.-in this situation-there is said to be an ouster of the tenant who has been refused occupancy. Conflicts over Rent & Possession Premises rented to a 3rd party: although a co-tenant is normally entitled to occupy the premises himselfw/out accounting for their reasonable rental value-the same is not true if he leases the premises to a 3rd person. Once he does this & collects rent, he is required to share these rents with his co-tenants. Case: Carr v. Deking: (father and son held tenancy in common)-held a cotenant may lawfully lease his own interest in common property to another w/out consent of other tenant & w/out other joining in lease.-( Facts: Two tenants-in-common. One co-tenant (father) made a lease without the other co-tenant’s (son) consent. When the former co-tenant died, the son brought suit against D to break lease because he now owned the property in FSA. Issue: Is the lease valid Application: The lease is valid and P cannot be ejected. The proper remedy is partition. Payments made by 1 tenant: 1. taxes & mortgage payments: 1 tenant may make property tax or mortgage payments on the propertythis tenant will be allowed to deduct the payment from the rents he has collected from 3rd persons & reimbursed for the payments off the top before any proceeds are distributed. 2. Repairs: if 1 tenant makes repairs before consulting others, he may not be able to get $ from other tenants, but he may deduct their portion of the repairs before turning over any rents received from 3rd persons & he may receive credit for expenditures before any partition proceeds are distributed. 3. Improvements: if 1 tenant makes improvements w/out others approval-he is never permitted to recover contribution in a direct suit. Partition: any tenant in common or JT may bring an equitable action for partition; by this means, the court will either divide the property or order it sold & proceeds distribute. 2)Joint Tenancy:(includes right of survivorship)-2 or more people own a single, unified, interest in real or personal property; each joint tenant has exactly the same rights in the property-thus one cannot have a greater interest than the other. i. Right of survivorship: each joint tenant has right of survivorship-2 joint tenants & 1 dies, thus the other becomes sole survivor of interest that the 2 of them had previously held jointly. ii. Right of Possession: in a sense-each joint tenant owns the entire interest-subject only to the right of the others.-this has 1 clear consequence: each joint tenant is entitled to occupy the entire premises, subject only to the same right of occupancy by other tenants; thus parties are not required to divide up premises for occupancy-though they are free to do this if all agree. a.-4 unities: under traditional common-law view-joint tenancy existed only where the 4 unities existed: (1)unity of interest, (2) unity of title, (3)-unity of time, (4)-unity of possession 1) unity of interest: means that joint tenants must have identical interests-both as to their share & as to duration of their interests.-thus-1 joint tenant cannot have a 1/4th interest & the other a 3/4 interests (similarly-1 person cannot have a 1/2 interest for life & the other has a 1/2 interest in fee simple-the 2 are not joint tenants because the durations are not identical) 2)unity of title: means that joint tenants must each acquire title by the same deed or will. 3)unity of time: means each joint tenant's interest must vest at the same time(at common law-owner of a fee simple could not directly create a joint tenancy in himself & another-as one cannot convey to oneself-has changed under modern statutes) 4)unity of possession: means that all the joint tenants have a right to possess & enjoy entire property. b Creation: at common law there was a presumption that no co-tenancy was a joint tenancy unless a clear intention to create a tenancy in common was shown, (except in husband/wife cases-where presumption that tenancy by entirety was created) i Presumption: this arose from fact that joint tenancy included a right of survivorship; if 1 of 2 joint tenants died, the entire interest in property would be in surviving joint tenant-meaning that all feudal obligations would be owed by 1 person-this was more desirable to feudal lord than was a tenancy in common-where upon tenant's death his interest passed not to surviving tenant but to deceased tenant's own heirs-thus dividing feudal obligations. ii. Modern statutes reverse Presumption: Feudal obligations are obviously of no significance today.Thus-all statutes have reversed common-law presumption-& now presume a co-tenancy is a tenancy in common-unless there is a clear intent to establish a joint tenancy.-most states have done this by statute or precedent a. Exception for fiduciaries & executors: modern presumption does not apply to fiduciaries & executors iii. Ambiguous Language: usual & clearest phrasing used to create joint tenancy is "to A & B as joint tenants with right of survivorship, & not as tenants in common"-2 problematic formulations: a. To A & B jointly: a few courts have held that the use of the word "jointly" is enough to make ownership a joint tenancy-BUT most courts have held that term "jointly" is ambiguous & that the usual presumption in favor of a tenancy in common applies. b. "To A and B and the survivor and his heirs": courts are divided as to interpretation of such a conveyance. Some hold that it creates a joint tenancy in fee simple, while others interpret it as creating a joint tenancy in fee simple. -Others interpret it as creating a joint life estate, with a contingent remainder in fee simple to the survivor-if so right of survivorship cannot be destroyed, as it can in the case of the conventional joint tenancy in fee simple. iv. conveyance by A to A and B: common law prohibits this thus-A would convey to a "straw man", who would in turn convey to A and B as joint tenants. -modern view allows this: many states have enacted statutes explicitly authorizing holder of a fee simple to create a joint tenancy in himself & another or the state has reached this result by case law. v. Personal property: joint tenancies may also be created in personal property; statutes establishing a presumption in favor of tenancies in common apply to personal property as well as real property. ej: -joint bank accounts Case: Tenhet v. Boswell: Johnson joint tenant w/Tenhet leased his interest in property to Boswell(D) for a term of years & died during that term-hence extinguishing the lease Facts: Joint tenant leases his interests with an option to purchase and then dies. Other joint tenant looking for sole possession. Issue: 1. Whether the lessee’s interest in the property effected a severance of the joint tenancy . Whether the partial alienation of Johnson’s interest in the property effected a severance of the joint tenancy. 2. Whether the joint tenant takes the property unencumbered by the lease, after the other joint tenant dies. Whether the remaining joint tenant is forced to honor the lease. Rule: 5 options: 1. Lease valid - no severance for life of lesser/term whichever is shorter 2. lease valid for term - severs JT 3. lease invalid - no severance 4. lease temporarily severs - if JT dies during lease, lease continues, tenants-in-common 5. lease is valid for its term - no severance The interest on non-surviving joint tenant extinguishes upon his death. And as the lease is valid only in so far as the interest of the lessor in the joint property is concerned, it follows that the lease of the joint tenancy property also expires when the lessor dies. Application: MAJORITY RULE: Lease is not so inconsistent with joint tenancy as to create a severance. The lease of the joint tenancy property does not severe joint tenancy, but expires when the lessor joint tenant dies. You need an express statement to destroy a joint tenancy = a mutual agreement to convert the tenancy into tenancy in common. The lease is no longer valid. c. Right of survivorship: principle distinguishing feature is that the surviving tenant has the entire interest in the property-deceased does not have ability to leave interest by will-nor is there anythign to pass by intestacy to his heirs. a. creditor: a creditor of 1 joint tenant does NOT have rights against the interest of the other joint tenant-thus if debtor JT dies first-the surviving JT usually takes property free & clear of deceased tenant's creditor, (unless state has statute preserving attachment) d. Severance: a JT may be severed (destroy) in a number of ways-which will usually result in creation of tenancy in common. 1. conveyance by 1 joint tenant: a joint tenant may convey his interest to a 3rd party.-since this 3rd party does not have unity of time or title, with the remaining original joint tenant-the joint tenancy relationship has been destroyed. a. JT between 2 persons: thus if there are 2 original joint tenants, A & B, & A conveys his interest to C, B & C become tenants in common-not joint tenants. b. where there are 3 or more Joint tenants: a conveyance by 1 of 3 to a stranger will produce a tenancy in common as between the stranger & the remaining original joint tenants, but the joint tenancy will continue as between the remaining original members. If 1 of the 2 joint tenants passes away, then the remaining joint tenant gets 2/3, and stranger has 1/3, and they become tenants in common. c. Conveyance between joint tenants: essentially same analysis as above applies if there are 3 joint tenants, & 1 conveys to another of the joint tenants.-grantee becomes a tenant in common, & joint tenancy survives the interest not conveyed. d. conveyance to 3rd party: modern rule-1 court allowed it, thus breaking joint tenancy-Riddle case. 2. Granting of mortgage: jurisdictions not in agreement as to whether granting of a mortgage by 1 tenant severs the JT.-answer largely depends on whether state considers transfer of a mortgage a lien or transfer of a title i. title theory: in some states-mortgagor by granting the mortgage is deemed to transfer title to the property to the mortgagee ii. lien theory: most states follow this theory-by which a mortgage is deemed to be merely a security for repayment & not a transfer of title.-right of survivorship is not destroyed; some states hold that this mortgage can be enforced & other do not: Case: Harms v. Sprague-holding mortgage could not be enforced against surviving joint tenant but that state also followed lien theory 3. Lease: if 1 joint tenant executes a lease, courts are also in dispute about whether JT is severed.-majority hold that a lease is not a severance. 4. Partition: JT can be severed by partition, (dividing up & distribution of land)-this can be done by agreement of parties or by court order at request of 1 of the parties. 5. K to Sell: a few courts have held where a K to sell property, when executed by all JT, severs JT, even before title is actually transferred. 6. Wrongful Act: a wrongful act by 1 joint tenant to another may cause a severance. 3)Tenancy by Entirety: (exists only between husband & wife)-includes survivorship & indestructibilityneither party can convey interest or destroy right of survivorship. Individual undivided interest: individual as to property, undivided as to interest. a. Common-law concept of entirety: husband & wife were regarded as 1 person-as a consequence-there was a special form of co-ownership between husband & wife-tenancy by entirety 1. All 4 unities required: unity of interest (100%) 2. Right of survivorship: surviving spouse has right of survivorship. 3. no severance: major difference is that here there is no doctrine of severance while both are alive: individual interest cannot be sold, transferred or encumbered by a mortgage w/o consent of the other spouse. b. Creation of entirety estate: at common law-any conveyance to 2 persons who were married, necessarily resulted in a tenancy by the entirety-even if the words of the document stated differently-at common law husband & wife were considered 1 person, thus so was title to the property. i. no creation by 1 spouse: if man wanted to convey to spouse-had to use “straw man principle” ii. modern view: modern view universally treats man & wife as 2 individuals, (only 20 states retain tenancy at all) iii. presumption favoring entirety: in states which retain it, there is a presumption that a conveyance to married couple is a tenancy by entirety-most have rebuttable w/evidence provision iv. conveyance to husband, wife, & 3rd party unless otherwise specified, H & W will take a ½ interest, & the 3rd person will take the other ½ interest. 2 units will hold as tenants in common to one another, while H & W hold ½ interest as tenants by entirety to each other-if H dies-W takes entire ½ interest. v. personal property: at common law-there could not be a tenancy by entirety in personal property c. Indestructibility: so long as both parties are alive, neither one can break tenancy -i. right of survivorship: means that H & W take property as tenants by entirety-they know that the survivor of them is assured of a complete interest in the property. -ii. No partition: thus neither party may obtain a judicial partition of the property. Only through divorce. a. termination by agreement: if both spouses are so inclined-they may agree to terminate the tenancy by entirety-replacing it by tenancy in common or joint tenancy. -iii. Conveyance: in some but not all states-one spouse may convey his interest in the tenancy; but this conveyance cannot affect the other spouse’s right to the entire estate if latter survives. iv. rights of creditors: courts are in dispute about whether a creditor of 1 of the spouses may attach or levy on that spouse’s interest in the tenancy by the entirety -minority of states allow attachment -divorce-if parties get divorced-the creditor of 1 spouse receives a lien on the resulting ½ tenancy in common interest-which the creditor can arrange to have sold at auction. 5. Divorce: if parties are divorced-the tenancy by entirety ends. In some states the property is then deemed to be held in joint tenancy.-BUT in most states-the property is held as tenants in common-so that if 1 tenant dies before there has been a sale of the property-there is no right of survivorship in the ex-spouse. Sawada v. Endo Haw 728 Facts: After P was injured by an uninsured motorist (D), D transferred his and his wife’s tenancy by the entireties interests to their son. P brought suit to set aside the conveyance. Issue: Whether P could attack a tenancy by the entireties. Whether the interest of one spouse in real property, held in tenancy by the entireties, is subject to levy and execution by his or her individual creditors. Rule: The interest of a husband or a wife in an estate by the entireties is not subject to the claims of his or her individual creditors during the joint lives of the spouses. If the debt arose prior to the creation of the estate, the property was not a basis of credit, and if the debt arose subsequently the creditor presumably had notice of the characteristics of the estate which limited his right to reach the property. A creditor cannot get to one spouse’s property rights, b/c in tenancy by the entireties each spouse has 100% interest, therefore, the creditor cannot reach to debts of a single spouse. Florida recognizes tenancy by entirety. The interest can be divided only through divorce procedures (partition). A spouse cannot unilaterally alienate her interest, even w/ other spouse’s consent. If the spouse consents to mortgage, to allow the property be reached by a mortgage company, then it can. But the spouse cannot alienate the interest. Conclusion: Conveyance was not fraudulent. Notes: In most states with tenancy by the entireties, the interests of P would be held until the wife dies first. P was an involuntary creditor. Most property in Hawaii is owned by four trusts. DEEDS Elements: 1. identify the parties; 2. describe the property being conveyed (with reasonable certainty, sufficiently precise to locate the boundaries of the property) 3. state the grantor’s intent to convey the property interest in Q; 4. contain the grantor’s signature Deed does not have t be recorded – the transfer of the deed to the grantee is enough. Recording assists grantee in the case the right of ownership is contested later. Recording Acts: • race statutes: the person who records first prevails, even when a person knows about an earlier conveyance to someone else; Majority jurisdictions require a subsequent owner to be a bonefied purchaser; some jurisdiction go with a pure race theory: whoever is first wins. • notice statutes: a subsequent purchaser prevails over an earlier purchaser only if the subsequent purchaser did not have notice of the earlier conveyance; Statutes are established to protect a bonefied purchaser. If the land was gifted, the notice statute does not answer this question. If an earlier purchaser recorded his deed, the subsequent purchaser is on constructive notice. • race-notice statutes: a subsequent purchaser prevails over prior unrecorded interests only if she 1. had notice of the prior conveyance at the time she acquired her interest and 2. records before the prior instrument is recorded. Bone fide purchaser is the one that doesn’t know about purgery, fraud or doesn’t have a notice about prior conveyance. If there’s no recording statute, under common law rule who wins? – first in time, first in ride. SABO v. HORVATH Facts: Lowery conveyed the same 5 acre tract of land twice; first to Horvath, then Sabo. Lowery did so in each instance by quit-claim deed. Lowery’s interest originated out of a land patent. He conveyed the land to Horvath prior to receiving the patent and to Sabo afterward. Issue: Whether land conveyed before land patent was issued, outside the chain of title, satisfied the constructive notice requirement to the subsequent purchaser? - NO Procedure: Superior ct ruled for Horvath’s interest as a warranty deed from Lowery. This constituted constructive notice. Sabo did not receive constructive notice. Recording was outside the chain of title. Reversed. Rule: Conveyance of real property is void as against a subsequent innocent purchaser for a valuable consideration of the property whose conveyance is first duly recorded. An unrecorded instrument is valid as against one who has actual notice of it. A purchaser has notice only of recorded instruments that are within his chain of title. Ct. Rationale: At the time Lowery executed the deed to the Horvaths he had complied with the statute to a sufficient extent so as to have an interest in the land which was capable of conveyance. Because the Horvaths recorded their deed prior to Lowery receipt of the land patent, Sabos did not have constructive notice by the recording system. Sabo’s interest was therefore the first recorded interest in the tract of land. PL A: (Horvath) Pl recorded the deed in accordance with the law, prior to the conveyance and recording of Def. Def A: The deed was not recorded before the land patent was granted, and therefore the recording by PL was not notice. Chain of title - Period or evolution of a deed of title’s existence. ZURSTRASSEN v. STOINER The trial court entered summary judgment in a suit to quiet title brought by P, finding that he waived the right and/or was estopped from asserting the forgery of his signature on a deed conveying the property to his brother and that he ratified his brother's subsequent sale of the property. The appeals court reversed, holding that material issues of fact remained on both the estoppel and ratification claims. The court found that the forged deed was void and had no legal effect to transfer appellant's ownership of the property to his brother, thus no valid title could pass from thereon, regardless of appellee's status as a bona fide purchaser. Further, there were no representations made by appellant to either purchaser. Moreover there was no evidence that appellant knew that his signature had been forged onto a deed conveying his interest to his brother. Since he did not know of the fraud, he could not ratify it. He did not waive his right to contest the sale. Thus, the court erred in finding any ratification on appellant's part. McCOY v. LOVE Elliott land owner owned an undivided one-fifth interest in the minerals underlying a 75 acre land tract. Elliott could not read or write. She orally agreed to sell purchaser two of the 15 mineral acres. Purchaser gave petitioner a fraudulent deed covering the entire 75 acres. Elliott signed the deed after her daughter stated that she guessed it was alright. Purchasers conveyed the thirteen seventy-fifths (13/75ths) interest to respondents – subsequent purchasers. Elliott brought an action seeking the cancellation of a deed. The trial court granted the cancellation based on fraud. The lower court reversed. The court quashed the lower court's ruling for respondents and remanded holding that where all the essential legal requisites of a deed are present, it conveys legal title. The deed was voidable. If subsequent purchasers are bona fide purchaser, then deed is valid, and Elliott is entitled to damages only. There were no findings of fact on the issue of the good faith of respondents, thus further proceedings were required. Equity: Ex.: if dealing w/ nuisance, there must be balancing of interests = Ct makes equitable consideration. DEEDS and TITLE PROTECTION FORGERY A forged deed is void ab initio. Forged deeds fail to transfer interest to bona fide purchasers or other parties. Void Title When a deed is void, no title is conveyed to a grantee. They can in turn convey no valid title. When this occurs bona fide purchasers are not protected. FRAUD Deeds that are obtained through fraud are voidable. The victim of the fraud may choose to void a fraudulently obtained deed. However, a deed that passes to a bona fide purchaser unaware of the fraud cannot be rescinded. Voidable Title When a deed is voidable, a subsequent bona fide purchaser can pbtain good title. Victim of fraud can only prevail against wrongdoers for fraud or conversion/ MORTGAGES Lender-mortgagee----buyer=mortgagor----mortgagor’s interest in the property is called the equity of redemption or equity. • • 2 contacts: note and mortgage FORECLOSURE – WAY TO SATISFY DEBT of a mortgagor by selling collateral property, which provides financial benefit to a mortgagee. Protections generally accorded to mortgagors-by common law or legislation include the following: 1-equity of redemption2-notice of foreclosure proceedings3-foreclosure proceedings4. public notice of foreclosure sale5. mortgagor’s right to bid at foreclosure sale6. judicial supervision of Price 7. reinstatement Deficiency judgment When a foreclosure sale does not satisfy the existing debt obligation of the mortgagor some jurisdiction allow the mortgagee to obtain a deficiency judgment against the mortgagor for the balance. Equity of Redemption The mortgagor’s equitable interest in redeeming mortgaged property after defaulting on their debt obligations is an equity of redemption. Until a foreclosure proceeding and sale is complete the mortgagor retains the right to redeem their property from the mortgagee by satisfying their debt obligation. Statutory right of redemption (in some jurisdictions) allows mortgagor to buy back the property for price bid at foreclosure sale w/i a designated period (often a year) after foreclosure, while they remain in premises. Reinstatement Some jurisdictions allow a mortgagor to reinstate a mortgage before foreclosure by satisfying unpaid amounts along w/ the mortgagee’s costs. Installment Land Contracts – a buyer makes a down payment to the seller and signs a sigle K w/ the seller, in which the buyer promises to pay the rest of the price at the times and in the amounts specified in the K. It allows seller to regain possession over the property in case of default in payment. It also generally allows the seller to keep the payments already made by the buyer as liquidated damages for the buyr;s breach of the agreement. Liquidated damage – for BoK set in advance by the parties themselves as part of their agreement. Forfeiture Clause provides that if the buyer defaults in payments the seller can terminate the K and retain all payments previously made as rent and liquidated damages. Foreclosure would be impossible in lien theory jurisdiction dealing w/ joint tenancy, b/c foreclosure would destroy joint tenancy…. But only if this is 2nd mortgage, made by one of the tenants. But if we’re talking about the 1st mortgage, the other tenant is on at least constructive or inquiry notice. In the title theory jurisdiction the bank has the legal title for the property ...
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PROPERTY OUTLINE - Introductory Note: The word...

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