Property

I. AQUISITION OF PROPERTY OTHER THAN BY VOLUNTARY TRANSFER

A. First in Time (Aquisition by Conquest, Capture, Creation)

1. Conquest

a. Conquest--where title is acquired and maintained by force/conqueror proscribes rules and regulations(Johnson)

b. conquest takes precedence over first in time(Johnson)

2. Capture

a. Animals of ferae naturae is property only when they are occupants of property/once leave property premises = no longer property.(Pierson)

b. Must have actual possession of animal to have capture. Wounding not enough. (whaling-just cuz have harpoon, property goes to one who brings it in)(Pierson)

c. When a legal business operation exists, one that hinders/obstructs not under FAIR COMPETITION is held liable(Keeble)

d. Gas/oil like ferae naturae and thus have no control over their movements/only property when on your property

3. Creation

a. Unfair mkt conditions, such as freeloadling hurt the general public(International News)

b. Those create property, such as the news, should have exclusive rights to the property (International News)

4. Basis for Property rights

a. First in time/First occupancy--most influential

b. Labor Theory--Those who improve the lot the most should get property rights

c. Utilitarian Theory--Those who make the best use of the land/Property should be assigned to those who use the land to the highest and best value

5. EXTERNALITY--an external effect that has not been accounted for

a. not compensated for

b. example: if a buffer zone if implemented around a national park--the externality is the limited tax growth

B. ACQUISITION BY FIND

1. RULE--The finder of a lost article is entitled to it as against all persons except the real owner (ARMORY)

a. "THAT THE TITLE OF THE FINDER IF GOOD AS AGAINST THE WHOLE WORLD BUT THE TRUE OWNER"

2. RULE--A landowner may claim custody of things found on the land if the owner has EXERCISED SUFFICIENT CUSTODY OR CONTROL of the land. (Hannah)

3. RULE--If left in PUBLIC PLACE, property goes to the finder. (Bridges)

4. RULE--If a man finds a things as the servant or agent of another, (under another's employment), he finds it not for himself, but for his employer. (South Stafford Water Co.)

5. Social Policy--Favor finder when find on someone else's property to ENCOURAGE people to find and disclose to true owner.

6. RULE--Property left VOLUNATARILY goes to the owner of the premises. (McAvoy)

7. RULE--ABANDONED PROPERTY, property intentionally and voluntarily relinquished with NO INTENT to reclaim, is AWARDED to the FINDER rather than the owner of the premises. (note 3/p. 79)

8. TREASURE TROVE--Treasure hidden WITH INTENT to reclaim went to the KING/the STATE(note 4/p. 79)

a. different from ABANDONED PROPERTY that goes to the FINDER

b. modern American cases TREASURE TROVE, usually awarded to FINDER as long as not trespassing

C. ACQUISITION BY ADVERSE POSSESSION

1. ADVERSE POSSESSION FUNCTIONS AS A METHOD OF TRANSFERRING INTERESTS IN LAND WITHOUT THE CONSENT OF THE PRIOR OWNER, AND EVEN IN SPITE OF THE DISSENT OF SUCH OWNER.

a. usually from those in occupancy by mistake

b. acquire ADVERSE POSSESSION by overcoming statute of limitations for ejectment by the rightful owner

c. good faith not required

2. REQUIREMENTS FOR ADVERSE POSSESSION

a. must have EXCLUSIVE occupancy

b. occupancy must be OPEN AND NOTORIOUS enough to give the owner notice

c. occupancy must be ADVERSE AND HOSTILE--inconsistent to the claim of the real owner

d. CONTINOUS AND UNINTERRUPTED for a certain period of time

3. COLOR OF TITLE V. CLAIM OF TITLE/RIGHT (p. 104)

a. Color of title:

(1) claim founded on a written instrument (a deed, a will)

(2) judgment or decree that is for some reason defective and invalid

(a) ie where a grantor does not own land conveyed by deed or is incompetent to convey, or the deed is improperly executed

b. Claim of title:

(1) one way of expressing the requirement of hostility or "claim of right" on the part of the adverse possessor

c. Tacking (Howard v. Kunto) p. 108

(1) using predecessors occupancy to establish continuity

(2) tacking of adverse poss = OK if successive occupants in "privity"(continuity of actual possession/formal connection between owners)

(a) buyer-seller = privity

(b) trespasser-trespasser = NO privity

-tacking need 1) continuity 2) privity

4. AVERSE POSSESSION FOR PERSONAL PROPERTY (O'Keefe v. Snyder) p. 117

a. Extension of Statute of Limitations

(1) insanity

(2) minority - underage

(3) imprisonment

b. Discovery Rule

(1) delays running of statute of limitations

(2) if diligently search for property - statute begins when property found

(a) property is easier to move around than real property

II. POSSESSORY ESTATES

GRANTOR TYPE FUTURE THIRD

INTEREST PARTY

(reversionary interest)

================================================================= | |

| |

FEE SIMPLE | |

ABSOLUTE | |

| |

FEE SIMPLE |possiblity of reverter |

DETERMINABLE | (automatic) |

| |

FEE SIMPLE SUBJECT |power of term/right of |

TO CONDITION |reentry(discretionary) |

SUBSEQUENT | |

| |

FEE SIMPLE SUBJECT | | executory

TO EXECUTORY | | interest

INTEREST | | (auto)

| |

=================================================================

(reversions)

| |

FEE TAIL | reversion or | remainder

| | (vested)

| |

LIFE ESTATE | reversion or | remainder

| | (vested/

| | contigent)

| |

LEASEHOLD | reversion or | remainder

| | (vested/

contigent)

A. Up from Feudalism

1. William the conqueror established the Fuedal system in England and from this sytem the law of real property developed.

a. William parceled out tracts of land to his chief supporters who became his tenants in chief. In exchange for land each tenant agreed to render the king specified services. ie. military and economic support.

b. each tenant in chief parceled out lands to a subtenant and required from the subtenant a promise to render services. The subtenant then culd SUBINFUEDATE to another tenant extracting services from him. This was known as the FUEDAL LADDER.

c. fuedal services reserved by the contract of subinfuedation were the fuedal equivalent of taxes. The man in possession was the big winner as inflation rose because possession kept its value while the value of the fixed services owed declined.

d. FUEDAL INCIDENTS were like services, a form of taxes and fell due on a number of occasions, particularly when the tenant below died. When incidents fell the lord got possession of the land back. These incidents were jealously guarded by the lords and more valued than fuedal services. Fuedal incidents were the following:

(1) ESCHEAT - if a tenant died without heirs the possession of the land reverted to the lord.

(2) FORFEITURE - if a tenant was convicted of breaching his oath to the lord, the lord repossessed the land.

(3) WARDSHIP AND MARRIAGE - the lord was entitled to sell tenants minor heir in marriage if he died leaving one.

-subinfuedation devalued fuedal incidents because by interposing another tenant between the lord and the tenant in possession, when the incidents fell due the lord did not possession but only the MESNE LORD'S rights against the tenant in possession.

e. SATUTE QUIA EMPTORES' - prohibited further subinfuedation in a fee simple. As the price for prohibiting further subinfuedation the top lords had to concede to their tenants the right to ALIENATED THEIR LAND. THUS, THE RESULT WAS TO ESTABLISH THE PRINCIPLE THAT LAND SHOULD BE FREELY ALIENABLE. It did not however forbid subinfuedation in less than fee simple, ie: fee tail, life estate, or a term of years with a reversion.

B. THE FEE SIMPLE - an estate that has the potential to endure forever. It is created by O granting land to "A and his heirs."

1. Alienability - transfer anytime when alive

2. Inheritability - tranfer upon death

3. "to A and his heirs" (p. 159)

a. "to A" - Words of Purchase

b. "and his heirs" - Words of Limitation

4. Fee Simple Determinable

Fee Simple Subject to Condition Subsequent

Fee Simple Subject to Executory Limitation

C. THE FEE TAIL - estate that has the potential of enduring forever but will necessarily cease if and when the first fee tail tenant has no lineal descendants to succeed him in possession. O grants land to "A and the heirs of his body."

1. to keep land in the family

a. A and heirs has fee interest until line runs out

b. reversion back to grantor

c. no remainder

2. inheritable and inalienable

3. only in direct line, thus not absolute

4. biological descendant

5. to entail

6. abolished/does not exist anymore

D. THE LIFE ESTATE - will end at the death of a person. O grants property "to A for life."

1. arose before fee simple

2. reversion or remainder

a. if comes back to original grantor = reversion

b. if granted to someone else = remainder

3. life estate terminates when original tenant dies and property goes to the remainder

a. similar to tenancy -- estate for a term

4. tendency for a limited duration

5. PRESUMPTION AGAINST LIFE ESTATE IN CONSTRUING CONVEYANCES

6. USE RESTRICTION VERSUS RESTRAINTS ON ALIENATION

7. DOCTRINE OF WASTE (p. 180 / Baker v. Weedon)

a. one restriction of life tenant = nothing can be done by life tenant that reduces property value.

b. designed to avoid the use of property which fails to maximize its value

c. life tenant may want to exploit the land for present values -- forbidden by the law of waste

d. permissive wastes - failure to take reasonable care of property. Results in liability less often than affirmative acts of waste (changing the character of the property)

e. ameliorative waste - when the principal use/character of the land is substantially changed so as to increase the value of the land.

(1) Baker v. Weedon - must maintain character of the property

E. FEE SIMPLE ABSOLUTE (FSA)

1. highest grandest estate

2. goes on forever/not limited in it's duration

3. fee simple absolute = life estate + remainder

a. if occupant less than FSA, someone else has a remainder

4. both inheritability (the right to transfer and dispose of at death) and alienability (the right to transfer and dispose of while living)

5. Under modern law the word of inheritance "and his heirs" are not necessary to convey a fee simple absolute anymore. The deed/will is presumed to pass the largest estate the grantor/testator owned.

a. A conveyance of a real property interest is presumed to be in fee simple absolute, unless the terms of the conveyance clearly indicated that another interest is intended. (Usually this is a statute rule)

(1) TO CONVEY PROPERTY WITHOUT SPECIFICATIONS = FEE SIMPLE ABSOLUTE

b. If a purported grant of a fee simple absolute interest contains restrictions that are contrary or "repugnant" to the broad rights associated with a fee simple absolute interest, the restrictions may be stricken from the conveyance.

6. RULES CONSTRUCTION

a. The terms of the conveyance must be found from within the written instrument itself unless the wording is so ambiguous that it cannot be interpreted in which case, intrinsic evidence of the grantor's intent may be introduced.

7. Restraints on Alienation - restrictions on ability to sell or give away property. Unreasonable restraints will not be enforced.

a. Disabling, Forfeiture, and Promissory

(1) Disabling Restraint - prohibits selling

(2) Forfeiture Restraint - imposes a penalty for attempting to sell.

(3) Promissory restraint - no punishment is stipulated but makes a person promise not to sell

b. Effects of Restaints on Alienation

(1) make property unmarketable

(2) tend to perpetuate the concentration of wealth

(3) discourage improvements on land

(4) prevents the owner creditors from reaching the land

c. RESTATEMENT - provides that an absolute restraint on a FSA is void. But partial restraints such as limiting a conveyance to certain person, and putting a time limit on the restraint, may be held valid if under all circumstances the restraint is found to be reasonable in purpose, effect, and duration.

F. DEFEASIBLE ESTATES - one that may last forever or one that may end upon the happening of an event in the future. (can be destroyed upon a condition)/defeated by conditions for fee simple -- not FSA

1. FEE SIMPLE DETERMINABLE (Mahrenholz p. 187)

a. created by language connotating that the transferror is conveying a fee simple only until the event happens

b. will end AUTOMATICALLY when a stated event happens/condition is broken

(1) grant has condition built into it/limited grant

c. future interest

(1) reversionary interest - possibility of reverter (automatic)

d. language of the conveyance -- A to B ...

(1) "so long as"

(2) "while"

(3) "until"

e. FSD + pass of reverter = FSA

2. FEE SIMPLE SUBJECT TO A CONDITION SUBSEQUENT

a. fee simple that does not automatically terminate but may be cut short or divested at the transferor's election when a stated condition happens

b. grant built outright, then attaches limitation

c. future interest (reversionary interests)/not automatic defeat if condition arises

(1) right or entry

or

(2) power of termination

(3) if not enter -- only a reversionary, and thus, can't pass on

d. language of conveyance -- A to B ...

(1) "but if"

(2) "upon condition that"

(3) "provided that"

** FDS and FSSCS = reversionary interests (can only follow defeasible fee simple.

** Public Policy - courts and legislatures tend to be hostile to

defeasible fee simples

** reversionary interests can't be passed on by will

- However, legal conveyances can be passed to legal

heirs by state law

- if no will goes to heir anyway through state statutes of

descent and distribution

3. FEE SIMPLE SUBJECT TO EXECUTORY LIMITATION (p. 230-231)

a. upon happening of a stated event, automatically divested by an executory interest in a transferee.

(1) executory - future/yet to be executed

(a) Thus, executory interest = future interest

b. only difference than FSD and FSSCS is that future interest goes to THIRD PARTY

(1) in practice, usually automatic

(2) but/if -- still automatic

c. in order for executory interests to become possessory, necessarily needs to DIVEST A PRECEDING VESTED FEE SIMPLE

4. GRANTING V. HABENDUM CLAUSES

a. Granting Clause

(1) tell what's given

(2) portion of a deed or instrument of conveyance which contains the words of transfer of a present interest

(3) prevails when there exists ambiguity

b. Habendum Clause

(1) "To have and to hold"

(2) supplement granting clause

(a) defines extent of the ownership in the thing granted to be held and enjoyed by the grantee

5. RESTRICTIONS ON USE

a. condition attached to defeasbile fee simple = unenforceable indirect restraint against alienation -- "if it materially affects marketability adversely"

(1) if condition subsequent in the conveyance expressly limits alienation of the property to an impermissibly small number of persons -- void and unenforceable

(2) CONVERSELY -- most use restrictions are valid and enforceable unless they also have the practical effect of "affecting marketability adversely" by unreasonably limiting the class of person to whom it may be alienated.

b. DEFEASIBLE LIFE ESTATES - upon marriage are valid if they do NOT have the purpose of:

(1) coecing abstention from marriage

(2) if they provide support until marriage without any desire to hinder marriage

III. CHAPTER THREE: FUTURE INTERESTS

A. INTRODUCTION

1. future interests = nonpossessory estates capable of becoming possessory

a. future interest is not a present possessory interest -- it is a presently existing interest that may become possessory

2. future interests, though, often have considerable present value

B. Interests retained by the transferor/grantor

(Future Interests in Transferors)

1. Reversion (p. 211-212)

a. a future interest retained whenever the transferor transfers a vested estate of a lesser quantum then he has

b. reversions result from hierarchy of estates

c. reversion = what transferor retains when conveys less than he had

(1) reversion = vested interests in the transferor

(2) where a vested estate of same duration not transferred, property may/will return to the grantor

d. most important future interest a transferor may retain

e. interest is NEVER CREATED

f. retained interest that always arises by operation of law

g. transferor has conveyed away a lesser estate than he had

h. you can never have a contigent reversion, what you have is a vested reversion subject to divestment

i. at common law a reversion was alienable during life and descendible and deviseable at death, it remains so today.

j. reversions can only follow interests less than a fee simple

k. no such thing as "possibility of reversion" -- "possibility of reverter follows a determinable fee

2. POSSIBILITY OF REVERTER (p. 213)

a. arises when a transferor carves out of his estate a determinable estate of the same quantum.

b. future interest remaining in the transferor or his heirs when a fee simple determinable is created.

c. EX. - O conveys Blackacre "to Town Library Board so long as used for library purposes." O has a possiblity of reverter.

3. RIGHT OF ENTRY/POWER OF TERMINATION

a. when a transferor creates an estate subject to condition subsequent and retains ths power to cut short or terminate the estate.

C. FUTURE INTERESTS IN TRANSFEREES

- (vested remainders, contigent remainders, & excutory interests)

- cannot be retained by the grantor/interests are created only in transferees

- Once created, a remainder or executory interest can be transferred back to the grantor, but the name originally given the interest does not change

1. Remainder (p. 214-215)

- must be capable of becoming possessory at the termination of a prior estate. (only possibility of possession necessary, not certainty)

- cannot divest any interest in a prior transferee (an interest that divests a prior transferee is an executory interest).

a. vested remainder

(1) given to ascertained person/person already born and identity is known

and

(2) not subject to condition precedent (other than the natural termination of the preceding estates)

b. contigent remainder

(1) given to an unascertained person

or

(2) subject to a condition precedent

- "A remainder is vested in A, when, throughout its continuance, A, or A and his heirs, have the right to immediate possession, whenever and however the preceding freehold estates may determine. A remainder is contigent if, in order for it to come into possession, the fulfillment of some condition precedent other than the determination of the preceding freehold estates is necessary."

- living people do not have heirs - only heirs apparent -- heirs cannot be ascertained until a person is dead

c. 4 differences between vested and contigent remainders (p. 221-222)

(1) a vested remainder accelerates into possession whenever and however the preceding estate ends

contigent remainder cannot become possessory so long as it remains contigent

(2) vested remainders are transferable inter vivos (between the living)

contigent remainders were inalienable under common law/modern American law - they are alieanble

(3) contigent remainders were destroyed if they did not vest upon termination of the preceding life estate

vested remainders were not destroyed in this manner

(4) contigent remainders are subject to the Rule against Perpetuities

vested remainders are not subject to the Rule against Perpetuities

** the law favors a vested construction over a contigent one if the instrument is ambiguous (Browning v. Sacrison p. 217)

- policy -- "quickens commerce in the ownership of property by facilitating alienability to a considerable degree.

d. vested remainder subject to open - a remainder vested in a class of persons, at least one of whom is qualified to take possession, but the shares of the class members are not yet fixed since more people become members of the class

"to A for life, then to A's children" the remainder is contigent until a has a child, then it is vest but until A is dead it is subject to open

However, the class closes whenever any member of the class can demand possession and no one born after that date can share the class gift

for the purposes of property law, a person is treated as "in being" from the time of conception. Thus, a child in the womb can share in a class gift if it becomes possessory before it is actually born.

** where a remainder is subject to a condition subsequent, it is termed a "vested remainder subject to divestment"

- vested remainder - "to A for life, remainder to B and her heirs, but if B dies before A, to C and her heirs."

. no condition is attached in the clause giving B his interest (remainder to B and her heirs) and a second clause was added to take the interest away from B if she fails to survive. The second clause is a condition subsequent. "but if" is a key phrase!

** where a remainder is subject to a condition precedent, it is termed a contingent remainder; some condition must be met before the remainder becomes possessory.(p. 216)

- contingent remainder - "to A for life, then if B survives A, to B and his heirs; otherwise to C and his heirs."

. the condition of survivorship is incorporated into the very gift to B, making it a condition precedent. If the condition is in the same clause as the gift, it is a condition precedent!

** remainder vested/contingent depends upon language employed. If conditional element is incorporated into the description of, or into the gift to, the remainder-man, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested.

NOTE: A remainder cannot follow a fee simple, it can only follow a fee tail, a life estate, or a term of years. A remainder cannot divest a preceding estate prior to its normal expiration.

2. Transmissibility of for taxation purposes (p.222)

a. can only tax transmissible remainders

b. get taxed on remainder even though not enjoying possession of it yet

3. EXECUTORY INTERESTS (p. 224-233)

a. executory - future, yet to be executed

b. executory interest = future interest in a transferee that must, in order to become possessory,

(1) divest or cut short some interest in another transferee (known as shifting executory interest)

(2) divest the transferor in the future (known as springing excutory interest)

c. MODERN EXCUTORY INTERESTS (p. 230-233)

(1) Statute of Uses permitted the creation of a new estate: fee simple subject to an executory limitation = a fee simple that upon the happening of a stated event, is automatically divested by an executory interest in a transferee.

(2) EXCEPTIONS - executory interest may be applied in 2 situations that do not fit the definitions set forth above.

(a) where there is a fee simple determinable followed by a future interest in a transferee

(b) where there is a contigent freehold following a term of years

Review

** remainder stands ready to succeed on the natural termination of the preceding estate

executory interest does divest the preceding estate

** remainder never follows a fee simple; fee simple might have an infinite duration

interest following a fee simple = executory interest

D. TRUSTS - The trustee manages the property for the benefit of the beneficiaries. The trustee takes the entire lagal interest in personal property and, if necessary to carry out the purposes of the trust, the legal fee simple in land.

The trustee has the power to sell trust assets and reinvest the proceeds in other assets unless the trust provides otherwise. The net income of the trust is paid to the beneficiaries, and upon termination of the trust, the trust assests are handed over to the beneficiaries.

1. Duties of a Trustee

a. administer the trust solely in the interest of the beneficiaries

b. self-dealing or lending of the trust property to the trustee in his individual capacity is prohibited

c. preserve the property, make it productive, and dispose of the income in the manner specified in the trust instrument

d. keep accurate accounts

e. invest prudently, keep trust property separately from own property

Broadway National Bank v. Adams - the court will enforce a dead trustees stipulation that creditors cannot touch the trust money when the beneficiaries interest is vested.

- English Spendthrift Clause

except for trusts given to a married woman - trust alienable and liable to debts/can't protect debts from creditors

- American Spendthrift Clause

trust given to a foolish/irresponsible (spendthrift) beneficiary shall not be alienated from him by anticipation and shall not be subject to be seized by his creditors in advance of its payments to him.

can't create spendthrift clause for oneself (p.241)

E. RULES FURTHERING MARKETABILITY BY DESTROYING CONTINGENT FUTURE INTERESTS - designed to destroy contingent future interests and make land marketable.

1. Rule in Shelley's Case

a. no significance today

b. simplified statement of the rule: If

(1) one instrument

(2) creates a life estate in land in A, and

(3) purports to create a remainder in persons described as A's heirs (or the heirs of A's body), and

(4) the life estate and remainder are both legal or both equitable

the remainder becomes a remainder in fee simple (or fee tail) in A.

O to A for life, then to A's heirs

- A has life estate + remainder = FSA

- if said "children" instead of heirs -- not within Shelley's case

- merge A with A's heirs = FSA

If there is no intervening estate between the life estate and remainder, the life estate merges into the remainder, giving A a fee simple (or a fee tail).

c. rule applies generally to remainders and not executory interests

d. Rule of Law, not rule of construction.

(1) Thus, applies regardless of the intent of the transferor.

2. DOCTRINE OF WORTHIER TITLE (p. 244)

a. where there is an inter vivos conveyance of land by a grantor to a person, with a limitation over to the grantor's own heirs either by way of remainder or executory interest, no future interest in the heirs is created but a reversion is retained by the grantor.

(1) O to A for life, then to O's heirs.

(a) take O's heirs -- O's reversion to FSA

b. still technically around

3. DESTRUCTIBILITY OF CONTINGENT REMAINDERS

a. A remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate.

b. remainder can only take vested estate at time vested

c. If the remainderman is not ready to take seisin when it is offered, he is wiped out and seisin moves on to the next vested estate.

d. furthered alienability

(1) contingent remainders made land less alienable and were thus objectionable

(2) under doctrine of destructability, contingent remainders were destroyed if they did not vest upon the natural or artificial termination of the life estate

(a) artificial termination of life estate = forfeiture or merger

(b) Thus, life tenant had the power to destroy contingent remainders whenever he wished

e. destructibility doctrine does NOT apply to executory interests

f. abolished in virtually all jurisdictions

4. THE RULE AGAINST PERPETUITIES

a. NO INTEREST IS GOOD UNLESS IT MUST VEST, IF AT ALL, NOT LATER THAN 21 YEARS AFTER SOME LIFE IN BEING AT THE CREATION OF THE INTEREST.

(1) "no interest is good (valid and enforceable)

(2) "unless it must vest"

(a) only contingent interests (contingent remainders and executory interests) are applicable for this rule

(b) vested interests are not objectionable

(c) rule does not apply to reversionary interests (rights of entry, possibility of reverters) or reversions because they are automatically vested as soon as they are created

(3) "must vest, if at all"

(a) must be decided withing permitted time

(b) don't care which way it goes as long as decided vest/not vest

(4) "at the creat of the interest"

(a) all judgements made at the time the conveyance is created/existing life + 21 yrs. at the time of the conveyance

(b) no "wait and see"

b. Compromise - property may be tied up with contingent interests for lives in being plus 21 years thereafter, but no longer.

c. Policy - furtherance of alienability to avoid property being non-productive, and society having less income without it.

(1) prevents undue concentration of wealth in the hands of the few.

(2) socially undesirable for some members of society to have assured incomes and be protected from the economic struggle for existence - survival of the fittest

(3) strikes a fair balance between the desires of members of the present generation, and similar desires of succeeding generations, to do what they wish with the property which they enjoy

(4) it is socially desireable that the wealth of the world be controlled by its living members and not by the dead.

d. Validating or Measuring Life

(1) the person who enables you to prove that the interest will necessarily vestor fail within 21 yrs. after some "life in being" at the creation of the interest

** (2) apply the what might happen test - if there is ANY possibility that the contingent interest will vest later than 21 yrs. after the life in being, the contingent interest is void from the outset

(3) PROCESS OF FINDING THE LIFE IN BEING

(a) assemble all persons who can affect vesting of the particular interest in question

(b) test each of these persons to see if the interest will vest or fail during the persons life or upon or within 21 yrs. after that person's death

(c) if there is no person among this group of relevant lives who meets these requirements -- interest is VOID

(d) LIVES IN BEING MUST BE PERSONS ALIVE AT THE CREATION OF THE INTEREST

validating lives do not have to be persons mentioned in the instrument

since an interest satisfies the rule if it is vested upon creat, you should classify the interest initially to see if any interest is then vested

e. Class Gifts (p. 257)

(1) where there is a gift to a class, the gift is not vested in any member of the class until the interests of all members have vested.

f. Indefinite/Definite failure of Issue

(1) failure of issue occurs when A is dead and all of his descendants are dead

(2) could be indefinite because someone's issues could go on forever (the contingency would never vest) --VIOLATES the Rule against Perpetuities

(3) "to A and the heirs of his body, and if A dies without issue, to B and his heirs."

(4) In almost all states today conveyance "if A dies without issue" = "if A dies without issue living at the time of his death" --definite failure of construction

g. "Wait and See" Rule

(1) interests are valid if they actually vest within the 21 yr period.

(2) takes into account unlikely possibilities that MAY occur (ie fertile octogenarian, unborn widow)

(a) fertile octogenarian - a person is presumed to be able to have children until they are dead. Some states, like New York, have statutes that presume that a female over the age of 55 cannot have a child.

(b) the unborn widow - the law assumes that a person's surviving spouse might turn out to be a person not now alive

h. Treatment of Options under Rule Against Perpetuities

(1) Cy Pres Doctrine - permits a court to reform an instrument so as to carry out the transferor's intent "as nearly as possible."

(2) fertile octogenarian - rectified by assuming that females over 55 cannot have children

(3) unborn widow - largely eliminated by a presumption that a reference to a spouse of a person is a reference to a person in being.

(4) administrative contingencies - eliminated by a presumption that the testator intended the contingency to occur, if at all, within 21 yrs.

(5) Pertuities Savings Clause - designed to terminate the trust at the expiration of specified measuring lives + 21 yrs.

When a trust terminates with the 21 yrs, all interests in the trust are necessarily valid. If the drafter mistakenly creates an interest that would otherwise be invalid, a SAVING CLAUSE will cure the oversight.

** Future interest retained by the transferor (reversions, possibilities of reverter, and rights of entry) are not subject to the Rule Against Perpetuities.

STEPS TO FOLLOW WHEN ANSWERING QUESTIONS ON FUTURE INTEREST

1) pay careful attention to the exact language of the grant

2) read and analyze the interests in a grant in sequence

3) classify the present estate - since some future interests can only follow certain types of estates, this will help figure out what interest you are dealing with

4) look at who has the future interest - if it is retained by the grantor, you have narrowed it down to a reversion, possibility of reverter, or a right of entry.

5) think about how the future interest will become possessory - does the person with the future interest wait patiently for the natural termination of the preceding estate (remainder) or does he divest the prior estate (executory interest, right of entry)

6) determine whether the interest is vested or contingent.

7) apply the necessary rule furthering marketability

IV. CO-OWNERSHIP AND MARITAL INTERESTS

A. COMMON LAW CONCURRENT INTERESTS

1. TYPES, CHARACTERISTICS, CREATION

a. tenancy in common

(1) tenants in common have separate but undivided interests

(a) each tenant entitled to entire property (each co-owner entitled to entire property separately)

(2) the interest of each is descendible and may be conveyed by will

(a) if decide to bail out - one can sell his fractional share

(3) fractional share usually 1/2 though not necessarily equal - could be 3/4 & 1/4

(4) no survivorship rights between tenants in common

(a) when tenant dies - his share goes to his heirs -- not to co-tenant

(5) if co-ownership is ambiguous - favor TENANCY IN COMMON

_________________________________________________________________

physical dividing of property = PARTITION

each co-owner has the right to partition

1) voluntary

a) voluntary partition preferable to judicial force

2) judicial force

a) divide property equally

b) normal means = sell & divide proceeds

c) partition sale = sale for taxes -- won't get best price

i) must sell to best bidder even if only bidder

__________________________________________________________________

b. joint tenancy

(1) ESSENTIAL 4 UNITIES

(a) time

- The interest of each joint tenant must be acquired or vest at the same time.

(b) title

- All joint tenants must acquire title by the same instrument or by a joint adverse possession.

- A joint tenancy can never arise by intestate succession or other act of law.

(c) interest

- All must have equal undivided shares and identical interests measured by duration.

(d) possession

- Each must have a right to possession of the whole

- After a joint tenancy is created, however, 1 joint tenant can voluntarily give exclusive possession to the other joint tenant.

- (The unity of possession is essential to a tenancy in common as well; none of the other 3 unities is.)

(2) EACH co-owner entitled to possession of entire property simultaneously

(3) fractional undivided shares required to be equal

** (4) right of survivorship

(a) when co-tenant dies - living co-tenant gets everything

(b) the surviving co-tenant has the right to the entire estate

(c) joint tenant can not pass his interest by will

(d) estate of the dead decedent gets nothing

(e) if originally 2 joint tenants and 1 dies - other gets whole || if have 3 joint tenants and 1 dies - now have equal halves

(5) unlimited number can hold a joint tenancy as long as satisfiy the 4 unities

(6) PARTITION (physical division of property)

(a) before can be partitioned must have a severance [of 1 of the 4 unities]

(b) severance [of 1 of the 4 unities] makes the joint tenancy a tenancy in common

(c) severance can be done without consent of the other joint tenant - can be done in secrecy

(d) ex 1

A & B are joint tenants

if A wants to sell to C - sell severs joint tenancy and makes it a tenancy in common

C did not obtain the property in the same time and circumstance as B

(e) ex 2

3 joint tenants - A B C

if A sells to D

B & C have equal 2/3 interests in "joint tenancy"

B & C are "tenants in common" together with D's third interest

(7) BENEFITS

(a) good for avoidance of probate

(b) great for singular ownership by 2 people

(c) when A dies - B gets everything

(d) because no passage of property - NO TAXABLE TRANSACTION

c. tenancy by the entirety

(1) married people own property as 1 person

(a) created only by husband and wife

(2) has 5th unity in addition to the 4 unities of joing tenancy - the unity of marriage

(3) surviving tenant has the right of survivorship

(4) can only convey as husband and wife

(a) 1 tenant can not convey his interest to a third party

(5) no individual severance

(a) neither acting alone has the right to judicial partition

(b) DIVORCE terminates tenancy by the entirety - absent some agreement to the contrary -- parties usually become TENANTS IN COMMON

2. SEVERANCE OF JOINT TENANCIES

a. STRAWMAN PRINCIPLE (RIDDLE p. 284)

(1) olden days - person can't convey to oneself cuz would break the 4 unities

(2) convey to strawman and he conveys it back to joint tenants

(a) how conveyed sole ownership to joint tenancy - 4 unities preserved

(3) strawman rule abolished

(a) today, grantor can convey to himself and another as joint tenants without strawman

(4) RULE

- after RIDDLE could must use strawman

- now can have direct unilateral severance

- 1 joint tenant may unilaterally sever the joint tenancy without the use of an intermediary device

b. MURDER (p. 290)

(1) murder severs the JOINT TENANCY and converts it into a TENANCY IN COMMON

(2) the killer loses his right of survivorship in the decedent's share

c. MORTGAGE (HARMS p. 290)

(1) - A and B are joint tenants

- B borrowed $ and used his interest in joint tenancy as security

- B died and creditor want joint tenancy severed so can get his $

(2) LIEN (majority)

(a) no title passes when mortgage is given

(b) right to lien = passive/inchoate right

(c) no severance occurs (generally)

(d) HARMS decided with LIEN

(e) bad policy

- leave mortgagor holding the bag

- mortgagor can protect himself by getting A to co-sign loan

- every joint tenant has right to unilaterally sever property -- B should have severed initially

(f) property right of joint tenant B is severed at his death -- no more mortgage

(3) TITLE (minority)

(a) severance will occur

(b) mortgage would get 1/2 of A & B's property

3. JOINT TENANCY BANK ACCOUNTS

a. 3 TYPES

(1) "true joint tenancy bank" account

(a) will be enforced as joint tenancy property

(b) O intends to give to A 1/2 of sum deposited + survivorship rights

(2) "survivorship rights" account

(a) device for making testamentory transfer

(b) some states won't enforce as joint tenancy property (Uniform Probate Will will enforce)

(c) O makes gift to A of only survivorship rights

(3) "convenience" account

(a) not enforced as joint tenancy

(b) telling sign = when 1 party has no transactions throughout the entire life of the account

(c) O intends A only to have power to withdraw on the account to pay O's bills and not have survivorship rights

(d) no survivorship rights intended even though documents said there was a right to survivorship

b. WIGGINS (p. 299)

(1) A and B had joint tenancy bank account

(2) B made complete withdrawal and placed $ in another acct

(3) serious breach of joint tenancy -- severance

(4) severance occurred before A's death

(5) because severance by B (reduced to tenants in common) - B only gets 1/2 on A's death and A's estate gets other half

(a) if B would have waited until A's death - B would have gotten everything

(6) RULE (severance of a joint tenancy bank acct)

If one joint tenant withdraws the funds beyond the control of the other joint tenant in such a manner as to be inconsistent with the continued possession and ownership, it serves the joint tenancy.

4. RELATIONS AMONG CONCURRENT OWNERS

a. Partition (JOHNSON p. 304)

(1) HOMESTEAD

- legal recognition that a spouse that is widowed should have a right to remain on the home for life (life estate)

- EXEMPT from certain debts and can not bee conveyed without the consent of the spouse

- homestead is only for life estate - only if wife has no share of the property

- superior to other dispositions

- in JOHNSON had a homestead on a homestead (husband died - wife had homestead -- wife died - wife's 2nd husband had homestead)

(2) RULE 1

- tenants in common/joint tenants have the right to a partition (no partition when have tenancy in the entirety)

(a) right to partition

- right to go to court seeking an equitable rememdy

- court must 1st decide if can divide property in kind

1) if partition in kind - OVALITY

- payment of 1 party to another in a partition to even out the share

- what 1 party owes to another to even out portions

- can't make up gross discrepancies with ovality

2) if can't partition in kind - must sell property & divide proceeds

- usually sell cuz get objections by party

(3) RULE 2

(a) tenant in common can't make co-tenants pay for improvments when co-tenants did not give consent to the improvements

(4) RULE 3

(a) if life tenant improves property - normally he does not get value for the improvements

- benefit goes to remainderman

b. Sharing the Benefits and Burdens of Co-ownership

(1) RULES (SWARTZBAUGH p. 312)

LEASE

(a) one joint tenant can enter into a lease of their joint property over the objection of the other

- rights conveyed = limited to the rights they have [convey in lien (their share of the property)]

- 1 joint tenant can make a lease of the joint property if he only binds his share

- act of 1 joint tenant without consent of other can not bind or prejudicially affect the rights of the latter

(b) remedies for rent

i) partition

ii) enter into possession with the lessee

(2) ACCOUNTING V. CONTRIBUTION

- issues exist between co-tenants

(a) ACCOUNTING

i) a co-tenant who collects from 3rd parties rents and other payments arising from the co-owned land must acount to co-tenants for the amounts received.

ii) duty of 1 co-tenant to pay to the other the income from the co-owned land

a) give co-tenant amt in excess of his share - net rental income)

iii) accounting arises more times than contribution

iv) accounting happens when 1 co-tenant is in possession and 1 is out of possession

a) give net rental income if others out of possession

b) if force other out of possession (ouster) - must account to other co-tenant for value of his ousted possession

(b) CONTRIBUTION

i) duty of 1 co-tenant to pay the other for expenses of the property

a) co-tenants pay their share of the expenses

b) costs of preserving title to property

- taxes, mortgage payments, and other carrying charges

c) does not include necessary repairs or improvements (MAJORITY)

- credit given for reasonable repair at partition

- also at partition - co-tenant who made improvements gets to keep the value of the improvements

ii) usually no contribution during co-tenancy - no interim right of contribution (only contribution at partition)

a) usually happens when settle accounts during partition

b) during co-tenancy - have accounting but many juris. no contribution till partition

c) duty to contribution may arise if co-tenant asks for interim accounting -- may be forced to contribute before partition

(c) improvements = responsibility of co-tenant who put them in

** - right of accounting and contribution relates to expenses of preservation (not enhancements) and to income from 3rd party sources

(d) absent ouster, the accounting is usually based only on actual receipt, not FMV

- ouster of co-tenant = unlawful deprivation of possession by 1 co-tenant

(e) absent ouster, a co-tenant in EXCLUSIVE POSSESSION is not liable to co-tenants out of possession for a share of the reasonable rental value of the property.

(f) a co-tenant paying more than his share of (1) taxes, (2) mortgage payments, and (3) other necessary charges generally has a right to contribution from the other co-tenants, at least up to the amt of the value of their share in the property

(g) as to necessary repairs, a co-tenant making or paying for them has no affirmative right to contribution from the other co-tenants in the absence of an agreement

- how much to spend = too uncertain for law to decide

(h) improvement - co-tenant no right to contribution

B. MARITAL INTERESTS

1. The Common Law System

a. During Marriage (The Fiction That Husband and Wife are One)

(1) old days

(a) everything wife earned and had while married belonged to the husband

(b) husband and wife were 1 entity - that of the husband

(c) property alienable by the husband and reachable by his creditors

(2) MARRIED WOMAN'S ACT

(a) removed disabilities of coverture

(b) married woman had control over their property

(c) wife also gained control of her earnings outside the home

(d) wife now equal partner in the estate

(3) SAWADA (p. 326)

(a) since "tenancy in the entirety" between husband and wife

- can not be destroyed by voluntary alienation, by levy or execution, or by compulsory partition

- indivisible except by joint actions of spouses

(b) thus, injured party in car accident can't get to husband's house cuz D. had "tenancy in the entirety"

RULE ------------ - "tenancy by the entirety" immune to creditors of a single spouse

(4) note 2 p. 334

(a) ABANDONMENT does not affect "tenancy by the entirety" (creditors can't get to it) -- only dissolution of marriage

b. Termination of Marriage by Dissolution or Divorce

(1) common law

(a) strongly favored husband

(b) emphasis on how property was held -- usually by the husband

(c) husband get $ he earned + property besides the house

(d) wife only gets alimony

(2) no-fault divorce

(a) equitable distribution

(b) movement towards equal distribution of marital property upon divorce

(3) GRADUATE DEGREE (GRAHAM p. 338)

(a) though wife gave up many things and supported husband through MBA school - MBA degree does not = property

- can't be bought/not inheritable

- no exchange value on the open mkt

(b) earning capacity does not correlate directly with degree

- reputation, diligence, and personality determine how much $ going to make

(c) degree not taken into consideration as property when . . .

1) if there was other marital property

2) if she had asked for alimony - earning capacity would be taken into account

(d) MAHONEY (p. 343)

- professional degree = too speculative

- therefore give middle of the road compensation -- $ reimbursement for services that were rendered

c. Termination of Marriage by Death of 1 Spouse

(1) common law

(a) dower

- gift by the husband to the wife at the wedding

- law gave dower to the wife in all freehold land of which the husband was seised during marriage and which was inheritable by the issue of husband and wife

(b) curtesy

- a life estate in all the wife's lands which continued after the wife's death

(2) modern statutory rights

(a) upon divorce, marital property is distributed in accordance with the state's existing division system - usually equitable distribution

- equitable does not mean equal

(b) upon death, the decedent owns 1/2 of the marital property and can dispose of it by will; the surviving spouse owns the other half of the marital property

V. LEASEHOLDS: THE LAW OF LANDLORD TENANT

A. THE LEASEHOLD ESTATE

1. Tenancy for a Term of Years

a. fixed tenancy (period of time) with known beginning and a known end

b. since term stated from the outset when it will end - no need for notice

(1) main difference from periodic tenancy which requires a notice

2. The Periodic Tenancy

a. lease for a period of some fixed time which continues (repeats) from period to period until either landlord or tenant gives notice for termination

(1) NOTICE needs to be given

b. usually month to month

3. The Tenancy at Will

a. no fixed period that endures so long as both landlord and tenant desire

(1) a transitory agreement until either does not want to stay

b. "terminates by either party whenever other wishes"

(1) ends when 1 of the parties terminates it

(2) also ends at the death of 1 of the parties

4. The Tenancy at Sufferance (hold-over tenant)

a. arises when tenancy for a term ends and tenant won't leave

b. no longer a tenant because term for possession is over

c. tenant is not a trespasser because his original entry was legitimate

d. must go to court to get rid of

5. today - must have reciprocal termination rights -- if 1 party can terminate at will, so can the other party (MAJORITY)

a. minority (GARNER p. 379) - no need for reciprocal termination rights

6. if don't know exact duration (ie lease for duration of the war/as long as use for that purpose) -- minority and growing view to lease for as long as condition is prevailing

a. intent of the parties sustained

B. THE LEASE

1. LICENSE V. LEASEHOLD

- does not depend on what people call it - depends upon the legal effects of the provision

a. LICENSE

(1) a personal privilege to use the land of another in some specific way or for some particular purpose/act

(2) revocable at will

(3) license = privilege to use land as distinguished from possession

(4) ie. - movie ticket = license to use a theater

(5) ie. easement also = right to use, not to possess

b. LEASEHOLD

(1) grant to exclusive possession to use the land for any lawful purpose(s) "not inconsistent with the privileges granted the tenant."

(2) property right

(3) may be personal or may be transferrable

(4) more than mere right to use - right to possess (occupy)

(5) usually with no restrictions on use

(a) not like license where only have specific use

2. LEASE -- CONVEYANCE V. CONTRACT (note 2 p. 386)

a. CONVEYANCE

(1) a lease transfers a possessory interest in land

b. CONTRACT

(1) modern lease always provides a number of promises (convenants)

(a) tenant promises to pay rent

(b) landlord promises to provide utilities

(2) takes better account of the party's expectations

(3) implied warranty of habitability - K principle adopted by the MAJORITY of juris.

(4) if tenant defaults on a lease - landlord may recover the agreed rent

(5) before possession usually apply K law

(a) tenant defaults on an agreement to make a lease - K damages

c. STATUTE OF FRAUDS

(1) American statutes provide that leases for more than 1 yr. must be in writing

(a) memo enough

(2) majority juris - allow oral agreement for a term less than 1 yr.

(a) minority - entry upon an oral agreement + payment of rent (part performance) creates a PERIODIC TENANCY not subject to the Statute

- conduct provides enough evidence of performance

d. FORM LEASES AND BARGAINING POWER

(1) landlords usually use form leases - standardize documents

(a) strongly favor landlord

(b) take-it-or-leave-it basis (nonnegotiable)

(2) if unequal bargaining power and unconscionable K - w/hold judicial enforcement

(a) usually in residential leases

C. DELIVERY OF POSSESSION (HANNAN p. 391)

- equal support for both sides -- neither Am. nor English rule is the majority

- can safeguard by putting removal of hold-over in the K clause before take possession

1. ENGLISH RULE

a. implied convenant requiring lessor to put lessee in possession

b. landlord has obligation to put in actual possession

c. rational - that the landlord has more knowledge over the facts of wrongdoer -- he should be the one to remove

2. AMERICAN RULE

a. no duty upon lessor for wrongdoers/trespassers

b. favors landlord

(1) all he has to do is make the right available

(2) landlord does not have to do anything about a hold-over tenant

(a) rational - that landlord is not responsible for a hold-over tenant who had no control over

(3) up to tenant to enforce right of possession against wrongdoers

D. ASSIGNMENTS AND SUBLEASES

1. ASSIGNMENTS

a. transfer of entire balance of time of term

(1) assignment of the rights

b. tenant who assigns = assignor

new tenant = assignee

L

|\ default

| \

T1-T2

c. if T2 defaults - landlord can sue T2 directly if T2 assumes duties

(1) in normal assignment - all T2 gets is T1's rights

(2) T1 is rarely relieved of responsibility

(a) exceptions

- landlord relieves him - does not sue T1

- landlord and T1 write a new agreement

(3) if T2 agrees to assume all (K) obligations - just means that L can sue both T1 and T2

(a) assignees never have privity of K unless they assume

d. PRIVITY

(1) PRIVITY OF ESTATE (possession) between lessor and lessee is broken

(2) PRIVITY OF K (actual lease) is unaffected for T1

L

|

|

T1--------T2(no assume)---------T3(assume)

- L can sue T1 and T3 -- can't sue T2

- T1 has privity of estate [until his possession ends] and privity of K

- T2 has privity of estate [until his possession ends] and no privity of K

- T3 has privity of estate [until his possession ends] and privity of K

L

|

|

T1--------T2(assume)--------T3-------T4

- T1 has privity of estate and privity of K

- hwr once assign, T1 no longer has privity of estate

- since T2 assumes - has privity of K along with privity of estate -- T1 still has privity of K

- if T4 defaults (given that T3 and T4 did not assume) - L can sue T1 and T2

2. SUBLEASE

a. transfer of balance less than entire term

b. if have reversionary right - majority says sublease

c. tenant who sublets = sublessor

tenant who comes in = sublessee (subtenant)

L

|

|

T1------T2

d. T1 is never relieved of duties

(1) when T2 defaults - L sues T1 who can then sue T2 to recover $

(a) no direct line of action between L and T2

e. PRIVITY of estate and K are unaffected by T2

(1) T1 has privity of estate when in possession

(2) T2 does not have privity of K

*** (a) T2 does NOT ASSUME

3. CONSENT BY THE LANDLORD TO SUBLET

a. MAJORITY

(1) if have clause that a lessor must approve the sublet -- can reject no matter how suitable

(2) can restrain arbitrarily

(3) DUMPORE (p. 417)

(a) when landlord reserve right to give consent and gives it -- consent is deemed given for all similar situations

- ie. when landlord says can sublet for 1 summer - can sublet for another summer without further consent

b. MINORITY (KENDALL p. 406)

(1) if have approval clause, can only withhold where lessor has a commercially reasonable objection to the assignment

(2) landlord must have good reason/commercially reasonble reason for withholding sublet

4. PERCENTAGE/PERSONAL LEASES (note 3 p. 415)

a. courts decide BOTH WAYS with cases for leases where lessor has relied on the tenant's skill and knowledge (has special trust in the tenant) -- lease is PERSONAL and not TRANSFERABLE

________________________________________________________________

LEASE INGREDIENTS

1. who - what - when - where - why - (how)

2. Statute of Fraud items

a. who are the parties

b. identification of the premises

(1) usually street address sufficient

c. what

(1) usually renting out accomodations

d. timing (when)

(1) beginning and ending dates of the term

(2) tenancy for a term - can leave without giving notice

(3) if stay after term look to

(a) agreement (supercedes everything else)

(b) state law

(c) common law

e. what (specifying the premises) - RENT

(1) may specify uses on the property (nothing illegal)

f. how and when consideration to be paid

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E. TENANT'S DUTIES; LANDLORDS RIGHTS AND REMEDIES

1. The Duty Not to Commit Waste, the Duty to Repair, and Related Issues

a. LAW OF WASTE

(1) the duty not to commit waste is breached if a tenant makes "such a change as to effect a VITAL and SUBSTANTIAL portion of the premises, as would change . . .

(a) its characteristic appearance,

(b) the fundamental purpose of the erection, or

(c) the uses contemplated, or

(d) a change of such a nature, as would affect the very realty itself - extraordinary in scope and effect, or unusual in expenditure.

(2) temporary occupant can not due anything to DAMAGE the property

(a) damage = anything that changes the character of the property

(3) loophole

(a) if neighborhood has changed so drastically so as to make the present property useless

(b) can change to conform to community

b. AMELIORATIVE WASTE

(1) change in property that enhances value

(a) ie. erect condos in beautiful peaceful park

(2) unfortunately - different perspectives place a different value on changes

c. VOLUNTARY V. INVOLUNTARY/PERMISSIVE WASTE

(1) VOLUNTARY

(a) arise from AFFIRMATIVE ACTIONS

(2) INVOLUNTARY/PERMISSIVE

(a) arising from a FAILURE to act where there is a duty to do so

(b) tenant's duty to repair

- duty to repair only extended to ordinary maintenance

- commonly not extended to fair wear and tear or damage by fire or other casualty

i) current trend relieves tenant of liability to damage by fire caused by his negligence

d. GREENFIELD (p. 419)

(1) old general rule that without specific provision in the lease - tenant not relieved of K duty despite total destruction

(a) old days - land = important part of the lease (soil interest still there after the fire)

(b) property was shared risks and bounties

- tenant pay rent for destructed premises

- landlord gets property back with permanent damage

(2) no major change to common law by statute

(a) most change by private individual agreement between landlord and tenant

i) problem is that we don't know when substantial % such that building is unuseable (ie flood but everything still intact)

(b) must have agreement to modify common law

(3) modern K principles (exceptions to the common law)

(a) only when portion of building is rented - total destruction relieves tenant of obligation to pay rent

** (b) IMPOSSIBILITY OF PERFORMANCE (FRUSTRATION OF PURPOSE)

- can't perform without building when that is what K for

- in GREENFIELD bargain for building to store and work on cars -- no building = no purpose for the lease

2. THE HOLDOVER TENANT

a. CRECHALE (p. 425)

(1) tenant want to extend term on month to month - landlord said no but accepted checks

(2) RULE

Once landlord treats tenant as trespasser and refuses to extend lease on month to month, but does not eject tenants and accepts monthly checks -- landlord agrees to extension of month to month

(3) once landlord responds to tenant - he is locked into it

(4) 4 possibilities for landlord when found out tenant wanted to extend term for month to month

(a) reject all together and treat the tenant as a trespasser

- hwr tenant is not really a trespasser cuz no forcible entry

- since not true trespasser - can't get sheriff to remove

(b) accept holdover tenant for a new additional term

- common law

no holdover for longer than 1 yr.

(c) treat holdover tenant as new tenant for a periodic term

- usually month to month

(d) let holdover tenant pay for however long held over for

3. THE DEFAULTING TENANT

a. The Tenant in Possession (BERG p. 431)

(1) landlord came to retake possession of restaurant by changing the locks

(2) TRADITIONAL COMMON LAW

(a) landlord can use self-help to retake premises with no liability if . . .

i) landlord was legally entitled to it

ii) landlord's means of re-entry are peaceable

- BERG court said changing locks are not peaceable (forcible entry) cuz have potential for violence

(3) MODERN TREND (away from common law)

(a) judicial remedy = exclusive remedy for eviction

- self-help is never available

- self-help always has potential for violence

- judicial process is usually quick

- judicial remedy must have . . .

i) legal right to evict

ii) written notice of judicial proceedings

- must let tenant know how going to remedy situation or sue

- must have notice or unconstitutional

- note case MITCHELL (p. 439) provided for sequestration of property without prior notice

(b) modern trend is not quite yet majority

- majority of juris allow for concurrent remedies of both self-help and judicial process

** tenant must resort to judicial process when landlord illegally re-enters

b. The Tenant Who Has Abandoned Possession

- when tenant has to leave - usually tenant must pay for period until someone can take the apt

- Restatement = no mitigation required by the tenant

(1) MITIGATION (SUMMER p. 443)

(a) in SUMMER landlord did not try to mitigate damages - sent away prospective tenants

(b) MAJORITY RULE

- Landlord does not have to mitigate

- Restatement supports this view

- why should landlord have to act when it is the tenant who defaults

i) since tenant is the one who breaches - should protect the landlord

- what happens when landlord finds a new tenant who

i) defaults

ii) can only pay less rent

iii) can pay more rent

iv) can only rent for a shorter period of time

(c) MODERN TREND (against majority rule)

- landlord must mitigate

- landlord must show reasonable diligence to re-let apt

- can't let damages accrue

- up to landlord to prove that he did diligently try to re-let premises

- can't say that could have had 2 tenants instead of 1 (apts are unique)

- SUMMER case follows modern trend

(2) How a Landlord Protects Himself From a Defaulting Tenant (p. 456-457)

(a) security deposit

- ie. non-refundable cleaning fees

- hwr landlord in many juris must refund the security deposit within 2 weeks if everything OK or tenant entitled to $100

(b) advance rent

- tenant pays for the whole term

- if landlord fills vacated apt - he must return the advance rent to the defaulting tenant

(c) rent acceleration

- upon tenants default - tenant must pay all the rent due

i) seems kind of stupid because many times when the tenant defaults - he does not even have enough $ to pay for that months rent

(d) write into the lease that . . .

i) old tenant laible for vacant time until new tenant comes in

a) old tenant still liable even for the new lease

- ie. old tenant must pay difference in rent

F. LANDLORD'S DUTIES; TENANT'S RIGHTS AND REMEDIES (ESPECIALLY REGARDING THE CONDITION OF THE LEASED PREMISES)

1. Condition of the Premises Generally

a. Quiet Enjoyment and Constructive Eviction (RESTE REALTY CORP)

(1) rain from adjacent driveway flooded tenant's floor

(2) creations of condition that make it impossible/intolerable (breach of quiet enjoyment) would excuse tenant from paying lease

(a) tenant must leave premises within a reasonable time to show such a condition

- hwr tenant vacates at his own peril

- defect must be substantial enough to make justify the tenant in leaving

(b) common situation

- tenant leaves - landlord sues - tenant's defense is that premises were unsuitable for occupancy

- in this case - landlord brought suit at the end of the lease since it was in the majority juris -- landlord no duty to mitigate

(c) DOCTRINE OF CONSTRUCTIVE EVICTION

Any act or omission of the landlord which . . .

1) renders the premises substantially unsuitable for the purpose for which they are leased; or

2) seriously interferes with the beneficial enjoyment of the premises

is a breach of the covenant of quiet enjoyment and constitutes a constructive eviction of the tenant.

- ie. failure to supply heat

- landlord is responsible for latent defects (defects not immediately foreseeable to the tenant but known or should have been known to the landlord)

- applies equally to residential and commercial leases

- can have partial constructive eviction where tenant withdraws from part of it (ie withdraw from flooded bathroom)

b. The Illegal Lease (SOUTHALL REALTY p. 469)

(1) General Rule of SOUTHALL

- an illegal K made in violation of the statutory prohibition designed for police or regulatory purposes, is void and confers no right upon the wrongdoer

(a) remedies for illegal lease

1) void K (as in SOUTHALL) - K not permitted

2) landlord pay penalty

3) reduction in rent to the tenant

a) illegal K

b) tenancy at sufferance (holdover)

c) landlord entitled to the reasonable value of premises when occupied (note 3 p. 472)

(b) tenant's bad faith does not matter

- purpose of the law not to punish bad tenants but to RAISE THE STD OF LIVING

c. The Implied Warranty of Habitability

(1) FACTORS OF IMPLIED WARRANTY

(a) Implied Warranty exists in a lease whether oral or written

(b) landlord will deliver over and maintain, throughout the period of the tenancy, premises that are safe, clean, and fit for human habitation

(c) landlord must be given prior notice and reasonable time to rectify the situation

(d) all tenancies usually under an implied warranty

(e) warranty not waiveable

(f) covers all latent and patent defects in the essential facilities

- essential residential facilities = facilities vital to the use of the premises for residential purposes

- only substantial defect constitutes a breach

- can have minor violations that don't affect the habitability

** - can never waive this right

(g) source of warranty is unimportant (note 3 p. 481)

(h) stds of warranty (note 5 p. 482)

- housing code

- local municipality code

- sometimes court leaves open for case by case adjudication

- don't want to tie to code

- can have violations not specified in the code that affect warranty

- court usually take position that violation of code = violation of warranty until landlord prove otherwise

(i) remedies (note 6 p. 483)

1) give difference in $ between warranted dwelling and defective one

2) $ for tenant's discomfort and annoyance

3) if tenant repairs after landlord given notice - gets deduction of expense of repair from future rent

4) punitive damages for breaches that are very wilfull and wanton

- deterrance measure

5) tenant put $ on deposit to show good faith while matter being settled

6) rent-reduction

7) withhold rent and go to court

(j) warranty sometimes does not apply to commercial leases

(2) evolution from common law of contructive eviction to contractual duty of implied warranty of habitability

(3) implied warranty developed shortly after illegal lease theory and is far more substantial

(4) doctrine of caveat lease (common law)

(a) tenant took possession of the demised premises irrespective of their state of disrepair

- land (not dwelling) = essence of the conveyance

(b) doctrine of constructive eviction = exception to caveat lease

- if the landlord wrongfully interfered with the tenant's enjoyment of the demised premises, or failed to render a duty to the tenant as expressly required under the terms of the lease, the tenant could abandon the premises and cease paying the rent

(c) assumed equal bargaining power between landlord and tenant

(d) caveat lease rendered obsolete by implied warranty

- today - main assumption is that tenant was the dwelling value as opposed to the land value

- also - landlord usually has more bargaining power

2. LANDLORD'S TORT LIABILITY (BECKER p. 487)

a. BECKER (minority case - only in CA & LX) - tenant slipped and fell through untempered shower door -- sustained injuries

b. doctrine of caveat emptor (old common law)

(1) tenant assumed risk of quality unless expressly provided for

(2) tenant temporarily bought property from landlord -- landlord not responsible for whatever happened

(3) modern trend towards more liability from the landlord

- landlord in a better position to inspect and repair

c. MAJORITY RULE

(1) landlord owes a duty of reasonable care in providing and maintaining the rented premises in a safe condition

(2) GENERAL RULE

- negligence liability only if injury in violation of the IMPLIED WARRANTY

- violation of WARRANTY = prima facie case for negligence

d. MINORITY RULE (BECKER)

(1) strict liability to landlords for tort injuries from latent defects when defects existed when rented to tenant

- liability for negligence is so strong that strict liability is needed

- landlord can spread the costs to other tenants

e. 3rd Parties

(1) landlords liable to 3rd parties injuries

f. exceptions to non-liability (see p. 499)

(1) fraud

(2) concealment of known defects

(3) covenants of repair

(4) voluntary repairs

(5) latent defects - ie. termites

(6) common areas

(a) ie. grounds, sidewalk, parking lot, laundry room, stairwell

(b) not common area if only 1 tenant uses it

- ie. stairwell only for 1 tenants apt

(7) violation of safety laws - indication of negligence

(8) leases for semi-public purposes

g. Exculpatory Clauses (note 3 p. 498)

(1) contrary to public policy

(2) can not sanction below stds of care

(3) not universally held unenforceable

(a) commercial leases sometimes OK - no unequal bargaining power

3. Retaliatory Eviction (EDWARDS p. 500)

a. traditional doctrine

- landlords could terminate at will

b. Prima Facie

(1) tenant made a complaint

(2) tenant was evicted

- then up to landlord to prove otherwise

c. UNIFORM ACT

(1) if evict within 1 yr. of complaint - presumption that it was retaliatory

(2) if more than 1 yr. - up to tenant to prove that it was retaliatory

d. removal of apt from mkt.

(1) can't just take 1 apt off the mkt - would be retaliatory

(a) must take all to not be retaliatory

G. GOVERNMENT INTERVENTION IN THE RENTAL MKT

1. Discrimination in the Selection of Tenants

a. Prima Facie

(1) potential tenant tried to rent the premises

(2) apt was not rented to the ethnic tenant

- once prima facie established with circumstantial evidence - up to landlord to prove otherwise - then tenant rebuts

b. MARABLE (p. 519)

(1) landlord said don't rent to single, unmarried people

(a) black potential tenant showed that had in fact rented to and does rent to single white males

(2) landlord said did not rent to him cuz of bad financial statement

(a) Pl. showed that landlord had rented to others with worse financial records than him

c. FAIR HOUSING ACT

- prohibits both public and private housing discrimination and is based on no specific constitutional provision

- the act extends discrimination to

1) negotiation

2) framing the terms, conditions or privileges

3) section (c) violates freedom of speech - 1st Amd rights

a) can't refuse sell or rent / negotiate / make unavailable or deny because of

- race

- color

- religion

- sex

- national origin

- handicap

- familial status

b) unlawful to discriminate against any person in terms, conditions, or privileges of sale or rental of a dwelling

c) - to make, print, or publish or caused to be made, printed, or published

- any notice, statement, or advertisement

- that INDICATES any preference, limitation, or discrimination

d) can't say unavailable cuz of race, etc when it is in fact available

e) can't base sales pitch on sale or rent to try and get people to sell because minorities are entering the area

EXEMPTIONS TO THE FAIR HOUSING ACT

Nothing in  3604 [other than  3604 (c)] shall apply to . . .

1) a person renting a room in their own house

- ie see p. 519

2) person renting a single dwelling not occupied by more than 4 families (4 = max)

3) any single family house sold or rented by an owner provided that such private individual owner does not own more than 3 such single-family houses at any one time

- the little guy is still entitled to discriminate as long as a broker is not used AND the advertising is not done contrary to  3604 (c)

d. CIVIL RIGHTS ACT OF 1866

- can still discriminate in public

- deals only with racial discrimination - does not deal with religion or national origin

- does not deal specifically with provision of services or facilities in connection with sale or rental of dwelling

- does not prohibit advertising or other representations that indicate discriminatory preferences

- SCOPE is less than that of the FAIR HOUSING ACT

- ONLY RACE & PUBLIC

2. Rent Control

a. originally - it was an emergency concept

b. base price - then certain % increase per year is allowed (usually 6%)

(1) in addition could have hardship increases

(a) hardship increase - due to the increase in taxes, utilities, etc.

(b) could pass on these additional expenses as long as did not make a profit

(c) CROMWELL (p. 528)

- got hardship increase from Rent Control Board of 33%

- landlord then wanted yearly 6% increase

- hwr Board said that 25% is a cap

- crt rule that 6% is automatic and not part of the 25% cap

c. all need to protect is that the landlord get a fair rate of return (usually 11.5%)

(1) can not be confiscatory or else a taking of private property without just compensation

d. condo conversion

(1) objection = economic discrimination