What is Property? What do we consider property and why? Real property vs.

personal property.
Rights & Limits

Adverse Possession

Air & Water

Law of Finds & Finders Lost, mislaid, abandoned and treasure trove

Gifts Inter vivos and causa mortis gifts.

Estates & Future Interests

Rule Against Perpetuities

Co-Ownership

Landlord—Tenant

Purchase and Sale

Remedies & Damages

Title Assurances

Recording

Mortgages and Financing the Borrower’s remedies; lender’s remedies

Sale
Private Land Use Planning Covenants, easements, land use restrictions, nuisance law

PROPERTY OUTLINE

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 WHAT IS PROPERTY?

Property is a collection of rights relating to land and chattels. Or, “rights among people
concerning things.”

1. REAL: property refers to land and things that are permanently attached to land, like
buildings.
2. PERSONAL: property, or chattels, are everything else. Particularly portable things

Public property: owned by the government ex. national park

Private property: owned by one or more private persons or business ex. a house

Property rights include the power and rights to:

 Transfer—alienability (Ex. Johnson v. M’Intosh)
 Exclude (Ex. Steenberg Homes)
 Destroy (Ex. Eyerman)
 Use
 Profit
 Possessions
Our property law system is based on the concept that property is a human invention, not natural.
Property exists only to the extent that it is recognized by the government; it is not absolute—
LEGAL POSITIVISM. ***These rights are defined and conferred by government and exist
relative to each other.
4 key implications to property rights:
1. Rights defined by government: legal positivism—property rights and ownership of such
is only to the extent recognized by the government.
2. Rights are not absolute: property rights are relative. Most of property law involves
reconciling disputes between owners and communities.
3. Rights can be divided: property rights concerning a thing may be split among multiple
holders and difficult to identify one single owner. Ex. tenants in an apartment.
4. Rights evolve as law changes: stability of title—a concept that property rights should be
certain and predictable. Ex. airspace when planes were invented.
Property rights include obligations and duties of those owners.

Natural Law Theory—the idea that certain rights naturally exist as a matter of fundamental
justice regardless or government action.
5 theories that seek to justify the recognition of property rights:
1. Protect First Possession: practical explanation for how unowned things become
property.
2. Encourage Labor: John Locker—each person is entitled to the property produced
through his own labor. New issue with tech—copyrights, patents, and biotech.
3. (Utilitarian) Maximize Societal Happiness: utilitarian theory—Jeremy Bentham—we
recognize property in order to maximize the overall happiness of society.

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 4. (Republicanism) Ensure Democracy: civic republican theory posits that property
facilitates democracy. To ensure economic security necessary to make political decisions
that serve the common good.
5. (Personhood) Facilitate Personal Development: Georg Hegel—personhood theory—
arguing that property is necessary for an individual’s personal development. Each person
has a close emotional connection to certain tangible things which become part of one’s
self.
*These theories form the foundation of American property law—a blend of these different
approaches.
Property Rights

The Right to Transfer:

Generally, a person may freely transfer, or alienate, any property that they own. The law favors
free alienation of property as a general matter, but it can sometimes be limited. Alienability—in
general, any owner may freely transfer or alienate any of her property to anyone. But the scope
of this right is sometimes limited for public policy reasons. The law restricts who can transfer or
obtain property: ex. an insane person cannot do either. More commonly, the law regulates what
property can be transferred.
o Ex. Johnson v. M’Intosh: In violation of British law, p’s purchased lands from a
number of Native American tribes while the US was still a British colony. After
the Revolutionary War concluded, the United States federal government acquired
title to most of the land involved and sold it to third parties, including Def.
Applying the relevant law, the Court found that the Tribes only had limited rights
in the land, which did not include the right to transfer. Ultimately, P’s land
negotiations with First Nations were not authorized by the US government and
were therefore superseded by the government’s purchase of the same land.
 Rule/Takeaways: 1. This case represents the Nemo Rule: tribes were not
given absolute right to transfer land and any transfer given was then not
legally recognized either. 2. Legal Positivism also—property to the extent
that the government recognizes it.

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Requirements to Transfer Property: 
1. Intent: (By grantor or transfer ownership)
2. Delivery: (of the land, by a deed)
3. Acceptance: (by grantee, presumed if the property is beneficial) law presumes person
receiving has accepted as long as that thing is beneficial.

Conversion – intentional interference with someone else’s property and changes its nature or
character so significantly it is no longer usable to the owner.
Chain of title – record of some land and who has owned it when and how
 If two different people have competing claims to the same property, the person with the
better chain of title will prevail

NEMO RULE: ONE CANNOT TRANSFER MORE THAN THEY HAVE.

A voluntary, inter vivos transfer of title requires intent, delivery, and acceptance. There are 3
exceptions to the Nemo Rule, all of which deal with Bona Fide Purchasers at Value.
*controls the giving aspect of transfer in regards to the grantor

A bona fide purchaser is a person who buys honestly and without notice of any adverse claim
on the property purchased. BFPVs are subject to certain protections that allow them to change a
voidable title to a good title. *Bona Fide Purchaser of Value—BFPV.

***Bona Fide Purchaser Exceptions –3 ways a voidable title can become good (none of
these apply if the title is void)
 UCC § 2-403: “A purchaser of goods acquires all title which his transferor had… A
person with voidable title has power to transfer a good title to a good faith purchaser for
value.”
 Equitable estoppel: owner gives possession to a transferee without apparent limits on
what the possessor can do. If the grantee sells to a BFPV, BFPV will be protected from
the owner and has good title
 Statutory estoppel: owner gives possession to a merchant of like goods, who
fraudulently sold to a BFPV.

SHELTER RULE: ONE RECEIVES ALL THAT THE GRANTOR HAS TO CONVEY
One who buys a transformed title from a BFPV is similarly given a good title. 
However, one who fraudulently obtained title cannot launder it through a BFPV. (“Good title
cannot be conveyed free from prior equities back to a former owner who was charged with
notice or who was a wrongdoer.”)
*controls the getting aspect of transfer in regards to a grantee/transferee.

SUI GENERIS – something that is a thing in and of itself and does not really have a comparable
analogue. doesn’t fit in without traditional notions of property—court uses this to address case
by case basis because the thing hasn’t been ruled on and doesn’t usually have precedent.
 Ex. Moore v. Regents cells: Π alleged that his doctor did not properly inform him of
“pre-existing research and economic interests” in cells that were removed from his body

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 during a medical procedure and sued for conversion. The Court was unwilling to
recognize property rights in excised biological material on public policy grounds.
Since conversion is a strict liability tort and we recognize a public value in medical
research, we do not want to discourage such research by exposing doctors and researchers
to potential liability.
 Takeaway: property rights are relative

The Right to Exclude:

The right to exclude is broadly recognized and is enforced through the tort/crime of trespass.
One can be liable for trespass so long as they voluntarily enter owned property. There is no
requirement of intent to trespass. 
o Ex. Jacques v. Steenberg Homes, Inc.: D crossed P’s land to deliver a mobile
home over P’s repeated objections. P brought suit for trespass and was awarded
both nominal and punitive damages. Court argues there is a social interest in
discouraging trespass, regardless of actual harm caused, because it infringes on
owners’ right to exclude.
 Rule/Takeaway: The court viewed the right to exclude as the most
important property right and they hold it very high and absolutist.
Any entry made under a privilege is not a trespass. Private property is
state-enforceable exclusion by a private citizen. If there is no means of
enforcement, then the right is meaningless

Property rules vs. Liability rules:

Prop: owner has absolute right to say no “until the cows come home” no entry can be made
Liability: would be trespasser pays a price in value of the entry but cannot be stopped and may
enter upon payment.
When should these two rules be used? Importance of efficiency in resolving disputes?
Intangible rights like privacy and autonomy are still violated under liability.
Premise is:
 Misallocations of resources result if: owners have the right to decide whether to sell a
resource and at what price
Enabled by: the right to exclude—where owners thwart transfer of property rights to higher value
uses. Results in monopoly, for ex: an owner has a unique asset such as a strategically located
parcel of land that is needed for a new building. With the right to exclude that owner has
monopoly power and can use it to hold out and block the transfer of assets to higher value uses.

The right to exclude ensures control and profit from a given property
 Guarantees a return on investment
 Provides incentive to safeguard property
 Protects right to transfer by increasing value

***Any entry made under a necessity is not a trespass. The most common privileges are consent
or privilege.

 State v. Shack: Ds entered P’s land to provide legal/medical assistance to migrant

workers living on the land. Defs were both workers for NGOs funded by the Office of
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 Economic Opportunity. The NJ Supreme Court overruled the lower court’s decision,
stating “Title to real property cannot include dominion over the destiny of persons the
owner permits to come upon the premises.”
o Rule/Takeaway: these rights are not absolute; they do not exist in a vacuum
you have to consider the views outside of what is being discussed already.

The Right to Use

Traditionally, one had an absolute right to use their property as they wanted, so long as they did
not harm the property rights of others. Later developments in the law, such zoning laws and the
spite fence doctrine, imposed limits on this.
**You have a private nuisance claim where your right to things like sunlight are being affected.

Limits on the right to use are enforced through Nuisance claims:

Nuisance Elements:
1. intentional
2. non trespassory
3. unreasonable; and
4. substantial interference
5. The use and enjoyment of the plaintiff’s land.
*Modern view: the conduct is unreasonable if the “gravity of the harm outweighs the utility of
the actor’s conduct.”

 Ex. Sundowner, Inc. v. King: After selling the Sundowner Motel to P’s, D built another
motel on an adjacent property and constructed a “large structure” next to the property line
that was 85 feet long and 18 feet tall. This structure covered an entire side of the
Sundowner Motel.
o Rule/Takeaway: Spite Fence Doctrine: you cannot build a structure to annoy
your neighbor; an otherwise useless structure will not be protected by law.
 Ex. Prah v. Maretti: P had constructed a solar collection system on his property for
heating and energy. Later, D purchased an adjacent lot and constructed a home there after
obtaining the necessary permits. Due to its location, the house obstructed P’s solar
collection system.

The Right to Destroy:

The right to destroy is a logical analog to the right to use. Generally, a property owner enjoys a
broad right to destroy during their lifetime, so long as it does not cause direct harm to others.
However, the law may impose limits on the destruction of real property that retains substantial
value. Difficulty arises when an owner seeks to destroy property that retains substantial value. If
the owner is insane or otherwise incompetent to handle his affairs, a court is empowered to
appoint a guardian or conservator to preserve the estate.

 Eyerman v. Mercantile Trust Co.: D’s will included a provision to level her house upon
her death. Her neighbors did not like this and sought an injunction. The home was located
in a historically significant neighborhood and razing the house would allegedly cause
significant damage to neighboring property values. The Court granted the injunction,
citing the harm that would be caused by the destruction of the house and the dead
woman’s lack of future interest as strong public policy reasons.
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 o Rules/Takeaways: 1) adverse effect on everyone else by destroying house should
be avoided, 2) house is historically significant to the neighborhood which has
some social value, and 3) the lady is dead so what can she do about it anyways.
***Sometimes the court can limit your right to destroy if the property retains
a substantial value or strong public policy exists to protect it.

**Other limits on the right to destroy include Historical Preservation laws:

Federal laws: provides funding for the maintenance and restoration of historical buildings, but
does not affect property rights
State and local laws: restrict ownership rights by preventing alteration or destruction, as well as
imposing certain use limits.

Eminent Domain: government has the inherent power to take private property for public use
upon payment of just compensation, consistent with the 5th Amend. Taking Clause and similar
provisions of state constitutions.

REAL PROPERTY

Real property: consists of rights in land and things attached to land, such as buildings, fences,
trees.
 Fixtures: items of personal property that are attached to real property are generally
treated as real property (such as chandeliers or smoke alarms).
Personal property: refers to rights in moveable items (such as chairs, pens, and computers) and
intangible things (such as patents or shares of stock).

3 Aspects of Real Property Law:

Main issue: finding the balance between the rights of the owner and the interests of society in
general.
ADVERSE POSSESSION

Adverse possession: when someone occupies land for a long enough period while meeting
certain conditions, they acquire the title to that land without consent.
1. 4 justifications for adverse possession in law:
a. Preventing frivolous claims—encourages productive use of land
b. Correcting title defects—lengthy possession serves as proof of title
c. Encouraging Development—reallocates land and title to more productive
usage/ownership
d. Protecting personhood—right to enjoyment of something you have been enjoying
already

Adverse Possession is the hostile taking over of a property against the owner’s desire. To
succeed in an adverse possession claim, the claimant’s possession must be (OCEAANS):
 Open: visible and obvious; must be visible and obvious so that it would be discovered
upon reasonable inspection of premises
 Continuous: you can’t leave and come back
 Exclusive: cannot be shared with the owner, the public, or a third party

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  Actual: must physically occupy and use the land in the same manner as a reasonable
owner would given the nature, character and location
 Adverse and/or hostile: without permission, rather than with animus. The degree to
which this element is enforced varies by jurisdiction, but in all places, you cannot be in
adverse possession if you occupy the land with the owner’s permission.
 Notorious: visible and obvious; must be visible and obvious so that it would be
discovered upon reasonable inspection of premises
 Statute of Limitations time period has been met: A claimant must occupy the land for a
minimum amount of time as described by statute. The term varies by jurisdiction. The
Statute of Limitations begins to run upon the accrual of an ejectment action. It ends upon
abandonment by the Adverse Possessor or successful ouster by the titleholder. It can be
tolled when the titleholder suffers from:
o Infancy (under 18)
o Imprisonment
o Insanity
o Military service
* Note on NYS approach: usual cultivation—meets statutory standard—will normally also
fulfill the elements of actual, open and notorious, and continuous possession.

Why do we recognize adverse possession?

1. To prevent frivolous claims: serves as a kind of statute of limitations and allows people to
feel secure in their title.
2. To corrects title defects: if there is a defect in the chain of title, the law will side with the
person actually using the property
3. To encouraging productive use

 Ex. Gurwit v. Kannatzer: Ps purchased a property in 1963, which they believed

included the tract in question. In 1983, Ds, who lived across the street, informed them
that the land in question actually belonged to them. In the intervening time, Ps had done
things like post “No Trespassing” signs, cut firewood, and cleared the land along the
road. In the action for quiet title, the court awarded the land to Ps.
o Rule/Takeaway: actual and adverse here: use depends on a reasonable owner’s
use of the property—nature and character context.
o Land – measures and boundaries used to be used for describing land before
addresses

Quiet Title Action: party asking court to settle title of land forever
Color of Tile: adverse possession by constructive possession and may shorten the statute of
limitations. *Note on Color of Title: enhanced state protection when title it claimed under this.
Color of Title refers to a deed, a judgment, or another written document that is invalid for some
reason. Required period is often shortened under this doctrine. Additionally, a successful
claimant with color of title may be able to acquire more land.

**Some jurisdictions have a State of Mind requirement for adverse possession.

1. Good Faith standard (minority/NY): jurisdictions require a claimant to believe they

have a legitimate claim to the property in question. This is a minority rule now. (New
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 York follows this rule requiring “a reasonable basis for the belief that the property
belongs to the” claimant.)
o Fulkerson v. Van Buren: P took ownership of a tract of land in 1949 that
contained an abandoned church building. In 1985, Ds moved into the church
without P’s permission and renovated the building. In 1995, Π brought an ouster
suit. Ds claimed adverse possession. Here, the claimant congregation
acknowledged the possessory rights of the titleholder, so they were not found to
have satisfied the requirement for Adverse Possession”
 Rule/Takeway: possession was not adverse/hostile because D admitted he
asked for the title and was rejected and this is a Good Faith jurisdiction
and that requires that you know the land is not yours “Arkansas law
presumes a claim to possession is subservient to the legitimate claim until
an Adverse Possessor claimant asserts a claim to “right, title, or
ownership.”
 Further, “a possessor of land does not possess adversely if, while in
possession, he recognizes the ownership right of the titleholder.”
 CoA for ejectment arises when possessor starts taking possession
regardless of their intent and knowledge and this rewards the aggressive
trespasser and punishes the goof faith possessor.

*Note on NY Law: requires a good faith for adverse possessions without color of title: a
reasonable basis for belie that the property belongs to an adverse possessor.

2. Bad Faith Standard/Only Some: jurisdictions require a claimant to know that the
property belongs to another 

3. Objective/Majority: jurisdictions evaluate the claimant’s conduct regarding the land.

Where they find that one is using the land in the same way as an actual owner, the hostile
possession element will usually be satisfied. This is the most common rule now.
o Tioga Coal v. Supermarkets General Corp.: P brought an adverse possession
claim for property that bordered their title property that they used and controlled.
Π originally brought suit against the City of Philadelphia, believing them to be the
owner of the land in question, but soon found that Δ was the true owner of the
property in question. At issue was whether Π had met the element of Hostility if
they were mistaken as to the identity of the owner.
 Rule/Takeaway: Bath Faith and Objective—city did not own property
and P’s did not meet Bad Faith because they did not know who actually
owned it at trial court level—supreme court said objective standard now
because bad faith is too complicated—mistake of ownership wont defeat
an adverse possession claim.

2 ways adverse possession is in court:

1. Quiet title action: an adverse possessor bringing suit to get the proper, legal title to land
2. Raised as a defense: an adverse possessor is being sued to be ejected by true owner

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Tacking Doctrine: you can add up time periods of subsequent possessors to meet the SoL for
adverse possession if the subsequent parties were in privity with each other. Adverse possession
periods of two or more successive occupants may be added together to meet the statutory period
under this doctrine.
Element of continuity: Possessor must be there the whole time or successive possessors for
tacking—must be in privity or in some kind of relationship. Aka house title passed down or
continuous possession known to each other.

Privity: with knowledge between parties.

 Ex. Howard v. Kunto: A surveying error caused several houses located along the Puget
Sound to be located approximately 50 feet east of the locations described in the
corresponding deeds. Continuous use—it’s a summer home so its fine and does not break
this element.
o Rule/Takeaways: SoL with Tacking because new Defs bought house from old
defs and deed was in error but was a legal contract so a basis for privity.

RIGHTS IN AIR, SUPPORT, AND WATER

At common law, possessory rights extended infinitely upward and infinitely downward. Over
time, the realm of control has been limited in light of things like airplanes and separate mineral
rights.

Rights in Air:
Modern developments in technology have largely made an infinite vertical property interest
obsolete. Courts have developed 3 different ways of limiting a property owner’s interest in Air.
1. The landowner owns at least as much of the space above the ground as he can occupy or
use in connection with the land. Majority rule articulated in United States v. Causby
2. The surface owner holds title only to a fixed height, typically 500 feet.
3. Surface owners still have an infinite vertical property interest, but aircraft have
permission (an easement) to pass through.

Air: how high do air-rights extend? At least as much space above the grounds as he can occupy
or use in connection with the land. Usually a fixed 500foot height now but some still use
indefinite heights.
o Subsurface rights: rejection of common law extension to the center of earth.
Now the rule is that a reasonable depth may be used and invasion can be excluded
only if it “actually interferes” with the owner’s “reasonable and foreseeable use of
the surface.”
o Carbon sequestration: long-term storage of carbon that can affect ground water
up to 15 miles. Two doctrines at common law:
 1. Lateral support: each landowner has the right to have his land in its
natural condition supported by the adjacent parcels of land.
 2. Sub-adjacent support: each landowner has right to have his land in its
natural condition supported by the earth immediately below it.
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  These are both strict liabilities.

Rights in Support:
Pertains to the land adjacent to or underneath the surface property.

Means Duty owed Liability Nature of liability

by neighbor  arises

Lateral That provided to Support Excavation  Absolute; except if supported

one piece of land needed under land had been built upon such
by parcels natural that subsidence would not
surrounding it conditions have occurred but for
improvements, then
Not for negligence
structures

Subjacen That pertaining But not by

t to support withdrawal of
underneath fluids
underneath 

Rights in Water:
Water rights can be divided into Surface rights and Ground water rights.
 Water: often characterized as real property.
o Individuals may only acquire rights to use the water for beneficial purposes
(agriculture, homes, industry) rather than have full ownership. FOR SURFACE
WATER:
 Riparian System: assigns water rights to each landowner whose property
adjoins a watercourse.
 Turned into the reasonable use doctrine over time.
 Flaws: takes little or no account of the relative productivity of the
land the water services
 Encourages development of uneconomical “bowling alley” parcels
of land perpendicular to stream
 Prior Apportionment System: many western states—water rights are
allocated to the first person to divert the water for beneficial use.
 Permit system: many states require a permit—government effectively
regulates the amount of water that may be withdrawn.
o Almost all states now follow one of 3 approaches for GROUND WATER:
 Reasonable Use approach: dominant view—that a surface owner may
use groundwater only for a reasonable use on the overlying land.
 Correlative rights: surface owner is entitled to a proportional share of the
groundwater beneath his land.

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  Permit system: title to groundwater is vested in the state, so the surface
owner can obtain water rights only by securing a permit.
o These approaches all effectively prevent injury to one owner by another.

Surface Water
Theory Means Limits

Riparian Rights of landowner adjoining a Reasonable use; not interfere with use
river by others
Prior First to divert water  Beneficial use
Apportionment
Permit Government issues a permit for Determined by public needs, policies
diversion

Flaws
Riparian rights
 Takes little or no account of the relative productivity of the land the water services
 Encourages the development of uneconomical “bowling alley” parcels of land
perpendicular to the banks of the stream
 Rations poorly when stream levels are low

Prior Appropriation
 Encourages premature development and excessive diversion

Ground Water
Theory Means limits

Reasonable Landowner may extract Reasonable amounts for productive activities

Use
Approach
Correlative Entitled to proportional Rights of other landowner; no pumping dry
Rights share
Permit State owns the water Location and use of wells determined by public
need, policy
Permit required for wells

Ex. Michigan United Citizens for Water Conservation v. Nestle Waters North America: Ps
brought a citizen’s suit against a Nestle bottling plant that they alleged would drain the
groundwater in the area. Weighing the competing interests in the water, Michigan adopted a
Reasonable Use standard for competing claims. When applying the standard consider:
 Purpose of use
 Suitability of use to location
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  Extent of harm
 Benefits of use
 Necessity of the amount and manner of use
 *Reasonableness factors*

Some Other Legal Doctrines Affecting Water Rights

Public trust doctrine
Communal rights exist in certain basic and omnipresent natural resources. By “natural law,”
these things are the common property of all:
 Air
 Running water
 Seas
 Shores
 Below median high tide lines

Justifications:
 Resources are of too great importance for private ownership
 Value depends on bounty of nature not from individual enterprise

Navigable Waterways
 Navigability means practical utility to the public as a means for transportation, for
trade or travel. Recreational use may also be considered under navigability analysis:
o A waterway that is not navigable-in-fact is the private property of the
adjacent landowner. If a waterway is non-navigable, there are no public rights to
float or fish as it flows through, across and within the boundaries of privately
owned land. The land underlying such water (the stream bed) is vested in the
proprietors of the adjoining lands.
o A waterway that is navigable-in-fact is a public highway even if it crosses
private land. But public use is for purposes of transport and travel and uses that
are strictly incidental to navigation. Ex. Hudson river

PERSONAL PROPERTY RIGHTS

Chattels/Personal Property are things or “movable property.”

Possession of Chattels can come from capture, finds, adverse possession, and gift.

Finders
Ownership rights of lost items are qualified.
A finder of a lost thing has a good title against all but the true owner.

Found chattels can be:

 LOST: owner unintentionally and involuntarily parts with the item
 MISLAID: when the owner voluntarily and knowingly places it somewhere, but then
unintentionally forgets it.
 ABANDONED: owner knowingly and intentionally relinquishes ownership rights.

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 o Can be done through affirmative actions or can be inferred from a long period of
non-use
 TREASURE TROVE: old, valuable things like gold or coins that have been hidden
away, under ground
 Salvage Law: Per the Abandoned Shipwreck Act of 1987, Shipwrecks found within 3
miles of US territory technically belong to the federal government, who automatically
transfers ownership to the state who controls the water where the wreck is found.

Armory v. Delamirie:
P found a jewel and took it to D’s shop. The jewel was given to an apprentice to weigh and the
owner offered P money. P refused the money and demanded the jewel back, which was likewise
refused.
 As the finder, P was found to have better title and the court granted Trover.
 Policy reasoning: Society favors the finder having superior title because otherwise
anyone could just take anything and say they own it more than a counter claim of
ownership.

Trover is monetary compensation for conversion

Replevin is the return of the item in question

Hannah v. Peel: P was a soldier who was stationed in a disused home owned by D and found a
broach while cleaning. A dispute arose as to whether the broach belonged to P as a found item,
or to D since it was found on his property. In deciding this, the court looked at 2 cases:
1. While the general rule, states that when a person owns property and exercises control
over it, they also own any of the things found on that property, the Court ultimately
awarded the broach to P, finding that D did not use or occupy the home in question and
therefore did not possess the brooch. The determination re: ownership of a lost item will
ultimately turn on who found it and where it was found. *first finder has the second-
best claim compared to the true owner.
a. Bridges v. Hawkesworth: P was a travelling salesman who found a wallet. D
agreed to try to find the true owner. When the owner never appeared, P tried to
claim ownership and D refused to deliver. The court held the location where the
item was found made no difference and awarded the wallet to P.
b. South Staffordshire Water Co. v. Sharman: D was an employee of P who found 2
rings embedded in the mud while cleaning the premises. There, the court applied
the locus in quo rule and awarded the rings to P. Landowners will win when the
item is attached to the land or found under the land.

**Locus in quo: the place in which. Found items are awarded to the owner of the locus in quo.
General principle that “where a person has possession of house or land, with the manifest
intention to exercise control over it and the things which may be upon or in it, then, if
something is found on that land, whether by an employee of the owner of by a stranger, the
presumption is that the possession of that thing is in the owner of the locus in quo (where it’s
found).

***If an employee finds an item while in the course of their employment, the item will usually
be awarded to their employer.
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McAvoy v. Medina: P was a customer in D’s barber shop who found someone else’s wallet.
Wallet was found to be mislaid property to be left with D for safe keeping. 
 Mislaid property goes to the owner of the locus in quo so that the true owner may be
better able to find it.

Benjamin v. Linder Aviation: P was an employee of D’s hangar who found a bunch of money
inside a plane that had been recently repossessed. The court examined the evidence and found
that given the nature of storage (wrapped up in foil and stuffed inside compartments) and the
quantity of the money ($18,000), it was neither lost nor abandoned and therefore must be
mislaid. As mislaid property, it goes to D, the owner locus in quo. *This was carefully
packaged money, probably abandoned but court rules mislaid.

SS Central America: Law of finds gives title to the finder. Law of salvage gives compensation
to the salver (Finder). Courts apply the law of salvage in almost all cases per the Abandoned
Shipwreck Act of 1987. Salvage law and shipwrecks: provides the finder with a reward but not
ownership.
 Finders law gives the finder ownership of their discovery. In maritime law, finders law
applies only if the shipwreck is abandoned.

BAILMENTS
A Bailment is the rightful possession of goods by one who is not the owner. The person who
delivers the chattel is called a bailor, while the one who receives it is called a bailee.

A bailment requires delivery of physical control to bailee and that the bailee has to take control
of that item.
Finders of lost items are Bailees. They have a right of possession but not title. The true owner
is a Bailor. A Bailee is required to keep the chattel safe and return it to the bailor on demand.

Three basic types of bailments:

1. Those for the mutual benefit of both the bailor and the bailee
a. When a bailment is for mutual benefit, the bailee has the duty to take reasonable
care of the property.
2. Those for the primary benefit of the bailee
a. When the bailment is for the primary benefit of the bailee, extraordinary care is
required.
3. Those for the primary benefit of the bailor
a. When the bailment is for the primary benefit of the bailor, the bailee is liable only
if the property is damaged because of gross negligence or bad faith.
*However, it is worth noting that there has been a trend toward applying reasonable care to all
situations.

Degree of Care for Bailed Property

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ADVERSE POSSESSION OF CHATTEL:
Chattels are personal property. Their primary difference from Real property (i.e. land) is their
portability. **Rules are similar as those for adverse possession of land. The statute of limitations
is usually shorter.**

There are 3 main rules for tolling the statute of limitations:

1. Normal Rule: Period begins to run when the item is taken
2. Discovery Rule: Period begins to run when the owner discovers, or should discover, the
location of the lost chattel
3. *New York Rule: Period begins to run after Demand and Refusal Ex. Monet

 Ex. Reynolds v. Bagwell: P sought replevin for a stolen violin. Approximately 5 years
passed between the date of the theft and when P discovered the violin in D’s possession.
For adverse possession, Oklahoma requires one to possess openly, notoriously, and in
good faith for 2 years. The statute of limitations begins to run “from the time of the
wrongful taking.”
o Rule/Takeaway: Concealment can toll the statute of limitations, but this must be
an affirmative act to frustrate attempts to locate the item in question.
o *Silence is not concealment. *Normal Rule for SoL.
 O’Keefe v. Snyder: P brought suit for replevin of 3 paintings that had been stolen in
1946. Def claimed adverse possession, having purchased the paintings in 1975. The court
here rules that the statute of limitations began to run when P discovered the location of
the paintings (Discovery rule), which shifts the inquiry to “whether the owner acted with
due diligence in pursuing his or her personal property.”
a. While the Statute of Limitations had not expired, P is barred from recovery by
Laches; an equitable defense preventing one from waiting too long before
bringing suit. *Used to get rid of frivolous claims.

TYPES OF TITLE

1. Good: normal title that meets all requirements for transfer

a. Satisfies first principles
b. FIRST PRINCIPLE: No one can transfer more right to another than he has
himself:“nemo dat qui non habet”

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 2. Voidable: results from fraudulent inducement to transfer. Title is considered good until
grantor brings action.
a. Results from fraud in the inducement
i. Grantee lies to Grantor, convincing her to form the intent to transfer

3. Void: Results from: fraud in fact

a. Grantee tricks Grantor: A deed or bill or sale (usually evidence of intent to
transfer ownership) is disguised or represented as a contract for cleaning or
repairs (no intent to transfer ownership, just custody).
b. No delivery – Grantor lacked title

**NEMO RULE: ONE CANNOT TRANSFER MORE THAN THEY HAVE.

A voluntary, inter vivos transfer of title requires intent, delivery, and acceptance.
*There are 3 exceptions to the Nemo Rule, all of which deal with Bona Fide Purchasers at Value.
Nemo Rule: controls the giving aspect of transfer in regard to the grantor.

A bona fide purchaser is a person who buys honestly and without notice of any adverse
claim on the property purchased. BFPVs are subject to certain protections that allow them to
change a voidable title to a good title. *Bona Fide Purchaser of Value

Bona Fide Purchaser Exceptions –3 ways a voidable title can become good.
 UCC § 2-403 Statutory Estoppel: “A purchaser of goods acquires all title which his
transferor had or had power to transfer except that a purchaser of a limited interest
acquires rights only to the extent over the interest purchased. A person with voidable
title has power to transfer a good title to a good faith purchaser for value. When
goods have been delivered under a transaction of purchase the purchaser has power even
though:
o A. the transfer or was deceived as to the identity of the purchaser, or
o B. the delivery wasn't exchange for a check which is later dishonored, or
o C. it was agreed that the transaction was to be a cash sale, or
o D. the delivery was procured through fraud punishable as larcenous under the
criminal law.”
 Statutory estoppel: owner gives possession to a merchant of like goods, who
fraudulently sold to a BFPV. Any interesting of possession of goods to a merchant who
deals in goods of the kind gives him power to transfer all rights of the entrustor to a buyer
in ordinary course of business.
o “Entrusting” includes any delivery and any acquiescence in retention of
possession regardless of any condition expressed between the parties to the
delivery or acquiescence and regardless of whether the procurement of the
interesting or the possessors disposition of the goods have been such as to be
larcenist under the criminal law.
 VOID title  BFP/V becomes  GOOD title.

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  Equitable estoppel: owner gives possession to a transferee without apparent limits on
what the possessor can do. If the grantee sells to a BFPV, BFPV will be protected from
the owner and has good title.

Predicate Means Effect Theory

Cloaking Owner giving possession Owner vis-a-vis No intent to transfer title

+ to a transferee w/o transferee: Nemo rule applies
Reliance by apparent limits  VOID title
bfp/v on what the possessor
can do with the thing (looks
like the owner)
Void title transferred Rationale: By giving possession:
to bfp/v: 1. Owner says to world, Possessor
Becomes  is the owner
GOOD title in bfp/v 2. Bfp/v relies on this appearance to
his detriment (paying value)
3. Owner will not be allowed. (will
be “estopped”).
4. Owner is at fault.

Weighing the Equities of BFP/V Rule:

Party Owner Bfp/v

Equities 1. Is innocent 3. Is innocent

2. Would lose the thing 4. Would lose the value paid for the thing
5. Has legal title (because I,D,A)
English Maxim Controls:
“Where the equities are equal, Law [the one with legal title] prevails.”

Weighing the Equities under BFP/V Equitable Estoppel:

Party Owner Bfp/v

Equities 1. Would lose the 3. Would lose the value paid for the thing
thing 4. Is innocent; Owner set up the situation.
2. But, is 5. Society should encourage people to enter the
culpable. the markets with confidence

**SHELTER RULE: ONE RECEIVES ALL THAT THE GRANTOR HAS TO CONVEY
One who buys a transformed title from a BFPV is similarly given a good title. 
However, one who fraudulently obtained title cannot launder it through a BFPV.
(“Good title cannot be conveyed free from prior equities back to a former owner who was
charged with notice or who was a wrongdoer.”)
*Controls the getting aspect of transfer in regard to a grantee/transferee.

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Exceptions to Corollary Principles:
 GOOD title cannot be conveyed
o free from prior equities, back to a former owner, who was charged with notice or
who was a wrongdoer
 Means party committing fraud or earlier knew about prior claims
o Will not be allowed to filter an infirm title, through a bfp/v in order to get good
title
 Effect
o The shelter/umbrella principle will not apply.
*Cannot assert Shelter rule if you fraudulently induce void/voidable title to sell to a BFPV just to
have them sell it right back to you.

Latches—an equitable defense to bar someone form bringing their claim under law where there
would have been legal relief otherwise because they waited too long to bring the suit.
**Fallback theories:
1. Adverse possession
2. Estoppel
3. Latches – someone waits too long and it would injure the other party if the suit would
allow them to bring it, equity operates in personam

GIFTS

Gifts: the immediate transfer of property rights from the donor (the person making the gift) to
the donee (the person receiving the gift), without any payment of other consideration.
3 types: inter vivos, causa mortis and testamentary.
Gifts are the transfer of ownership rights from the donor to the donee without consideration or
payment. They require:
 Donative intent: the donor must intend to make an immediate transfer of property
o Present transfer to donee
o Right to enjoy, control, or profit from now
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 Delivery: the property must be delivered to the donee, so that the donor parts with
dominion and control. Delivery must be as good as the circumstances allow.
o Manual delivery: donor physically transfers possession of the item to the donee.
 Traditionally required if practical.
o Constructive delivery: donor physically transfer to the donee an object that
provides access to the gifted item. Like a key or bank code.
o Symbolic delivery: donor physically transfers to the donee an object that
represents or symbolizes the gifted item, like the letters in Gruen.
 Only if manual delivery is impractical or impossible.
o Why require delivery? Gift of personal property is valid without delivery IF the
donor’s intent to make a gift is established by clear and convincing evidence.
 Policy considerations:
 Saying something vs. doing it
 Witnesses of delivery
 Proof of delivery and of title
 Acceptance: the donee must accept the property-although acceptance of a valuable item
is usually presumed.
o Presumed if the subject of the transfer is beneficial

1. Inter vivos gifts are “normal gifts” made during the donor’s lifetime. Title vests on
delivery of the item.
o The donor must form donative intent, meaning an intent to transfer NOW. Rather
than testamentary intent, meaning an intent to transfer in the future.
o Inter Vivos gifts are irrevocable, the donor cannot demand their return.
o Engagement rings are a special category of gifts and their revocability depends on
the jurisdiction.
 Under the majority rule, ownership is not transferred completely until the
marriage ceremony, the donor may revoke the gift any time prior to the
wedding. A minority of jurisdictions make ownership complete upon
delivery.
 If the engagement is broken, most jurisdictions follow a no-fault rule,
where the ring is returned to the donor regardless of who is at fault. A
minority of rules apply a fault analysis and award the ring to the non-
offending party.
o Ex. Gruen v. Gruen: Father gifted a painting to his son but wanted to hold onto
it while he was alive to avoid taxes. Father died and son and stepmother disputed
ownership of the painting. 
 Rule: Future rights in property can be transferred separately.
 *Notes: Dispute over delivery—but father transferred future interest and
that was ok because property rights can be divided by time.

2. Gifts causa mortis: are gifts of personal property made by a living person in
contemplation of death. Title vests on delivery.

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 o Donor may revoke up until the time of death. If the donor does not die, the gift is
automatically revoked in most states.
o **Adds a fourth element of “anticipation of imminent death.” 
o If a donor does not die, or dies from a different cause than contemplated, the gifts
are revoked.
 Ex. Brind v. International Trust: Brind deposited jewelry with
International Trust with instructions to deliver the jewelry if she died
during an upcoming surgical operation. Brind ultimately did not undergo
the surgery, but she died shortly thereafter from the illness. Several people
who were named as recipients wanted their ‘gifts’ delivered. 
 Rule: Because the gifts were specifically intended for causa mortis
—they could not transfer the gifts since she did not die.
 *Note: If you don’t die of the thing you think you were going to
die of, the gifts are revoked.

3. Testamentary gifts: are those transferred through a will. Title vests upon death of the
donor. For the gift to valid, the will must be a valid writing signed by the donor. An inter
vivos gift transfer an interest to the donee now, while a testamentary gift transfers an
interest to the donee only in the future when the donor dies.
o Will: written and signed by donor with 2 witnesses.

1. Revocation: obsolete view in Brind.

a. Now under modern law: a gift is effective at the time it is made but may be
revoked depending on future circumstances.
b. Some jurisdictions require specificity of choice to revoke.
c. Suicide: a public policy argument says no—criminal act, should not be
encouraged.
d. Judicial Disfavor: generally, courts disfavor gifts causa mortis. Main concern is
for potential for fraud and inability of a decedent to testify.

ESTATES

What Are Estates?

The common law of estates is an elaborate system that allows ownership to be split over time.
An estate is simply one particular temporal slice of ownership rights in relation to a parcel of
land. Estate law is the common law rules of land ownership. Estates grant possessory rights in
land. Possession includes occupation and exclusion.
One can possess:
 Presently
 In the future
 Potentially

*Estates can be divided in space and in time. They can be classified by potential duration
(length of time), time of enjoyment (presently, future, potentially), or dignity (freehold—
own; non-freehold—rent).
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  Dignity is a holdover term from medieval property law. Under modern rules, a freehold
estate is an owned property where a non-freehold estate is rented.

Estates are often created by conveyance. The type of conveyance created depends on:
 The words of conveyance. Certain phrases are traditionally associated with certain
estates. E.g. “to X and his heirs” creates a Fee Simple Absolute.
o At common law, the words of conveyance were extremely important. Modern
rules are more lenient and are usually interpreted to convey the greatest possible
estate. (see Cole v. Steinlauf).
 The grantor’s estate. Basically, the Nemo rule. One cannot convey more than they
possess. If you only have a life estate, you cannot transfer a fee simple absolute.

Property can only be transferred to entities that can own property, such as people or
corporations.

Freely alienable: sold or given away at any time.

Devisable: can be transferred by will at death.
Descendible: can pass by the laws of intestate succession if owner dies without a will.

Ex. Cole v. Steinlauf: Ds were attempting to sell a property to Ps. Ps hired an attorney to review
the deed and found that an earlier conveyance transferred the property to the Grantee “and
assigns forever.” Ps refused to purchase the property, asserting that this language failed to create
a fee simple.
Rule: The court here held that a title in fee simple required the phrase “and his heirs.” Since
this was missing, the Grantee only received a life estate. The only way to fix an issue like this
is to determine the intent of the Grantor, which the Court cannot do here.
 Note that this case has been overturned. Modern courts will construe ambiguities in favor
of creating the largest possible estate, typically a fee simple.

Corollary principle runs with and explains the first principle:

Shelter/Umbrella principle—the transferee takes all the transferor had to give. Donee acquires
the same rights as the bona fide purchaser.

Estates can be conveyed in three main ways (Instruments):

1. Deed: Document transferring possession between living parties. The completed transfer
is called a conveyance or a grant. The verbs used to describe the transfer are convey or
grant. (grantor/grantee). A living person may transfer real property by a deed.
o Conveyance (or grant) – the transfer contemplated
o Persons involved: grantor and grantee

2. Will: Property of a decedent may be transferred by a will. The completed transfer is

called a devise and property transferred in this way is devised. 
o Some states recognize holographic wills (wills drafted without an attorney) but
they are prone to error and can create problems. 

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 o Most states require an attested will, which requires a will to be written, signed,
and witnessed. They can be combined with a revocable trust during life, or a
testamentary trust after death.
o Property of a decedent may be transferred.
 Devise – the transfer
 Persons involved: testator/testatrix and devisee.

Who are Heirs?

3. Intestate Succession: If one dies without a will, their property will descend to their heir.
Heirs are those who outlive us. Living people do not have heirs, only Heirs Apparent.
Intestate succession is governed by statute. The order of preference is as follows:
o Issue and surviving spouse. Issue are direct descendants. *Your children.
o Parents and their issue. *Parents and your Siblings.
o Ancestors and collaterals. Collaterals here are other relatives. *Grandparents,
aunts, uncles.
o If a person dies without a will, property gets distributed according to state
statutes, usually closest living relatives.
 Intestate succession – property transferred by descend.
 Persons involved: to an heir.
o Escheat. If a decedent has no living family, their property escheats to state
ownership. *Goes to state.

The law looks disfavorably on terms that restrain alienation. Such terms are usually considered
void. There are three broad categories of restraints:
 Disabling restraints prevent a grantee from transferring ownership
 Forfeiture restraints lead to a forfeiture of title if the grantee attempts to transfer 
 Promissory restraints require grantees to promise not to transfer 

*Numerus Clausus prevents new forms of estates from being created. We do not make new
types of estates; what we have is what we get.

Types of PRESENT Interests

Estate types by duration:
1. Fee Simple Absolute
a) Fee Simple Determinable
b) Fee Simple subject to Condition Subsequent
c) Fee Simple subject to Executory Limitation
2. Fee Tail
3. Life Estate
4. Term of Years
5. Periodic Tenancy
6. Tenancy at Will

1. FEE SIMPLE ABSOLUTE: To X and his heirs. (Or “To X, assigns and successors
forever.” if X is not a person.) 
a. Grantee takes all property rights, and the estate ostensibly endures forever. FSAs
do not create any accompanying future interest. FSAs are freely transferable
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 through alienation, devise, and descent, and may be divided in time and space. All
estates are subdivisions of a Fee Simple Absolute. When the owner of an FSA
dies, possession descends to their heirs. An FSA only terminates when there are
no more heirs to inherit. FSAs are by far the dominant type of estate, with more
than 99% of land in the US being held in this manner.
i. The phrase “and his heirs” does not confer any actual interest in the
grantee’s heirs. These are words of limitation that just indicate that the
grantee is receiving an FSA. *The heirs do not have any interest until
the Grantor dies!
b. Alienable, devisable and descendible.
c. Ambiguity is resolved in favor of a fee simple.
i. Three variants called defeasibles.

2. Life Estate For life; until death

a. Grantee possesses the land for the duration of their lifetime. Grantor retains a
future interest (reversion) and retakes possession upon the death of the
grantee. An owner of a life estate can alienate their interest during their lifetime,
but it cannot be transferred by a will or intestate succession because the life estate
terminates upon their death. Life Estates cannot be transferred to non-person
entities.
b. One can also convey an estate Pur Autre Vie: literally for another’s life.
i. O conveys Dunktown, USA “to B for the life of C.” B possesses
Dunktown, USA until C dies, after which the property returns (reverts) to
O.
ii. O conveys “to G for life.” G then conveys to M. M’s interest is still
limited by G’s lifetime. If G dies before M, the property reverts to O. If
M dies before G, the property instead reverts to G. (see page 314)
c. Legal Life Estates are very difficult to transfer and are consequently very
uncommon. Most life estates are held as equitable life estates, where the property
is held in trust by a fiduciary on behalf of the beneficiaries. The words of
conveyance for this would be “to T in trust for the use of B for life, then to C.” T
has a legal FSA in the property, B receives an equitable life estate that grants all
of the income produced by the property during B’s lifetime. C has an equitable
remainder and receives the FSA after B’s death.
d. Alienable only
e. Subject to waste
f. When conveyed to another becomes LE pur autre vie
i. Equitable life estate – modern trust.

3. Fee Tail To X and the heirs of his body...

a. A Fee Tail is similar to an FSA, however the duration of the estate is determined
by the lineal descendants on the grantee. A Fee Tail is subject to several limits
on alienability. An owner of a fee tail can only alienate their possessory interest.
When that grantor dies, regardless of who is actually in possession, the property
passes to the grantor’s lineal heir. Because of these restrictions, only a few states
recognize fee tails.

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 i. Ex. Conveys Coolsberg to “X and the heirs of his body.” O retains a
reversion on the property. If X’s line of lineal descendants ever ends, the
property goes back to O or O’s heirs and they have a fee simple. X can
only alienate interest during his lifetime. If X conveys to Y and X dies,
possession of the property is automatically transferred to X’s heir. 
b. Trying to create a Fee Tail in a state that doesn’t recognize them creates a Fee
Simple instead. One can also disentail a Fee Tail through an inter vivos transfer.
c. Alienable only
d. May only alienate right to possession until death
e. Descends only to lineal descendants
i. Most extinct

Fee Simple Defeasibles (Variants of FSA): A defeasible estate is one that ends upon the
occurrence of some future event. These estates create future interests.

4. Fee Simple Determinable To X and his heirs until; so long as; while; during...
a. Grantor specifies an event in the deed. When it occurs, title automatically reverts
to the Grantor, who retains a possibility of reverter. FSDs and Possibilities of
Reverter are freely transferable, but the condition continues to be enforceable. 
b. Alienable, devisable, and descendible
c. Not subject to waste

5. Fee Simple Subject to Condition Subsequent To X and his heirs, but if; provided that;
on condition that; unless... Might also include O has a right to re-enter and reclaim the
property”
a. Grantor retains a right of re-entry (also called Power of Termination), which
they may use at their discretion after the specified event occurs. If the grantor
chooses to re-enter, the owner is divested. FSSCSs and rights of re-entry are
freely transferable, but the condition continues to be enforceable.
i. Traditionally, RoR required the grantor to physically enter the property.
Most jurisdictions now allow the grantor to give notice to the grantee or
file a quiet title action.
b. Alienable, divisible and descendible
c. When ambiguity exists, preferred over a FSDet
d. Not subject to waste

6. Fee Simple Subject to Executory Limitation [words that create FSD or FSSCS] ...
then to Y
a. Grantor creates either an FSD or an FSSCS, but the future interest lies in a third
party rather than the Grantor. The third party retains an executory interest.
FSSELs and executory interests are freely transferrable.
i. California has Abolished FS Determinable; only FSSCS and FSSEL can
be created
ii. New York Reposes Possibility of Reverter and Right of Re-entry, meaning
if the event that will cause estate to end does not occur within 30 years of

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 the grant, Possibility of Reverter and Right of Re-entry CANNOT be
enforced. Instead, the Estate becomes FSA, but it may be possible to
preserve PoR and RoR by recording a notice in land records.
1. Ex. Metropolitan Park District v. Unknown Heirs of Rigney:
Tacoma Park District brought a quiet title action against the heirs
of John Rigney (O). In 1882, O conveyed a parcel of land to the
Tacoma Light and Water Company for the express purpose of
providing water to the city. The conveyance included “if at any
time [grantees]… cease to use said strip of land for the purpose of
conducting such water for the supply of the City of Tacoma… it
shall and may be lawful” for the descendants of O to “re-enter”
and “repossess” the land, creating a Fee simple subject to
condition subsequent. TL&WC conveyed the land to the city of
Tacoma in 1893, and the land was used as specified until 1905.
Sometime later, the land was transferred to Π and it was used as a
park.
a. The court holds 1) that the grantee of a Fee Simple Subject
to Condition Subsequent may not obtain title through
adverse possession after breaching the condition in the
deed. And 2) the holder of a Right of Re-entry must
exercise the RoR within a reasonable amount of time. Since
something like 60 years has passed since the term was
breached, Δs have missed their opportunity to re-enter.
i. Rule/Takeaway: **Right to re-enter must be
exercised within a reasonable amount of time.
b. Alienable, devisable, and descendible
c. Future interest in a third party follows the estate
d. Not subject to waste

7. Term of Years To X for y Years

a. Grantee has possession of the estate for the specified number of years. Their
rights automatically expire at the end of the specified term.
b. Alienable, divisible, and descendible
c. Subject to waste

HOW TO APPROACH ESTATE PROBLEMS:

1. Look to the words used 

2. If property speak is not used look to the intentions of the grantor
a) What the language is most like
b) Surrounding circumstances: relation of parties, reason for conveyance,
sophistication of parties 
3. Consider other tools for construction, grammatical rules, Equitable maxims (forfeiture or
injustice)
4. Apply public policy (against discrimination, in favor of alienation, against unreasonable
restriction on use)
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 a) If one construction violates public policy, then avoid it 
b) If one construction furthers public policy, then apply it

WASTE
The concurrent existence of present and future interests can lead to friction between those who
have said interests. To preserve the condition of an estate for those who hold future
interests, the courts have developed the theory of Waste. *Common law approach to waste: an
action in waste lies only where the alterations reduce the value of the property.

 Voluntary waste is an affirmative act that significantly reduces the value of the
property.
 Permissive waste is deferred maintenance. The property value is diminished through
neglect rather than affirmative actions. From failure to take reasonable care and protect
the estate.
 Ameliorative waste is an affirmative act that increases the property value. Most states
don’t recognize this as “Waste” and will not enforce an action against it. *it enhances.
o Ex. Woodrick v. Wood: George Wood had a will stipulating that upon his death
his wife would get a life estate of his property which would pass to their children
upon her death. The son and the mother wanted to tear down a barn, which the
daughter did not want them to do. 
 Pay the value if waste occurred

**Waste in the fee simple defeasible: the doctrine of waste does not apply to a person holding a
defeasible fee simple.

 Rules of Construction: when a deed or will is ambiguous, court will interrupt transferor’s
intent –by applying this rule: a legal principle that breaks a tie. The transferor’s intent to
convey to largest possible estate is usually the winner.
 Valuing a Life Estate: monetary value value—courts estimate the amount of income that
the property could produce during each year of the life tenants remaining life, discounted
to present value.
 Holographic Wills: written entirely by hand of decedent and signed.
 Restraints on Alienation: any attempt to restrict the free alienation of the property would
be inconsistent with the incidents and nature of estate devised and contrary to public
policy.
 Utilitarian theory of alienation: transferability is necessary to ensure the productive use of
land.

If such a provision expressly prohibits the future transfer of a fee simple, it is void against
public policy.
 3 types of restraints:
 Disabling restraint: prevents a transferee from transferring her
interest.
 Forfeiture restraint: leads to a forfeiture of title if that transferee
attempts to transfer her interest.
 Promissory Restraint: stipulates that the transferee promises not
to transfer her interest.
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  Legal and Equitable Life Estates:
o A special type of life estate in modern trust. The trust is in essence a separation
of legal and equitable title.
 A trustee: holds legal title to the trust property and manages the assets as
a fiduciary for the benefit of the trust beneficiaries
 Trust beneficiaries: hold the equitable title.
o An equitable life estate is the most frequent type of present interest.
o A testamentary trust: must be in writing, signed and witnessed by 2.

FUTURE Interests
Future interests are existing, nonpossessory property rights that may become possessory in the
future. Future interests are owned presently. They may be freely alienated in most
jurisdictions. Future interests are most often categorized by who may own them.

Grantors can have:                                 Grantees or Third Parties can have:

Reversion                                             Indefeasibly vested remainder
Possibility of Reverter                          Vested remainder subject to divestment
Right of Re-entry                                   Vested remainder subject to open
                                                              Contingent remainder
                                                              Executory interest

A. Retained Future Interests (Grantor)

Retained future interests are held by a grantor when they transfer an estate that is smaller than
what they possess. Retained interests do not require express language to create. *The law
presumes the grantor is retaining a future interest unless specified otherwise.

1. Reversion is retained when the grantor transfers a smaller vested estate than the one they
own, such as an FSA owner transferring a life estate. When the life estate expires, the
property automatically reverts to the grantor.
a. A future interest remaining in the transferor when granting a vested estate of a
lesser quantum than she began with.

2. Possibility of reverter is retained when the grantor transfers a fee simple determinable.
If the conditions specified in the deed are met, the property automatically reverts to the
grantor.

3. Right of Re-entry is retained when the grantor transfers a fee simple subject to condition
subsequent. If the conditions specified in the deed are met, the grantor has the option to
assume possessory rights. Possession does not return to the grantor until they
affirmatively act.

B. Created Future Interests (transferee)

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Grantors may create future interests when they transfer ownership of an estate. All created future
interests are either remainders or executory interests. Created interests must be indicated by
express language. Equitable life estates in assets of a trust – future interests.

* If not a remainder, then must be an executory interest and vice versa when encountering
problems of future interest created in a transferee.

1. Remainders
a. A Remainder is a future interest that:
i. Is capable of becoming possessory immediately upon the expiration of
the prior estate, and
ii. Does not divest or cut short any interest in a prior grantee.
b. Capable of becoming possessory: possibility of possession is enough,
guaranteed possession is not required.
c. Does not Divest: waiting patiently for preceding estate to expire.
i. **Remainders are either vested or contingent.

A. Indefeasibly Vested Remainders are created when the remainder is assigned to an

ascertainable person and the remainder is not subject to a pre-condition (We call that
pre-condition a “condition precedent”).
a. Indefeasibly vested remained: if
i. 1) created in an ascertainable person and
1. Both alive and identifiable.
ii. 2) not subject to a condition precedent other than natural termination of
the prior estate.
1. Must be met before the remainder can become possessory or
remainder will not vest.
b. **A remainder in an identifiable person that is certain to become a possessory
estate.
i. Because living people do not have heirs, a person’s heirs are not
ascertainable persons. Similarly. Because more children can be born, a
person’s unborn children are also not ascertainable persons. However,
children who are already alive are ascertainable.
c. A condition precedent is any kind of condition, circumstance, or event that
must occur before the remainder can vest other than the termination of the
preceding estate.
d. Ex. O conveys the Beta Lounge to B for life, then to C.

B. Vested Remainder Subject to Divestment is created when a remainder will vest unless
a specified event occurs (We say the interest is “subject to a condition subsequent”).
*That person will get the property unless a certain event happens, but if that event
happens they will not get the property.
a. Ex. O conveys the Beta Lounge to B for life, then to D and their heirs, but if D
does not survive B, then to E.

C. Vested Remainder Subject to Open is created when a remainder is created in a group

or class of people that may be enlarged in the future.
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 a. Both ascertainable and no condition precedent but open to potential the vestee
may have more children.
b. Ex. O conveys the Beta Lounge to B for life, then to D’s children.

**Contingent remainder: if a remainder is not vested, it is contingent. Either:

1. Given to an unascertainable person, or
2. Subject to a condition precedent.

Ex. O conveys to B for life, then to C if C wins the World Vape Tricks Championship. SCS.
Ex. O conveys to B for life, then to C’s heirs. Unascertainable persons.

2. Executory Interests:
An Executory Interest Is a future interest in a transferee that must divest another estate or
interest to become possessory. Exact opposite of remainder.

a. Springing Executory Interests follow a grantor’s interest and

b. Shifting Executory Interests follow a grantee’s interest.
i. There is no substantive difference between the two, this is just a label.
1. *common law provides that a future interest in a transferee
following a defeasible fee simple could only be an executory
interest.
2. *today executory interests are alienable, devisable, and
descendible in all jurisdictions.

Ex. O conveys Sweet Sam’s Barbecue Extravaganza and Cornhole Emporium to B for life, then
one year after B’s death, to D and his heirs. Springing.

Ex. O conveys Sweet Sam’s Barbecue Extravaganza and Cornhole Emporium to B and her heirs,
but if J lands a hundred kickflips in a row, then to J and her heirs. Shifting.

Significance of the Classification: policy reasons

a. Transfer: remainders were freely transferrable but contingent remainders could
not be conveyed by deed or by will. NOW  both types of remainders are freely
alienable, devisable, and descendible in all jurisdictions.
b. Marketability: designed to make land more marketable for functional difference.
c. Presumption: if the wording of conveyance was ambiguous, judges presumed
grantor intended a vested remainder thereby maximizing marketability of the
land.

Restatement Third Property:

a. Abandons traditional distinctions among future interests.
b. A future interest is either a remainder or a reversion.
i. Remainder: if it is created in a transferee.
1. Executory interest
ii. Reversion: if it is retained by the transferor.
1. Right of entry
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 2. Possibility of reverter

MARKETABILITY AND LIMITS ON FUTURE INTERESTS

Future interests that may potentially vest at some unknown point in the future stifle real estate
transactions by creating a risk that a given property will automatically change ownership with
little control by the parties actually using the land. In the interest of promoting the free alienation
of land, several doctrines arose to pre-empt future interests, particularly contingent remainders
and executory interests.

**Importance of the ability to transfer ownership with ease and efficiency.

Over time: a continuous march toward a greater alienability through judicial devices:
1. Latches  prevents stale/prejudicial claims
a. Basically, if you wait too long—no suit for you.
2. Disclaimer/release + fee—merge  unites related interests.
3. Limitation on restraints  land becomes more versatile
4. Bona fide purchase and estoppel  to settle title

RULES FURTHERING MARKETABILITY:

*Contingent remainders and executory interest adversely affected marketable because of their
uncertainty.

1. Rule in Shelley’s Case: if a freehold estate is given to a person and, in the same
instrument, a remainder is given to the heirs of that person, he takes both the freehold
estate and the remainder.
a. Converting the contingent remainder in the heirs of the grantee  a vested
remainder in that grantee.
b. Elements:
i. One instrument
ii. Creates a freehold estate in a transferee, and
iii. A remainder in that transferee’s heirs, and
iv. Both interests are legal or both equitable
1. Mostly abolished now.

Ex. to B for life, then to B’s heirs.

Effect of rule: takes away remainder in B’s heirs because they are unascertainable right now and
gives it to B as a vested remainder. Now B has a Life estate and a remainder in FSA so Merger
operates here and merge into the larger estate to make land more marketable and B now has a
FSA.

The interests must be successive for the rule to operate. So, if O conveys to X for life, then to
X’s heirs, this just gives X a fee simple absolute. However, if O conveys to X for life, then to Y
for 1 year, then to X’s heirs, the rule does not apply. X gets a life estate, Y gets a term of years,
X’s heirs get a contingent remainder

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 2. Doctrine of Worthier Title: common law doctrine applied to any inter vivos conveyance
of land by a grantor to a third party in which a future interest was created in the
grantor’s own heirs. Rules provided that a grantor could not create a remained or
executory interest in his heirs. If they attempted, the interest would be void and grantor
retains a reversion.
a. Remainder or executory interest in grantor’s own heirs  future interest in
grantor instead of a future interest in grantor’s heirs.
b. Elements:
i. A conveyance creates a remainder or executory interest
ii. In the grantor’s heirs.
c. Exception: this applies to the remainders in the heirs of transferee’s unless
transferor clearly manifests an intent to create a future interest in his heirs.

Ex. O to G for life, then to O’s heirs.  Contingent remainder because O’s heirs are
unascertainable right now and a reversion is created in O the grantor.
Remainder (waiting for previous estate to end) and contingent (because we don’t know heirs
yet).

If O conveys to B for life, then to O’s heirs, B gets a life estate and O has a reversion.

3. Destructibility of Contingent Remainders: Any contingent remainder that has not

vested at the termination of the preceding freehold estate is destroyed. To terminate
remainders that might vest too far in the future.
a. If contingent remainder does not vest before prior estate ends  executory
interest.
b. Elements:
i. A contingent remainder
ii. Does not vest before the preceding freehold estate ends.
c. Failure to vest scenario: under destructibility the estate would be destroyed but
now abolition of this rule  so nothing is destroyed it reverts back until vestee
can complete condition and then estate springs to vestee from grantor
d. Reverts back to grantor and the person has a FSSEL (springing executory interest)
and M has springing exec interest

O conveys Sweet Sam’s Barbecue Extravaganza and Cornhole Emporium to B for life, then to J
and her heirs if J lands a hundred kickflips in a row. We do not know when or if J will land a
hundred kickflips in a row. Under the doctrine of destructibility, if J has not done so before B
dies, then J does not get the estate.
 At common law the Contingent Remainder will terminate, and ownership passes to the
next vested interest. (here it would go to O)
 Under modern rules, the estate passes to the next vested party and the holder of the
contingent remainder gets an executory interest. (again, goes to O but J has a springing
executory interest)

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 RULE AGAINST PERPETUITIES

No interest is good unless it must vest, if at all, no later than 21 years after some life in being at
the creation of the interest. This limits the duration of contingent interests by providing that it is
void unless it must vest or forever fail within 21 years of the death of life in being.
*Must logically prove it can vest (valid), if no possibility of vest then it is void.
 Elements:
o Unless it must vest, if at all: can vest or cannot
o Not later than 21 years after some life in being: must be able to vest within 21
years of the end of all present interested persons mentioned at time of conveyance
o At the creation of the interest: when the interested parties are gone, the 21 years
starts ticking.
 Interest holder has to prove with absolute certainty that the contingency
will be resolved within the perpetuities period
 If there is a possibility it may not resolve, it is void NOW and struck and
title must be rewritten. *In other words, a contingent interest must vest
within 21 years of the death of a life in being.

A Life in Being is a person who is in existence at the time when a deed or will takes effect.
Vesting is the point where the uncertainty is removed.

**It either MUST vest by end of life in being or it must FAIL to vest. The contingency must
be certain to happen within 21 years or not at all.
If it “could maybe possibly” vets then under RAP it is void.

What interests are subject to RAP? Those NOT certain to vest. Contingent remainders,
executory interests, classes (children (VR subject to open) or class gifts – students, etc.)
Rule does not apply to reversion, possibility of reverter or right of entry. Retained by Grantor.
Does not apply to vested remainders subject to complete divestment.

 Ex. O conveys “to B, then to C if anyone cures cancer.” Void, possible that anyone could
cure cancer more than 21 years after C’s death.
 Ex. O conveys “to B, then to C if C cures cancer.” Valid, it is certain that C will cure
cancer or not cure cancer within 21 years of his death.

Approach to RAP problem:

 Identify the contingent intertest
1. If none, rule does not apply.
 List the lives in being
 Consider whether anyone can be born who might affect vesting
 Kill off the lives in being at some future date and add 21 years
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  Ask yourself: is there a possibility that the contingent interest will vest after this point?”
if yes, then it is void the moment it was created, if not, it is valid under the rule.

Modern Reforms of RAP:

1. Wait-and-See: validity of an interest is not determined at the creation but by the events
that actually happen in the future.
a. There is a possibility of remote vesting.
b. The contingent remainder is a valid interest if it vests within the perpetuities
period.
c. Don’t destroy interest but wait and see if contingency resolves within perp period.
i. **NY uses Traditional common law RAP
2. Uniform Statutory Rule Against Perpetuities (USRAP): an interest is valid if it
satisfies the common law rule OR if it actually vests within 90 years after its creation.
a. Allows courts to rewrite the instrument to allow for vesting.
b. 90 years or within common law period
3. Cy pres: future interest no longer violates the common law rule in order to honor the
transferor’s presume original intent.
a. No possibility of remote vesting.
4. Future of the Rule: some states have abolished the common law rule. States are
increasingly adopting legislature that authorizes the perpetual trust, in effect, allowing
contingent interests to endure in perpetuity.

Savings Clause: a simple way to avoid the rule.

 A savings clause prevents any potential violation of the role by requiring that
every interest must vest before the end of the applicable perpetuities period.
o The rule will not be violated, if it is written expressly that any trust will
terminate if it has not previously terminated in 21 years.

TO ANALYZE:
1. Identify the contingent interest
2. List the lives in being
3. Consider if anyone could be born who might affect vesting
4. Kill off the lives in being at some future date and add 21 years
5. Determine if there is any possibility that the contingent interest will vest after this point.
There are no reasonability standards or any other kind of limit on the ways that the
interest could potentially vest. Go wild!
6. If yes, RAP applies. If no, you’re good to go.

STEP-BY-STEP EXAMPLE OF RAP:

Example: To A for life, then to A’s children (A is alive and has no children) – 
A’s children = contingent remainder.

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Step 1: Determine which future interest you have (the RAP potentially applies only to contingent
remainders, executory interests and vested remainders subject to open).
- Here in example, we have contingent remainder.

Step 2: Ask what has to happen for the future interest holder to take?
- Here, A must die, leaving behind a child.

Step 3: Find a measuring life. Look for person alive at date of conveyance whose life and/or
death is relevant to the given condition’s occurrence. 
- Here, A qualifies as the measuring life.

Step 4: Will we know for sure within 21 years of the death of that measuring life if there is or is
not a future interest holder to take?
- Here in example, yes we will know at the moment of A’s death if she left behind a child or not. 
- So here, we will have an answer within the perpetuities period!

CO-OWNERSHIP AND CONCURRENT INTERESTS

This is called concurrent ownership. The key characteristic of concurrent ownership is that
each co-owner or cotenant has the right to use and possess the entire property. Concurrent
ownership grants full rights to enjoyment and use of the property in question. People who
concurrently own a property are called co-tenants. Multiple people can hold interests in the
same land at the same time. It is preferable for the terms of conveyance to explicitly state the
kind of concurrent interest being created.

Modern Concurrent Estates (3 kinds):

1. Tenancy in Common: each tenant has undivided, fractional interest in the property.
Each may transfer his interest to another person.
a. Freely alienable, devisable, and descendible. The interest can be freely conveyed
i. Language: To A and B. to A and B as tenants in common.
b. If they sell the property, the proceeds are divided according to proportionate
shares
i. The interest is undivided because all co-owners have equal right to use and
possess the entire property.
ii. The interest is fractional because proceeds from sale of the property are
divided by fractional interest.
*Ambiguous language will typically be resolved to create a Tenancy in Common. *

2. Joint Tenancy: undivided right to possess and use whole property but each joint
tenant also has a right of survivorship. If one dies, the other become sole owner by
surviving with all the interest in the property.
a. Neither devisable nor descendible.
i. Language: to A and B as joint tenants with right of survivorship.

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 b. Seized by the part and by the whole.
i. 4 unities required to create a joint tenancy:
1. Time—tenants must acquire interests at the same time (all interests
must be acquired at the same time)
2. Title—must acquire by same instrument (deed or will) (same
instrument creates title for everyone)
3. Interest—must have same shares in estate of equal size and
duration (same size shares in the estate)
4. Possession—must have equal right to possess, use, and enjoy
whole property (equal right to possess, use, and enjoy)
c. If one joint tenant transfers interest, the joint tenancy is severed and breaks the
unity of time and title so the survivorship is destroyed (for the person who broke
and transferred) and the grantee becomes a tenant in common with the other
concurrent owners. **If any of the elements are missing, a tenancy in common
is created instead.** The grantee of such a transfer possesses their interest as a
tenant in common.

Ex. To A, B and C as joint tenants, with right of survivorship.

d. A conveys to F
e. Once A transfers to F, A is no longer a Joint tenant BUT B and C are still joint
tenants & F has tenancy in common
f. B dies, devising interest to G 
g. If B and C are joint tenants, then right of survivorship is still in play
i. When a joint tenant dies – the survivors take ownership of their interest.
ii. Joint tenant cannot devise a joint tenancy only convey while alive.

3. Tenancy by the entirety: only married couples can hold this.

i. Language: to A and B as tenants by entirety.
b. Can only end by death, divorce, or agreement of both spouses.
c. Seized by the whole and not by the part.
d. Neither spouse may transfer interest share
i. These are very similar to joint tenancies, but they are only available to
heteronormative marriages.
e. Cotenants have undivided right to use and possess the property.
f. Both parties each have a right of survivorship, but unlike Joint Tenants, they
cannot unilaterally convey their interest. 

Ex. James v. Taylor: Mother conveyed interest to her 3 children “jointly and severally, and unto
their heirs, assigns, and successors forever.” There is a dispute as to whether this created a joint
tenancy or a tenancy in common. 
Rule/Takeaway: Here, by statute, a conveyance to 2 or more persons is a tenancy in
common unless there are rights to survivorship to create a joint tenancy. Language
indicating such an intent (like “with right of survivorship”) is absent, so a Tenancy in
Common was made.This case just illustrates how courts will interpret vague or unclear
terms in a conveyance.
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Severance:
 Ex. Tenhet v. Boswell: P and RJ owned a property as joint tenants. Without telling P, RJ
leased the property to D for ten years with an “option to purchase.” Johnson died shortly
thereafter, and P sought to assert her right of sole ownership as the surviving joint tenant.
At issue was whether Johnson’s lease of his interest severed the joint tenancy.
 Rule/Takeaway: “A joint tenant may, during his lifetime, grant certain rights in
the joint property without severing the tenancy. But when such a joint tenant dies,
his interest dies with him, and any encumbrances placed on the property become
unenforceable against the surviving joint tenant.”

Partition:
Sometimes cotenants have beef. When they can’t squash it, they can bring suit to partition the
property. A partition divides the property and distributes it among the cotenants. There are two
kinds of partition:
1. Partition in kind: divides the property and the parties continue to occupy their respective
portions. Partition in kind is preferable in most situations because land is not fungible.
2. Partition by sale: sells the property at public auction and the proceeds are divided
among the parties. Partition by sale is actually more common.

 Ex. Ark Land Co. v. Harper: Property interest was divided among many family
members. Ark Land purchased approximately 2/3rds of the ownership rights, hoping to
develop it into a “dump site for mining waste.” Family members with the remaining
interest refused to sell and Ark Land brought suit for partition by sale. 
 Rule: Partition by sale requires a party to show:
 The property cannot be conveniently partitioned in kind;
 The interest of one or more parties will be promoted by sale; and
 The interests of the other party will not be prejudiced by the sale
 Takeaway: Economic interests are a factor to consider, not the factor. Emotional
and sentimental value should be “controlling” in these determinations. Here,
because the family’s emotional and sentimental interests would be prejudiced by a
forced sale of the property and it is technically possible for Ark to use the
property without forcing its sale, partition in kind is proper.

Cotenant Rights and Duties

 Ex. Esteves v. Esteves: There was a dispute over proceeds from the sale of a home,
which was held by a tenancy in common. P had lived on the property and paid for all
repairs/maintenance. D did not live on or use the property during that time. After selling
the home, P sued for half the value of the repairs they had paid for and did not want their
sole occupancy to count against them.
 The court describes three rules for resolving these types of disputes:
1. Co-owner who pays less than their pro-rata share of operating expenses must
account to the co-owner who overpaid when the property is sold.
2. Occupation by one party does not impose an obligation to make any
contribution to the non-occupying co-owner.

37
 3. Notwithstanding the above, when a property is sold and the occupying party
demands contribution from the non-occupant, equity requires evaluation of a
sole-occupancy credit.
 Takeaway: Applying these rules, the court holds that D is entitled to an
offsetting credit equal to the reasonable rental value of the property for
the time that D was out of possession.

1. Right to Occupy: A co-tenant in possession does not owe any rent to a co-tenant out of
possession, absent an ouster.
2. Ouster: An ouster occurs when a co-tenant in possession refuses to allow another co-
tenant to occupy the property. This essentially creates an adverse possession.
3. Sharing Rents and Profits: Co-tenants must share profits and are entitled to proportional
shares. A co-tenant cannot select and take part of a jointly owned property and make a
partition- all profits generated by the property must be divided.
4. Accounting: Equitable action to receive the share of profits generated by the property.
5. Contribution: Equitable action seeking reimbursement for the cost of repairs or
improvements that a co-tenant has already paid.
6. Repairs and Improvements: A co-tenant cannot seek payment for improvements to the
property (e.g., an in-ground pool) But, a co-tenant who makes repairs will receive a credit
in a partition action.
7. Owelty: A co-tenant who makes improvements/repairs receives a credit equal to
increased market value; adjustments between the parties if the physical division is
unequal. (Basically, you can get credit for what you added to the market value.)

Marital Property
1. Separate Property System (majority rule)
During the Marriage
 Property is separately owned by the spouse who acquired it.
 Creditors of a particular spouse can only attach the separate property of that
spouse.
Divorce
 There is an equitable distribution of the property owned by each spouse. – Factors
such as income, standard of living, contribution, age/health, special needs, and the
length of the marriage impact the distribution of the property.
 Property that is subject to equitable distribution is all the property that was
acquired with the earnings of either spouse.
Death
 Surviving spouse is offered a forced share (or elective share) of the decedent’s
estate.
 The survivor can either (a) take under the will, or (b) receive a defined portion of
the decedent’s estate.
o The survivor can choose which option is economically better. (e.g., will = 50% v.
estate = 33%)

2. Community Property System 

During the Marriage

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 All the earnings during the marriage and assets are owned by both, except
property that was acquired by gift, devise, and inheritance.
 There is an equal, undivided share in community property à neither party can
transfer his/her interest to a third party.
 Each respective share of the property is descendible.
Divorce
 All community property is divided between the spouses. Depending on the state,
the property is either divided equally or equitably.
 Property from before the marriage is considered separate property and is not
included. 
Death
 The decedent may devise his/her half of the shared property and all separate
properties.
 The other half of the estate belongs to the surviving spouse.
o Here, there is no forced share!

Common Law Distributions of Marital Property and their Modern Equivalents

Common Law Means Modern Means

Femme covert The wife ceases legal Married Women’s Property Wife now has the right to
existence – Husband owns all Rights (late 1800s) control her own property.
of her personal property but
protects Wife in return.

Jure uxoris Right to possess all of Wife’s Community Property Property bought during the
land – Wife is reachable by marriage (except by gift,
(10 States follow this)
Husband’s creditors. devise, inheritance). It requires
joinder for transfers and each
spouse’s respective share
descends.

Dower There is a Life Estate in 1/3 Elective Share – The Wife can You can get more or less
of all of Husband’s elect against the will and take depending on what you choose.
inheritable lands. ½ or from the will and get 1/3.

Effects of Tenancy by the Entirety

At common law, each conveyance to a married couple presumed tenancy by entirety, meaning
both spouses co-own the conveyance. Today, half of the states presume this co-tenancy.

 Ex. Sawada v. Endo: Ps brought suit for personal injury. Ds had owned their house as
tenants by the entirety. Between the time that P filed their complaint and when D was
actually served, Ds had conveyed title to their house to their sons without consideration
and continued to live on the property. After the original lawsuit was resolved in favor of
Ps, D had no assets to recover against and Ps brought a new action to set aside the
conveyance of D’s property. At issue was whether creditors can go after a property
owned in tenancy by the entirety to satisfy an individual’s debts.
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  Rule/Takeaway: The court reviews four different jurisdictional rules and sides
with the majority, holding that “the interest of a husband or wife in an estate by
the entireties is not subject to the claims of his or her individual creditors.”

Four Approaches on whether a creditor can reach property held in tenancy by the entirety:
  Group 1 Group 2 (N.Y.) Group 3 Group 4
(Majority)

Who controls Husband H&W H&W  

Alienability Husband can convey, but Neither Husband or Wife Neither Husband Right of
he is subject to Wife’s can make a unilateral or Wife can make survivorship =
right of survivorship. transfer. a unilateral separately
transfer. alienable.

Liability to Some states = entire Can attach to interest of Cannot attach! Right of
Creditors of estate, BUT subject to debtor spouse, but subject survivorship =
One Spouse non-debtor spouse’s right to non-debtor spouse’s separately
of survivor ship. right of survivorship. alienable.
 
Other states, use/income
is not subject to levy for
separate debts during the
marriage

LANDLORD-TENANT RELATIONSHIPS

A Leasehold or rented property is an estate in land; a nonfreehold estate. The Lessee has the
exclusive right to possession and Leasor has a retained future interest (reversion). *LL
cannot allow others into space you are leasing. At common law, landlords had near-unlimited
power over tenants and the properties they leased. Modern reforms have created protections for
tenants.

*Exclusion: Broad right to exclude has evolved around Anti-Discrimination – Federal Fair
Housing Act of 1968: outlaws a refusal to sell or lease to someone based on race, color, religion,
sex, familial status, national origin, or handicap.
 
Elements for showing Discrimination under FHA (disparate treatment)
 P is a member of a protected class and D knew or suspected it
 P applied and is qualified to rent the property in question
 D rejected P’s application
 The property remained available thereafter

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Ex. Neithamer v. Brennan Property Services: P is gay and HIV positive. He attempted to
lease an apartment and was denied on three separate occasions, despite P being able to pay,
having a co-signer, etc. P brought suit for discrimination. The suit is in federal court, so P cannot
use the DC anti-discrimination statute, which includes sexual orientation as a protected status.
 Rule/Takeaway: When P has no direct evidence of discrimination, a claim is to be
examined under a burden-shifting framework. P must establish a prima facie case of
discrimination, meaning “sufficient evidence to show he was ‘rejected under
circumstances which give rise to an inference of unlawful discrimination.’”
 D must give a “legitimate, nondiscriminatory” reason for rejection.
 P must show D’s reason is pretext or that there is a dispute in the material facts.

** Where there is perceived discrimination, P does not have to provide “definitive proof”
of D’s perceptions at the summary judgment stage. **

*Exemptions from the FFHA:

1. Rooms or units occupied by no more than four families living independently of each
other if the owner occupies one of such living quarters as his residence and does not
advertise the property.
2. Any single-family house sold or rented by an owner if he does not own more than three
houses and does not use a real estate broker/agent in the sale or rental.
1. Note: The FFHA does not apply to roommates, because roommates are an
intimate situation
3. Advertising: FFHA’s prohibition on discriminatory advertising applies to all dwellings
(even those above listed as exceptions to the Act).

Ex. Fair Housing Council of San Fernando Valley v. Roommate.com, LLC: D operated a
website to help people find roommates. As part of that process, the website asked users questions
about their personal characteristics and preferences. P brought suit, alleging that the website’s
requirement that users disclose their sex, sexual orientation, family status, etc. violated the
FFHA.
 Takeaway: Basically, you can have preferences and it’s not necessarily discrimination

 
TYPES OF TENANCIES:
1. Tenancy for Years or Term of Years Tenancy: A fixed duration that is agreed upon in
advance.
a. Once the term ends, the tenant’s possessory right automatically expires
(reversion to owner) and landlord may retake possession of property.
b. The language of conveyance specifies the date of expiration.
i. L leases to T from July 1, 2012 to June 30, 2022.

2. Periodic Tenancy: Lessee’s possessory interest will automatically renew until either
party affirmatively terminates the agreement by providing advance notice. The longer the
period, the more advance notice is needed.
a. Month to Month leases are a common example of Periodic Tenancies. 
b. L leases to T from month to month, beginning June 1, 2021.

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 3. Tenancy at Will: Lessee’s possessory interest continues as long as both parties
desire. No fixed ending point listed. Continues so long as both tenant and landlord/owner
desire. Terminates when either party dies, the tenant abandons possession, or the landlord
sells the property.
a. A TAW arises by implication without an express agreement.
i. Common law: either could end the tenancy at will without any advance
notice to the other.
ii. Modern law: most states require notice to end this tenancy; usually notice
is equal to the period of time between the rent payments.
b. A TAW terminates automatically if either party dies, the tenant abandons
possession, or the landlord sells the property.
c. L leases to T for as long as both us wish.

4. Tenancy at Sufferance. Analogous to adverse possession. Lessor may treat tenant as a

trespasser or renew the lease. A tenant occupying a property in this way is created when a
person who rightfully took possession (legitimate interest) of land continues in
possession after that right ends and continues to occupy past the termination of the lease
– A Holdover tenant.
a. This arises from improper conduct not from an agreement. A convenient label
for a wrongful occupancy *not a true estate.
b. Holdover tenant: when a tenant’s lease term ends but they continue possessing
anyways. (suit to evict  forceable detainer)
i. Common law: landlord can 1) treat holdover as a trespasser and evict
them or 2) renew their lease for another term.
ii. Today: most states have abolished the second option in order to avoid
unfairness to tenant.
1. Require paying double the rent during holdover or limit length of
renewal

5. Statutory Tenancy. Some states have statutes regulating rent-controlled housing or some
other protection for tenants that prescribe rules for the tenancy or a potential eviction to
be valid. The specifics of these statutory tenancies will vary with the applicable statute.

*When you’re trying to identify a given lease, look at how long the lease lasts and how the
lease may be terminated*

Ex. Effel (D) v. Rosberg (P): In 2006, the parties settled a legal dispute. As part of that
settlement, P purchased land that was owned by Ds. Ds would “continue to occupy the property
for the remainder of her natural life,” or until she voluntarily left. The deed conveyed to P made
no mention of a life estate for D and set out the terms for D’s lease (for a term equal to the
remainder of the Lessee’s life, or until such time that she voluntarily vacates the premises”),
including several covenants. Breach of any of the covenants was grounds for terminating the
lease. D broke a covenant and P moved to evict. 
 Rule/Takeaway: Phrasing is very important. D insisted she had a life estate, however the
terms of the deed created a tenancy at will, which is freely terminable by either party.

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 Additionally, Texas requires that a lease specify a period of time or else it will be
automatically considered a tenancy at will.
 *Note: Because the end of a lessee’s lifetime is not a knowable date, leases based
on a tenant’s lifespan are tenancies at will, subject to termination by either party.

Covenants: are promises regarding the use of land that affects the parties to the promise and
their successors.

License vs. Lease:

1. License: a personal privilege to use the land of another for some specific purpose.
a. Rights are minimal. Example—a movie theater ticket reservation seat.
2. Lease: transfer of exclusive rights of possession to the tenant.
a. These rights are extensive. Example—apartment

3 Aspects of lease negotiations:

1. Statute of Frauds: mandates that a lease of real property for a term of more than one
year cannot be enforced unless it is in writing.
a. Document must contain the key lease terms: parties, property, duration, and rent.
b. Must be signed by party against whom enforcement is sought.
2. Standard forms: key terms of a residential lease: the amount of rent and duration of
tenancy. Typical tenant asked to sign a pre-prepared boilerplate form without any
meaningful opportunity to negotiate other terms.
a. Form typically favors landlord/owner.
3. Rent control: local ordinances may limit the amount of rent that a residential landlord
can charge, especially in large cities.
a. Supersedes the ability of landlords and tenants to negotiate rents.

Immutable vs. Default:

Some rules governing landlord-tenant relationships are immutable, meaning they cannot be
contracted around or otherwise altered. Other rules are default rules, which are assumed to apply
unless the parties negotiate an alternative.

Residential leases are governed by a combination of contract and property law. 

 Residential tenants are usually protected by statute
 Commercial tenants are usually considered to be sophisticated enough to negotiate
favorable terms.

Delivering possession:
Is physical delivery or symbolic delivery required? Once a landlord says you may move in, do
they need to do everything possible to ensure the old tenant is gone and you can actually,
physically take possession?

American Rule vs. English Rule: rules apply when the lease fails to cover the delivery of
possession

1. Majority of states use the English Rule. The Lessor must provide legal (lease) and
actual (physical ability with keys) possession to a new tenant. If there is a holdover
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 tenant, it is the lessor’s responsibility to remove them. Failure to do so is a cause of
action. The new tenant may terminate the lease or withhold payment until they can
occupy the property.
a. The promise: legal and actual possession. Means: there is not another person in
possession, rightfully or wrongfully. “Possession in fact” is owed to the tenant
b. The effect: holdover is LL’s problem
c. Ex. Keydata Corp. v. United States: Keydata was a holdover tenant in a space
that NASA was supposed to occupy. After this case, federal courts used the
English Rule.

Persuasive reasons to support the landlord’s duty to ensure actual, physical possession is
possible (in support of the English rule):
1. Landlord knows status of tenants (previous and future)
2. Landlord knows previous tenant dates
3. Landlord has the power to evict and ensure move-out
4. Landlord has the opportunity to see through a tenant moves out
5. Unfair to new tenant to get less than they bargained for

Remedies to Tenant where LL fails to deliver under English rule:

1. Terminate the lease (bx of K): actual damages: benefit of bargain (fair rental value less
agreed rent)
a. Consequential damages: relocation, loss profits
2. Rescission: get return deposit and walk away
3. Stand on the lease: abate rent but wait for possession
4. Sue holdover tenant: sue for possession
a. Damages: reasonable rental value or some multiple of the rent

2. A minority of states use the American Rule. The Lessor only provides legal possession
to a new tenant. If there is a holdover tenant, removing them is the new tenant’s
problem. The new tenant must continue to pay rent while they deal with the problem.
a. The promise: Only legal possession – means: there is no other person with
paramount title (prior in time)
b. Effect: holdover is new tenant’s problem

Constructive Eviction
All leases include an implied Covenant of Quiet Enjoyment, which requires that the landlord
not “wrongfully interfere” with a tenant’s possession of the property. This originally only
protected against actual eviction but has evolved to include protection against constructive
eviction.
 In order to prevail on a claim of constructive eviction, a tenant must show:
 (1) the landlord intended that the tenant no longer enjoy the premises (which a
trier of fact can infer from circumstances),
 (2) the landlord or its agents committed a material act or omission that
substantially interfered with the use and enjoyment of the premises for its leased
purpose,

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  (3) the act or omission permanently deprived the tenant of the use and
enjoyment of the premises, and
 (4) the tenant abandoned the premises within a reasonable period of time after
the act or omission.
 When such circumstances exist, a tenant may vacate the property and terminate the
lease.
 Additionally, the tenant must have notified the LL about the problem, given reasonable
time to fix the problem and then vacate the premises.
 
“Wrongful conduct” When is an omission a wrong conduct by a landlord to satisfy C.E.?
1. LL fails to perform an obligation in the lease
2. LL fails to maintain and control the common area
3. LL breaches a statutory duty owed to the tenant
4. LL fails to perform promised repairs, or
5. LL allows nuisance-like behavior

*Exceptions for 3rd parties: generally, a tenant cannot assert constructive eviction due to the
acts of third parties. But many courts recognize an exception—if the LL has a legal right to
control the 3rd party conduct then a tenant may assert a claim for CE.

Constructive eviction actions can be:

Offensive: Tenant can sue to recover damages; terminate the lease in the case of an eviction; or
Defensive: no future rent is owed

 Ex. Fidelity Mutual v. Kaminsky: Kaminsky performed reproductive health services in

a building owned by P. Protesters frequently entered the building and on occasion entered
D’s office. D stopped paying rent and P brought suit. D asserts construction eviction. 
 Rule: To assert constructive eviction, one must show: LL intended for Tenant to
no longer enjoy the premises; LL committed a material act or omission that
substantially interferes with use or enjoyment; LL’s action or omission
permanently deprived tenant of use or enjoyment; and Tenant abandoned the
property within reasonable time.
 Takeaway: Here, LL committed an omission by allowing protesters to gather in
and around the building and by not providing security on weekends, as per the
lease agreement.

 Ex. JMB Properties Urban Co. v. Paolucci: D leased a storefront from P. A stereo
store leased the property next to D’s and made a lot of noise. D filed complaints to P
periodically from 84-90. After the stereo store left, D stopped paying rent and vacated the
premises, asserting that they were constructively evicted by P’s failure to control the
noise from the stereo store.
 Rule/Takeaway: While a constructive eviction claim usually requires an analysis
of the parties’ behavior, such an inquiry is unnecessary here because D did not
vacate within any version of a reasonable time. Instead they stayed on the
premises for years, renewed their lease, and abandoned the premises after the
nuisance had been resolved.

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Implied Warranty of Habitability
New doctrine asserted against inhabitable housing defects and conditions. Leases for residential
property also include an Implied Warranty of Habitability. The precise terms of the warranty
vary by state, but generally they require a landlord to maintain properties so that they are
habitable. Some states use local building codes as a yardstick, while others use a “bare living
requirements” standard.
 
 Ex. Wade v. Jobe: D rented a house from P. Shortly after moving in, she discovered a
major sewage leak in the house that P refused to properly fix. D stopped paying rent and
the suit arose. An inspection from the city found numerous health and safety violations
on the building. If a landlord breaches the implied warranty of habitability, the tenant
is entitled to a percentage reduction of the rent for the period of the breach.
 Rule: *Under an implied warranty of habitability, a landlord represents that
premises are habitable, i.e., fit for human occupation, when the lease begins and
that the premises will remain habitable for the duration of the tenancy. The
implied warranty of habitability is consistent with housing codes intended to
ensure safe and decent housing.
 Takeaway: Residential leases are not held to a Caveat Emptor standard. Instead,
LLs warrant that the property is habitable. This warranty is immutable and
cannot be bargained away.

Remedies for breach under IWH:

1. Withhold rent: most effective remedy because it gives the LL an incentive to repair the
premises.
a. Most jurisdictions allow it even for a partial breach of warrant.
2. Repair and deduct: tenant may withhold rent and use those funds to repair the defects.
3. Sue for Damages: tenant may sue while remaining in possession or after vacating
premises.
a. Courts differ here with allowance.
b. Actual or punitive
4. Terminate the lease: most states allow the tenant to terminate the lease, vacate the
premises, and avoid liability for future rent.
*There is no constitutional right to housing. Lindsey v. Normet.

Damages measured by the rent abatement based on Wade:

1. Fair rental value as warranted minus the FRV in its present condition
a. FRV W $1000 – FRV as is $500 = 500
2. Rent reserved (stated in lease) minus the FRV in present condition
a. RR $500 – FRV as is $500 = 0
3. Percentage reduction based in diminution in value due to poor condition
a. RR $500 x %Dim maybe 25%  $125
 
Uniform Residential landlord & Tenant Act §2.104 generally requires: the LL must do
whatever is necessary to put and keep the premises in a fit and habitable condition and impose
specific duties as well like: providing running water (including hot), adequate heating, lighting,
and plumbing, trash facilities and safe and clean common area.
46
*IWH: same elements for Constructive Eviction but no vacating is required (tenant does not
have to abandon). *More common to abandon commercial facilities because they are not where
someone lives.

Transferring the Tenant’s Interest:

General rule that the tenant and the LL are both entitled to transfer their interests to third
parties. Core policy of property law: freedom of alienation. A tenant may transfer by either an
assignment or a sublease.

A landlord-tenant relationship creates privity of estate, imposing a duty to pay on the party in
possession based solely on possession. Privity of estate terminates when a tenant transfers their
entire interest.
1. Privity of estate: both have an interest in the same property
a. Tenant: present possessory interest
b. LL: future reversion
i. Ex. from an assignment – liable to original LL
c. Ends: when tenant transfer entire estate to new tenant.
 
A landlord-tenant relationship also creates privity of contract, imposing a contractual duty to
pay rent. Privity of contract only terminates when a Landlord releases a tenant by express acts.
Both landlords and tenants are generally free to transfer their interests to third parties. Tenants
may transfer their interests in two ways: An assignment transfers a tenant’s entire to an
assignee. This creates privity of estate between the landlord and the assignee.
1. Privity of contract: parties to a contract
a. Tenant is liable for rent because they promised to pay
b. Bilateral contract (a lease)
c. Assumption: of the original tenant’s contractual obligations
i. “I hereby undertake to perform…"
d. Third party beneficiary contract: promises made by parties to a K
e. Made to benefit
i. Ex. from a sublease – no liability to original LL
f. Ends: when LL releases the tenant – this requires express language from LL

 Assignment
A sublease only transfers a portion of a tenant’s interest and the tenant retains some future
interest. There is no privity of estate between the landlord and the sublessee and the original
tenant is still ultimately responsible for rent payments.

Sublease
Obligations of a tenant to their landlord are not affected by an assignment or sublease to a third
party without an express or implied agreement between the landlord and the tenant indicating the
tenant has been released from their obligations or without some action on the part of the landlord
that operates as a waiver/estoppel.
 

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When analyzing a transfer of a tenant’s interest, the courts will typically focus on the intent of
the transfer rather than the specific words of conveyance. *Assignment (no future interest in
transferor) vs a sublease (retaining a future interest).

Transfer analysis:
1. is there privity between parties?
2. what kind?
3. how does privity of estate arise? Did it? Who is liable?
4. how does privity of K arrive? Did it? Who is liable?
5. how does privity of estate end?
6. how does privity of K end?

 
Ex. Ernst v. Conditt: P leased a plot of land to FR, who built a really cool go-kart track. FR
then transferred his interest to D, which modified the original lease. D disappeared almost
immediately and stopped paying rent. At issue is whether FR transferred his interest via a
sublease or an assignment.
 Rule: One who takes an assignment of a leasehold interest is responsible to the lessor
under the terms of the lease. *Modern rule: look to the intention of the instrument alone
for a guide and that intention can be arrived at from the language of the instrument read
in the light of the surrounding circumstances.
o “An assignment conveys the whole term, leaving no interest… in the grantor.”
o “A sublease is a transaction where a tenant grants an interest in the leased
premises and keeps a reversionary interest.”

Limits on transfer:
While the common law ostensibly allows tenants to transfer their interests, this is a default rule
and it is common for leases to expressly prohibit such a transfer or require the landlord’s
consent.
When a lease requires the LL’s consent to assign or sublet there are 3 approaches:
1. Sole discretion clause: the lease might provide that the LL may refuse consent for any
reason whatsoever in his “sole discretion.”
2. Reasonableness clause: the lease might provide that LL may refuse consent only on a
commercially reasonable basis. Ex. bad credit.
3. No standard in lease: the lease might require LL’s consent but contain no standard to
guide the LL’s decision; this is a silent consent clause.

Ex. Kendall v. Ernest Pestana, Inc.: P wanted to take over a sublease in a hangar. The terms of
the lease required the consent of the lessor (D), but there was no standard for refusal listed in the
lease. D refused to approve the conveyance and insisted he had arbitrary refusal power. A
commercial lessor may not unreasonably withhold his consent to an assignment of a lease,
with or without a clause requiring landlord's consent to transfer the lease. *Where a lease
provides for assignment only with the prior consent of the lessor, search consent may be
withheld only where the lessor has a commercially reasonable objection to the assignment,
even in the absence of a provision in the lease stating that consent to assignment will not be
unreasonably withheld.
 Majority rule allows refusal clauses to be exercised arbitrarily.

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  Minority rule requires refusal to be based on a commercially reasonable objection. 
o Takeaway: This is in line with the policy against restraining free alienation of
land as well as an increased recognition of the contractual nature of leases and the
resulting contractual duties of good faith and reasonableness.
o *Note: CA adopts the minority rule. Restraints on alienation are frowned upon
and must be justified. The greater the restriction, the greater the justification
required.
Ending a Tenancy:
1. Abandonment: when a tenant vacates the leased property without justification and
without any present intention of returning and he defaults in the payment of rent.
a. What can a LL do if a tenant abandons?
i. Sue for all the rent: keep premise vacant and sue for accrued rent.
ii. Terminate the lease: treat the abandonment as an implied offer of
surrender and terminate the lease.
iii. Mitigate damages and then sue for the rent: LL can mitigate his
damages by reletting the premises to another tenant, retaining that rent,
and then suing for the balance.
2. Surrender: tenant vacates the premises on mutual agreement and consent with LL to
terminate the lease early. A LL may accept a surrender either through express terms or by
implication via actions that demonstrate an exercise of control over the property.
 
Ex. Sommer v. Kridel: At the time the events in question occurred, the majority rule was that a
landlord had no duty to mitigate when a tenant abandoned the premises. D signed a 2-year lease
for an apartment. D wrote a letter to P explaining two weeks before the lease began that
circumstances had changed and requested a release from the lease. P did not respond. Prior to
reletting the premises, P brought suit for the total value of the lease. 
 Rule/Takeaway: The court decides that a residential lease is more like a contract than a
true conveyance of a property interest and applies the contracts requirement of
mitigation. A landlord has a burden to demonstrate that they exercised due diligence
in mitigating damages. An abandoning tenant would be responsible for the costs
associated with such due diligence. 
 
MITIGATION requires that the non-breaching party must undertake reasonable efforts to
mitigate or reduce damages that might flow from the breach. It is based on the doctrine of
avoidable consequences, which holds that the non-breaching party cannot recover for those
injuries that could have been avoided by reasonable efforts. 
 
Security deposits: law doesn’t typically regulate rental prices, that’s up to market value, but they
will regulate how much security deposit can be required/allowed. Be aware that most states have
implemented restrictions on the value and handling of security deposits, but they are extremely
averse to imposing regulations on rent payments.  

Eviction: traditionally a LL was free to terminate a periodic tenancy for no reason at all.
Modern law: no termination in violation of the FHA for discriminatory reasons. When a tenant
defaults on rent payments or breaches the terms of a covenant, a landlord may terminate the lease

49
and remove them from the premises via Eviction. At common law, landlords could do this with
impunity, but modern reforms have greatly restricted their ability to do so.
 
A landlord cannot unlawfully retaliate against a tenant by terminating a lease because of the
tenant’s good-faith complaint. *to show retaliation by taking a certain described acts “after” a
tenant has engaged in certain describe activities, the LL may not retaliate by:
1. Increasing rent or decreasing services
2. Serving a notice to terminate the tenancy, or
3. Bringing or threatening to bring an action for possession
After a tenant has:
1. Made or expressed an intent to make specific complaints and the complaints are in good
faith and related to the tenancy,
2. Organized or become a member of a tenant’s union or similar group,
3. Testified against the LL in any judicial action
4. With certain exceptions, successfully defended an action for possession or
5. Performed or express intent to perform any other act for the purpose of asserting,
protecting, or invoking the protection of any right secured to tenants under law.

**Most states presume that an eviction is retaliatory if it occurs within a certain time after a
tenant has exercised their rights. If a state does not make that presumption, then use the same
burden shifting test from Neithamer. URLTA.
 
If a landlord wants to evict a tenant there are two procedures they may follow:
1. Use self-help: the landlord could retake possession through self-help by physically
entering the premises and causing the tenant to leave, as long as the landlord used only a
reasonable amount of force.
a. Common law rule: At common law, landlords could evict by personally taking
possession of the premises or by seeking a judgement for eviction and having the
police enforce the eviction.
b. Modern courts are reticent to endorse self-help evictions and some states have
barred them. 
c.  A self-help eviction requires that the landlord be legally in possession of the
property and that the means of eviction be peaceable.
2. Sue the tenant: the landlord could Sue the tenant and secure a judgment ordering the
tenancy eviction and have the judgment enforced by a law officer.
a. NY and most jurisdictions now self-help is always wrongful
b. Some jurisdictions self-help is wrongful if violent

Ex. Elk Creek Management Co. v. Gilbert: Ps issued a thirty day, no-cause termination of D’s
lease shortly after D had reported some maintenance issues and D refused to vacate.
o Rule/Takeaway: This case describes retaliatory eviction. Tenant must show that
their complaint was a but-for cause for eviction or was a substantial factor.
Landlord can still evict if they show a valid cause for eviction or the decision was
made before the complaint.

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Ex. Berg v. Wiley: Ds (landlords) leased a property in 1970. The lease provided, among other
things, that the tenants would pay for all repairs, they would not alter the building without
permission, and that they would operate the restaurant in a “lawful and prudent manner.” The
lease also allowed the landlord to retake possession if the tenants failed to meet the conditions of
the lease. Ps took assignment of the property in 1971 and began operating a restaurant on the
premises. Ps remodeled the building multiple times without D’s permission and were cited for
multiple violations of the applicable health codes, in violation of the lease. While the property
was “closed for remodeling,” D entered the property and changed the locks and P brought suit
for wrongful eviction.
 Rule/Takeaway: Evictions are only proper where the tenant has abandoned the
property, or the landlord follows the proper procedure. Here, there was no
abandonment as the tenants were remodeling rather than leaving the property. Absent
abandonment, eviction is only allowable when the landlord is legally entitled to
possession and the landlord’s means of reentry are peaceable. Asserting that peaceable
reentry is impossible, the court rejects self-help entirely. From this case on, landlords
must get judicial approval for an eviction.

SELLING REAL PROPERTY

Purchasing a home is key example of the right to transfer. Usually governed by a state’s common
law. There are 3 major steps:
1. Purchase contract: the parties negotiate and sign a written purchase contract and prepare
to consummate the transaction.
a. The K is used in the purchase of a house usually on a standard, preprinted form
supplied by a broker—an adhesion contract. Including, the price, time, method
conditions, etc. of the purchase.
b. Once singed – parties prepare for closing by:
i. Examining seller’s title
ii. Evaluating the condition of the property
iii. Obtaining financing for buyer
iv. Escrow opened to consummate transaction and
v. Various documents prepare like a deed, mortgage, promissory note,
instructions, etc.
c. Common issues in the step: statute of frauds, marketable title, equitable
conversion and seller’s duty to disclose.
2. Closing: the contract is fully performed at the closing: the buyer pays the purchase price,
the lender advances the loan funds, and the seller transfers title.
3. Title protection: the buyer protects his title through title covenants, a title opinion based
on a search of public land records, and/or a title insurance policy.
a. Insurable title: one that a title insurance company would be willing to insure at
normal rates (low risk). An insurable title may provide less protection than a
marketable title standard.
b. Record title: the title that appears in the public land records.

51
Common issues:
1. Statute of Frauds: an oral agreement for the sale of land is not enforceable. All contracts
for the conveyance of real estate are subject to the statute of frauds and must be made in
writing.
a. Essential terms: usually identify the parties, the price, and the property
description – must be set forth in writing.
b. Writing: the writing can be formal K or an informal memo.
c. Signature: must be signed by the party sough to be bound.

*The court may fill in the Time for Performance or Payment in Cash if excluded from the
document (Gap fillers).

The Electronic Records in Global & National Commerce Act allows digital signatures to satisfy
the statute of frauds. Or you can be cool like 😊 and refuse to have a pronounceable name.

An oral agreement for the transfer of land will only be enforced if a party demonstrates partial
performance or equitable estoppel. 
 
Part performance: an oral contract for the sale of real property may be enforced if the buyer:
1. Take possession;
2. Pay at least part of the purchase price; and
3. Make improvements to the property.
 
Equitable Estoppel an oral contract may be enforced if:
1. one party acts to his detriment in reasonable reliance on another’ oral promise; and
2. serious injury would result if enforcement is refused (injustice).
 
Reasons to support signed in writing:
1. More certain/accurate
2. Not as open to misinterpretation
3. More thought out and detailed
4. Not subject to PER
5. Likelihood of serious commitment and performance

According to the class slides, these transactions involve 4 steps:

1. Pre-Contract - Parties make the decision to purchase or sell and begin establishing
relationships with professionals.
2. Executory Period - After the contract to purchase is signed, the buyer begins gathering
information on the property and arranging the financing.
3. Closing - The purchase price is paid, the deed is delivered, and the buyer moves in.
4. Post-Closing - The purchaser records their title and acquires protection for it. Other
developments can arise, like hidden defects or defaulting on payments.

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Ex. Hickey v. Green: Parties entered into an oral agreement to convey land. P gave D a deposit
check, but D never cashed it. Acting in reliance on the agreement, P sold his house. D then
backed out of the deal. P brought suit and D claimed a statute of frauds defense. 
 Rule/Takeaway: The court applied the rules of equitable estoppel and found that P acted
in reasonable reliance on the oral agreement and changed his position to his
detriment.; and Demonstrated that serious injury would occur unless specific
performance is ordered.
 
Marketable Title: every contract for the sale of real property, the seller expressly or impliedly,
promises that she will deliver marketable title (merchantable title). Marketable title: title
reasonably free from doubt as to its validity. The basic principle is that a buyer should be able to
purchase property without fear of litigation about her title. It does not need to be perfect title to
be marketable. If a reasonably prudent person would pay fair market value for the property, then
the title is marketable. Remember, no title is perfect, it just must be reasonably free from risk of
litigation.
 
3 types of defects that make title unmarketable:
1. Encumbrances: easements, restrictive covenants, liens, mortgages, dower rights,
mineral rights, options, leases, future interests
a. Interest of third parties affecting title
2. Flaws in seller’s ownership/title:
a. Seller owns less than trying to sell
b. Problems with recording of deed
c. Defects in dead
i. No acknowledgment
ii. Non-delivery or
iii. Inadequate legal description
d. Proceedings conducted without authority (like an invalid foreclosure or
sheriff’s sale
3. Hazard of litigation:
a. The city is threatening suit to enforce land use laws
i. Setbacks
ii. No pools in front yard
b. The party benefitted by a practice covenant might sue for compliance
c. Private covenants

*Options: An agreement that conveys the right to purchase property or engage in a transaction in
the future upon agreed-upon terms. An option is paid for as part of a contract, but must be
"exercised" in order for the property to be purchased or the transaction to be completed. business
law. contracts. PROPERTY.

Generally, title is unmarketable if:

1. The seller’s property interest is less than the one he purports to sell;
2. The seller’s title is subject to an encumbrance; or
3. There is reasonable doubt about either 1 or 2.
 
Private Restrictions impede marketability, and almost always make a title unmarketable.
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Public Restrictions do not impede marketability and will not affect marketability unless the
property is in violation of that restriction and it is likely the restriction will be enforced.
 
**Marketability of title has nothing to do with the actual condition of the property. It is only an
assessment of legal risk.**
 
Ex. Lohmeyer v. Bower: P attempted to rescind an offer to purchase property after determining
the title was unmarketable. The structure was too close to the property line, violating a local
ordinance. There was also a covenant limiting structures on the lot to two stories, but the
structure was one story tall. 
 Rule/Takeaway: The court finds the mere existence of publicly applicable regulations do
not render a title unmarketable, but the active violations thereof do make a title
unmarketable because they render the owner subject to litigation. 

**Marketable title is the default standard.** If a contract fails to specify a standard, then the
title must be marketable. However, parties can freely contract to instead use an Insurable Title
(one that a title insurance company would cover) or Record Title (which appears in public
records but offers no protection from title defects that aren’t found in public records).  

When is marketable title required?

Parties do not typically need to provide marketable title until closing. If it becomes clear in
advance that the seller will not be able to convey marketable title, the buyer may rescind before
the closing. If a title problem is discovered shortly before closing, the seller has a reasonable
time to cure it unless the contract stipulates that time is of the essence.
*Once a buyer accepts the deed he can no longer sue to enforce a seller’s promise to deliver
marketable title. Unless there was an agreement otherwise stated.*

Buyer’s Recourse for breach of marketability: A buyer can rescind (get back deposit & give back
possession), sue to enforce and get specific performance, if it is a minor defect, one can get
damages (will not get specific performance, unless if it is a large defect and instead would cancel
the contract and/or sue for damages).

ISSUE EXAMPLE AFFECT ON MARKETABILITY

Private Restrictive Homes must have 2 stories Unmarketable

Covenant

Violation of the 1 story house is built Unmarketable because of the

Restrictive Covenant hazard of litigation

Public Zoning/Land Use Houses must be set back 3 Marketable because this applies
Restrictions feet from the lot line to everyone

Violation of Public The house is set back only 18 Unmarketable because of the
Restriction inches hazard of litigation

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Allocation of Risk During the Executory Period – Equitable Conversion:

During the period between contract signing and the closing (executory period) the property may
get damaged. The K may contain a provision as to who is liable/responsible for the damages and
who assumes the risk. The risk is placed on the buyer under the doctrine of equitable conversion.
There are three primary means of allocating that risk.
1. Traditional equitable conversion assigns that risk to the buyer. The buyer is
considered the equitable owner of the property since they are contracted to purchase
it. The seller is considered the equitable owner of the purchase price (meaning they
are entitled to that amount of money). 
2. Massachusetts Rule assigns risk to the seller as the legal owner of the property.
3. No-Fault Casualty assigns risk based on who has the right of possession at the time
the loss occurs. This rule is codified in the Uniform Vendor and Purchaser Risk Act.

*In New York, except if loss is immaterial, a contract is enforceable with abatement (reduction)
of purchase price.

Ex. Brush Grocery Kart, Inc. v. Sure Fine Market, Inc.: Parties were engaged in fruitless
negotiations re: renewal of a lease when a hailstorm damaged the property. Further dispute arose
as to who was responsible for the damages.
 Rule/Takeaway: Court analyzed the three rules described above and applied no-fault
casualty.
o *Note: If a party to a real estate transaction dies before closing, their heirs can
still enforce the contract under equitable conversion. 

**Note: Risk of Loss can also be assigned in the lease, contract, whatever. The above are just
default rules when no provision is included.**

Duty to Disclose
1. Common law (minority): caveat emptor—buyer assumes all risk to inspect before
buying.
o Seller only liable if:
 Affirmatively misrepresented the condition of the property,
 Actively concealed its defects, or
 Owed a fiduciary duty to the buyer.
*Exceptions: Conditions created by Seller; Latent defects known to Seller and undiscoverable by
Buyer; Misrepresentation by Seller; Half-truths by Seller; Active concealment; Fiduciary
relation; Implied warranty of quality for newly constructed buildings
 
2. Modern (majority): Caveat Venditor – seller of a residential property is obligated to
disclose defects he knows about that:
o Materially affect the value of the property, and
o Are not known to or readily discoverable by the buyer.
o Notice that actual knowledge of the defect is generally required.
*There is a great deal of statutory variation as to what specifically has to be disclosed. 

55
 
Buyers have no duty to disclose. This might come up if like, a buyer knows that there be gold
in them hills but the seller does not.  
3.  Statutory Reforms: statutes in many states require the seller of a residential property to
provide a written disclosure statement to the buyer.
o Problems that arise: building code violations, zoning violations, structural
defects, and drainage issues typically disclosed.
o Psychological impact is not relevant and does not need to be disclosed. Mostly
health and safety, physically.
4. Implied Warranty of Quality: an exceptions to the caveat emptor doctrine – many
states use this. A developer impliedly warrants that the property is fit for its intended
purpose. This should be objective.
5. NY Condition Disclosure Law: requires that the seller of a residential property provide
a written disclosure statement to the buyer that lists any defects in the property.
o This includes off-site conditions that may affect value and habitability.

Ex. Strawn v. Canuso: Ps bring suit against a real estate developer for not disclosing that their
homes were constructed on a landfill that failed multiple EPA inspections. 
 Rule/Takeaway: In New Jersey, sellers are already required to disclose on-site defects
when they are known because sellers have a stronger bargaining position and are more
likely to have knowledge of said defects. Applying the same logic, the court requires
professional real estate agents and brokers to disclose off-site defects that materially
affect the property.
 
Buyer’s Rights when Seller Fails to Disclose:
 Rescind contract if there are defects that were not disclosed
 Sue for damages that buyer experiences as consequence of these defects
 
Closing
Neutral third party receives the purchase price, the deed, mortgage, promissory note, and any
other documents needed to consummate the transaction. When all conditions are satisfied, the
escrow agent distributes the funds and documents as directed.
The buyer pays, the loans are tendered, and the seller delivers/transfers interest.
*NY does meeting-style – The parties sit down together and meet whereas escrow is through the
agent. The attorneys are the ones leading the closing, but sometimes there are settlement agents
(don’t represent either party but facilitate the closing).
 
Typical Closing:
1. The buyer pays the purchase price to the seller and executes a mortgage and promissory
note for the lender;
2. The lender advances the loan funds; and
3. The seller transfers title to the buyer by delivering a deed.
4. The deed is then recorded and the buyer obtains title protection.

The Deed

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A deed is a funky little dude that represents ownership of a given property. A deed is only
effective when it is delivered. In general, the grantor must manifest an intention to immediately
transfer title to the grantee. Acceptance presumed. An undelivered deed is just a very expensive
piece of paper with no legal significance. Delivery requirements vary among the states, but all of
them require an intent to presently transfer ownership. *(Remember the elements of transfer!)
Must identify: the parties, land (legal description) consideration recited (usually nominal),
include words of conveyance or grant and must be signed by grantor.
 
 The Uniform Simplification of Land Transfers Act defines delivery as “an act
manifesting an intent to make a present transfer of real estate.”
 The Restatement defines delivery as when “the donor manifests that the document is to
be legally operative while the donor is alive.” 
 Most states presume delivery if a deed is manually transferred to a grantee or if the deed
is recorded. In some states, the absence of manual transfer creates a presumption of non-
delivery.
 
Deeds are subject to the Statute of Frauds:
Statute of Frauds: to satisfy the statute of frauds a deed must:
 Be in writing,
 Contain essential terms (identities of grantor, grantee, description of the property, words
showing intent to convey title), and
 Be signed by the grantor.

There are a handful of special types of deeds recognized in a majority (but not all) jurisdictions.

1. A death escrow allows one to transfer a deed in the future where the grantor gives a deed
to an escrow company and directs them to deliver the deed only upon the grantor’s death
so long as the grantor is unable to retrieve the deed.
2. Beneficiary deed: new deed that transfers upon death. This allows an owner of real
property to designate the beneficiaries she wants to receive the property upon her death.
It is revocable during the grantor’s lifetime. Owners interest will automatically convey
once she dies. The deed is not legally operative until their death, delivery is not required.
3. Some states also recognize revocable deeds, where a grantor retains a life estate and the
power to sell the property during their lifetime. 

Devise vs. inter vivos transfer:

A title transfers upon delivery of deed – this could happen before a grantor dies leaving
nothing to be devised. Ex. grantor drafts a will and then next week decides to sell his property
(previously in will) the inter vivos transfer will trump the devise; there is nothing left to devise.

MERGER 
At common law, promises made in the contract were “extinguished” at closing unless they were
restated in the deed. After closing, the deed represents the final agreement between the parties,
and Merger extinguishes all prior agreements not recorded in the deed. Merger can be avoided
where there are identifiable issues with the deed, like mistake or fraud, or if the deed contains a
survival clause.

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*Survival Clause: “If any provision herein contained which by its nature or effect is required to
be observed, kept, or performed after Closing, it will survive the Closing and remain binding
upon for the parties hereto until fully observed, kept or performed.”

**EXCEPTIONS TO MERGER:
1. Collateral promises - those not pertaining to title, possession and quantity
1. E.g., promise to repair, to remove junk – i.e. seller promises to repair property –
that’s not typically under merger.
2. Those determined by facts
2. Existence of fraud, mistake, ambiguity in final documents – these claims will survive
closing as well.
3. Those duties or promises that arise from law, not contract – may survive closing as well
like implied warranty of quality.
Ask: Does merger apply? – Does it relate to title/possession/quantity?

 
Ex. Giannini v. First National Bank of Des Plaines: P entered into an agreement to purchase a
condo unit and paid money to that end. Sometime during the executory period, the construction
project changed owners and because of *market pressure* the building in question was not
declared a condominium, so possession of the unit was not transferred to P. P brought suit for
specific performance of the purchase agreement. 
 Rule/Takeaway: The court may grant specific performance unless it would impose an
undue hardship. Specific performance of a contract is a matter of right and equity, which
is why it is granted when the parties fairly bargain with the mutual understanding in a
valid contract for real property. 
 
Types of Damages:
 Actual (Incidental or Consequential/Special): based on the loss of the bargain
o Incidental: out of pocket expenses (hire an inspector; appraisal to make sure the
property is worth what you’re paying for)
o Consequential/Special: This is the same theory that applies in contract law – the
damages must be something when the parties contracted; it must reasonably flow
from the breach. 
 Punitive: Damages that the law imposes for wanton conduct; courts look for an act that
independently establishes a tort. 
 Liquidated: These are damages that the parties agree upon at the time of contracting
because they cannot currently determine the true amount of damages. As long as it is not

58
 totally out of line, the court will uphold these damages. (Liquidated damages precludes
all other remedies) 
 Specific Performance: an equitable remedy, where the remedy at law is inadequate. The
Seller conveys, and the Buyer pays and takes title. 
 Legal Rescission: Innocent party may rescind the contract – bargained for in the contract 
 Equitable Rescission: Innocent party may rescind the contract – only if there is mutual
mistake of fact or fraud

In a real estate transaction, the most typical damages are specific performance, actual damages,
or recission of the contract.

POST-CLOSING & TITLE ASSURANCE

Buying a home is actually buying a bundle of legal rights in fee simple absolute to a home and
the land it sits, it is actually a sale of title. There are risks associated with title and the legal
ability of a seller to convey the promised estate. The estate may be burdened with
encumbrances – rights or interest held by third parties that affect the value or use of the land.
The title could be subject to an easement, lease, or mortgage.

1. Title covenants: the grantor promises in the deed that he has good title to convey.
a. Because Merger extinguishes promises made in the contract that were not restated
in the deed, buyers started demanding title covenants. Title covenants are
promises in the deed itself stating the Grantor has good title. Their efficacy
depends on the type of deed and the scope of the promises.
2. Title opinion based on search of public records: an attorney or other professional
renders an opinion about the state of the title after searching the public land records.
3. Title insurance: a title insurance company issues a policy that insures the grantee’s title.

*Reasonably prudent buyer uses a title covenant and title insurance policy.

There are 3 (4) types of deed commonly used today:

1. General Warranty Deed: the grantor warrants title against all defects, whether they
arose before or after the obtained title. *this is the best deed to have – most protection.
a. Present:
i. Seisin (grantor has title)
ii. Right to convey (authority to transfer ownership)
iii. Against encumbrances (no outstanding interest held by third parties –
liens, minerals, leases, easements)
b. Future:
i. Quiet enjoyment (grantee shall have peaceable possession)
ii. General warranty (grantor will defend title if grantee’s possession is
disturbed by someone with an apparent paramount title)
iii. Further assurances (grantor will execute documents necessary to sure up
the title)

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*may be tailored to grantor’s concerns and acknowledgment of certain encumbrances

2. Special Warranty deed: the grantor warrant title against all defects that arose after the
obtained title.
3. Quitclaim deed: the grantor makes no warranties about title, so the grantee receives only
what the grantor has, if anything.
a. But makes with no representation that owns anything at all.
b. Essentially “take what I have.”
i. The granting clause will state: “remise, release, and quitclaim”

*Custom and Market Conditions usually dictate what type of deed is used.

4. Statutory warranty - Short form warranty authorized by statute. Use of the form means
the common law covenants (seisin, right to convey…) are implied into the instrument
a. Some states have set forth approved types of short form deeds, which simplify the
drafting process. Ex. in Maine – every short form warranty deed is deemed to
include the covenant of seisin, right to convey, against encumbrances, warranty,
and quiet enjoyment even if not expressly set forth in the form.

 
Ex. Brown v. Lober: Ps purchased land from Ds in the 1950s. Ds later went to sell their mineral
rights and found that the owner who preceded D kept a reservation of 2/3rds of the mineral rights
on the property. P brought suit for breach of seisin and quiet enjoyment.
 Rule/Takeaway: Seisin is a present covenant that was definitely breached, however Ps
failed to bring a claim within the statute of limitations. Quiet enjoyment is a future
covenant that may be breached later. Discovery of a paramount interest in and of itself is
insufficient for a breach. Where one is not acting in adverse possession or is not
restrained from using the property, they believe they own, there is no quiet enjoyment
claim.

ANALYSIS OF RIGHTS UNDER COVENANTS: CONSIDER

1. Present v. future covenant
2. What the covenant promises
3. How is was breached
4. Accrual of CoA
5. Runnability (whether covenants are enforceable by successors in title)
6. Amount of recovery for bx covenant

*The General Warranty and Special Warranty deeds both contain specific title covenants: there
are 6 kinds:
1. Covenant of Seisin (Good Right to Convey): a promise that the grantor owns the estate
he purports to convey;
a. Ex. this covenant is breached if the grantor purports to convey a fee simple but
only owns a life estate.
b. Breached at the time of delivery of deed.
2. Covenant of right to convey: a promise that the grantor has the right to convey title;

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 a. Ex. this covenant is breached if the grantor is a trustee who lacks the authority to
transfer to title to the trust property.
3. Covenant Against Encumbrances: a promise that there are no encumbrances on the
title, other than those expressly listed in the deed;
a. Ex. this covenant is breached if there is a prior mortgage on the property.
4. Covenant of warranty: a promise that the grantor will defend the grantee against any
claim of superior title;
a. Ex. if a third party holds better title than the grantee does, the grantor must defend
the grantee's title.
5. Covenant of quiet enjoyment (Warrant): a promise that the grantee's possession of the
property will not be disturbed by anyone holding superior title;
a. Ex. this covenant is breached if the grantee is evicted because of a defect in title.
b. Breached only when there is actual or constructive eviction of the covenance
by the paramount title holder.
6. Covenant of further assurances: a promise that the grantor will take all future steps
reasonably necessary to cure title defects that existed at closing.

The first three covenants are PRESENT covenants – they are breached at the moment the deed
is delivered. The marketable title doctrine applies to defects discovered before the closing, while
title covenants protect against defects discovered after the closing.
Breaching a Present Covenant:
 A present covenant is breached when the deed is delivered, so the statute of limitations
begins running at that time.
o The measure of damages for breach of a title covenant is normally determined by
the purchase price paid by the grantee plus interest.
o The standard for breach of the covenant against encumbrances is the lesser of 1)
the amount necessary to remove the encumbrances, or 2) the amount by which it
reduces the property value.

The last three covenants are FUTURE covenants – they are breached, if at all, after the closing
has taken place. This is most common when the grantee is actually or constructively evicted by a
third party holding superior title.
Breaching a Future Covenant:
 A future covenant is breached when the grantee is actually or constructively evicted by
someone holding superior title.

RECORDING

An unrecorded deed is valid, but it will be open to threats from third parties claiming ownership.
It is much more secure to record a deed as soon as possible. Many states have implemented
marketable title acts that limit disputes to those that arise within a certain timeframe. 
 
Recording requires the Grantor’s signature and acknowledgment by a notary public. A deed
that is entered into the public land records without an acknowledgment by a notary is considered
an invalid deed.

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 1. Title Opinion Based on Search of Public Records: The second method of title
assurance is a title opinion based on a search of public land records. Usually an attorney
or professional is retained to conduct the search and then they provide a written opinion
of the title record and whether or not any encumbrances or defects exist.

2. The Recording System: The give notice of rights to land to the world in traditional old
England feoffment times.
a. Modern: modern recording statutes given special protection to a subsequent bona
fide purchaser who acquires title without notice of an adverse claim and pays
valuable consideration.

How to Search Title:

In order to determine the state of title, the searcher must 1) locate the recorded documents that
affect title to the parcel and then 2) evaluate their legal significance.

Building a Chain:
1. Start with the Seller’s name in the Grantee index.
2. Find that Grantee’s Grantor in the Grantee index. (Z)
3. Find Z’s Grantor in the Grantee index... so forth and so on, back to the origins of title
or 40 – 60 years depending on the custom in the area.
4. Then, as to each grantee in the chain, search the grantor index, for conveyances out to
persons not in the chain from the date of acquisition up to the first recorded
instrument out.
o Building a chain is not enough, must read all the instruments:
 Looking for proper joinder of owners, proper execution, problems with
the legal description, etc.

Two ways to organize title recording:

1. Grantor-grantee index: organized by last names of parties. The most commonly used
method. Each parcel indexed twice, once under grantor’s name and then again under
grantee’s name.
a. Info included: parties names, type of instrument used, time of recordation,
location of recorded document, and a brief description of property involved.
2. Tract index: organized by parcel involved. Each parcel is assigned a unique
identification number and filed in a folder under that.

Operation of the Recording System:

 Title searcher can review the documents to locate and evaluate records to see if the seller
is able to convey good title.
 The recording system allows protection to the current owner from losing title to a later
buyer. The sale and transfer will be immediately recorded.
 Even if a document is recorded, it may not give constructive notice to a searcher (special
rule on notice)

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Ex. Luthi v. Evans: In 1971, Owens conveyed her interests in oil and gas leases to International
Tours, Inc. using a general conveyance called a Mother Hubbard instrument.* In 1974, Owens
then transferred her working interest* in those same oil and gas leases to D. D personally
checked the records office and found no mention of the prior transfer to Tours. D contends the
use of the Mother Hubbard instrument, which lacked specificity, did not provide constructive
notice of the transfer to Tours.
 Takeaway: *The legislature intended that recorded instruments of conveyance, to
impart constructive notice to a subsequent purchaser or mortgage, should describe the
land conveyed with sufficient specificity so that the specific land conveyed can be
identified.
 Rule: The conveyance must have specific information in description of the property to
provide actual or constructive notice to a subsequent bona fide purchaser.
o *A Mother Hubbard instrument very generally conveys “all interests in the
county” rather than specifying individual tracts of property.
o *Working interest is a term for a type of investment in oil and gas drilling
operations in which the investor is directly liable for a portion of the ongoing
costs associated with exploration, drilling, and production

Root of title: under marketable title acts, title defects that exist before the statutorily-determined
“root of title” are extinguished. Root of title is the statutory determined period of time to go back
and search when evaluating title.

3 types of commonly used property descriptions:

1. Government survey: PLSS – townships and Principal Meridian: a PLSS survey begins
at an initial point, PM lines run north and south throughout the continental US.
a. Base line: the east-west line that runs through the initial point perpendicular to the
PM.
b. Township designations: indicate the property’s location north or south of the
base line.
c. Range designations: indicate the property’s location east and west of the PM.
2. Metes and Bound: identifiable geographical points that parcel land using distances and
directions.
a. Visible topography.
b. Changes over time so less reliable.
c. Must close – step by step you would return to start.
d. Eastern states and TX.
e. Oldest known method
f. Legal Description: Contains a series of calls: distances, directions, monuments,
and compass points.
3. Subdivision map: when a tract of land is subdivided into smaller parcels, a map shows
where each lot is located.
a. Plat numbers – Pace Acre Subdivisions

The Recording Acts:

 First-in-time: the person whose interest was created first prevails.
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 o Major exception: the bona fide purchaser doctrine.
o The recording acts create special protection for the subsequent bona fide
purchaser, which supersedes the first-in-time rule.

3 Basic types of acts:

1. Race: the purchaser who records first has priority.
a. A subsequent purchaser has priority over a previously created interest if she
records first – *even if she actually knows about that interest.
i. Whoever wins the race to the recording office.
ii. Cons: Inherent unfairness; only 2 states use this.
2. Notice: the subsequent boma fide purchaser has priority.
a. A notice statute provides that a subsequent purchaser for value prevails if he
takes without notice of a prior interest.
b. Later in time and no notice.
i. The purchaser does not have to record in order to gain priority.
ii. Motivation to record quickly; may lose interest if you fail to record.
iii. About half of the states use this.
3. Race-Notice: the subsequent bona fide purchaser who records first has priority.
a. A race-notice statute protects the subsequent purchaser for value who both
takes without notice and records first.
b. Later in time, no notice and recorded first.
i. About half the states use these statutes.
ii. What constitutes effective recording? In general, a deed or other document
affecting title must be acknowledged in order to qualify for recordation.

**First in time rule governs any title disputes unless a subsequent purchaser qualifies for
protection under the state’s recording act. However, states also recognize Bona Fide Purchaser
exceptions, which allow a bona fide purchaser who conducts a “careful” search of the property
records and finds no defects to be protected from unrecord interests.

*Policy: The recording acts seek to protect the subsequent purchaser who has no notice of
prior adverse interests. *Otherwise it would make searching too burdensome.

Ex. Messersmith v. Smith: Dispute arising from multiple conveyances of mineral rights on the
same property. The true owner of the rights must be determined based on who properly recorded
their conveyance.
o Takeaway: By statute, all conveyances must be acknowledged by a notary public to be
valid. Here, Smith’s deed was not acknowledged, so therefore it is not a valid
conveyance. It is also notable that Messersmith did not actually possess title when she
attempted to convey to Smith, so Smith’s conveyances to Seale was presumptively
invalid.
o As a general rule, the recording of an instrument affecting the title to real estate which
does not meet the statutory requirements of the recording laws affords no constructive
notice. The applicability of the rule is easily determined where the defect appears on the

64
 face of the instrument, but difficulty frequently arises where the defect is latent. If the
statutory procedure is not followed properly, then a deed bearing acknowledgment on its
face is insufficient. No acknowledgement = no notice = no SBFP protection.

As a general rule: When an unacknowledged deed is entered in the public land records, it is
not deemed to be “recorded” and thus it does not provide constructive notice. Where the
acknowledgement appears to be valid on the face of the deed, but is defective due to a hidden
flaw, most states treat the deed as validly recorded.

o Latent defect: a defect that cannot be discovered just by looking on the face of the
instrument (grantor did not appear or did not deliver).
o Patent defects: we can discover just by looking at deed (no notary).

Different treatments latent vs. patent:

o Majority: Latent defect – instrument deemed to give constructive notice. Patent
defect – instrument is deemed NOT to give constructive notice.

Forgery & Fraud:

A forged deed is void, transferring no interest to the grantee. Any subsequent grantees in that
chain of title, including BFP, receive nothing.

A deed that is induced by fraud is voidable by the grantor, but if the grantee conveys title to a
BFP, the SBFP prevails. A subsequent bona fide purchasers are protected by the shelter rule.

What constitutes “notice?”

In notice and race-notice jurisdictions, a Subsequent purchaser gains priority only if she takes her
interest without notice of any adverse title claims.

THREE PRIMARY FORMS OF NOTICE:

1. Actual Notice: knowledge of a prior interest; knowledge in fact.
a. Proven by direct evidence or circumstantial
b. Ex. the subsequent purchaser:
i. Was present when first deed was delivered
ii. Saw the first deed
iii. Was told of the first deed
2. Record Notice: notice of any prior interest that would be discovered by a standard search
of public land records or Constructive notice: imputed to purchaser whether or not he
looks.
a. From land records:
i. Recorded instruments themselves
ii. Recitals and references within those documents
iii. Other public records
1. Tax records
2. Court records re: judgments
a. Lis pendens – notice of pending litigation – title subject to
the outcome of the litigation
3. Sherriff’s office re: enforcement of tax or liens
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 4. Probate records
b. In the chain, properly recorded:
i. If sufficient to identify the premises referred to
3. Inquiry Notice: notice of any prior interest that would have been obtained by
investigating suspicious circumstances; from facts and circumstances which should
prompt a person of ordinary prudence to follow up on including:
a. From recitals in recorded instruments so long as there is enough specificity to
follow up
b. From someone’s possession
i. If the possession is open & notorious
ii. And inconsistent with record ownership
** Inquiry Notice: only imputes information that would have been discovered by reasonable
investigation. Potentially expands each buyer’s search to off-record matters, which raise costs,
imposes delays, and increases litigation risks. It may, however, prevent an unfair result.

Record notice and Inquiry notice are forms of constructive notice. The subsequent purchaser
is deemed to know the information that she could have learned by examining the public land
records or making an appropriate investigation, even if she failed to do so.

 To be recorded:
o The instrument must be recordable
 To be recordable it must:
o Be acknowledged
 To be acknowledged:
o Maker of the instrument must personally appear before the public officer
o Must sign in presence of NR
o Officer must sign/seal/stamp with official stamp/signature

 
Ex. Raub v. General Income Sponsors of Iowa, Inc.: Ds fraudulently obtained a warranty deed
for P’s property from P. D’s then mortgaged the property to 2 banks. The banks acknowledge the
fraud, but assert they are bona fide purchasers, so the mortgages should stand. Iowa is a notice
jurisdiction. Bona Fide Purchasers cannot have notice of prior interest. 
o Rule: A bona fide purchaser is entitled to have its purchase upheld if it is not on
reasonable notice to make inquiry into whether the grantor obtained the property
fraudulently.

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 o Held: First National and Manson had no notice to make inquiry and would not have
learned of the fraud upon inquiry in any case. Therefore, First National and Manson are
bona fide purchasers whose mortgages on Raub’s property are valid. The trial court’s
judgment declaring the deed to General Income voidable because of fraud is affirmed,
and the judgment declaring the mortgages invalid is reversed.

Chain of Title Problems:

If a recorded document cannot be found in a standard title search, it is considered to be outside
the chain of title and provides no notice to a subsequent buyer.

4 classic situations of recorded documents outside the chain of title:

1. Wild Deed: a deed is unable to be captured by a reasonable searcher. Creates an

unreasonable burden.
a. S  B, doesn’t record.
b. B  C
c. C records
d. S  D
e. D records.
i. B  C is unable to be found; although t is recorded, it is not properly
recorded and cannot provide notice to D.
ii. D owns the property.

2. Deed recorded too late: the deed was recorded at a point when the new buyer is no
longer searching under that grantor/ee’s name.
a. S  B, doesn’t record.
b. S  C, C has actual knowledge of B.
c. C records.
d. B records.
e. C  D
f. D records.
i. The B deed was recorded too late and does not provide D notice.
ii. D owns the property.

3. Deed recorded too early: the new buyer will not discover the deed because it was
recorded at a point when the new buyer was no longer looking under that grantor/ee’s
name.
a. S owns Greenacre.
b. B  C
c. C records
d. S  B.
e. B records.
f. B  D
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 g. D records.
i. D will not discover C’s interest because B  C was recorded too early.
ii. D owns the property.

4. Deed from a common grantor: when buyer purchases from a grantor with multiple
properties and only checks chain of title of the property they purchase not his others.
a. S owns Greenacre and Forestacre.
b. S  B (Greenacre with an easement to cross F for purpose of accessing G)
c. B records
d. S  C (Forestacre, C unaware of easement with B)
e. C records.
i. C is only checking F’s chain and does not discover the easement for B to
cross F to get to G. C would not discover this easement checking only F.
 
Today: title insurance is the main method of title protection. If the buyer suffers a loss from a
title defect that existed on the effective date of the policy, he receives compensation from the
title company.

Title insurances vs. title opinion: in general, title insurance offers better protection than a title
opinion based on a search of public records.

2 basic types of standard policy forms or ALTA (American Land Title Association):
TYPES INSURES COVERS

OWNER’S Title; quality/quantity Historical, not future risks – so if an

POLICY *Protects the estate/title. issue arises after the date of the policy,
it is not covered.

LENDER’S Priority of the lien  

POLICY Validity of the lien
*Lien is a burden on the title – validity of the lien.

1. Owner’s: title; quality and quantity; covers historical risks – those defects existing on
date of policy. Not future ricks – issues arising after
2. Lender’s: priority of the lien and validity of the lien; covers same as above.

The basic ALTA owner’s policy:

1. Cover page: setting forth the scope of coverage provided
2. Exclusions: listing specific items that are excluded from coverage for all properties
a. Exclusions or
b. Exceptions: taxes, survey, rights of parties in possession (not always excluding
but can be by these exceptions)
3. Schedule A: stating the name of the insured party, the maximum amount insured by the
policy, in the estate that is insured
4. Schedule B: listing specific items that are accepted from coverage for this property
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 5. Conditions: specifying procedural requirements, such as the time and manner for making
claims

The coverage provided by the title insurance company is quite broad. This coverage is limited by
standard exclusions and property specific exceptions. An exclusion is a potential risk that the
company is unwilling to cover in any policy, such as encumbrances created or agreed to by the
insured party. A title insurance company will not insure against known defects, the point of a
title insurance is to protect the buyer against unknown risks not known title problems.

There are two duties imposed on a title insurance company under a title insurance policy:
1. The duty to defend which requires the company to pay the attorneys fees and costs
necessary to protect the owners title as guaranteed by the policy; and
a. The company may be required to defend the owners title even if it is not
completely clear that the potential defect is covered by the policy
2. The duty to indemnify which obligates the insurer to compensate the owner if a loss
occurs.
a. This is generally less broad than the duty to defend.
 
As a general rule, an ambiguity in a title insurance policy is interpreted in favor of the
insured party. The doctrine of reasonable expectations only applies where the policy terms are
ambiguous. Absent ambiguity, provisions of an insurance contract need only be applied, rather
than construed or interpreted. Clear and unambiguous contract terms must be enforced as
written.

Defects in the physical condition of the property do not constitute a marketability of title. A
difference exists between economic lack of marketability which relates to physical conditions
affecting the use of the property and title marketability which relates to defects affecting legally
recognized rights and incidents of ownership.

The standard ALTA policy provides broad coverage, but the exclusions set forth in small print
eroded much of that protection.

Matters that could be discovered through an inspection or survey of the land, such as adverse
possession or boundary line disputes, are also often excluded. **As a general rule, private
encumbrances make title unmarketable; governmental restrictions do not.

Ex. Riordan v. Lawyers Title Insurance Corp.: P purchased land that was surrounded by
federal land, which P did not have right to access via vehicle. P brought suit against the federal
government seeking an easement but sold the property before it was resolved. P then demanded
payment from D, which was refused.
o Rule: Title insurance for lack of a right of access to the property and unmarketability of
title does not cover losses caused by lack of only practical access or physical defects.
o Takeaway: Rather, unmarketability of title is unmarketability due to defects in the
legal rights over the property. Here, the Riordans had pedestrian and horseback-riding
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 access to the property. The policy explicitly covered a right of access and not vehicular
access, practical access, or reasonable access.
 
Title Registration: Alterative approach
Recording systems suffer 2 major defects:
1. They do not conclusively establish title; and
2. Even purchaser who scrupulously search the records may lose title due to unrecorded
interest that are outside the scope of the recording acts.

 Title Registration: government assumes the role of title assurer by maintaining an

authoritative registry of title. To determine the state of title, a purchaser simple examines
the registered title. She need not delve into historical title records stretching back for
decades.
o Torrens System: title is passed by registration in a government agency. In order
to set up such a system, the ownership of each parcel of real property must be
determined by litigation. Once the court determines the state of the title, the
property is registered with the gov. agency, which issues a certificate of title to the
owner. The owner can transfer his interest only by registering title in the name of
the buyer. Unregistered interests are invalid, except for a few exceptions (e.g.
leaseholds).
o Only a handful of state maintain this system.
 More efficient but also more expensive, not mandatory, requires litigation
and judicial determinations.

Other Devices for Curing Defects:

DEVICE MEANS EFFECT PROBLEM/DRAWBACKS

STATUTE OF After a period of time, the cause of Adverse claimant Tolling:

LIMITATIONS action is barred; possessory and becomes the owner; minority/incapacity/in war
non-possessory interests. implied social policy
furthered

STATUTES OF The right is reposed (cannot be Title becomes absolute  

REPOSE enforced) after a period of time.
Right of re-entry, possibility of
reverter; real covenants, ancient
mortgages

CURATIVE ACTS Defective instruments of record for Instrument is properly  

period of time are “cured” (cannot recorded; gives
be challenged) constructive notice

QUIET TITLE Suit against all possible claimants Settles title for all the Cost/time/mechanics. There
ACTIONS world in one litigation is no recordable instrument.

AFFIDAVITS Minor defects: name spelling, the Eliminates challenges  

only heir, births, etc. and risks to the title
 
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 FINANCING THE SALE OF REAL PROPERTY

Our national economy depends on the availability of credit. Almost all real property transactions
are financed by borrowed money.
There are four key parts of a real property finance transaction:

1. Obligation: the borrower's duty to repay a loan evidenced by a written promissory note
or to perform other duties is called the obligation.
2. Security: the borrower will provide security to the lender through a mortgage, a deed of
trust, or similar incumbents on the property.
3. Foreclosure: if the borrower defaults on the obligation, the lender will have the property
sold at a judicial foreclosure sale or a nonjudicial foreclosure sale and will use the sales
proceeds to satisfy the loan.
4. Right After Foreclosure: the borrower and the lender may have additional rights after
the foreclosure sale occurs.

1. Mortgage: a lien or an encumbrance given by the borrower to the lender

a. Security for repayment.
b. For a debt that is quantifiable in dollars and evidenced by a promissory note
c. The mortgage covers:
i. Principal – the loan amount
ii. Interest – rate expressed in the mortgage (the charge for borrowing the
money)
d. Total amount paid on the loan with interest – usually x2-3 what was borrowed.
2. Owner defaults: historical stages: at early common law – a forfeiture
a. Then  equitable right of redemption
b. Then  strict foreclosure
c. Now  foreclosure by sale
i. Judicial foreclosure: lender has to sue and ask court for a foreclosure trial
ii. Power of sale: mortgagee reserves to himself the right to foreclose
without a suit by establishing a date to sell
3. After foreclosure: deficiency judgments
a. But – anti-deficiency legislation in some states bar deficiency judgments
b. Statutory right of redemption in some states, hard to get
4. Transfers: subject to assumption –
a. Limits by due on sale clauses

How do most people pay a mortgage?

A Promissory Note: a contract by which they promised to pay the debt. The most common
obligation is the borrower's duty to repay a loan as evidenced by written promissory note. A
promissory note is a specialized type of contract between the borrower and the lender by which
the borrower agrees to repay the loan on certain terms and conditions. A note has intrinsic value
and it is a negotiable instrument that can be sold to another person.
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If a lender does not ask for security for the loan and makes a loan without any security that is an
unsecured loan and it may never be repaid.

When the loan is made, the lender requires the borrower to provide collateral – something of
value. If the borrower defaults the lender may sell the thing of value.

*The most common form of security for a large loan is an interest in real property. They
allow the lender to hold a security interest in real property that is the right to sell the property to
repay the debt even though the borrowers are in possession of the land.

Policy goals: the law in this area seeks to strike the right balance between two competing goals
1) ensuring an adequate supply of affordable credit and 2) protecting borrowers against unfair
treatment. Lenders typically have more bargaining power than borrowers.

A mortgage or other security instrument has no intrinsic value. It essentially provides a remedy
which the lender can use to satisfy the obligation if the borrower defaults.

A fully amortized loan is the equal installment payments the borrower makes that will
completely repay all principle an interest by the end of the loan term. Many loans are not fully
amortized this means that the borrower must make a large final payment or a balloon payment
to repay the loan.

 Acceleration clause: if the borrowers miss even one monthly payment the lender may
demand payment of the entire loan. This clause is valid in all states. This is a preliminary
step in the foreclosure process.
 Due-on-sale clause: a due on sale clause is fully enforceable pursuant to federal law that
preempts any conflicting state law. This gives the lender the option to demand full
payment of the loan if the borrower sell the property or any part of it.
 Non-monetary obligations: keeping the property in good repair, avoiding waste,
maintaining adequate property insurance, and defending the title to the property in
litigation with third parties.
 Liability of successor owner: this determines who is obligated to repay the loan if they
sell the house and an existing loan is paid off when the property is resold. The bank has
to have released the borrower from their obligation if they signed a promissory note.

Assuming v. Taking Subject To:

1. Assuming: if the agreement provides that the buyer will assume the loan, then he is
personally liable to repay it together with the borrowers. If the loan goes into default the
lender can Sue the buyer for breach of contract and collect the resulting judgment from
the buyer's other assets unless the buyer has a defense under one of the rules discussed
later on. The rights after foreclosure

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 2. Taking Subject to: if the agreement provides that the buyer will take title subject to the
loan then he is not personally liable period of course if payments are not made the lender
may foreclose and eliminate the buyer's estate in the home. Thus, while the buyer has an
economic incentive to make sure that someone makes the payments due on the loan his
other assets are not at risk.

Subprime lending
Between 2000 and 2006 the use of subprime loans exploded these were risky loans made to
borrowers with poor credit, uncertain income prospects, and often little or No Down Payment.
Most of these loans involved adjustable rate mortgages. Typically, such a loan would begin with
a low fixed interest rate for the first few years called a teaser rate and then would reset to an
adjustable rate for the duration of the loan. Because these interest rates rose during the financial
housing crisis a lot of homes lost value and people failed to make payments and there is
exploitation of minorities even when credit risks were equal and there was a housing crisis.

FINANCING AND MORTGAGES:

Providing the Security:

FOUR methods to provide security for an obligation:
1. MORTGAGE: the mortgage is the traditional security instrument. The borrower
conveys an interest in real property to the lender as security for the performance of an
obligation, usually payment of a promissory note.
a. Once the borrower repays the loan in full, the mortgage is automatically
extinguished.
b. If the borrower defaults, the property will be sold at foreclosure and the sales
proceeds will be used to pay off the loan.
i. Because the mortgage transfers an interest in real property it is governed
by the SOF.
2. DEED OF TRUST: the most common mortgage substitute is the deed of trust. This is
the main security instrument used in many states. This is a three-party relationship. The
borrower (the trustor) conveys real property “in trust” to a third party (the trustee) for the
benefit of the lender (the beneficiary).
a. This text creates an express power of sale. This is intended to allow lenders to
circumvent laws that protect borrowers. It is not a mortgage even though it serves
the exact same function. Most states treat the deed of trust just like a mortgage
with power of sale. In general, the trustor has the same rights and duties as a
mortgagor; And the beneficiary has the same rights and duties as a mortgagee.
b. Despite the confusing name the deed of trust is not a type of trust.
3. INSTALLMENT LAND CONTRACT: the installment land contract is also known as a
land sale contract or contract for deed and as an alternative to the mortgage. The buyer
(the vendee) promises to pay the purchase price to the seller (the vendor) in installments
over a fixed period of time.
a. The buyer is allowed to take possession of the property but the seller retains title
until all payments are made. Traditionally the installment land contract includes a
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 clause that provides for forfeiture of the land and all payments made if the buyer
misses even one payment.
b. Also referred to as: contract for deed, bond for deed, long term land contract,
conditional contract, or land sale contract,
c. Seller keeps legal title until last payment is made.
d. Consequence: equitable conversion; risk of loss on buyer.
4. EQUITABLE MORTGAGE (or absolute deed as security): the court probably can
conclude a mortgage in substance if someone delivers a deed that transfers fee simple
title to her home to a lender as part of what appears to be a sales transaction. But the
parties have an oral agreement that they will convey title back within a year and pay
more money. The seller with the normal rights of the borrower.
a. This is also called an absolute deed as security.
b. Arising out of equity: not a legal “mortgage.” Instead – it is based on substance
of relationship
c. Despite what appears as a deed absolute on its face, it arises when parties used an
instrument that looks like a deed but is intended as security for a loan.
d. Results:
i. Equity Regards Substance and not Form
ii. Instrument will be treated as a mortgage

Mortgage theories:
Although It may seem strange, the states are split on a fundamental question: what rights does
the lender receive?
 Title theory: some states follow the common law view that the mortgage is a transfer of
title from the borrower to the lender. In theory, the lender has the right to possession of
the property before default, but in practice his rate is rarely exercised.
 Intermediate theory: in a few states, the lender holds title, but does not hold the right
to possession until the borrower defaults.
 Lien theory: in most states, the mortgage is seen as a creating a lien or security
interest, not conveying title. Accordingly, the lender does not have the right to
possession until foreclosure occurs.

Traditionally this took the form of a fee simple subject to condition subsequent. The borrower
would convey a fee simple to the lender but the borrower retained the right to regain title if he
repaid the loan by a specified date. If he failed to do so the lender would have a fee simple
absolute.

Equity redemption: the English equity courts intervened to protect the borrower by allowing
him to repay the debt and this redeem the land long after the designated payment day. The
recognition of this rate created a problem for the lender how could they know when the equity of
redemption ended? The equity courts responded by allowing the lender to bring a lawsuit to
foreclose or terminate the equity of redemption if the loan was not repaid. This procedure

74
evolved into the modern foreclosure sale which technically ends the borrower's equity of
redemption.

In some states the only way to foreclose a mortgage is through a specialized type of lawsuit
called a judicial foreclosure. Many states use non judicial foreclosures also called the power of
sale foreclosure, which is a sale conducted without any judicial involvement, if the mortgage
expressly provides such a power.

Recording the mortgage: an unrecorded mortgage is valid. But the standard practice is to
record it as soon as possible just like a deed to avoid any claim that a third party in his
subsequent bona fide purchaser or an encumbrance of the property.

Purchase Money Mortgage: arises when the buyer of real property, finances the purchase by
giving the seller a promissory note secured by a mortgage on the property. *Most states view
the mortgage as a purchase money mortgage.

It is common for a property to be encumbered by multiple mortgages. This creates a risk that the
sale of the property may not generate enough money to pay off all the secured debts. In this
situation it is important to determine the relative priority of each mortgage.

A junior mortgage: is later in time or an earlier mortgage; given on the same property as an
earlier mortgage to secure a later loan. Has greater risks because a junior mortgage is
extinguished at foreclosure of senior liens.

Rents and profits clause: this clause authorizes the lender to collect the rents directly from the
tenants usually through a court appointed receiver during the period after default and before
foreclosure sale.

Future Advance Clause: the sample mortgage also secures repayment of future advances
which is loans that the lender may make to the borrowers in the future if the parties so agree. A
mortgage with such a clause is called a future advance mortgage; search future loans may create
questions about mortgage priority.

Clogging the Equity of Redemption: given the unequal power relationship between
borrowers and lenders there is a fundamental principle that the courts will not allow clogging
of the equity redemption. If you find a boilerplate clause by which the borrowers waive their
equity of redemption and thus allow the lender to obtain title without closure this clause would
be ineffective and unenforceable.

Ex. Slone v. Calhoun: P entered into an installment land contract with D for the purchase of a
lot and a mobile home. The K contained a forfeiture provision stating that P would forfeit her
interest in the property if she defaulted on payments. P stopped paying and later sued for breach.

75
  Rule: An installment-land-contract provision stating the buyer forfeits her property
interest upon default of payment is unenforceable.
 Takeaway: an installment land contract is substantively the same as a purchase-money
mortgage, because in both transactions, the seller conveys title to the buyer but retains a
lien to secure payment.
o An Installment land K doesn’t do much for the buyer. Court held:
recharacterization of the buyer and seller – under a mortgage relationship;
extinguished the mortgagor’s interest requiring foreclosure not forfeiture. The P
could’ve redeemed the property by paying in full unless seller foreclosed. May
produce a surplus to mortgagee.

Forfeiture clauses: time is of the essence in this contract. If vendee fails to pay an installment
payment on or before its due date then after giving 10 days written notice of such default 1) the
vendor may retain all prior payments made by vendee as liquidated damages which shall not be
construed as a penalty 2) this contract shall be null and void and 3) the vendee shall have no
further right title or interest in the property. Such a clause permits this a way to regain
possession of the property without going through foreclosure and keep all the payments made as
liquidated damages. For its routinely enforced foreclosure clauses even when they produced
harsh results.

Remedies for breach: modern courts increasingly scrutinized forfeiture clauses. Particularly
when the buyer has paid a substantial portion of the purchase price. Concern for fairness and
equity has led many guards to protect the defaulting buyer. Restatement of property mortgages
§3.4b provides that: an installment land contract creates a mortgage. Some states follow this
approach. Others enforce the forfeiture clause but only so long as the benefit to the seller is not
disproportionate to her damages.

Character of the default: Abandonment as a voluntary termination of the contract. Forfeiture

provisions of the contract may be enforced if vendee abandons the property and absconds.

Structuring the Transaction:

Incentives: avoiding disclosure and recission rights; interest rate increases more than law allows
(usury laws); avoiding default laws.
Aftermath of Zaman; NJ adopted Foreclosure Fraud Prevention Statute to protect
homeowners which: prohibits the consensual sale of an owner-occupied residence while
foreclosure proceedings are pending if 1) the owner fails to receive at least 82% of the fair
market value or 2) the owner receives an option to repurchase or lease containing terms which
are “unfair or commercially unreasonable.”

Changes after original loan: what borrower does

1. Refinance
a. Borrow at a lower interest rate
b. Pay off original loan

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 i. Means lower monthly payments
2. Sale/Transfer
a. Borrower pays off original loan (as required by due on sale clause)
Or
b. Transferee agrees to make payment (either an assumption or subjection to
transfer)
3. Foreclosure Avoidance by:
a. Modification of the loan
b. Short sale
c. Deed in lieu of foreclosure
4. Default
a. Then foreclosure
b. Occurs for:
i. Nonpayment
ii. Breach of covenants in the mortgage
1. Against waste
2. Use – storing hazardous materials

FORECLOSING ON THE SECURITY Steps:

1. Borrower’s (Mortgagor’s) RIGHTS BEFORE the foreclosure sale:
a. Reinstatement: as a general rule, a borrower can avoid foreclosure by paying the
missed payments before the lender accelerates the loan. Some states also allow
the borrower to reinstate for a limited period after acceleration occurs.
i. Always before acceleration
ii. Sometimes after…
b. Equitable redemption: all states allow the borrower to avoid foreclosure by
paying the loan in full (plus any incurred costs) after default but before the sale
occurs.
i. Paying the full balance before the sale

*But if you fail to use one of these remedies, the home may be sold at a foreclosure sale.

2. Judicial Foreclosure: the traditional remedy for collecting on a secured loan after the
borrower’s default. Still the exclusive and dominant method in about 1/3 of states.
a. Step 1: file in court for foreclosure.
b. Step 2: auction sale of the home.
i. Usually the lender bids the amount remaining on the loan balance and
is not required to bid with cash.
c. Step 3: judicial confirmation. In order to protect the borrower’s interest, the
courts must confirm the sale and may refuse to do so at its discretion. It is almost
always granted, however. Once official, a quitclaim deed is delivered to the
successful bidder and the borrower’s equity of redemption is terminated.

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 3. Nonjudicial Foreclosure: in 2/3 (most) states, a nonjudicial foreclosure is the dominant
method for collecting on a secured loan after a borrower’s default because it is quicker
and cheaper than going through the courts. It present greater risks however due to a lack
of court supervision.
a. No judicial involvement.
b. Executed sale and delivery of quitclaim deed. This terminates B’s equity of
redemption.
i. B’s remedy in this situation is to file a lawsuit seeking an injunction to
prevent the sale.

4. Results of the Foreclosure Sale: two basic principles govern foreclosure sales. Both are
based on priority of the mortgage being foreclosed. Mortgage priority: the lender whose
mortgage was created first has priority under the first-in-time rule unless a subsequent
purchaser or lender is protected under the state’s recording act statutes.
a. A SBFP or encumbrancer may be protected against prior interests, and
b. Shelter rule may also protect a subsequent party.

Foreclosure Principle 1: foreclosure eliminates or “wipes out” the mortgage being foreclosed
and all junior interests but does not affect senior interests.
 The lender accepts a certain risk of nonpayment, measured by the facts that exist at the
time the loan is made. B cannot be allowed to increaser the lender’s risk by transactions
that occur after the loan is made. Thus, foreclosure also wipes out all interests that are
junior in priority to the mortgage which is foreclosed. These included junior mortgages
and any other junior interests, such as easements, leases, and covenants.
 At Foreclosure:
o Senior interests will remain intact including easements
o Junior interests will be extinguished upon foreclosure.

Principle 2: foreclosure sales proceeds are distributed first to the foreclosing lender and then to
junior interest in order of priority; any surplus proceeds go to B.
 *this protects the lender’s ability to recover its loan based on the risk it knowingly
accepted.
 How foreclosure proceeds are distrusted:
o First to the foreclosing Mortgagee (lender)
o Then to junior claimants in order of recording priority
o Then surplus to mortgagor (borrower)

Special Mortgage Priority Principles: special rules govern mortgage priority in 3 situations:
1. Purchase money mortgage: priority over any other lien or interest that attaches to the
property purchased through the buyer such as judgment liens or community property or
dower.
2. Future advance mortgage: has a clause which provides that the mortgage will serve as
security for future loans to the borrower. In most states, if the mortgage obligates the
78
 lender to make such additional loan, the new loan takes priority from the date of the
mortgage. But if making such such a loan merely optional an the lender has notice that a
third party has acquired interest in the property after its original loan was made, then the
new loan takes priority only as of the day its made.
3. Deed in lieu of foreclosure: after default, the lender may be willing to accept a deed in
lieu of foreclosure. Which allows the B to avoid foreclosure by conveying title to the
property to the lender. One drawback of a deed in lieu of foreclosure is that it does not
wipe out junior interests. Thus, a lender takes title subject to these junior interests. A
second potential concern is that the mortgage itself might be extinguished under the
merger doctrine, though this turns on the intent of the parties. Notice that such an
arrangement does not clog the equity of redemption because it comes after the loan has
been made.

Protecting the Lender: when the foreclosure sale proceeds do not fully repay the loan, the
lender can usually sue the borrower for bx of K – failure to pay the promissory note.
Mortgagee’s duty to mortgagor in conduct of foreclosure sale:
1. Act in Good Faith:
a. With honesty and fairness
b. But not without regard to self
2. Exercise due diligence:
a. Aim to get best price for property

Deficiency judgment: to satisfy the different in mortgage and foreclosure sale price the lender
may go after the borrower’s other assets to cover his losses if the court allows. Frowned upon
and typically legislature designed against this.

Ex. Wansley v. First National Bank of Vicksburg: Wansleys (Ps) held as co-tenants some
farmland. The Ps received crop-production loans from the Vicksburg (D). Ps executed and
delivered deeds of trust conveying their interests in the land to JW as trustee, to secure their
indebtedness to D. The deeds of trust secured the Ps farm-related financing through the bad crop
year. After the sale of the crops, the Ps were unable to pay a substantial portion of what they
owed. D directed the trustee, to foreclose and sell the land at public auction. At auction, D bid
half of each interest. Trustee accepted and gave D trustee’s deeds. There was nothing in the
record indicating that the sale prices were commercially unreasonable.
 Rule: The sale of real estate by a trustee of a deed of trust will be upheld and accepted
for deficiency judgment purposes if the sale is commercially reasonable in all respects.
 Takeaway: In the deed of trust, legal title is vested in the trustee. A Trustee under deed
of trust does not assume the important obligations which in some instances are cast upon
a trustee by operation of law. The trustee of a trust deed is not a trustee in the strict sense
of the word. The role of such a trustee is more nearly that of a common agent of the
parties to the instrument.

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 o If the secured creditor is authorized by foreclosure power of sale, after the
debtor’s default and upon compliance with the deed of trust or other instrument,
the secured creditor may sell any or all of the real estate that is subject to the
security interest in its then condition or after any reasonable rehabilitation or
preparation for sale.
o *Every aspect of the sale, including the method of advertising, time, place, and
terms, must be commercially reasonable. This is an objective standard.

Essential role of lending with a deed of trust – lender doesn’t have to go to court to foreclose
they can go to sale immediately after default whereas a mortgage requires judicial foreclosure.

Borrower remedies: challenging the sale – the price as it pertains to validity of sale (gross
inadequacy – set aside sale) or price as it relates to recovery of deficiency judgment
(unreasonableness in the conduct if the sale – none or reduce deficiency).

Potential for unfairness, many states restrict deficiency judgments through anti-deficiency
legislation or judicial action, especially when the property is a home.
1. Fair value legislation: many states restrict the size of a deficiency judgment by limiting
it to the amount which the loan balance exceeds the fair market value of the property as
of the foreclosure sale date.
a. What NY uses.
i. Ex. Balance owed $100k
ii. Bid for $45k
iii. FV $75k.
iv. Deficiency under traditional = 55k
v. Under FV Rules = 25k
2. Prohibition: some states prohibit deficiency judgments altogether in certain situations,
most commonly after nonjudicial foreclosure or foreclosure on a purchase money
mortgage.
3. Judicial approaches: a number of courts will invalidate deficiency judgment based on
inadequacy of the sales price or unfairness in the foreclosure process.
a. Trade off power; if you want to quickly be able to foreclose you must give up
your right to deficiency judgment.

Exercising RIGHTS AFTER Foreclosure

1. Protecting the Borrower: obvious risk of being treated unfairly.
 Statutory Right of Redemption: a B may regain title by redeeming the property from
the successful bidder within a set period of time.
o About half of the states
o In some states, the right only applied of the property is a home or farm.
o To exercise the right, the buyer must pay the sales price (plus interest and costs)
to the bidder.
 Setting aside the sale: the borrower may be able to set aside the foreclosure sale.
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 o Most jurisdictions: a nonjudicial sale will be set aside if the sales price is so
inadequate to “shock the conscience” of the court is “grossly inadequate.”
o More commonly: set aside when both factors are present 1) sales price
substantially below fair market value and 2) a procedural irregularity occurred.
o Few jurisdictions impose a higher duty on the lender conducting the nonjudicial
sale to obtain a fair price and attract bidders at reasonable efforts.

**EQUITABLE right of redemption vs. STATUTORY right of redemption:

1. Equitable – ALL jurisdictions; starts at default and paying all that’s owed before the
sale of foreclosure.
2. Statutory – only some jurisdictions about a few to 18 months (specified statutory time
period) after foreclosing purchaser completes sale.
a. NY does not allow this.

PRIVATE LAND USE PLANNING & EASEMENTS

Building blocks of land use planning: easements, land use restrictions, and nuisance laws.
Private planned communities are regulated by land use restrictions: covenants, conditions, and
restriction – CC&Rs. Land use may conflict with societal policies and goals – productive use
and right to use. Consider role of public policy – underlying entrepreneurial devices, limiting
them, and filling the gaps.

Common law principles:

1. Easements: land cannot be used unless the owner has adequate access to it, which may
require an easement across land owned by another.
a. Although most easements are the product of an agreement, courts will
sometimes enforce or impose an easement without the consent of the burdened
owner.
2. Land Use Restrictions: an owner might agree to restrict the use of his land by creating
a real covenant or an equitable servitude.
a. Courts were traditionally hostile to these restrictions due to fear they would
impair productive use, but modern law recognizes their value in private land use
planning, notably their use in enforcing CC&Rs.
3. Nuisance Law: nuisance law resolves the comparatively rare situation where one
owner’s use seriously interferes with another owner’s use.
a. Today nuisance law is less important than in the past. Since the 1920’s zoning
laws and other land use regulations have largely taken over its traditional
function.

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The Restatement merges the easement, real covenant, and the equitable servitude into one
doctrine – the servitude. A burden on some land to benefit another. Hence – servitude – a charge
or burden on land.
Servitudes are entrepreneurial devices; they accommodate competing interests in neighboring
landowners.
How:
 Limiting what a landowner can do on land
 Requiring a landowner to do certain things on land
 Enable landowner to put land to particular use.

 Easements: a nonpossessory right to use the land of another person.

a. Vital tool for productive use of land.
b. Most commonly: for access to travel to/from land through another’s.
c. Modern law basic easements:
i. Express Easement – consented to!
ii. Implied Easement by Prior Existing Use – court imposed
iii. Existing by Necessity – court imposed
iv. Prescriptive Easement – court imposed
v. Easement by Estoppel (or irrevocable license) – court imposed.

Express Easement: arises only with the agreements of the owner whose land is burdened.

Types of Servitudes:
1. Easements: right to use or restrict another’s land
a. To cross or free flow of air
2. Profits: right to remove natural resources from another’s land
a. To take gravel, sand, pick apples, timber
3. Restrictive covenant: promises between parties; running to successors; enforced at law
(damages)
a. To use the land only for single-family dwelling not as a slaughterhouse
4. Equitable servitudes: promises between parties, running to successes, enforced in equity
(injunction)
a. To use land only for residential purposes, not for gas station
**Sometimes restrictive covenants and equitable servitudes look like zoning but they were
agreed by borrows. They may be narrower than the ordinance and zoning codes but cannot be
more broad **

Pros & Cons:

1. Limits/directs uses: by the interest created, promises made  may freeze or distort land
uses and frustrate normal development or depress land values.
2. Perpetual Effect: success are bound  clogs title and diminishes marketability.

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 3. Ease of administration: rights and burdens pass automatically there is no need to
negotiate each transfer  high transactions costs for termination; negotiation may be
impossible for release modifications are difficult.

Larger importance of servitudes:

 Segregation of uses: burdens the particular land apart from zoning;
 Large scale planning: enables development; and
 Efficient: investor or developer purchases only degree of control needed to maximize
investment

Resolution of issues by considering: the effects (burdens, reasonableness, who is bound), the
rule to apply (property or liability rule) and larger public policy issues.

Private acts: landowners deal with each other for the highest, most productive and enjoyable use
of their lands but the law asks what efforts permit toward these ends.
Easement terminology:
 Property: two landowners in privity of the estate (mutual continuous interest in the same
land).
a. Dominant tenement or dominant land – the land benefited by the easement
(who is asking for the easement?)
b. Servient tenement or servient land – the land burdened by the easement (who is
granting or allowing the easement?)
 Parties:
a. Dominant owner – the easement holder.
b. Servient owner – the owner of the servient tenement (the burdened owner)
 Appurtenant or in gross:
a. Appurtenant easement – benefits the holder in their use of a specific parcel of
land, the dominant tenement.
i. Rights: benefits the E holder in connection with the use and enjoyment of
the land
ii. Characteristics:
1. Runs with dominant estate meaning no separate document
necessary when dominant estate is transferred
2. Apportionable: E holder can transfer to several others that same
right
iii. Ex. driveway to get to land
iv. Ex. Apportionment: developer builds 10 houses on land; each new owner
can use driveway.
b. Easement in gross – not connected to the holder’s use of any particular land,
rather it is personal to the holder. (this is less common)
i. Rights: benefits the E holder personally
ii. Characteristics:
1. Does not run

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 2. Generally, not apportionable
3. Generally, not transferrable except for commercial easements in
gross
iii. Ex. string utility lines, erecting billboarding.
 Affirmative or Negative:
a. Affirmative easement – allows the holder (benefiter) to perform an act on the
servient (burdened) land. Gives the right to use another’s land
i. Ex. easement to cross/pass for access
b. Negative easement – allows the holder (benefiter) to prevent the servient owner
from performing an act on the servient land. (most easements are affirmative).
Prevents certain activities on land
i. Ex. Against blocking a view or a stream

CREATING EASEMENTS:
The most common type pf easement is the express easement. This is simply an easement which
is voluntarily created by the servient owner, usually in a deed. The easement may arise either by
grant or reservation.
1. Grant: Express easement by grant arises when the servient owner grants an easement to
the dominant owner.
a. Deed says: “Hereby grants unto grantee a right of way for ingress and egress
to….”
2. Reservation: Express easement by reservation arises when the dominant owner grants
the servient land to the servient owner but retains or reserves an easement over that
property.
a. Deed says: “Hereby grant unto grantee [property description] reserving unto
Grantor a right of way for ingress and egress to … [over granted land].”
*Express easements may only be created in a writing that satisfies the Statute of Frauds. A well
drafted easement will:
 Identify the parties,
 Describe the servient land and the dominant land (if any),
 Describe the exact location of the easement on the servient land, and
 State the purposes for which the easement may be used.

How:
1. express act
2. implications (prior use/quasi-easement), necessity, from Plat
3. prescription: two theories (lost grant or adverse possession)
4. estoppel
5. by statute

Traditionally – an express easement by reservation could only be reserved in favor of the

dominant owner.
Modern – allow this easement to be reserved in favor of a third party.

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Termination of Easements:
Release, abandonment, sale of servient land to a BFPV, misuse or prescription (like adverse
possession).

Ex. Millbrook Hunt, Inc. v. Smith: 75-year term for fox hunting granted to P on D’s land. D
tries to rescind.
 Rule: The grant of an interest in land typically constitutes an easement if it is for some
definite period of time.
 Takeaway: An easement is an interest in land that is usually created by a grant and lasts
for a definite duration or indefinitely. In contrast, a license is not an interest in land; it is
a personal privilege to conduct an act on someone else's land and may be revocable at
will. The parties to the agreement clearly expressed an intent to create an easement for
Hunt.

Easement: implies an interest in land ordinarily created by a grant and is permanent in nature.
License: does not imply an interest in land but is a mere personal privilege to commit some act
or series of acts on the land of another without possessing any estate therein. An informal
permission that allows the holder to use the land of another for a particular purpose. But it is not
classified as an interest in land and can be revoked at any time. A License is with permission,
revokable and usually temporarily limited grant.

Profit: a right to enter land of another and remove minerals, gravel, timber, game, or other
natural resources.

Easements & Conveyances:

What happens to an easement when the servient land is conveyed to a new owner? The easement
remains attached to the land like any other encumbrance unless the grantee is a bona fide
purchaser.

When can an easement be transferred to a new holder? The transfer of the dominant land
automatically transfers the benefit of the easement to the grantee.

Modern trend: to allow the transfer of an easement in gross unless the parties had a contrary
intent.

Easement by Implication:
1. Prior use/Quasi easement: 4 elements
a. Original unity of ownership,
i. Grantor owned what was then one but are now two parcels because of a
severance.
b. Prior use,
i. Before severance, grantor used on part to benefit the other.
c. Use was apparent, visible, continuous, and permanent, and
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 i. To give notice.
d. The use was necessary.
i. Reasonably necessary for the enjoyment of the dominant tenement.
Rationale: presumed intentions of grantor and grantee. Parties expected this use to continue after
conveyance.
Ex. Emanuel v. Hernandez: Ps lived next to Ds, the property line bisected a driveway between
the properties, but most of the driveway was on the D’s property. The Ds began building a fence
on the property line, blocking the P’s continued use of the driveway. The Ps could not access
their garage without use of the driveway.
 Rule: If an easement implied by prior use did not arise at the moment the property
was severed, a change in circumstances after the severance cannot create such an
easement.
 Takeaway: Generally, a party can prove the existence of an easement implied by
prior use by demonstrating that (1) the properties had been commonly owned at one
point but were severed; (2) prior to the severance, the owner used part of the property
for the benefit of another part of the property; and (3) the easement is necessary for the
enjoyment of the severed property. A court will find such an easement only if there is
evidence that the parties to the original conveyance intended the easement. The P’s did
not present evidence that a garage or the driveway existed when the commonly owned
property was severed in.

Policies justifying implied easement by prior use: productive use of land and owner autonomy.

Required elements for showing implied easement by prior existing use:

1. Severance: of the title held in common ownership,
2. Use: an existing, apparent, and continuous use of one parcel for the benefit of another at
the time of severance, and
3. Necessity: reasonable necessity for that use.

General standard for defining reasonable necessity:

Must be beneficial or convenient for the use of the dominant tenement but need not be essential.
Restatement § 2.12 cmt. e. – reasonable necessity usually means that alternative access or
utilities cannot be obtained without a substantial expenditure of money or labor.

The Big Issues with Easements: Scope.

What are the rights given and what is the purpose of the easement?
How is the scope defined?
When should scope change be allowed?
How much change should be allowed?

Easements implied from Plats: developer prepares a map of the area, showing rights of way for
ingress and egress, result: rights of way drawn on map will be implied to exist on the ground.
Prescriptive Easement: from continuous use.

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  An implied easement by prior existing use may arise either by grant or by reservation.
 Implied Easement from Plat: Another type of implied easement arises when a
developer conveys a lot in a subdivision by reference to a plat or subdivision map. This
easement is implied unless the parties have an actual intent to the contrary.

EASEMENT BY NECESSITY:

Ex. Berge v. State of Vermont: P’s only way to access his property via land was on a gravel
road that crossed over state land. The state erected a gate on the road, preventing P from
accessing his property by land. P claimed that he had an easement by necessity over the state
property.
 Rule: Water access alone is generally not sufficient to defeat a claim for an easement by
necessity.
 Takeaway: Without practical access year-round, a landowner is deprived of the
enjoyment of his or her land. The use was not practical.

Three Elements for an Easement by Necessity:

1. Unity of ownership
a. Grantor owners both estates
2. Necessity
a. Strict – the dominant estate becomes landlocked
3. When
a. At the time of severance.
Terminates – when the necessity ends
Rationale: presume intentions of public policy

Two justifications for an easement by necessity: 1) implied intent of both parties and 2) public
policy favoring the productive use of land.

*The law is clear that an easement by necessity will not arise if this would contradict the
actual intent of the parties.

Required elements:
 Severance of title to land held in common ownership, and
 Necessity for the easement at the time of severance.

Under the traditional approach – minority view – strict necessity is required; this is found only
when the owner has no legal right of access to her land. The parcel must be surrounded by
privately owned land and the owner has no right to access or cross that land to reach a public
road.

** Mere inconvenience or expense is not enough for necessity for most courts. **

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Today – majority view – most courts require only reasonable necessity: the easement must be
beneficial or convenient for the use of the dominant parle but not absolutely necessary.

Berge adopted a middle ground – the “lack of reasonably practical access.” No practical means
of access.
Restatement Approach § 2.15: requires only reasonable necessity. It provides that a
conveyance “that would otherwise deprive land of rights necessary to reasonable enjoyment of
the land implies the creation of a servitude granting or reserving such rights” unless facts show
contrary intent.

Scope and Duration:

Traditionally, the easement by necessity doctrine applied in only situation: road access to a
landlocked parcel. An easement by necessity lasts only so long as the necessity continues.

Competing Interests on Implying Easements:

For: land becomes productive
Against: the issue is entirely avoidable; undermines reliance on land records.

In general, the owner of the servient land is entitled to select the route for an easement by
necessity, as long as it is reasonable.

EASEMENT IMPLIED BY STATUTE:

 A sort of private condemnation; the condemning landowner must compensate the servient
owners.
 Varying degrees of necessity required; varying limits on location of easement.
o Ex. over least productive land.
State can condemn property by paying compensation to owner; State can also condemn
landowners privately to be able to exercise this right.

PRESCRIPTIVE EASEMENT:
An easement may be acquired by similar conduct or adverse possession – open and notorious for
a period of time.

Ex. O'Dell v. Stegall: P owned a parcel of land and had access to the south side of that land via a
driveway. P would also enter his land from the north side via a private gravel lane he did not
own. Ds used the gravel lane, which they also did not own, to access their property, which was
completely surrounded by land owned by others.
 Rule: A person claiming a prescriptive easement has the burden of proving his use of
the land was adverse.
 Takeaway: The common law regarding prescriptive easements is similar to the common
law of adverse possession. Someone claiming a prescriptive easement must establish:
(1) the adverse use of another’s land; (2) that the adverse use was continuous and
uninterrupted for at least 10 years; (3) the adverse use was known to the owner or so

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 open, notorious, and visible that a reasonable owner would have noticed the use; (4) the
reasonably identified starting point, ending point, length, and width of the land that
was used; and (5) the purpose for which it was used. Adverse usage does not require
malicious intent. The intent of the adverse user is irrelevant. Rather, the adverse user
must use the property as the owner would use it and without the owner’s express or
implied permission, disregarding the owner’s claims, such that the usage is inconsistent
with the owner’s rights.
o *Note: adverse usage is no longer presumed merely because the other
prescriptive-easement elements exist. Courts do not like prescriptive easements
because they reward wrongful behavior (adverse possession).
So, why recognize prescriptive easement? Encourages productive use of land.

Required elements for Prescriptive Easement (similar to adverse possession) USE must be:
 Open and notorious
 Adverse and hostile
o Some states with acquiescence (tacit assent) of servient owner
 Continuous
 For statutory period.
Interruption: most states – injunction, physical barriers.
Exclusivity: Most states – not required to exclude servient owner, only use without permission.

*most states use the same statutory period as they have set for adverse possession.
*most allow tacking as long as there was privity.
Restatement §2.17: adverse, open, or notorious, continued without interruption for prescriptive
period.

**Most states presume adversity. Some presume consent.

Traditional view – public could not acquire a prescriptive easement.
Modern – courts recognize public prescriptive easements.

Public Trust Doctrine: provides that navigable waters and certain related lands belong to the
government as a trustee for the benefit of the public. Title subject to public’s right to use land for
certain activities.
Public access to beaches.
 Certain natural resources
o The air
o The seashore
o The seas
o Cannot be privately owned
 Instead, held in trust by the state
o For the benefit of the public
o For navigation, bathing, swimming…
 Regarding the seashore:
o Land below the mean high tide line is not subject to private ownership.
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 o Right to get to any area below high tide line
o Any land above high tide line can be privately owned.

Impediments to acquiring PPE (Public Prescriptive Easement):

Landowner can interrupt adverse use by posting sign giving revocable permission.
Ex. Rockefeller Plaza closes for one day every single year to avoid a public right to prescriptive
easement which would arise from long-standing adverse use.

Can be entitled to an easement by estoppel or an irrevocable license. (most states).

Ex. Kienzle v. Myers: a public sewer line was constructed along the road adjacent to both
properties, and P and D were required to connect to the public system. D would have had to
excavate her driveway at considerable cost and inconvenience in order to directly connect to the
public line. Accordingly, D and P agreed D would install a line from D’s home to P’s line. P’s
line would then connect to the public line.
 Rule: An easement by estoppel exists where:
o (1) a property owner grants another permission to use the property,
o (2) the other party has reasonable grounds to believe the permission will not be
revoked, and
o (3) the other party, relying on this permission, incurs costs or otherwise
substantially changes position by acting in a way that is not easily undone
 Takeaway: The change in position must be reasonably foreseeable to the property
owner granting permission. The property owner need not have any intent to mislead.
The owner need only grant permission that is reasonably foreseeable to induce
reliance and a substantial change in. P’s permission to link the sewer lines created an
easement by estoppel for Bauer and her successors, the Myers’. The judgment of the trial
court is reversed.

An easement should state what it’s used for, where, by whom, for how long, the intensity
and frequency of use, cost sharing, maintenance, and repairs responsibility, etc.

The easement by estoppel is called and irrevocable license by most courts. An irrevocable
license is a license that becomes an easement by estoppel under the circumstances set forth –
most authorities agree there is no functional difference between the two however some
jurisdictions do not recognize either.

EASEMENT BY ESTOPPEL AKA IRREVOCABLE LICENSE:

 Predicate: landowner gives a license to another to use her land. License is revocable at
the will of licensor.
o the other incurs expenses in reliance upon that license; builds a house or a bridge.
 Result: landowner will be estopped to deny the right to use if the result would be harmed.
 The rationale: fairness. How can one reasonably rely on a license?

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 o Best cost-avoider? What could the landowner do to avoid an easement resulting?
What could other person do to ensure their access?

Why recognize easements? An oral agreement to create an easement is unenforceable under the
SOF. The main rationale is simple fairness: it would be unjust to allow a landowner to revoke his
permission after the user has relied on it in good faith by substantially changing is position.

Required elements for irrevocable license:

 A landowner allows another to use his land, thus creating a license
o Permission
 The licensee relies in good faith on the license, usually by making physical improvement
or by incurring significant costs, and
o Reliance
 The licensor knows or reasonably should expect such reliance will occur.
o Induced.

Scope of an Easement:
Determined by – how it was created
 Express Easement – language in the grant
 Implication – how its used
 Prescription – most narrow scope

Scope Issues:
ASPECT MEANS NEW USES/QUESTIONS
Dimension Geographical – how much land, Originally 5 feet in width;
width, length extend to 6? Length by X?
location Where. What path? North edge of servient: relocate?
Mode How is it traveled? Dows a “cartway” exclude cars?
Electricity exclude cables?
Purpose For what uses: to cross to a To reach nudist resort on other
home or for a ditch side of home?
Intensity One family cottage; 2x4 inch Subdivide dominant path?
pipes Increase to bigger pipes?
Physical effect Natural or developed Gravel path: can be paved?
Ditch: replaced by underground
pipe?
duration How long? When building burns down?
Necessity end?
Overall impact Original aesthetics From rural to urban

Determining the allowable scope: the manner in which it was created, public policy concerns
for tech, productive use, and changes in environment, but with some regard for the burdens on
the servient owner.

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Ex. Marcus Cable Associates, L.P. v. Krohn: P granted an easement for electrical wiring to
HC, HC gave D the rights but then D wanted to put up cable wires.
 Rule: An express easement may only be used for the purposes specified in the
easement’s terms according to their common meaning.
 Takeaway: When construing the scope of an express easement, the relevant question is
not what is most convenient to the public or profitable for the grantee. Rather, the
relevant question is what purpose the contracting parties intended the easement to
serve, which is answered by examining the easement’s language.
o *Note: Common law recognizes that certain easements may be assigned or
apportioned to a third party, the third party’s use cannot exceed the rights
expressly conveyed to the original easement holder. Express Easements
encompass only those technological developments that further the particular
purpose for which the easement was granted. Supported by Public policy –
productive use of land, exclusion right and profit rights.

Takeaway: the manner, frequency, and intensity of an easement’s use may change over time to
accommodate technological development but only in accordance with purpose of the easement.

Reasonable/foreseeable changes in the purpose of easement over time. Easement in gross not
typically transferable unless held by a commercial company. In gross because it was given to HC
for MC to use so it did not benefit any land owned by HC.

Relocating an Easement:
Traditional rule – the location of an easement can be changed only if both the servient and
dominant owner agree.
Today – Restatement §4.8 – the servient owner may relocate the easement as long as this does
not significantly lessen the utility of the easement, increase the burdens on the easement holder,
or frustrate the purpose of the easement.

RR interests: Congress started granting RRs money to build tracks in the 60’s. Split interests in
the railroads between RR companies and Fed gov.

Ex. Preseault v. United States: Gov taking of land after RR initiative. Turned RR track no
longer being used into a pedestrian trial.
 Rule: An easement is terminated if the easement is used in a way that is inconsistent
with the easement's original use and that was not reasonably foreseeable at the time the
easement was established.
 Takeaway:. The scope of an express easement is established expressly at the time the
easement is granted. Although the scope of the easement may be changed if necessary, as
times and circumstances change, the change must serve the original purpose of, and be
consistent with, the original grant. To allow otherwise would permit the easement-
holder to impermissibly increase the burden on the servient landowner. the railway’s

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 interest in the land was extinguished, and the land had reverted to its original
owner.

Abandonment: in order to establish an abandonment, there must be in addition to nonuser, acts

by the owner of the dominant tenement conclusively and unequivocally manifesting either a
resent intent to relinquish the easement or a purpose inconsistent with its future existence. *Most
jurisdictions agree that mere nonuse is not abandonment.

Taking: express affirmative act pursuant to eminent domain power for condemnation of land OR
Inverse condemnation based on acts by Gov that have the effect of an act of taking. Cannot resist
a taking – taking must be for public use and give just compensated.

A “misuse” can extinguish an easement – the servient owner becomes unburdened by it but the
taking requires compensation to them (Presaults).

Non-use or giving up possession will result in abandonment but this also requires an intent to
give up those rights.

Termination by Prescription:
An easement may be terminated by prescription – if the servient owner blocks use of the
easement in an open and notorious, adverse and hostile, and continuous manner for the
prescriptive period, the easement ends.

Other methods of termination: an express easement may terminate by its own terms.
1. Condemnation: condemnation of the servient land also terminates the easement, in this
event, the easement holder is entitled to just compensation. Ex. Presault.
2. Estoppel: an easement ends if the servient owner substantially changes his position in
reasonable reliance on the holder’s statement that the easement will not be used in the
future. Easement holder makes representation by words or conduct or silence – that the
easement no longer exists. Servient owner relies to his detriment. Ex. puts up building on
the way.
a. Result: easement holder is estopped to deny early representation.
3. Merger: If one person obtains title to both the easement and the servient land, then the
easement terminates under the doctrine of merger.
4. Misuse: in some jurisdictions, if the holder seriously misuses the easement, it may be
ended through forfeiture.
a. Gross and persistent acts exceeding the scope of easement.
b. Rightful use cannot be separated from wrongful
5. Release: the easement holder may release the easement to the servient owner by
executing and delivering a writing that complies with the SOF.
6. Natural Termination or Expiration: easements is granted for a term: life, or X years.
Easement is made determinable: “for as long as services are held at New Baptist” or etc.

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 7. Abandonment: cessation of use + intent to give up rights. Ex. going out of business;
taking up RR tracks.
a. Long period or nonuse gives rise to inference of abandonment
8. Sale of Servient Tenement to BFP for value without notice of the easement.
a. No actual notice or inquiry notice
i. No visible path
ii. Not apparent from geography of lands
b. No constructive notice
i. Writing not recorded
9. Prescription: acts by servient owner blocking use by easement holder
a. For the SOL for acquiring rights in land
10. Sale of Servient tenement in tax sale
11. Foreclosure of servient tenement as to easements created after the mortgage was given.

NEGATIVE Easements:
An easement that entitles the dominant owner to prevent the servient owner from performing an
act on the servient land.
Common law: disfavored negative easements out of concern it would interfere with productive
use. Only a few types of negative easements are allowed for example, prevention from
interfering with water flowing through a property.
Today: courts recognize that private restriction may encourage productive land use. Modern
restrictions usually take the form of real covenants or equitable servitudes.

The most common negative easement is the conservation easement. This is authorized by
legislation in nearly all jurisdictions. This restrict development and use of servient land in order
to preserve space, farmland, historical sites, or wild and undeveloped land. The servient
landowner usually conveys the easement to a land trust or other conservation group often
receiving income tax and property tax benefits.
Merits of private preservation – cost-effective to have a nonprofit buy an easement rather than a
whole title.

Land Use Restrictions: usually created through a simple process authorized by statute. By
recording a declaration containing covenants, conditions, and restrictions (CCRs).
Traditionally – it was difficult to create a restriction that would bind and benefit future
landowners. Common law contract would not bind their successors.
Today – the enforcement of land use restrictions, not their creation, is the main focus area.
Traditional tools of real covenants and equitable servitudes used to enforce CCRs.

Servitudes based on Promises:

Real Covenants, and
Equitable Servitudes

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Real covenant – allowed the benefits and burdens of a restriction to “run with the land” to
successive owners. A promise concerning the use of land that benefits and burdens both the
original parties to the promise and their successors. The traditional remedy is money damages for
a breach of a real covenant.
Common law rules – two sides to every real covenant – the burdened side and the benefited side.
A promise to do something, to refrain from doing something, having to do with the land, that
runs with the land to bind and benefit successors.

The burden: has the duty to perform the promise.

The benefit: has the right to enforce the promise.

Traditionally 6 elements must be proven for the burden of the promise to bind the promisor’s
successors, but only four are generally required for the benefit to run to promisee’s successors.
1. Compliance with SOF: the covenants must be contained in a document that satisfies the
SOF.
2. Intent to bind successors: the original parties must intend to bind their successors. The
needed intent is usually found in the express language of the document, but it may also be
inferred from circumstances.
3. “Touch and Concern” the land: the covenant must “touch and concern” the land. It
must relate to the enjoyment, occupation, or use of the property. Modern courts agree that
any monetary covenant closely related to occupation do touch and concern.
4. Notice: the promisor’s successor must have notice of the covenant. This requirement is
satisfied by actual, record or inquiry notice.
a. Constructive notice by recording in land records satisfies notice.
5. Horizontal Privity: this concerns the relationship between the original parties to the
promise. Originally deemed between LL-T. But now split authority:
a. Mutual (Simultaneous) interests: most states, the horizontal privity requirement
is met where the original parties have mutual simultaneous interest in the affected
land.
b. Successive interests (Simultaneous conveyance of interest in the land with the
make of a covenant about the land): almost all states, require horizontal privity
– element usually satisfied by grantor-grantee relationship between the original
parties so that they have successive interests in the affected land.
c. Landlord-Tenant Relationship: tenant promises to clear driveway of snow; T’s
assignee becomes obligated to perform same duty.
d. *No requirement: increasing number of states don’t require HP and have
abandoned the requirement. This is the modern trend.
6. Vertical Privity: concerns the relationship between an original party to the promise and
his successor. Today most states no longer require VP. Some retain the requirement – the
TEST: VP exists only if the successor receives the entire estate that the original party
had.
a. Successor has succeeded to the estate held by the transferor, and
b. Transfer must be voluntary

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*NY requires horizontal privity but modern trends are moving away from HP and VP
requirements at all.

Real Covenants Requirements

For BURDEN to run For BENEFIT to run
Statute of Frauds Yes Yes
Intent to Bind Successors Yes Yes
Touch & Concern Yes Yes
Notice Yes No
Horizontal Privity Yes No
Vertical Privity No No

HORIZONTAL & VERTICAL PRIVITY

Burden Side Benefit Side

Horizontal Privity
Original promisor  relationship between original parties  original promisee

Vertical Privity Vertical Privity

Relationship between Relationship between
original promisor original promisor
and successor and successor

Successor Successor

Ex. Deep Water Brewing, LLC v. Fairway Resources Limited: Ps sued for D’s breach of
equitable servitude – land was sold with a height restriction so it would not affect the view from

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P’s restaurant. Damages awarded. The easement touched and concerned the land and was
binding to remote grantees.
 Rule: In Washington, a covenant runs with the land if (1) it is enforceable between the
original parties; (2) it “touches” and “concerns” the land; (3) it binds successors in
interest; (4) there is privity between the original parties to the covenant and present
disputants; and (5) there is privity between the original parties.
 Takeaway: The creation of a third-party beneficiary agreement requires that the parties
intend at the time of the agreement’s execution that the promisor assume a direct
obligation to the beneficiary. 
Once we have a real covenant, we can enforce the promise or give damages. Legal remedy.

Equitable Servitude – the principal tool for enforcing private land use restrictions. A response to
shortcomings of real covenants which were difficult to use in practice due to difficulty to prove
elements. ES in contrast is generally easier to enforce as a restriction because horizontal and
vertical privity are not required. The traditional remedy is an injunction.
Ex. Gambrell v. Nivens: Ps subdivided their land into with attached to the deed undated,
unsigned covenants restricting the lots to residential uses only. The covenants stated that they ran
with the land for a period of 30 years. One of the purchasers, who had notice of the restrictive
covenant, commenced construction of a wedding chapel on the lot in violation.
 Rule: A restrictive covenant binds remote grantees as an equitable servitude if the
covenant touches and concerns the land, the original parties intended that the covenant
run with the land, and the remote grantee had notice of the covenant.
 Takeaway: An owner of land may sell portions of it and make restrictions as to its use
for the benefit of himself as well as for the benefit of those to whom he sells. Courts will
enforce the covenants as they were contracts, deriving the clearly expressed intentions of
the parties from the language. Regardless of enforceability at law, a court in equity can
enforce a restriction as an equitable servitude – a covenant respecting the use of land
enforceable against successor owners or possessors. The chain of title need not reflect the
equitable servitude if the remote grantee had actual notice of its existence.

*Equitable servitudes are often more favorable since they are easier to enforce.

Common Plan Exceptions:

ES gets a special exception from the SOF. Where a developer has manifested a common plan to
impose uniform restrictions on a subdivision, all lots are burdened and benefited by the
restrictions even if they do not appear in the chain of title to every lot. Sales literature, statements
by the developer and percentage of deeds containing the restrictions are used to determines
whether a common plan exists.

Equitable Servitude Requirements

For BURDEN to run For BENEFIT to run
Statute of Frauds Yes Yes
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 Intent to Bind Successors Yes Yes
Touch & Concern Yes Yes
Notice Yes No
**Horizontal Privity No No
Vertical Privity No No
**Difference from Real Covenants.

Real Covenant vs. Equitable Servitude:

Both are a promise concerning the use of land that benefits and burdens both the original parties
to the promise and their successors.
The difference: is the availble remedy.
Traditional remedy for breach of a real covenant  damages.
Traditional remedy for breach of equitable servitude  an injunction.
Modern courts: often blur the distinctions.
Second distinction is that the standard equitable defenses are available against an equitable
servitude claim: unreasonableness, abandonment, and changed conditions.

Remedies for Bx of ES:

Usual – injunction.
Defenses to enforcement (those that arise in equity)  waiver, latches, unclean hands (bad faith),
estoppel, changed conditions.

Restatement Approach:
Combines both RC and ES into one doctrine: the Covenant that Runs at Law. A type of
servitude that arises when:
 The owner of the property to be burdened intends to create a servitude;
 He enters into a contract or conveyance to this effect that satisfies the SOF; and
 The servitude is not arbitrarily unconstitutional, unconscionable, or violative of certain
public policies (e.g. cannot unreasonable restrain alienation).

*Vertical Privity is never required for a negative easement and is required for an affirmative
covenant only in certain situations. Notice to successors is not required to create a valid
servitude, but lack of notice is a defense to enforcement.

Common Interest Communities (CICs): a planned residential development where 1) all

properties are subject to comprehensive private land use restrictions and which is 2)
regulated by a homeowner’s association (HOA). Typically, a written instrument called a
declaration and has four basic parts:
1. Homeowners association: it establishes the association that will administer the CIC,
species the associations powers, and provides for an elected board of directors or similar
group.

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 2. CC&Rs: it imposes CC&Rs or similar restrictions on all land within the CIC. These
restrictions may be enforced as real covenants or equitable servitudes.
3. Assessments: it requires all unit owners to pay monetary assessments which finance the
operation of the association.
4. Ownership rights: it generally provides that each unit owner hold a fee simple absolute
in their particular own unit, an undivided interest in common areas of the CIC, and a
membership interest in the association. Alternatively, title to the common area may be
held by the association on behalf of the unit owners.

Ex. Vernon Fire Depot. v. Connor: FD wanted to build a hall and sell alcohol but the township
HOA had a restrictive covenant against alcohol on the premises – despite majority of
homeowners agreeing to release the covenant, the court found it was not such a substantial
change in environment to frustrate the original purpose and allow release.
 Rule: A restrictive covenant is not invalidated by non-conforming activity that takes
place outside the restricted tract.
 Takeaway: Restrictive covenants may be discharged if the original purpose of the
covenant has been destroyed or materially altered by changed conditions, and there is no
longer a substantial benefit from the covenant’s enforcement. Changed conditions may be
demonstrated by establishing acquiescence in the breach of the covenant, abandonment
of the covenant, or changes in the character of the immediate neighborhood. If not
discharged, a restrictive covenant will be enforced, but strictly construed, because it
interferes with the free use and enjoyment of property.
o It is only when violations are permitted to such an extent as to indicate that the
entire restrictive plan has been abandoned that objection to further violation is
barred.

Border Lot common situation for defense of Changed Conditions Doctrine:

When a vacant lot on the edge of a subdivision is restricted to residential use but is no longer
suitable for this purpose – usually a busy street built up next to. Courts tend to reject such claims
in favor of residential purposes.

Logical implications that initial allocation of a property right is irrelevant because competing
parties will bargain their way to an efficient resolution, assuming no transactions costs. Law and
Economics.

Efficient Solution’s:
1. Invalidate the restriction and enjoin, or
2. Compensate objecting owner with damages.

Where there is little continuing value because the purpose designed and intended for originally
has changed or become less important, monetary damages are more appropriate relief than an
injunction.

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Governing the Development:
CIC declaration provides that the association will:
1. Maintain the common areas of CIC,
2. Enforce the CC&Rs,
3. Adopt and enforce rules to supplement CC&Rs,
4. Collect assessments from the unit owners, and
5. Take such other actions as are necessary to administer the CIC.

States disagree about the appropriate scope of judicial review re: CIC/HOA’s.
1. Business judgment rules: the HOA is akin to a corporation and follows corporate law.
2. Reasonableness standard: HOA not liable if the board made the decision in good faith
and rationally believed it was appropriate.

Restatement: act reasonably in the exercise of its discretionary powers.

Interpreting CC&Rs:
Restrictive Covenants were narrowly construed at common law because they interfered with the
free use of land. Today they are widely used and commonly recognized.

Modern view: to give interpretation effect to the intention of the parties ascertained from the
language in the writing and the circumstances around the creation of the servitude to carry out
the purpose for which it was intended.

Terminating Covenants:
 Natural termination
 Release
 Abandonment
o If all or great majority of covenantors are in violation
 Waiver
 Merger
 Estoppel
 Prescription
 Condemnation
 Changed conditions (Ex. Vernon)
 Operation of statutes of repose (covenants terminate after 30 years, unless readopted)
 Sale to a BFP without notice

License language – landowner “granting permission to do, use, pass …” vs. an easement with a
natural end “Granting a right of way…restricting this activity…etc.” perpetual or term of time.
License is temporary or shorter in time.

NUISANCES
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PRIVATE nuisance: a nontrespassory invasion of another’s interest in the private use and
enjoyment of land. Almost all nuisances are private.
PUBLIC nuisance: an improper interference with a right common to the public.

To establish a PRIVATE nuisance, the defendant’s conduct must have resulted in an

intentional, nontrespassory, unreasonable and substantial interference with the use and
enjoyment of the plaintiff’s land.

Elements:
1. Intentional: The defendant's conduct is intentional if he acts for the purpose of causing
the harm or he knows that the harm is resulting or is substantially certain to result from
his conduct.
2. Nontrespassory: the interference must not involve any physical entry onto the land of
another period for example noise, vibration, light, an odor are all viewed as
nontrespassory invasions.
3. Unreasonable: jurisdictions differ about the meaning of this element.
a. Some states follow the gravity of the harm test: the defendant's conduct is
unreasonable if it causes substantial harm, regardless of the social utility of the
conduct.
b. Many states use the restatement standard: conduct is unreasonable if the gravity
of the harm outweighs the utility of the conduct. Restatement section 826 A.
c. A number of states use multi factor tests that fall somewhere between these two
approaches.
4. Substantial interference: there must be a real an appreciable invasion of the plaintiffs
interests.
5. Use and enjoyment of land: the defendant's conduct must interfere with the use and
enjoyment of land for example causing physical damage to the property or personal
injury to occupants.

Ex. Boomer v. Atlantic Cement Co.: D is a cement plant in the Hudson River valley. Its
surrounding neighbors brought suit alleging that the pollution Atlantic produces as a byproduct
of its operation is a nuisance and causes damage to the Ps’ properties.
 Rule: Permanent damages, rather than an injunction, are appropriate when the
damages resulting from a nuisance are significantly less than the economic benefit
derived from the party causing the harm.
 Takeaway: Generally, an injunction is appropriate in cases where a nuisance would
otherwise persist after a trial. However, an injunction in this case would require Atlantic
to completely close its operation unless a cleaner method of producing cement could be
found. By awarding an injunction that will be lifted once permanent damages are
paid, Atlantic may keep its business open, and Boomer will be compensated for the
harm he may suffer.

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Nuisance vs. trespass: dust, fumes and smoke were seen as akin to noise and vibration than to
physical matter. Today some courts impose trespass liability for microscopic particles. “only
intrusions by physical, tangible things are capable of constituting trespass.”

Appropriate Remedy: injunction or damages.

Ex. Thomsen v. Greve: Ps complained about neighbors stove which lets smoke into their house
and became unbearable.
 Rule: Intentionally interfering with others’ use and enjoyment of their home by
subjecting them to odor and smoke is a nuisance. A private nuisance is a non-trespassory
invasion of another’s interest in the private enjoyment of land. The invasion must be
intentional and unreasonable for liability to exist.
 Takeaway: Whether an invasion is unreasonable depends on the extent and character of
the harm, the social value the law attaches to the type of use or enjoyment invaded, the
suitability of the particular use or enjoyment to the character of the locality, and the
burden on the person harmed of avoiding the harm.
o The social value of allowing a person to enjoy his or her home is great. It is
unreasonably burdensome to expect people to avoid smoke by moving or
keeping the windows closed.

Defining “Unreasonable:”
1. In determining the gravity of the HARM from an intentional invasion of another's
interest in the use and enjoyment of land, the following factors are important:
a. the extent of the harm involved
b. the character of the harm involved
c. the social value that the law attaches to the type of use or enjoyment invaded
d. the suitability of the particular use or enjoyment invaded to the character of the
locality, and
e. the burden on the person harmed of avoiding the harm.
2. In determining the UTILITY of the conduct:
a. the social value that the law attaches to the primary purpose of the conduct
b. the suitability of the conduct to the character of the locality, and
c. the impracticability of preventing or avoiding the invasion.

Whether or not to presume if an interference was unreasonable is subjective to the claimant's

point of view and recount of the facts.

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