You are on page 1of 101


Property, possession and ownership

a. Concept of Property
Justification for private propertywhy do we permit it? Most people dont oppose notion of private
property but just want redistribution of property not the actual notion of private ownership
o Incentives
Under private ownership more incentive than under communal ownership:
to protect property against exploitation
to use it to full advantage
environmental costs of polluting diffused under collective system thus
not internalized by polluters which would deter
o Just desserts
One who labors should enjoy fruits of this
But does this mean fruits of this production goes to children in will?
If cant transfer ownership then might
Exploit the property because state would take it
Consume the property/wealth
Private property ownership integral to democratic society
o Not every polity that every nation that has private property is a democracy BUT cant
have democracy without significant private property ownership
i.e. China has private property and not democratic
o In state without private property citizens come to state as beggars instead of right holders
then challenge to state could result in withdrawal of goods
substantial check on power of government
o Corporations, labor unions, churches etc.when they own property they limit the power
of governmentmay not limit it in a good way but they do limit it
Bundle of rights in fee simple absolute
o Right to possess or occupy
Limitations on the right to occupy bc cant build on the land, etc due to:
Zoning ordinances
Restrictive covenants
o Right to use as one sees fit
Limitations on right to use as please
Zoning ordinancese.g. govt says single family use only whereas was
worth much more for commercial purposes
Environmental laws
Private nuisance lawsD cant use his property to unreasonably
interfere with use of Ps property
o In using your real estate have obligations to neighbor
Restrictive covenants
o Future owners are bound by zoning ordinances etc bc when
buy are bound by notion in contracts with restrictive covenants
Constitution says that govt cant take private property for public use without
paying fair value but can often limit use of land to point where value of it is
seriously impacted
o Right to excluderight not to let others inmay only be able to use it as govt says but
have right not to allow others in
Limitations on right to exclude
Fire or police
Safety hazard
When dealing with residential property right to exclude is at its strongest

Wisconsin casenorth side of property owned by elderly couple had

lake with narrow road. Owner of lake lot nearby buys mobile home but
it cant be moved through narrow road. Mobile home dealer asks
couple if they can put motor home on the lot until the snow subsides
and will pay them for it. Put mobile home there anyway. Owners tell
police and mobile home dealer prosecuted for trespass. Then sue in
civil court and jury finds 100k for the couple even though no damage
punitive judgment because infringed on right to exclude. Couple
clearly unreasonable yet right to exclude nearly absolute even if
When commercial real estate right to exclude less absolute
Businesses cant exclude people from premises based on race, creed,
color, religion, etc.
Right to alienate or transfer as one sees fitnearly absolutecommon law doctrine
called unreasonable restrain on alienation doctrine
right to sell or give away while alive (inter vivos)
or transfer after death through (incident to death)
tenancy in commoncheaper will because once one dies other takes
over title without a willpoor persons will
intestate succession if no will
o goes into probate
limitations on right to alienate despite nearly absolute right
lot split ordinancesif own lot inside a city in a subdivision, cant split
it and sell part to one person, part to another, etc.
eminent domaingovt can force you to sell your land if it wants it
housing discriminationcant discriminate between potential
o but decision to leave upon death based on some type of
discrimination is sacrosanctdifferent than dealing in
gift taxdeterrent/restrictions on amount one can give in gifts
collected once the donor has diedexemption from gift tax for gifts to
charitiesthis imposes limitations on inclination to alienate property
estate taxdeterrent/restrictions change peoples behavior during life
if know that will incur significant costs from transfer may try to
exploit it more during life
sublettingcant sublet without permission of ownerrestraint on
alienation and in some states those laws have been found to be
unreasonable restraints on alienation and are only valid if landlord turns
you down on a reasonable basis (i.e. subletter unlikely to pay rent)
o if you enter into a lease and the market favors yourents go
higheryou cant reap the benefits of that
o but some leases are VERY pro tenant because they involve
anchor tenants in shopping centers who have significant
bargaining power (Target, Kmart, Nordstroms, etc.) and they
can sublease out
o Kmarts stock has gone up even as its business has dwindled
because it owns fixed rent leases on thousands of locations
because when it signed the leases it was an anchor tenantthe
leases did not have restrictions on alienation so Kmart can rent
out to someone at a much higher market value thus valuable

b. Adverse Possession
Two parties making claims to land
o Record ownerrecording act requires person who acquires interest in real estate to
record that interest
o Adverse possessor
In minority of cases have whole hog adverse possession, but majority are boundary line disputes
with two adjoining parcels of real estate both of whom have true owners but one true owner has
extended fence, structure, etc. a minor amount onto the other partys landboundary line disputes
inevitably trigger adverse possession claims
Policy behind adverse possessionwhy do we have adverse possession?
o People shouldnt sleep on their rightsif didnt think to recover property within statute
then didnt value the propertyplus there is chance of estoppel reliance
o Estoppel reliance theoryadverse possessor may rely to their detriment on the fact that
no one lives there
AP who is innocent might make improvements to land and invest money only
to find out that it belongs to someone else
This doesnt apply to knowing APs but only innocent APs
o Pro development concept

the govt values real estate development thus allowed adverse possessors to
gain titles if they had made improvements to land, etc
not as relevant today esp from environmental point of view
o efficiency
if fence is on others property make assumption that it belongs to that person
on other hand could just go back to records office instead of going through
entire AP trial
AP statutesexceptions and limitations
o Some allow recovery for AP in shorter time if
AP has paid real estate taxes (CA)
Not applicable to boundary disputes generally though in foreclosures
can be relevantforeclosure sale may be defective and not give an
actual title to the buyer but since buyer thinks he has title and pays
real estate taxes, he can gain title by AP
Easement by prescription can be gained without paying taxes but not
AP thus no titlecan gain title by adverse possession if pay taxes
In CA no AP at all unless pay taxes though can have easement by
AP has color of title
Deed to landAP thinks gives him title but doesnt
Some papers cant even be color of title bc grantee knows its
Color of title may help AP get title to whole land when only used part
o Monroe v. Rawlingshunters bought land at tax sale and
even though purchase invalid, gives them color of title
which helps them gain AP to whole land even though had
only used part of it
o Some land/people not subject to adverse possession
Land owned by government
Can argue this is because we all own the government land
But in contrast land owned by warehousers is subject to it even
though many shareholders would lose, unions, pensions, etc. so this
isnt that strong of an argument

To justify this doctrine must assume that government is incompetent

because basically saying that no one is ensuring that the land is not
being taken over whereas we do expect private citizens and
corporations watch land
Basically the argument for not subjecting govt land to AP is at odds
with efficiency standards
Future interestspiece of land owned by A for life and remainder to B in fee
simple absolute. C takes over by AP but can only take title to life estate, not
future interests. Future interest holder doesnt have same level of
responsibility to take over the land when the AP took over thus policy reason
not to give AP future interest. Future interest can only be effected if it was
created after AP went into possession (first started occupying).
Mortgagesif O gives mortgage after AP goes into possession then
mortgage can be wiped out as well as title owner.
Disabilitiesnot subject to AP if under age of majority, insane, imprisoned for
less than life in prison or execution (though life in prison does not limit AP)
statute of limitations doesnt apply to these owners. But if disability occurs
after AP goes into possession AP can still can title (take land as find it).
o Constructive adverse possessionnot really adversely possessing but law treats them
as if they were
If AP uses part of land but not rest then owns rest of it IF has color of title but
if has no color of title then no AP for the rest of land
AP and litigation
o Supposedly there is instant in time when title leaves true owner and flies to adverse
possessor but the only way we determine whether that transfer took place is litigation
o If title did pass did then owner owes rent to adverse possessor if lived there past point
where AP took title
To acquire title by adverse possession must satisfy two things:
o Statute of limitations must have expired so that record owner can no longer claim title
o For full period of statute adverse claimant must demonstrate five elements of adverse
Statutes can range from 5 (CA)-20 (MA) years though most are 10-15
In CA AP must also pay taxes to gain AP (though can gain easement of
prescription if meet statute and elements but no paid taxes)
Though sometimes argue that if built property on disputed land and
assessor assumed part of APs land then essentially paid taxes on it bc
assessor took value of that property into acct when calculating taxes
Five elements are:
o Actualmust actually use land as typical landowner in that area would
Is AP doing what a reasonable possessor would do as per a reasonable person
in that community (Monroe). Must consider
Type of land (i.e. residential or not)
Monroe v. Rawlingshunters used seasonably which was normal for
rural land.
o Open and notorious
Give notice to the true owner so has opportunity to repossess land
Make possession known to the world
Not same as actual noticeform of constructive noticeare actions designed
to put true owner on notice
Manillo v. Gorskiencroachment of steps not enough to meet
notorious requirementdidnt put other side on notice

Exclusive of the true owner. If AP and true owner are both using property in
reasonable way then negate AP.
Courts more and more permitting some use by third party as well as use by AP
that does not necessarily destroy exclusivity
Porter v. Poseythird parties had used tract but true owners hadnt so
no exclusivity problem
Without the owners permissiondoesnt mean must be angry, mad, etc.not
hostility in that sense
If get permission at any point the AP clock stops ticking
o i.e. if one side grants other easement to use land that will
avoid AP, but if easement only 5 years then clock starts
ticking at that point
Cant be AP if by through or under the owner
In sense treat the person who does the right thingask owner if can
use landworse than one who does not ask permission
State of mind? Different jurisdictions have four different tests
1. Claim of right thought it was minemust have claim of right
i.e. think he owns itmust be innocent in good faith and have made
o Essentially must be mistake which is often the case esp in
boundary line disputes
2. knew it wasnt minemust be an intentional
wrongdoer/knowing thiefmust know it is not ones own land but
still try to own
o Jurisdictions that like this theory say this is the way one
shows adversenessME view
o Policy argument would be to restrict AP to real land
grabbing and not include boundary line disputes
3. emerging view intent to claim as ones ownmust be an intent
to claim as ones own but assumes that doesnt matter whether
intentional or mistakenfrom time went into possession claiming it
as ones ownmore efficient than 1 but less than 4
o Manillo v. Gorskiencroaching steps are hostile bc intent to
claim land as her own but AP case fails anyway bc not
notorioussmall encroachment cant be notorious
4. hostility element of AP can only be destroyed by permission or
licensedoesnt even consider state of mind but asks whether AP
objectively uses land as reasonable person in that community would
have. Most efficient means to establish AP
o Nome 2000 testsame as Monroe for actual requirement
AL natives use land and other party tries to argue cant have
had hostile possession bc their culture doesnt believe in
owning land, ct rejects, says used land as owner would have
thus hostile
o Whitcombsquatter caseonce court labels someone a
squatter cant get title by AP bc at most view selves as
expectant licenseeexpecting to stay on land until owner
tells them to go
Be there for statute of limitations and must be continuous
Permission will stop AP but AP can choose not to accept permission which
makes his AP more hostile

Once find actual, usually also continuous bc if actual possession is seasonal

then seasonal interruptions dont affect continuity.
Record owner 1 lives for 4 yrs transfers to RO2 3 yrs who transfers to
RO3 3 yrs
AP 1 lives for 3yrs AP2 for 4 yrs AP3 for 3yrs
o Fact that record owner changes is of no significant to AP
does not stop clock from ticking
o BUT transfer from AP1 to AP2 to AP3 CAN make a
difference bc if the three are disconnected entities (no
privity) then may not be able to tack on the different APs to
make up the requisite time bc does not count as continuity
o How could the APs be continuous/privity?
AP1 dies and leaves land in will to AP2 and AP1
believes land belongs to her
AP1 may just say leave all assets to AP2 which is
good enough too (quitclaim or warrantee deed)
If no will govt provides one and default will can
provide privity
AP1 sells property to AP2 and disputed tract
described in deed
AP1 sells property to AP2 and disputed tract NOT
described in deedbasically oral transfer as to that
piececourts find privity here bc piece in privity
w/rest of land whereas if were whole land situation
courts weary of oral transfers (below)
Written deed ties fact situation down
Porter v. Posey situationnot privity of
people but privity of land
o How could APs not be continuous?
True owner takes AP to court which stops clock
Oral handoff between AP1 and AP2no privity
True owner goes in and tells AP that he has
permission to be therethen no longer AP
But if AP says no, I dont want permission, could
enhance AP
AP goes to true owner and says please dont sue
does that indicate anything? No.
AP rules for tenancy are different than normal ownership
o Presumption in tenancies is that there is NOT AP and this must be rebutted by
Constructive ouster
Sells part of land which implies acting in disinterest of outtenants
but is this fair if outtenant doesnt know about it?
Outtenant stops getting checks
o Wright v. WrightAitchey sold land and purported to sell it
all even though really only sold his part of it, also outtenants
didnt receive check from Aitchey for a long time which
should have put them on notice, plus Aitchey openly hostile
Thus court finds there was constructive ouster thus
AP from tenancy in common
Irony is if he were nicer person his heirs may have
lost the case
Actual ouster

Person physically kicks others off land or keeps them from coming on
Actual ousterkicking others off land
AP applies when true owner has fee simple defeasible as well
o Easier to prove if determinable, harder to prove if SCS
In re. 88 acres
2. Transferring Property
a. Intervivos
Voluntary transferstwo types of deeds
o Warrantee deed not worth anything unless title is good so sellers pay for buyers title
insurance that way if title turns out to be bad have reserves to go after
o Quitclaim deed passes everything seller has to buyer but still if title turns out to be bad no
cause of action against seller bc quitclaim deedgenerally govts wont give warrantee
deeds so more important to get title insurance and make sure title policy doesnt have
certain exceptions
Involuntary transfers
o Seller doesnt want to sell the property at the last minute is forced to due to contract
o Govt wants to buy land and seller doesnt want to but have to so long as govt pays fair
market value
o Mortgage or tax foreclosure
o Adverse possession
b. Intestate

o Heirssomeone who takes your property if you die without a will
By and large people who take under intestate succession get percentage of every
asset in the estate
Can still have heir even if have a will because there are people who WOULD
have taken your property if you didnt have a will
o Consanguinityrelated by blood
o Affinityrelated other than blood i.e. in laws
o Ancestorpeople from whom one descend lineallyparents, grandparents, great
grandparents and onalso called ascendants
o Descendantspeople who descend from one lineallychildren, grandchildren, etc.
also called issuethis includes adoptees
o Lineally consanguinityancestors and descendants
o Collateral consanguinityrelated by blood but not lineally consanguineousbrothers
and sisters, aunts and uncles, etc. related by blood and share common ancestor
o Default willeach state has a default will statute when there is no will
o Per stirpeseach person takes by representationif heir dies then his descendants take
by representation
if three children then all three take equally
but if two children alive and third dead but leaves two children, then two
original children take one third and grandchildren each take one sixtheven if
just said to my children and one dead, would probably go to his or her heirs
o Per capitaeach person takes an equal amount even if heir dies
Thus in above example the children and grandchildren would share equally
o First cousinsshare same grandparents, first cousin once removedfirst cousins child,
second cousinshare same greatgrandparents, second cousin one removedtheir child
o If die without any heirs at all property escheats to the state
Some states go to a certain degree of consanguinity before property escheating
to state whereas others go to the nth degree before it goes to state

Some say only after no heirs go to stepchildren

Intestate succession statutessame as default will statutewhat policy concerns should
legislature keep in mind
o Favor spouse over children?
In hypothetical will state wants to favor minor children bc otherwise state pays
for them
o Do we count how long marriage has lasted?
Generally we dont80 yo who gets married and dies walking down the aisle
treated the same as 40 year old marriagebut should we?
o Domestic partnerships
Some states provide for them and some do not
o Ask what normal decedent want if die without a will
o Try to minimize costs of probate by cutting off at certain degree of consanguinity
o When does state get their money
Practice problemswho gets the money when woman died with 150k?
o survived by husband and two sons
assuming husband is father of sons, all to husband (A)
assuming husband if father of only one son, first 60k to husband and then spouse
gets one half and remainder among two sons equally (thus husband 45+60=105,
each son 22.5) (C)
assuming husband if father of none of them, first 20k to husband and then
spouse gets one third and remainder among two sons equally (D)
o survived by husband, daughter, three grandkids (children of deceased daughter)
assuming husband is father to both daughters, all to husband (A)
assuming husband is father to one daughter, first 60k to husband then husband
gets one half and daughter gets one quarter and three grandkids split last quarter
assuming husband is father to no daughters, first 60k to husband then husband
gets one third and daughter gets one third and three grandkids split last third (D)
o survived by son, daughter, grandchild (child of deceased daughter), and two
grandchildren (children of son)
third to son, third to daughter, and third to child of deceased daughter. None to
children of living son (A)
o survived by husband only
all to husband (E) and 13
o survived by husband and mother
all to husband (E) and 13
o survived by two nieces (children of deceased brother) and two first cousins
to the nieces bc if no spouse and no children and no parent, to brothers sisters or
their kids (G)
plus they are level 3 and cousins are level 4
o survived by third cousin and stepson
to cousins as there are no surviving descendants of grandparents and the cousins
are next of kin and only to stepkids if no other next of kin (I,J)
o grandmother, niece (daughter of deceased brother) and aunt
to niece because if no spouse or children to brothers and sisters and their lineal
descendants (G)not to grandmother or aunt
c. Testamentary

Probate transferswithin jurisdiction of probate court

o By will
o Or intestate succession
Non probate transfersless court fees than probate but still pay taxes



Joint tenancy
Tenancy by entirety
Payable on death bank accounts
Beneficiaries of trust have equitable title and trustee has mere legal titlecould
be to settlor for life then remainder to my children because when settlor dies
trustee transfers
Life insurance

Sometimes need witness, sometimes dont

Normally in executing a will use the requirements of the most rigorous state in the union
because person might have will in one state and have property in another state, etc., or
might move
o Provisions in will regarding real estate are governed by the law of the state where the real
estate is located
Revocation of will
o Most common way is to write a new one because later of two wills will govern
Always have revocation clause in later will
o Also can just physically destroy the will
Problem with that is there are usually other wills floating around which is why
dont want many copies of same will
o Divorce sometimes revokes wills
o In some states marriage revokes a pre-existing wills
o In all states except LA can cut out children from will entirely but not in LA
Sometimes when parent cuts out child will leave nominal amount to make clear
not an oversight
In most cases if leave children out can get away with it though children will try
to contest and if will is revoked then default will goes into place
o Surviving spouse harder to cut out than children
Usually get forced share which is same amount would have gotten if there had
been no will (default state will)
Example: husband and wife have three adult children and five years ago wife
inherits 1mil from her father. Wife dies and her will leaves everything to the
spouse. Husband then remarries. Husband then makes out will and leaves
everything to kids. Year later, he dies. New wife now entitled to one third of his
estate because cant cut spouse out and must use default will which gives her
about one third or a half depending on the statute
Also if spouse left less than the forced share can ask to revoke will and get entire
forced sharewill look and see how fare if elect against the will
Could also have prenuptial agreement
Intentional killings
o Killer cut out of will under UPC and act as if he disclaimed intestate share

3. Present and Future Estates in Land

o Freehold
Feepotentially infinite duration OR of uncertain duration
Simplenot much meaning anymore except to distinguish from tail
o Absolutelargest bundle of rights
no restraints on alienation (ability to transfer)
will be transferred by will or intestate succession
upon death

cannot contain words of defeasance i.e. be subject to

any condition
Defeasibleexpress words of defeasance and if condition
occurs reverts or may revert back
Determinableautomatically reverts
Subject to condition subsequentright to revert
Subject to executory interestfuture interest in third
party subject to condition

o Nonfreehold
Fixed, periodic, at will, sufferance
a. Fee Simple Absolute

Fee simple absolute

o Examples: From O:
to A
to A and her heirs
to UCLA for law school
to A and her heirs for religious purposes
could be interpreted as a condition or could just be viewed as fee
simple absolute because just wish of owner
o History
Used to be to A and his heirs because to A conveyed life estate but now to
A is sufficient
Had heirs in it so as to ensure that land would remain in the familyin a
sense series of life estate in surviving sonsbut dont know who eldest son
would be until A diedmakes it impossible to transfer a fee simple absolute bc
no one really owns one thus not good for public policy
Courts thus said that
Words of purchase=to A
Words of limitation=and his heirs
Thus heirs describe only the quality of As estate to be infinite and A has a fee
simple absolute and has complete freedom alienation immediately

b. Fee Simple Defeasible

Fee simple defeasablecourts do NOT favor these and will construe ambiguity with presumption
against restrictionmust have magic language so long as or until to be unambiguous
o DeterminableO immediately reenters when condition occurs
Examples: From O:
to A and her heirs so long as land is used for X religion then back to
to A and her heirs until liquor is sold on premises
to A and her heirs so long as dont marry outside of X religion
to A so long as land used for church purposes
o Even if dont say back to grantor probably good enough
key words: until, so long as, but
O has future interest called possibility of reverter which is contingent upon event


Wood v. Board of County Commissioners of Fremont Countydeed to

land to Fremont County to Fremont County for purpose of
constructing and maintaining a hospital as a memorial to WWII
veteransCity sold land and no longer used as hospital
o Court says this deed is NOT a fee simple determinable
because the language isnt in thereno so long as or
untilnot even any condition subsequent language like on
condition thatno defeasible fee at all
Fee simple defeasible can also be in life estates
Example: From O
o to A for life so long/unless as liquor not sold on premises
O has both
o Possibility of reverter that cuts of As life estate
o Reversiongets land after A dies
CA has no determinable, only subject to condition subsequent because wants to
increase alienability
Says can have fee simple on condition subsequent every thirty years
but if dont record notice every thirty years then it dies.
o In one case ct gives family 5 years to file intent to have right
of entry and the five years expire and they are late in filing
o Ct says that since other atty never mentioned that family was
four months late thus assume that they had done it in time and
that they have a right of entry. They get the building back
even though not fee simple determinable.
Subject to condition subsequentO has right to reenter property when condition occurs
but must actually make action to reclaim title otherwise doesnt reverthas choice of
whether to reclaim or not
Examples: From O:
to A and her heirs but if liquor is sold on premises O has right to
reenter and take back the property
to A and her heirs on condition that liquor is not sold on premises
o could be read as condition subsequent but could also be read
as restrictive covenant
subject to executory limitationO gives third party right to re-enter or automatic
examples: From O
to A until liquor sold then to B
to A until liquor sold then right of entry to B
Restrictive covenantsNOT officially a fee simple defeasible but way to restrict certain
activities on land but if condition broken no reverter or right of entryinstead original
owner only has right to enforce the covenant and will probably get an injunction
Court will often find restrictive covenant where there is ambiguity thus not
enough to find either determinable or subject to condition subsequent
But usually only has precatory languagewishing and doesnt express a
particular right to re-enter or explicit language about what would happen once
triggering condition occurred
Example: From O:
to A and heirs but A promises not to sell liquor on the premises
to A and her heirs for religious purposes
o could be interpreted as a condition or could just be viewed as
fee simple absolute because just wish of owner
to A and her heirs on condition that liquor is not sold on premises


could be read as condition subsequent but could also be read

as restrictive covenant
Woods v. Countycould have argued that it was a fee simple absolute
subject to restrictive covenant (conceding not defeasible) and it is being
violated thus there should be an injunction against whoever took over
the land to operate it like a hospital
Courts dont like fee simple defeasible bc limits alienation
o The only way a fee simple absolute can be conveyed in fee simple defeasibles is if both A
and O agree to convey the fee simple absolute
If convey a fee simple defeasible the new owner of it can only convey the same,
so if says to A until liquor sold on premises and then A conveys to B who
leases to C and sells liquor, title immediately reverts to A
o Government may condemn the land if doesnt like the will, give notice, pay for fee
simple absolute title and wait for the parties to fight over the title
Why do we care whether fee simple determinable or fee simple subject to condition subsequent?
o AP differenteasier to prove AP in reverter than right of entry
Easier to get AP in determinable bc immediately trespasser while with condition
not AP until right of entry asserts ownership
In re .88 AcresHarrington conveyed land to town of Shelbourne so
long as the town builds a town meeting hall. Years later town meeting
hall then burns down and town authorizes and creates on the property a
school. Now town wants to sell but wants to sell fee simple
determinable, not defeasable
o City argues that has fee simple absolute based on AP because
title flew back to Harrington once began using it against
purposes set out in deed.
o Harrington said cant have AP against public land. But court
says statute was intended to keep private owners from gaining
title to public land by AP and not intended to keep a city from
gaining title by AP.
This seems kind of unfair because if public cant lose
land by AP why can it steal land by AP.
o Good example of how easy to get AP by possibility of reverter
In subject to condition subsequent, can only gain AP if the holder of right of
entry asserts that right.
If holder does NOT assert the right then no there is no AP.
Thus AP clock would only start ticking if holder of right of entry
asserts the right and current owner remained in possession
o but would a holder of right of entry allow that to happen?
Some states create reasonable time limitation for person with right of entry to
assert that right and if that time passes then current owner owns fee simple
Reasonable time might be equal to statute of limitations
o Rents and profits
If fee simple determinable and condition is violated and title flies back to owner
of possibility of reverter, from that very minute current owner is trespasser and
holder of possibility of reverter owns it. They have right to get rents from that
If instead right of entry, until holder of right of entry tries to enforce it no right
to rents and profits.
o Waiver and Estoppelweighs in favor of current holder w/right of entry bc if he doesnt
enter may waive his right even if the current holder cant get AP
Conceptually more difficult to waive possibility of reverter bc it occurs
automatically then to waive right to assert right of entry


For right of entry in some states if wait too long waive right of entry
Also certain conversations may waive right of entry bc may basically
be saying waive right of entry in future but not determinable
o Ex: from O to A so long as no liquor on premises and A then
serves liquor and O tells A thinks is good idea. If right of
entry then conversation alone may be enough to waive right of
entry, but if fee simple determinable still problem bc of
automatic nature
o O can waive title on determinable by giving deed to A but just
saying that thinks breach of condition is good idea probably
not enough

c. Fee Tail

Fee tail
o Examples
From O:
to A and heirs of his body
to A and heirs of his body, then to B and his heirs
o History
In England when said to A and his heirs could have meant life estate to A and
each of heirs and go down the line and if no more descendants back to O
Court didnt read it that way and instead said to heirs were just words of
limitation and thus to A and his heirs meant fee simple absolute
Court wanted to create something to convey land to A and his children but if he
had no lineage then to B
First called it fee simple conditionalconditional upon him having a
child and once has child can convey in fee simple absolute
Establishment didnt like this system because wanted land to descend
to lineage and if no lineage back to original ownerwith conditional so
long as had child could do whatever wanted which wasnt objective
What really wanted was series of life estates in the surviving eldest
male issue and when the line runs out reversion to O
Created fee tail to convey this objective: to A and his direct heirs and if they died
out then to B
Who could make this a fee simple absolute?
O could because they have reversioncould convey the reversion to A
otherwise would need all of As issue to agree to fee simple absolute
but some are obviously not born
environmentalists would love the fee tail bc land used at most for crops, trees bc
cant convey fee simple absolute
fee tail worked for 200 years then court began to have problems with it again
and tried to disentail land using devices bc didnt want it tied up
had A execute deed conveying his interest to X and then X convey back
to A and then A would have fee simple absolute even though it doesnt
make any senseviolates notions of property law
hostility to the fee tail in the US bc represented everything Englisharistocracy,
land tied up, etc.
most states have leg to render fee tail obsolete
o some say remainder that follows executory interest so to A
and heirs remainder B means A has fee simple subject to
executory interest and B has ex int cont upon A not having kid


some dont even have remainder so A would get fee simple, B

next largest group leg changes what would be fee tail into life estate
w/remainder in fee simple absolute to heirs but q of whether only As
kids get it or can be As grandkids can get it if alive when A dies
third group of states say first taker gets fee tail and lineal descendants
get fee simple so A cant transfer any more than life estate
four states recognize fee tail as in England except tenant in tial has
power to convey estate in fee simple absolute and all future interests
limited to take effect upon termination of fee tail by failure of issue
four states also say estate in fee simple conditional would be created by
language which would have created fee tail in England

o O conveys to A for life, then B for life, then C for life, then D and his heirs.
o compared to O conveys to A and the heirs of his body (meaning life estate in A and
remainder in fee simple absolute to As surviving issue per stirpes): assume A is 21 years
old at conveyance
In first instance land is tied up but in way that law would not view as violating
public policy bc if can get B, C and D to agree to it A can convey fee simple
absoluteeven though says to D and heirs that means fee simple absolute so no
problem in that areaalso if D died money would go through his will or
intestate succession or to whoever he sold it toNOT to C
In second instance (fee tail) land is tied up in way that does violate PPuntil A
dies and she has no issue at that time bc cant get future heirs to agree to convey
fee simple absolute bc they do not have rights to it until A dies and all of As
issue are present to make the decision
If A were 90 instead still couldnt convey fee simple absolute but if he
still didnt have any kids might take chances that wouldnt have any
kids and thus own fee simple absolute
d. Life Estate

Examples: O conveys land to A for life, until death, etc.

o A can sell life estate but buyer will probably demand physical exam of
o Life estates can get invol transferred when there is a judgment against A
o MortgagesDifficult to get a mortgage on a life estate because if A dies then mortgage
company has nothingusually gets holder of remainder to sign mortgage too
o Can only grant easements for As life as well
MeaningA has present interest and has right to possess and rights to rent and profits but not
right to exercise dominion and control the way an owner wouldmust take into acct holders of
future interest

e. Future Interests

Future interests in grantor

o Possibility of reverteronly exists following present fee simple determinable estate
o Right of entrypower of terminationonly exists following present fee simple estate on
condition subsequent
o Reversionfuture interest in grantor that is not either of the abovecomes after life
Interests in someone other than grantor (can usually be called third party but technically shouldnt
say third party because sometimes the future interest can be neither grantor nor third party)


Remainderfour conditions must be met in order for remainder to be metmust satisfy

ALL four rules and if any of those are violated it is an executory interest
1) remainder must be created at same time and by same document that creates
prior estate
2) remainder must follow freehold estate that is not defeasible, thus must follow
life estate or fee tail (but very very rare)cant follow fee simple absolute bc
then would violate rule 3
3) remainder must not have capacity to cut short prior estate but only upon
natural termination
Kind of only applies to life estates bc if fee simple then automatically
fee simple defeasible and violates rule 2 already
4) no built in time gap btwn termination of prior estate and remainder taking
o Executory interest or limitationany future interest in other than grantor that is not a
remainderso if one of four remainder rules violated then executory interest
Destruction of contingent remainders v. failed contingent remainders
o Example: O to A for life then to B if B graduates from law school. B has contingent
remainder in both of these (meets rules) but it is unvested bc contingent upon graduating
law school. Will revert to O if B doesnt graduate from law school. Plus there could also
be reversion in O if A dies before B graduates from law school. Then O has it until and if
B graduates law school. Law didnt like the way this worked bc unclear whether O or B
gets it if B graduates.
Under CL destroyed contingent remainders if not vested by time prior life estate
Now still law in some states and in others turns into executory interest
o In contrast, if said O to A for life then to B if B graduates from law school by As death
then still contingent remainder but it immediately fails if not graduated by As death so no
issue of whether or not it still exists and does not have to be destroyed
Even in states that destroy contingent remainders can still fail
o O to A for life. 3 days later all interest in property to N.
N does NOT have remainder because violates rule 1) not created at the same
time and by the same document as the prior estateinstead has identical
ownership interest but is called executory instead of remainder bc O conveyed
reversion to N
o O to A so long as land not divided and if it is divided then to B.
B does not have remainder because violates rule 2) remainder can only follow
either a life estate (99.9% of time) or a fee tail but NOT a fee simple of any kind
(defeasible i.e. determinable or condition)
o O to A for life but if A gets a divorce then to B
B does not have remainder bc violates rule 3) remainder cannot have capacity to
cut short prior estate and here cuts short As life estate by saying B gets upon As
divorce thus B has executory interest even though follows life estate
o O to A for life then if B turns 21 to B
B does have remainder but it is contingentlike law school interest
o O to A for life then one month after As death, to B and her heirs
B does not have remainder because violates rule 4) remainder cannot have time
gap built in between termination of prior estate and remainder taking possession
one month kills B having remainder thus must be executory interestduring
that one month reversion in O then executory interest in B
o O to B to take possession when B reaches 21
B does not have remainder bc violates rules 1), 2) and 3) because




1) not created at same time and in same document that creates prior
estate. O still has fee simple determinable and this was not created at
same time Bs interest was (prob long time ago).
2) remainder not following life estate or fee tailfollowing a fee
simple defeasible instead thus not allowed
3) Bs interest cuts shorts Os interest because if B never reached 21 O
would have fee simple absolute thus if he does turn 21 then he cuts
short Os estate
thus executory interest
O to A for life then B for life then C and her heirs
A has present interest
B has remainder because doesnt violate any of the rules
1) created same time
2) follows life estate
3) doesnt cut As short
4) no time gap
in sense this is contingent upon B outliving A but doesnt specify this
so not considered contingent remainder even though implicit in the
deedinstead call it vested remainder just bc has no express condition
C has remainder bc doesnt violate any of the rules (has fee simple absolute in
the future)
1) created same time
2) follows life estate
3) doesnt cut Bs short
4) no time gap
Cs interest is NOT contingent at allneed not outlive A or B because
it is a vested remainder in fee simple absolute and if C dies it will go to
whoever gets Cs property in his will
To Boone county school board for school purposes
Fee simple absolute OR at most restrictive covenants
To Boone County school board on express condition that land be used for school
Either fee simple condition subsequent OR just restrictive covenant
Assume land used for 30 yrs then stands vacant
if fee simple subject to condition subsequent then condition violates
and O has right to take title back
if restrictive covenant also violated O just has right to damages, relief,
maybe injunction (equitable relief
Assume land used as school for 30 yrs then building used by school board for
storing then question is whether condition really violated and if so same analysis
as above
To first Methodist church on condition that land be used for Methodist uses and if ceases
to be so used then land reverts to O
Fee simple determinable
To first Methodist church on condition that land be used for Methodist uses and if ceases
to be so used then O has right to reenter
Fee simple subject to condition subsequent
Assume that by later deed O transfers all right, title and interest in same land to
first Methodist church
Now fee simple absolute because one party owns the fee simple subject
to condition subsequent plus the right to re enter


Assume that by later deed O transfers right title and interest in property to Mary
then Mary purchases Methodist churchs interest in land
Now fee simple absolute bc Mary had the right to re enter (executory
interest, not remainder bc not same time) and the fee simple subject to
condition subsequent
To John provided he never uses alcoholic beverages and if he ever shall do so land passes
to daughter Mary
Fee simple subject to executory interesttitle flies if he uses alcohol
What happens to land if John dies without having a drink though? Does the
restriction apply to Johns successor or notin all probability ct would grant fee
simple absolute to Johns successor bc condition satisfied during his life

f. Restrictions on Alienation

The following discourage alienation but do not place unlawful restrictions on it

o O leaves land to A, B, C as tenants in common
Could only sell through action in partition
o O leaves land to A for life, then B for life then C for life then to D and her heirs
Could only sell if all parties agreed and this is more difficult than above bc
difficult to partition land including future interest thus hard to get fee simple
absolute sold
o O leaves land to A so long as property used for church purposes
Ironically A is completely free to alienate but short of O joining deed will be
difficult bc fee simple determinablenot many people want to buy land for
church purposespool of prospective buyers reduced significantlyNOT
restriction on alienation, use restriction instead
o Due on sale clauseindirectly restricts alienation bc cant transfer mortgage
enforceable bc congress made statute after cts said unreasonable restraint on
alienation (unless turning transfer down for security reasons i.e. new owner not
Lenders now have control over who possesses the land and can take advantage
of changing interest rates
o Consent requirements for assignment/sublease
Now enforceable in majority of jurisdictions whether or not reasonable
At some point restrictions on alienation can become unlawful and are void such as:
o Disabling restraintsmakes transfer literally impossible
Almost always unenforceable in fee simples, life estates, and leaseholds
O leaves to A and her heirs but A has no power to transfer and any
attempted transfer will be void
o Unreasonable/disabling restraint on alienation
O leaves to A for life or in lease but A has no power to transfer and any
attempted transfer without Os consent will be void
o Similarly voideven if only have life estate or leasehold it is
still unreasonable restraint on alienation
o Forfeiture restraintsgrantor seeks to create estate which automatically terminates upon
attempt to alienate or which is subject to power of termination held by grantor in such an
eventbasically present estate subject to future interest (reverter or right of entry)
Unenforceable in fee simple estates unless limited in time and scope
O leaves to A and her heirs but if A attempts to transfer without Os
consent then reverts back to Ofee simple determinable
o A can transfer but will lose the land and title will fly
o Unreasonable restraint


O leaves to A and her heirs but if A attempts to transfer without Os

consent then O has right of entryfee simple subject to condition
o Similar except subject to condition subsequent and still
Sometimes enforceable in life estates
O leaves to A for life and if attempts to transfer without Os consent
then O has right to entry
o Court more willing to uphold forfeiture restraint on life estates
bc dont last long anyway
o Beach v. Beachcourt wont partition life estate of mother in
daughters house which is restraint on alienation bc she cant
sell her part
if viewed as disabling restraint void
if viewed as forfeiture might be upheld bc is only life
estate where ff allowed (esp considering mothers age
not tying up land for that long)
if viewed as promissory probably allowed
Almost always enforceable in leaseholds
O leases to A for ten years and if tenant attempts to transfer without
consent of O he has right to reenter
o This type of forfeiture restraint IS enforceable 90% of time
and deemed reasonable restraint on alienation
o BUT if A transfers without Os consent and O never says
anything about it then the lease is valid or if there is no
termination clause in the lease then it is valid
If O does find out then he can choose to terminate
lease if such a provision is in k
Promissory Restraintsgrantor seeks to create contractual promise by grantee not to
convey an interest in landbut not an automatic reversion or right to reentry like in
forfeiture restraints
not viewed as suspiciously as disabling or forfeiture restraints bc nothing
happens to the interest in propertyat most triggers in future interest holder a
right to damages or injunctive reliefkind of like restrictive covenants
Unenforceable in fee simple estates unless limited in time and scope but once
limited chances for being upheld increase
Almost always enforceable in leaseholds
O grants lease A so long as A promises not to transfer land without Os
consentpromise but no automatic reversion or right to reenter

4. Protection of Future Interests

What default rules does the law use to protect future interest holders when present and future
interest holders are at odds
o Present interest holder has right to possess and use but not right to exercise dominion
over owner and is not allowed to create waste
o In general holder of present interest may not unreasonable impair value of future interest
o Though right to possess includes right to exclude future owner can get ct order to go on
property to see if waste is being created but NOT allowed to bring potential purchasers
on property thus right to possess somewhat limited
a. Law of Waste
Law of wasteapplies to life estates and leaseholds
o For life estates law of waste governed by default rules i.e. case law defining reasonable


Sometimes life estate will be written to A for life without impeachment for
waste which is attempt to exculpate life owner from being liable for waste
o For leaseholds law of waste governed by contract and landlord tenant law, not case law
whole set of different rules than other sets of present and futures interestswe will
consider later
o Harder to sue for waste if only have contingent interest
But Brokaw allows it
Types of waste
o Voluntary waste
Affirmative wastetearing down buildings, stripping forests etc. generally this
is considered waste
i.e. A tears down 6 mil viable building to make parkmight even be
punitive damages since intentional
testators intent is a consideration for whether the actions are
considered affirmative or ameliorative waste
Brokaw v. FairchildP has life estate of NYC house. If he has
children who survive P, they inherit, but if that doesnt happen, then
goes to his siblings. Pretty unlikely that siblings will ever inherit bc P
has 4 yo child who will probably survive him yet ct still takes their
interest into acct. P says cant get adequate return unless makes it apt.
o P says best interests of everyone to change into apt. bc more
revenue, wont continue to lose money on its upkeep as now
o Court says P cant tear it down. Why?
Testators intentin Brokaws will he conveyed his
home to P and court thinks this means that tearing it
down would be waste bc would change the
inheritance based on the testators intent (even
though no financial injury)
Distinguishes from Pabst, saying that Pabst was
accidental and also was business owner
Even if court said it wasnt waste P would still have
difficulty building this? Still needs a mortgage and if
cant get consent of future owners then bank might
not lend him the money w/o consent of future owners
need consent of siblings AND child bc they still
have future interest in property
Legislature changed this rule (see below)
Ameliorative wastesometimes tearing building that owned life estate in was
not considered waste because improved value of property for future owner
PabstPabst had life estate in house and tore the house down but after
did that realized only had life estate and owner of remainder sued Pabst
for waste. Pabst said increased value of property by tearing it down so
remainder owner should not be upset. Court said no waste bc future
harm benefited if anything
After Brokaw leg said if person had life estate for >5 yrs and
demolition would increase value and his actions were reasonable, then
not wasteinstead ameliorative waste
o Permissive wastefailure to act when law imposes duty to acthave duty to turn over
principle of property, reasonable wear and tear excepted
Default rules: A life estate holder, B future interest holder
Cap on As liability is greater than rent being paid OR fair rental value
thus A doesnt have to make repairs that exceed fair rental value
A takes property as he finds it thus if property dilapidated when finds it
can turn it over in same condition


At minimum A must keep property wind and water tightentitled to

reasonable wear and tear but must have roof, windows and paint bc
otherwise may lead to destruction of principle
A should pay taxes but B might get a tax bill every year to be sure that
holder is paying the taxes bc future interest void if state forecloses
A has no obligation to insure even though if he doesnt can harm future
holder just as much as not paying taxes
o If natural disaster occurs and A not neg, has no obligation to
rebuild which makes us think B should insure in order to
protect his interest
If A and future holder have mortgage on property has to pay the interest
on the mortgage to protect future holder
o but this is not as relevant today bc we have a 30 year evenly
amortized mortgage where pay same payment but more int in
beginning than end
o pre-1935 most mortg were balloons where paid interest only
and principal was due in full at end of period so made sense to
have pay only interest bc then passed on principal debt
o but now would have to split up monthly payments otherwise
life tenant would be improving property by paying principal so
not fair to life tenant
o Still many areas that law has carved out that are NOT considered waste
can cut down reasonable amount of trees for income
open mine doctrineif mine already open when get life estate can continue to
take out reasonable amount but if mine NOT already open cant open without
future owners consent even if very valuable
law of emblementsowner of life estate dies but there are still crops on land
life estate owners children reap benefits of crops, not future owner
o Assume B had fee simple absolute and A did tears property down. Measure damages by
diminution in value of whole property. i.e. before tort property worth 500k, after tort
property worth 300k. Now A liable for 200k
o Assume A for life, B future interest and the same thing happens. Now B not entitled to
200k bc doesnt get the property for n years until A dies.
Measure As life expectancy and if 20 yrs then B has right to receive 200k in 20
yrs which is worth less than 200kdont speculate as to what land will be worth
in 20 yrs so value it today then NPV amt
Use interest rate that includes both rate of return on safe investment and
inflation added together like 10 yr US Treasury bond
Give B NPV of 200k such that if she invested it in compound interest rate fund
it would end to be exactly 200klife estate owner would get rest of it
Question is what interest rate to usefuture interest holder wants it low
o Assume A for life, B future interest IF graduates from law school. Same thing happens.
Some cts would not allow B to sue for damages bc her interest is so speculative
BUT look at Pabstvery little chance siblings would inherit but court
took them into consideration
Many cts require future interest holder must be nearly certain to take land
Contingent future interests holders can seek injunctive relief unless highly likely
will never take but standard is higher for damagespresumption goes the other
way for injunctive relief than for damagespresumption that can get injunction
o Assume O to A so long as liquor not sold on premises
Unlike the example above where A only had life estate and B has vested
remainder here A has fee simple and O only has contingent remainder


A can exercise dominion in 1st ex but not second bc life tenant only has
possession and ownership, not dominion
Therefore can make argument that O has no right to sue for waste bc
whatever A does to property has nothing to do with O
Only time O may have cause of action against A for waste is if A does
something to diminish value and then A sells liquor and title reverts to
O bc until then A exercises dominion not mere possession, ownership
Assume A for life, remainder to B vs. to A and B as tenants in common

b. Unproductive Property
Partitioningdefault rule is that it is only allowed in concurrent interests, not future ones
o Concurrent interests both have possession at same time thus law must deal with it and
partition so long as one party wants it
o Future interests dont have possession at same time so more difficult
Which party should have more compelling argument for partition?
What if future interests not born yet?
Life tenant because has current possessory interest and future interest holder has
no right to possession now
In essence partition accelerates future interest to the present
When can future and concurrent interests be partitioned?
o In some states the following factors are considered and court of equity determines
whether the partition/sale should occur
Unproductive land
Necessity of life tenant
Land not producing enough income to pay taxes (or support life
tenant?) Deterioration
Interests of the remaindermen
Baker v. Weedon-- Weedon married had two daughters. Then married Anna but
had no kids. Left life estate to wife and if she dies to her issue if any then to
grandchildren sharing equally. Anna goes to court and says wants property sold
so she can get her share and get income from invested share. Grandkids want to
wait a few years bc land value appreciating quickly (normally would be
Appellate court says given property values about to increase shouldnt
sell now bc not in best interests of all parties but should sell part of land
to provide Anna with income
o Strange that ct assumes land will increase in value bc never
know future value
If this happened today and Anna unable to live on the income she had
and court denied partition Anna would have gone on welfare and
government will get paid back bc get lien on her life interestproblem
is when she dies life estate gone so lien worthlessin all likelihood
social welfare office would come in as party and ask for partition so
taxpayers dont have to pay for her when she has an asset
o In others (CA) only allow partition if in best interests of all parties
But if going to court clearly all parties dont think sale in best interest
Basically telling parties what best interests arenonsensical standard
o Some states dont allow at all (CO) unless statutorily specified
Beach v. Beach19 acres of land in rural CO. Daughter owns log home and
allows parents to build addition on it and live there for life and she will inherit
when they die. Father dies and mother and daughter no longer good
relationship. Mother wants to partition land so she can sell and move away.


Ct says state statute does not overturn common law which disallows
partitioning of nonconcurrent interests
o Statute does not specifically say deals only with concurrent
interests bc common law only allows partitioning of
conconcurrent interests thus if legislature is going to change a
common law rule they must be explicitnot enough to be
silent on the matter
Also says partition makes no sense because essentially destroys
daughters remainder interest (kind of like CA rulelooking at
interests of all parties) because
o If partition land then daughter either forced to live with
whoever buys the addition on foreclosure or bid higher than
all of the others and buy out interest
o Court could have
forced daughter to buy out life estate but didnt
forced daughter to mortgage mothers life estate

c. Time Value of Money

Right to receive stream of payments in future isnt worth number of payments times installment
o Always less bc of time value of money
o i.e. $1 mil for 20 years is really worth $11.7 mil today
o the higher the inflation the less its worth in the future
Example: pension plan
o right to 60k year until die OR all of it now
o assume 20 yr life expectancy
o based on table N=20, at 6% X=11.4699 times 60=688k; at 10% X=8.5136 times 60=510k
o if take lump sum payout bet that inflation will go up and/or interest rates will go up
Example: L leases building to T for ten years with rent of 8k a year. After five years T abandons
the building and refuses to pay any more rent. L relets to T2 who signs a lease for five years at
rent of 6k a year. L sues T for damages. How much recover?
o Landlord entitled to recover difference between lease rental and fair market rental
usually determined by what landlord obtained when rerented though landlord
could purposely lease to friend for very low amt and then would have to figure
out actual fair market rental
o 8k-6k=2k stream of money for N=5 years at 6% X=4.212 times 2k=8.4k; at 10% X=3.79
times 2k=7.6k
Example: O conveys farm to A for life, remainder to B. Fair market value of 50k. Highway dept
wants land and pays FMV. How should be divided btwn A and B where A has life expectancy of
20 years so B has right to money 20 years from now
o N=20 at 6% X=.3118 times 50=15.6k so B gets 15.6k, A gets 34.4k
o N=20 at 10% X=.1486 times 50=7.1k so B gets 7.1k, A gets 42.9
o Thus future holder actually has minority of interest even though seems like true owner
o Seems more fair to put it in bank acct and then divide because then at least takes into
account when A actually dies instead of speculating
Example: Anna and three grandchildren case but say ct orders property sold in partition. Worth
350k and sells to third party in partition sale for that amt. She has life expectancy of 10 years.
o N=5 at 6% X=.5584 times 350=195.4k so grandchildren split that and Anna gets 154.6k
o N=5 at 10% X=.3855 times 350=135k so grandchildren split that and Anna gets 215k
o So Anna wants higher interest rate and then invest proceeds
o Even with short life expectancy Anna owns close to or more than half
o Usually would not go to ct to split up small amt of money and just try to divide without
going to court because court fees not worth it


5. Marital Estates and Concurrent Interests

a. The Marital Estates

Rights of surviving spousesif will didnt account for spouse these rights took over
Common lawright of curtesy and dower
o Only applied to land
o Dowergiven to surviving widow
Smaller than curtesy
1/3 of lands H owned at any time during marriage but only for life
o Curtesygiven to surviving husband
All of lands W seized also only for life
Curtesy initiate as soon as issue born
o People would only buy land if both spouses signed because otherwise when one died may
elect dower rights and choose to take ownership of that particular piece of land
Modern lawright to elect against will but NOT in comm property states
o Same for husband and wife
o Applies to personal property as well as land
o Fee simple
o 1/2 or 1/3 of estate
o applied to estate owned at death OR
o conveyed by gift in fraud of marital rights
i.e. H leaves 500k in land and 500k in checking acct in Hs name
H deeds land to mistress in gift before deaththis is considered gift in fraud of
marital rightsthen leaves rest of money to daughter
W elects against will and argues that she gets 1/3 not just of 500k H gave to
daughter but also 500k value of land bc argues that gift is in fraud of marital
Can look bk on whole marriage and examine giftsnot transactions for fair
market valueand include those in value of estate
Problem can be for buyer that surviving spouse might say that it was
not a transaction for fair market value bc not fair cons.
This is why buyers of land from married couples always try to get both
spouses to sign bc then cant argue gift in fraud
Entire value of land will still go to Paula so the 1/3 value of land will come out
of daughters estate
If 1/3 of gift adds up to more of actual estate then court might have to sell the
land to give W her fair share and daughter and Paula might have to split the
remaindersdepends on whether set gift aside completely or just enough to
give W fair share
But would ONLY consider setting aside gift if had to sell it to give W fair share
otherwise Ws share must come out of actual estate
o Some states have augmentation instead of fraud on marital rights
similar to fraud on marital rights but is double edged swordcan make pot
bigger OR smaller unlike gift in fraud which can only make it bigger
i.e. H has bank acct 500k, 500k land and deeds land to wife while alive
H leaves estate to daughter in will so she gets 500k
W elects against will because thinks can get 1/3 of daughters 500k
Augment estate to include land so entire estate is valued at 1mil
So now W already has more than her 1/3 so she gets nothing from daughters
500k so has nothing to elect against
but does not keep her from only getting 1/3she gets the land she was deeded
but just cant elect for more


Example: H and B married and B inherits 1mil. B dies, H remarries S who has 5
kids and is a widow. H leaves his estate to his kids with B. H dies. S elects
against the will (if in a non community property state) and can inherit 1/3 of the
money and leave it to her kids.
Even if H had given gift of most of 1mil to his kids so his estate was
much less S could STILL elect to have 1/3 of the augmented estate
which includes the gift in fraud of marital rights

b. Concurrent Estates: Joint Tenancy, Cotenancy, Tenancy In Entirety

i. Joint Tenancy

Joint tenancy is an undivided interest in the whole and has rt of survivorship

o Used to be that to A and B created joint tenancy but now most states have statutes with
cotenancy as default and must be express language to create joint tenancy
Conveyance jointly may not be enoughmay need as joint tenants
o Undivided interest in whole
o Requires four unities
Timegrantees must have acquired interest at the same time
Titleby the same instrument or document
Interestmust have equal interest
Possessionsame right to possess every grain of sand of Blackacre
o Formalistic approach which follows four unities strictly whereas modern approach which
is more malleable
Used to be that grantor couldnt convey joint tenancy to himself and another
person because since person couldnt convey to himself bc unity of time and title
destroyedother person gets interest at different time and by different
instrument than grantor didused to use straw party so grantor conveys entire
interest to straw party then straw party convey joint tenancy
No longer have to engaged in straw party transaction bc can convey to self and
other in joint tenancy
Modern approach not as concerned with four unities as with the intent of parties
Basic joint tenancies are or may be severed by
o 1) conveyances
o Voluntary inter vivos conveyancebecomes tenancy in common insteadbut if there are
two remaining joint tenants then their relationship remains as joint tenants
Example: Parent and child as joint tenants. During life parent conveys his half
interest to third party with deed. The child has half interest but has no right of
survivorship because the joint tenancy was severed when parent deeded to third
party. Now child and third party share tenancy in common.
Example: A, B, C joint tenants. A deeds her third to R. B and C remain joint
tenants so that if B dies then C takes over Bs interest and owns two thirds and
owns tenancy in common with R.
Example: A, B, C joint tenants. A gives her third to B. B now owns 1/3 as
tenant in common and that interest goes to his heirs. B and C own joint tenancy.
If B dies then half to C, half to his heirs. If C dies all to B in fee simple absolute
Crowther v. Mowtherwife conveys to her son but lawyer tells him not to
record deed unless wife dies first bc otherwise will sever joint tenancy and she
wont have right of survivorship. So he never records it. Court says doesnt
matter whether recorded or not, she severed and son gets her half instead of
husband. Sort of having it both ways bc if husband died first she would still
have had rt of survivorship bc would never have brought up the deed.
In CA require some written and recorded instrument to sever joint tenancy
(before death) regardless of whether conveyance or not, just some written



intention to severforces parties to decide whether want to sever or notcant

have both ways
Though there is deathbed exceptionif deed only signed three days
before death than have certain time after death to record
Crowther would have come out other wayfailure to record would
have means joint tenancy not severed. Keeps parties from having it
both ways like in that case.
Patience v. SnyderDerrick, and Patience buy house as joint tenants
but then Derrick moves out of the house and Diana continues living
thereDerrick terminally ill and executes and delivers a deed to new
girlfriends mother. She then goes to record it. Gives deed to county
clerk at 11:15am and then at 12:54pm gets deed back and goes to pay
the cashier and it gets stamped. Derrick died at 11:55am same day.
o Patience says she owns whole house bc third party didnt
effectively comply with statute to sever joint tenancy
Cant use deathbed exception bc deed was delivered
8 days before he died
o Statute says not recorded until deposited in office with proper
person of record
o Court holds not officially recorded so joint tenancy in effect
DESPITE obvious intention of party to sever so clearly relying
only on formalistic approach
2) voluntary transfers
Voluntary inter vivos transfer by one joint tenant
even when deal is not completed when one party sells severs joint tenancy from
both modern and formalistic view bc
modernintent to sever and
formalistic unity of interest is missing (seller has lesser title then
remaining joint tenant bc when make sale agmt lose equitable title and
other joint tenant has complete title)
Doesnt matter whether seller or other jt dies firstsevered either way
Thus if deal completed, then definitely intent to sever (modern) and
lack of unity of title (one jt has title, other doesnt) and even if deal not
closed same from modern POV and formalistic still break in unity of
title bc lose equitable title at time when EMC signed but before closing
Voluntary intervivos transfer by both joint tenants (Earnest money contract) then
Formalisticdoes not sever bc both lose same amt of title thus still
have symmetry of interest
Moderntrickier questiondepends on intent and how the group
wanted money dividedif wanted division then probably severs but if
want in joint bank acct then no sever
o Estate of Philips v. NyusP and N own jt. P and Ns convey
part of the jt to other party. P died before the final closing of
that transaction.
If there is severance of joint tenancy then Ps
successors in interest get his portion of the price
If there is not severance of joint tenancy then Ns
take entire property and get his portion of the
property as well
Court takes formalistic approachsays unity of
interest NOT destroyed because ALL joint tenants
lose equitable title at the same time (after EMC
signed) so no asymmetry in terms of interest
3) involuntary transfer




Involuntary transfer can also sever joint tenancy i.e. foreclosurebut again if two
remaining joint tenants they remain as joint tenants
Example: A, B joint tenants. A wants loan and asks for mortgage on land. A
signs promissory note plus mortgage to bank. A defaults and bank forecloses on
land. Sells at auction to third party. Third party and B now tenants in common
Doesnt even have to mortgage bc that was voluntarycould just be default on
credit card and same results from execution sale
4) mortgages
Mortgage by one joint tenant
and are in title state (doesnt matter which jt dies first)
Formalistic approachno longer unity of titleone only has equitable
title whereas other joint tenant has full title so mortgagee has rt to half
Though intent approach more difficult bc prob intended to pay off
mortgage and remain in house
And are in lien state (MAJORITY)
non mortgagor dies
o no severance, mortgagee has rt to total property
o Brant v. Hargrovelender has rt to all property bc mortgage
did not sever joint tenancy
mortgagor diestwo approaches
o Anti lender approachmortgage worthless bc surviving joint
tenant takes whole title
o Partial severance approachmortgage valid but only on half
of property and surviving joint tenant gets remainder
mortgage by both tenants
no severance in either title or lien state bc
Keep same title interestboth may lose legal title in title state but both
have same
Intent is NOT to sever but stay together, just like in EMC but actually
even stronger case
5) leases
Lease by both tenants
Formalistic approach
No change in ownership occurred because no longer fee simple
absolutelandlord now owns reversion BUT the interests are still
symmetricalno upset of unity of interests
Intent approach
No intent to change survivorshiponly leasing land for certain amount
of time and continue to own itnot contemplating ending relationship
bc leases have a clear end
Where if had chosen to sell land there is at least contemplation of end
of relationship and STILL dont presume severance so certainly not in
this case
Lease by one tenant
If applied Nelsons rule no severance bc lease is nullity until other party signs on
CA says unilateral lease does NOT sever joint tenancy as do some other states
Formalistic approach
Could argue unity of interest severed bc now one jt owns reversion and
other owns fee simple absolute
Intent approach
Lessor tenant probably didnt intend to sever relationship so using this
approach might not find severance


Middle ground
Could look at unity of interest at TIME of death so if lease ended
before other party died then no severance but if was in place at time of
death then severance
This is logical but makes no sense in terms of intent
What if lease initially rejected by one party but later consented to?
Could argue mini severance
6) criminal proceedings
Joint tenancy when one jt kills the other
What behavior should we punish?
o Any intentional killing?
But cant include self defense which is intentional
some killings are privileged
o Some statute says must be willful or/and unlawful killing but
Nelson thinks it should be willful and unlawful bc otherwise
excludes self defense
o Other statutes say must be felonious and intentional killing
some drunk drivers would be excluded then, but maybe we
want that
What should burden of proof be?
o If have criminal conviction then we know that is enough bc
heaviest burden of proofbeyond a reasonable doubt
o But if dont have criminal prosecution or have not guilty
verdict then have separate civil proceeding dealing with estate
with preponderance of the evidence standard
Majority of states follow UPC and say killing severs jt, parties become
tenants in common
Some states say doesnt sever, killer can inherit all
Some states say kill has nothing except life interest in one half, no
Minority of states say constructive trust for those who would have
inherited estate without killing for either full half or half property
o Killer has life estate but then it passes to victims heirs
Lakatos jurisdiction says treat killer as predeceasing victim so killer
gets nothing, not even his half
Lakatos v. Estate of BillotiFrank Billotti and wife owned three
parcels, two as joint tenants one tenancy by entirety. He murdered her
and kids and convicted of second degree murder. Only heirs to her
estate are her parents. Frank died but before his death conveyed two
prop in joint tenancy to his mother. Dead wifes parents filed
complaint seeking partition of three parcels owned by her daughter and
husband. Trial ct ordered wifes mother to be sole owner of the
cotenancy one but denied request for joint tenancy ones so Frank and
Rose owned the two joint tenancy parcels.
o Trial judge interpreted statute to mean that killer husband still
had right of survivorship
WV slayer statute listed several ways that the killer
would be assumed to have predeceased the victim
(thus no right of survivorship) but joint tenancy was
excluded from the list
Judge just said if legislature had meant to include
joint tenancy they would have included itcant
assume forgot about joint tenancy bc big area of law


Appellate court interprets statute to include joint tenancy

Says word otherwise should be read to include
joint tenancy
This isnt great statutory interpretation
considering that joint tenancy is most
common form of ownership in WV and
legislature probably wouldnt have just left
it out
Could have just said that for public policy
reasons joint tenancy should be included
o As a result now assume Frank died before his wife and her
estate gets it all because in a jurisdiction that treats killer as
dying before victim
1988 court of appeals in TN decision where H and W owned house as
tenants by entirety and husband killed wife. Question is who owns
housekids or father?
o Court said husband owned house and was never appealed


7) divorce
Divorce decrees sometimes sever joint tenancies and sometimes do not
In some states presumption that divorce decree severs joint tenancy and most
divorced people would assume that the joint tenancy was severed
Judges may allow feelings to get involved in these cases when make
statements about whether or not divorce severs
Mann v. BradleyMarried couple have joint tenancy in property and
divorce decree says joint tenancy severed 1) upon mutual agmt 2) if
Betty remarries or 3) youngest kid hits 21. But wife dies before the
property sold. H says no severance, he takes all. Kids argue for
severance because they would then inherit wifes half
o Court says parties contemplated permanent dissolution thus
the intent was the sever the joint tenancy bc they intended to
sell the property within a relatively short time
o Suppose H had died first and he had new wife. Court would
probably NOT have found severance even though similar
situation bc parties had still contemplated dissolution, but then
second wife would inherit it and court might not want that.
o This case may have more to do with the judges feeling about
what was just then anything elsemay have gone other way if
question was whether new wife got half or kids got all instead
of kids get half or husband gets all
Other states presumption that it is not terminated and there must be specific
statement that it is terminated because joint tenancy is not tied to marriage like
tenancy in entirety thus it is not affected by divorce
Clearly intent approach bc formalistically the jt has been severed bc
after divorce only one person living there so unity of possession gone
Porter v. PorterMary Jane and Denis porter married in 48 and bought
house in 63 under joint tenancy. Divorced in 70. Final judgment of
divorce contained references that Mary Jane had exclusive occupancy
of residence. After divorce, Denis married Martha and remained
married to her till died in 83. No modification to divorce decree.
o Ct says granting of exclusive possession of house to appellant
did not destroy joint tenancy because of the modification
clause that allowed later change in divorce decree
Court takes modern approachno real intent to sever
joint tenancy bc would have specifically clarified


intentdecree had modification clause allowing for

modification later but specifically did not have intent
to sever at that point
Viewed divorce decree as temporary division of
property, not intent to actually destroy unity of
Under formalistic approach would have severed bc
no longer unity of possession

8) wills
do NOT sever joint tenancymust be a deed or written document like deed
Nonseverable joint tenancies are not severable like basic joint tenanciesonly in MI and OR
o starts to approach tenancy in entiretysame language that would otherwise create basic
joint tenancy creates this nonseverable type
o purchaser of one half of nonseverable joint tenancy thus essentially has life interest with
contingent future interest (if person he bought from survives other one)
If A conveys to N, then N has right to property during life (rents and profits) but
if A dies first then B takes over and Ns interest ends whereas if B dies first A
has conveyed not only present life estate but also right of survivorship so N
owns all of the property
Conveyance is just same as basic joint tenancy conveyance: To A and B for their
joint lives then remainder to the survivorLiterally no way to sever this except
o Albro v. AllenCommercial proper deeded to Allen and Albro (as joint tenants with full
rts of survivorship). Conveyance in most states would be normal severable joint
tenancyAllen agrees to sell her share to Kinzer. Albro then sues for injunction to prohibit
Albro from completing sale.
Ct overrules lower ct, says that life estates are alienable and that Allen can sell
her life estate to Kinzer BUT it will not destroy right of survivorship thus Kinzer
only buying a life estate with chance of survivorship if Albro dies before Allen
If this was regular joint tenancy Kinzer would own half interest in the
land because the joint tenancy would be severed when Allen conveyed
to him thus Albro would have no right of survivorship
Instead Kinzer basically only owns life estate because the joint tenancy
is NOT severed by conveyancehe has contingent interest in future
estate but not full interest
In both joint tenancy and tenancy in common each party has right to force partition
o Can partition in kind or partition by sale.
o Courts used to prefer partition in kind when mostly rural land
but when hard to divide land by value may have partition by sale
o With much real estate today cant have partition in kind so have partition by sale
Current joint tenants have advantage at sale bc they come to sale with money in
their pocket bc they already own part of it and dont have to pay for that part
o Example: A, B, C joint tenants. A wants to develop land for shopping center and B and C
disagree. A can file partition action if they dont agree with her or buy her out. Usually
preference for partition in kind v. in sale bc arose when most land rural
Mortgage role in severing joint title in detail
o Title theoryminority of statesas soon as mortgage is signed mortgagor retains
equitable title and mortgagee gets legal title
Titles dont come back together until mortgage paid off by debtor or third party
buys at foreclosure and mortgage is paid off
Gives lender more power before foreclosure sale to get at rentspower usually
only used w/commercial real estateusually dont try to get into possession of
residential home


If have joint tenancy in title theory state and both parties get mortgage title
CLEARLY not severed bc
Formalistic approachthough there has been a change in the title they
both lost legal title and still together have equitable title
o Like earnest money contract (when both parties agree to sell
property) because parties act jointly
Modern approachEven stronger case of maintaining joint tenancy
then earnest money contract bc at least in EMC have intent to get rid of
land and thus have to split up profitshere intend to KEEP the land
and just get mortgage
If have joint tenancy in title state and ONE party gets mortgage
Formalistic approachJoint tenancy severed bc unity of interest
severed (one party has legal and equitable title and one has just
equitable title)
o if foreclosure occurs there is mortgage on that half of property
and surviving joint tenant has no rt of survivorship
modern approachtrickier bc may not have actually intended to sever
bc mortgage suggests wanted to keep house so mortgagor may have
right of survivorship depending on ct
Brant v. Hargrove if in title theory state
o Formalistic approachIf Nick died first then mortgagor has
right only to his half under formalistic approach bc unity of
title severed
o Moderntrickier bc may not have intended to actually sever
bc mortgage suggests wanted to keep house so since she died
first mortgagor may have right to whole property if he has rt
of survivorship
Lien theorylien created on land but no bifurcation of title and only time original owner
gets title back is if property is foreclosed
If have joint tenancy in lien state and ONE party gets mortgage and mortgagor
joint tenant dies first then two options
anti lender approachunity of interest NOT severed and survivor has
right of survivorship and mortgagor has no interest in land anymore
o mortgage was essentially contingent interest
partial severance approachsurvivor owns all of the land subject to the
mortgage on a half interest in the land so they can only recover up to
half of the property value
if non mortgagor dies first
joint tenancy NOT severed and mortgagor has right to ALL of land
Brant v. Hargrove under lien theory (real result)
o Formalistic approachnick didnt lose title so unity of interest
still presentno upsetting of unities thus joint tenancy not
o Modern approachsameNick didnt intend to sever
o So Brants get the entire house on foreclosure bc Nick alone
lent them money since ct found that his wife and joint tenant
never validly signed the mortgage
Basically saying that if debtors title improves then mortgagee benefits
from itif acquire property after mortgage then mortgage is then on
that property too if clause in it

ii. Tenancy In Common


Tenancy in commonseparated interest in the whole and no right to survivorship

o Now default to to A and B creates cotenancy
o Undivided interest in fractional part of whole
o No four unities
only require unity of possession
doesnt have to be equality like in joint tenancy bc no unity of interest
thus one party can own 1% and other 99%
o Interest follows will bc no right to survivorship
o In tenantin possession
o Out tenantout of possession
Three types of equitable causes of actionremedies DEPEND on type of relief sought
o Accountingbrought by out tenantnot happy with how land is being handled
Generally in tenant who is living there doesnt owe out tenant rent because he
has right to live there too and chooses not to
if in tenant ousted out tenant then
o Adverse possession starts tickingin tenant becomes adverse
o Out tenant no longer has possession thus can demand rent
Contribution action in place
o when in tenant asks for contribution from out tenant his
contribution can be reduced by rental value due out tenant
o Treats this as a partition action thus each party should pay
their share
o Esteves v. EstevesPs, parents of D, bought house together
with D and took title as tenants in common. Purchased for
34.5 with 10k from each and 14.5 mortgage. All lived
together briefly then Ps lived there for 18 years and paid out
62k in mortgage, taxes, sewer charges, and homeowners
insurance. Ps sue for contribution.
Ct says D should pay half of in tenants expenses but
get money for rent bc to reject rent credit and
nonetheless require contribution to operating
expenses is unfair.
But in this case in tenants are asking for contribution
to mortgage, taxes, insurance, etc and thus out tenant
deserves credit to that contribution based on rent
If in tenant is acting like landlord and getting rent
o Must pay half to out tenant if rent is for full half
If in tenant runs business in building and getting profits and out tenant
then brings accounting action
o Does out tenant has right to half of profits? Should he also
have to share half of operating losses? Courts dont like that
o Court usually just give out tenant half of fair rental value
instead of half of profits
o Contributionbrought by in tenantwants contribution to protect jointly owned asset
In tenant generally has right to contribution from out tenant as regards taxes and
mortgage, especially taxes but in tenants cannot usually get contribution for
repairs which are treated somewhat like improvements
Contribution usually not allowed for improvements in contribution action
If in tenant adds addition to house of 100k and in tenant has been
paying rent to out tenant and then asks for 50k contribution from out


Cant get contribution when it involves an improvement upon

a property bc if out tenant didnt have much money then in
tenant could essentially force out tenant to sell interest in
cotenancyimprove someone out of ownership
Partitionbrought by either partysame as divorce to marriagewiping hands of each
otherhave one final accounting and add up and subtract all items for lifetime of joint
At partition improvements and repairs are taken into account even though not
taken into account in contribution
At partition point give in tenant who paid for improvement the increase in the
value of the house
In tenant wants credit for 100k additionto what extent do we credit
for improvementgive in tenant extra by amt property value increased
If in tenant increased rental value by his own improvement then he
doesnt want to have to pay half of the increased rental valuewants to
pay same as what he paid before and court usually allows this
Ct generally favor partition in kind over partition sale
hesitate to kick someone off the land which is the result if person in
possession cannot purchase the land bc doesnt have enough money at
a partition sale
partition sale should only be ordered when: physical attributes of land
such that partition is impracticable or inequitable, interests of owners
would be better promoted by sale
o again, this rule makes little sense bc if interests of owners
better by sale then wouldnt be in court
o court deciding best interests of parties
rule in favor or partition in kind makes less sense now that no longer
rural society and most real estate is not capable of physical partition bc
of real estate
Would expect that if majority of ownership cotenants want partition in kind they
will get it, but not always
courts may be swayed by person in possession of property for a long
time being forced out
Delfino v. ValeancisP and D own as cotenants real property 20 acres
and house. Ps own 99/144 int and D owns 45/144 int. D occupies
dwelling and portion of land and wants to hold on to her house and
garbage hauling business. Ps want to develop prop into residential lots.
Asked to partition property bc Ds business not allowed in residentially
zoned area and Ds want to develop as residential district. Trial ct
ordered partition by sale bc said Ds business illegal anyway and so
might as well zone and kick her out.
o Ct agrees, says physical partition is feasible and in best
interests of parties bc sale would not be in Ds best interest.
Only two owners and promotes best int of parties.
o Ct says Ds business not illegal so cant say she would have to
stop it even in absence of rezoning bc she wouldnt
o If look at majority rules then Ps would win since together they
represent 2/3 of parcel and lose
Also probably more efficient to sell and put garbage
business elsewhere
Clearly court is swayed by the fact that D lived there
her whole life and had still owned significant part of


Courts generally uphold restraints on partitions (either by sale or in kind) bc

they are not unreasonable restraints on alienation
Example: one tenth interest in land in Tahoe. All cotenants. Each
owner has week in good and bad parts of year. If one party exercises
partition by sale it will ruin the situation.
o Not restraint on alienation bc tenants can resell interests into
another party.
o It is a disabling restraint on partition but not an unreasonable
restraint on alienation
Example: husband leaves property to wife and says that children cant
partition while wife is alive
o Same situationrestraint on partition but not on alienation
Only time court may say restriction of partition is unreasonable is if it
is too long or for forever
o Even perpetual restrictions on partitions are allowed in
condominiumscant put elevators, common areas, etc. on
auction block
Cotenants and leases
o when one cotenant signs lease does it bind other cotenant?
Cotenant has right to lease without other cotenants signature
cotenant that did not sign the lease cannot eject lessee
Carr v. DekingJoel and George (father) Carr owned land as tenants in
common. Leased land for 12 yrs to Deking pursuant to a year to year
oral agmt receiving one third of crop as rent where Carrs paid for one
third of fertilizer. In 1986 Joel told Mr. Deking that he wanted cash,
not crops. Deking went to George and made ten year agmt to continue
crop share lease except now Carr wouldnt pay any fert. Joel said
didnt authorize lease therefore not bound by it.
o Joel said public policy should prevent prospective lessees
from going behind back of one cotenant in common.
o Deking says George Carr had right to enter into lease with
respect to his one half interest in property and Joel could not
bring ejectment action without Georges agreement.
o Court said Joel could not eject Deking bc didnt sign lease but
that he could opt into the contract
but he can opt into contract

and can also seek partition

Can physically split land in half then lessee would only be renting half
the land
What if land is not of equal value across? Would have to partition in a
very strange way bc parties cant agree on even split
May have to partition by salethird party buys it
o Does that party have to honor lease? Uncertain
o If he does, then price of property will decrease dramatically
and other jt will have exactly the result he wanted to avoid
Nelson thinks that lease not signed by both parties is not binding but if
nonsigning cotent reaps benefits of lease (accepts money) then it becomes
bindingin this case if Joel hasnt taken a cent then not binding
But this is NOT the law
Fiduciary duties among cotenants
o when one acquires outstanding superior title he must hold it for benefit of other cotenants
IF they offer to share cost of acquisition
same rule also applies to spouses of cotenants


Massey v. ProtheroCotenants of real property inherited from parents. (P)

agreed to give Lewis deeds to property and that Lewis would conduct probates
so that surviving children would receive inheritances. But Lewis never did.
After parents death diff family members lived in home rent free but were
obligated to pay taxes. One sibling never paid taxes on it and after his death
prop put up for sale by county. Lewis discovered this before sale and tried to
prevent sale but was told to wait and buy prop at sale. He did buy it and never
told his family members so only his and his wifes name are on the deed. Mary
sued to quiet title to property in names of surviving cotenants including lewis.
Court said that as cotenant lewis purchased sale for benefit of surviving
cotentants thus took no greater title than before, thus did not have title
against rest of fam.
D argues that at least his wifes title is good but ct disagrees bc same
rule applies to spouse
Not AP either bc not open and notorious which btwn cotenants means
must actually bring knowledge home (Wright v. Wright)
But does say other cotenants need to reimburse him for what he paid at
tax sale
o But if mortgage sale sometimes that cotenant allowed to keep superior title bc other
cotenants if adults had same chance to purchase
Only cases that go other way usually involve fraud
o And cant use straw party to get around this rule
i.e. if cotenancy severed by third party purchasing at tax sale then one cotenant
cannot later acquire title from third party if acting in collusion with him but
CAN do so if not acting in collusion bc cotenancy ceased to exist and bought
w/o fraud
o but if one cotenant defaults on separate debt and there is execution sale and other
cotenant buys her third of land he gets to keep it because the other debt is a separate
obligation, thus he has no fiduciary duty to her in that case
For rental purposes consequence is just whether get rental value or not
Killing in cotenancies
o doesnt affect right of survivorship but may affect will similar to above where assume
killer died before victim
o UPC says forfeits will, elective share, homestead allowanceestate passes as if killer
disclaimed intestate share

iii. Tenancy in Entirety

Tenancy in entiretyonly in purest form in 6 states and modified form in 15 others

o Has four unities PLUS a fifthmarriagebc only available only to husband and wife
o unless both husband and wife consent no one can pierce tenancy in entirety
Example: H and W have tenancy in entirety. H conveys to A. no meaning
does not destroy title
Example: H goes to bank to get mortgage. Default and bank forecloses. N buys
at the sale. N has bought nothing bc tenancy in entirety cant be pierced. The
mortgage was worthless
Most banks require signature of both H and W bc there is no 1/2 of
propertyits all or nothing.
Example: H is doctor and gets sued. Tort collectors now after her. Still cant
pierce the tenancy in entirety unless debt in both H and W.
o Thus H and W in high risk professions often do tenancy in entirety to avoid paying max
malpractice insurance bc keep some of their property secure


Do H and W need to retain property for life of marriage in order to keep the property safe
from debtors?
No. W can file for bankruptcy bc only other asset they have is 50k in bank.
Trustee appointed. Submits form to W and asks her to list all of her assets so
that tort creditor can recover. Trustee gives 50k to tort creditor and bankruptcy
court says W is discharged of all pre-existing debts bc cant obtain that property.
H and W then sell the land, get their 2mil and put it in bank account.
o Homestead lawsin some states one house is exempt from creditors (i.e. FL) so people
buy biggest one house they can and never risk losing it from creditors
Three types of tenancy by entirety
o Pure tenancy by entiretyneither party may act independently so as to affect the other
partys interest in any wayany attempt to convey deed, give mortgage, or judgment
from creditor is completely void
o Modified (MACoraccio)if not talking about home but instead other property then
one party can act independently either voluntarily or involuntarily BUT the purchaser
ONLY gets right of survivorship if H dies after Wcontingent future interest and NO
present interest (like lien state in mortgages)
Coraccio v. Lowell SavingsP filed action against bank bc bank took second
mortgage from her husband on property owned by her husband as tenants in
entirety. P bought prop. Bank gave H money and put second mortgage on prop
without Ps signature. Then loaned H more money and got second mortgage
from him alone. He defaulted and bank foreclosed.
Modified tenancy stateMA
Spouse may convey or encumber his or her interest in prop held as
tenants in entirety.
Nothing prevents one of co-owners from mortgaging interest in
o Does not require consent of both spouses.
BUT bank ONLY gets right of survivorship
If we were in NY or NJ bank would get half of rents during life plus
right of survivorship if H dies after Wsame would apply if
conveyance or judgment sale
o Modified (NY and NJ)H and W have cotenancy for life, remainder to the survivor (like
in Albro v. Allen)one party can sell but purchaser only gets a life estate plus the right of
survivorshipso half of rents during life of person who purchased from and remainder if
seller dies after the other cotenantpresent interest and contingent future interest
Killing in tenancy in entirety
o Treated same as joint tenancy above
o NC take approach where killer only has one half of life estate, no survivorship

c. Community Property

Only in 8 or 9 states, mostly in West

In traditional common law whichever party has title owns
CANNOT elect against will in community property states
In contrast, in community property states H and W have some property that they own in common
and some that they own separately
o Own community property 50/50
o Best way to figure out what is community property is to first look at what is separate
property and by process of elimination rest if community property
o Presumption in community property states in favor of community property
o Can contract out of community property through prenup


Separate property
o Property owned before marriage
o Property received as gift or probate (through will or intestate succession)
o Income, rents or interest from separate property
Some debate about this but most states treat it as separate
If assume income, rent or interest was community property unfair in
sense that interest is in part compensates owner for inflation and if treat
as community then essentially reduce value of principal each year
Community propertyessentially tenancy in commonno right of survivorship like in joint
o Most important community property is income from services
o Interest, income, rents off community property
Transmutationchanging property from separate to community or ones separate to others
separate property or community to separate (though this last is very hard to do because
presumption is in favor of community)
Why do we care why property is community or separate? Because it affects:
o law of wills
surviving spouse has no right to elect against the will in community property
statesspouse already has right to half of community property and cant elect
against deceased half of community or separate property
o intestate succession
if person dies without will spouse gets all of community property and gets
intestate succession share of separate property
o divorce
each spouse gets half of community property and own separate property
generally law favors community property so unless transactions are crystal clear
courts will favor community property
many states which do NOT have community property (thus are common law
states) nonetheless have Uniform Marriage and Divorce Act which can be
somewhat like community property. It is of two varieties
one institutes a community property regime for divorce purposes even
though not community property pre-divorce (use terms marital property
instead of community property)
o in divorce marital property split 50/50 so for divorce purposes
are community property states
other equitably distributes property however and whenever acquired
and whether property is name of husband wife or both and takes into
consideration length of marriage, prior marriage, prenuptials
agreement, health, age, skill, other sources of income etc.
o not community property states but look to ALL property for
equitable divisions
o control during marriage
real estate
spouses exercise joint control over community propertyneed
signature of both parties to make conveyance because
o buyer should make sure get signature if buy from married
couple because never know whether is separate or community
separate control over separate property but still buyer should get both
in signatures because of fraud on marital rights or augmentation
person property
either spouse can deal with third parties and bind the other spouse by
selling itthird party does NOT need both parties signatures to have
good title whereas with real estate need joint action


purchasers should be sure to get two signatures bc if that property happens not to
be community then person may argue that was fraud on marital rts
once have both signatures protected whether comm prop or not
rights of creditors
if in NON community property state than creditor can only collect from property
in the debtors namelook to title
if in community property states then can collect from debtors separate property
and half or all of community property depending on purpose that caused debt
family or community purpose doctrine
o if the debt (whether contract or debt) is created by an
individual spouse for a family or community purpose then can
reach that spouses separate and all of the community property
o if not for family purpose then can reach that spouses
individual property and half of community property

6. Landlord Tenant
a. Nature and Creation of Leaseholds

Leaseholds used to last about ten years and leaseholder essentially had ownership with reversion
o Usury lawused to be immoral to charge interest on lent money
o As a result people found way to get around this by making tenant technically a lender
who stays on land while landlord (borrower) pays rent which was really interest until
he pays the debt off and moves onto the land
Modern leaseholds
o amalgam of property law and contract law
Probably more like contracts because material breach by one party allows other
party to sue for damages
Suppose have commercial lease in office building and tenant signs lease for ten
years for space on first floor. LL agrees to remodel common areas then breaches
by failing to remodel common areas
Contract lawLL breaches so tenant can opt out of lease and sue for
Property lawcovenants in lease are independent of each other so
tenants obligation to pay rent is separate from LLs duty to remodel
thus tenant cant sue for damages or opt out of lease
o But implied covenant of quiet enjoyment is exception
covenant to pay rent IS dependent on covenant of quiet
enjoyment even under prop law
o Could put provision into lease to make it like contract law
where if either party breaches other party can sue, but usually
one sided and says if tenant violates lease LL can term and sue
for damages
Some say this distinction is not real, just figment of imagination of a
few courts and scholars but this is still the dispute
o Unlike life estates which are one sentence leases are pages long and full of contractual
provisionseven more so in commercial than residential leases
o Landlord has right to rents and a reversion
o Tenant has rental obligation and right to possess
Sometimes tenant has substantial asset on balance sheet if value of right to
possess exceeds the rental obligation under the leasebonus value
But part of value is freedom to alienate which is usually forbidden in residential


Differences between lease, license and easements

o Lease
Interest in land
Right to possess in land
Identifiable, specific area that cant be changed
Can exclude others
Specifically enforceable
Transferable unless specific language to contrary and survives death of parties
Tenant cannot be forced out without taking legal action
o License
NOT an interest in land
Right to use, not possess
Revocable by grantor who can just take the license away if he wants to
power to revoke but not right to revoke
in contract may say grantor cannot revoke but if grantor did revoke it isnt
specifically enforceable and licensee can only get damages, not what he
bargained for
Contractual right not in rem right in land
At most enforceable by damages, not specific damages
May not be transferred, doesnt survive death
Defense to criminal or civil action for trespass
Tickets to entertainment events, permits to hunt or fish on land (though could also be
easement), parking arrangements, department store concessions (certain areas like
ones that sell rugs, etc.), hotel guests, maybe even college dorms though usually
somewhere btwn leasees and licensees
Licensee can be forced out without legal action by using self help i.e. changing locks
o easement
Interest in land
Incorporeal NOT possessory (even though seems like possession when have power
lines and sewers are 6 ft underground and have been there for decades)
Usually exclusive
Specifically enforceable
Roadways, power lines, sewers
o How analyze whether lease, license, easement?
Language of k as well as usage
Friend v. GemGem was discount chain which sometimes housed other stores
within its store. Either as licensor (which it thinks it is) or as landlord enters into
arrangement with Bidermans furniture for Bidermans to be housed within Gem
store. Friend is employee of Biderman and gets injured on her way to the Gem
cafeteria in an area clearly controlled by Gem. She sues Gem for negligence.
Standard of care on Gem is lower if Biderman is licensee than if Biderman is tenant
so case turns on whether it was licensee or tenant.
Court says Biderman is a tenant, not a licensee.
o What cuts against it being a lease?
Contract is described as a license in the wording
No clear boundaries btwn Biderman and other stores
Agreement says Gem can move Bidermans area around
Gems employees have right to go into Bidermans space
to go into cash register (to be sure it is getting correct
percentage of sales)
o What cuts in favor of it being a lease?


De facto there is specific space allotted to Bidermans

even though in theory agmt says can revoke at any time
This is a slim reed based on nature of agmt and likely
court was motivated by wanting woman to be able to get
Harkins v. Win Corp.Harkins stayed in Wins hotel as lodger/hotel guest for
eight months, then stopped paying weekly rent. Hotel changed lock (used self
help) to eject him. Harkins sues in tort saying that law against self help should
apply to lodgers as well as tenants.
Court refuses to change law and says that he was not a tenant
o Had use, not possession
o Had people changing his sheets, maid service, esp
o Says rationales for forbidding self help in landlord tenant
relationship dont apply here
Not similar potential for violence in self help bc not
as many possessions on the street
Not as hard to find similar dwelling for possessions
bc less likely to have as many possessions and easy
to find another motel
Roomer doesnt have equivalent need for equitable
Roomer has less need to remain in accommodation
while litigation goes on
In CA once someone stays in motel for more than 30 days there is a
tenant relationship
Why do we care about whether is license or lease?
o Standard of care
o Security deposits
o Termination
o Eminent domain lawwhen state condemns leased building
lessee may get part of condemnation award (especially if FMV of premises is
more than rentbonus value) bc it is an interest in land
in contrast, licensee wont get an interest in land
o specific performance
only lease can get specific performance bc license is at most a contract where
can get damages
o ejectment using self help
licensor can use self help but landlord must take legal action
landlords used to use self help and resulted in violence so now must use
legal steps (otherwise guilty of tort) which have become more efficient
and inexpensive than before called summary proceedings
result is that it disadvantages a landlord to have a lease
Four tenancies that exist under landlord/tenant lawrent is NOT required in tenancies though if
not specified that there is no rent otherwise ct will read in implied duty to pay rent
o Fixed term tenancy
Lease for a fixed term regardless of whether monthly or in advance payments
Technically LL has reversion with right of entry to secure rent
Can be terminated by surrender by tenant or release by LL or condemnation
Otherwise just terminates automatically at end of term
NO notice required to terminate bc terminates automatically though could turn
into a periodic tenancy once landlord accepts rent
o Periodic tenancy
Leasehold that could last forever


Month to month is most common form though can be six month to six month or
year to year as well
Requires notice to terminate by both parties (usually 30 days enough for month
to month tenancy)
Unlike fixed term tenancy does not expire once time runs but continues until
terminated by appropriate notice so can go on forever
o Tenancy at will
Seldom expressly created though sometimes it is
Created by agreement, taking of possession with consent of owner,
entry into possession under a void lease prior to making periodic rental
No pattern of rental payments, no agreement as to rental periods
only lasts as long as neither side terminates
Either side can terminate with no requirement of notice
Tenant can terminate by moving out without reasonable amt of time or
by assigning it to someone else
LL can terminate by ending lease, conveyance of fee but usually tenant
is given reasonable time to get out
Death of LL or tenant effects termination
o Tenancy at sufferance
Never expressly createdonly occurs when tenant holds over from fixed term
Court could instead of made holdover a tenant a licensee to prevent AP
but instead created tenancy at sufferance
not really a tenancy at alljust describes relationship btwn owner in fee and
tenant who was in possession rightfully, now wrongfully
serves to distinguish holdover tenant from person whose intrusion has
no basis in right at all
Lasts until demand for possession by LL or until LL elects to have other than
tenancy at sufferance
Once tenant holds over he can be either trespasser or tenant depending on how
the landlord treats him
If trespasser tenant only owes damages equal to reasonable market
value of property
If tenant, he owes damages equal to value of lease that landlord
specified and tenants failure to respond to lease is considered
acceptance of that value of lease
How do tenancies switch from one type to another?
o Statutes of frauds requires contracts to be in writing including ones concerning land and
if trying to enforce lease must include term, rent, description of property and signed by
party to be charged which is party against whom trying to enforce lease so usually both
sides sign because never know who will become plaintiff
o When a lease violates a statute of frauds bc it fails to include term or description it is void
but not completelywhat might have been a fixed term tenant becomes a tenant at will
Law could have made these tenants mere licensees but it doesnt
Tenant at will can become periodic tenant
Must pay rent and if landlord accepts it for a few months then become
periodic tenant despite lease that doesnt meet statute of frauds
Tenant at will can even become fixed tenant
Part-performance doctrineif tenant or landlord get to point of
significant detrimental reliance (i.e. pays rent, makes improvements to
property or landlord makes business arrangements based on the tenants
rent) then bar of statute of frauds comes down and party trying to


enforce lease may be able to establish oral agreement through

testimony, extrinsic documents, etc.
If tenant at sufferance and holds over then court may either find tenant is periodic tenant
OR trespasser depending on actions of both parties
If landlord sends tenant eviction notice with wording that if dont leave then
owes certain rent then court may find landlord is treating tenant at sufferance as
periodic tenant thus tenant owes that rent and his silence is taken as acceptance
at that rent (David Props)
If instead court finds landlord treating holdover tenant as trespasser then tenant
only liable for fair market value of property, not the rent the landlord specified
(though could in that case also be liable for punitives)
David Properties Inc. v. SelkSelk, elderly man, sold to David Prop land on
which was located small house. DP paid some cash, rest in five installments
plus interest in mini mortgage. After S sold property to DP he continued to live
there with DPs permission. After time DP filed ejectment suit which resulted in
written lease agmt which said DP leased to S house occupied by him to end on
12/31 1959, consideration for one dollar. S didnt vacate and continued to live
there for 2 more years. DP sent S letter after month and half saying if dont
vacate you owe me 300/mo (more than prop worth). S admits got letters but
continued living there. No reason why. Then DP missed final 9k payment., said
would only pay 9k less 6,600 due in rent from S. S then filed to foreclose
mortgage. DP said not indebted bc S owed him 7,200 plus interest.
In mortgage legal and equitable title passed to David Properties bc lien
theory state so technically Selk owns nothing yet stays on the land
o At this point Selk could either be tenant or a licensee based on
what owner chooses to do. Hard to tell exactly what he is but
definitely there by permission
o DP doesnt want to make him a trespasser unless owner wants
to kick him out because otherwise might be AP so default rule
is he is either licensee or tenant
After DP sent letter telling him to vacate S was just a tenancy at
sufferance (no payment of rent that might change it to periodic tenancy)
o If court finds that DP treated S as trespasser damages are
limited to reasonable rental value of premises
o If instead court finds DP treated S as period tenant then
damages are equal to value of rent in lease agreement
specified by landlord and silence is acceptance
Court finds DP treated S as tenant thus he is liable for the rent specified
by landlord even though never agreed to the amount bc silence is
considered acceptance
o But letter did specifically it was NOT a lease so maybe trial
judge right in saying holdover is NOT periodic tenant bc
landlord says isnt a leasethis is a difficult case

b. Duties respecting title, possession, fitness and repair

i. Covenants, Implied Warranty, Duties

Covenant of quiet enjoymentone of most important parts of lease

o Landlord has obligation to deliver possession
Mutual dependenceif covenant of quiet enjoyment is violated tenant has right
to opt out of lease and sue for damages (despite contract/property law
distinction) below so duty pay rent is dependent on cov of quiet enjoyment
But if covenant is breached and ct finds not part of cov of quiet enjoyment then
Contract lawtenant could sue bc breached covenant


Property lawcourt might say that the particular covenant is

independent of duty to pay rent so tenant has no cause of action IF the
covenant was found NOT part of cov of quiet enjoyment
Does landlord have duty to provide title or right to actual possession?
i.e. if earlier tenant holds over does landlord have duty to eject that person or
does tenant have duty to eject that person
majority rule (English/Adrian): landlord has duty to deliver physical possession
on the day of lease and failure to do is breach of cov of quiet enjoyment and
triggers tenants right to damages
intuitively makes sense because tenant should not have duty to eject
prior possessor
landlord also in better position to prevent holdover than new tenant
tenant has right to difference btwn rent reserved in lease and the fair
market rental that he has to go out and find
tenant may also have right to loss of prospective profits if can prove
Adrian v. Rabinowitzcourt take majority rule and says landlord has
duty to eject holdover tenant, not new tenant, and thus tenant has right
to difference in rent and would have right to lost profits but not certain
enough in this case
minority rule (American) is that landlord only has to deliver legal right to
possess, not actual possession
reasons for this may be that tenant should take some responsibility but
intuitively doesnt make sense for tenant to eject prior tenant
in effect in these cases new tenant gets all rights landlord had so new
tenant can collect rent from old tenant
Covenant of quite enjoyment protects against
actual evictiononce possession is delivered, landlord has implied obligation
not to interfere with tenants possession and that no third party who has better
right to land (i.e. mortgagor) will interfere with tenants possessionprotects
against ACTUAL eviction
Lease is junior to mortgage so mortgagor CAN take over building BUT
tenant has cause of action against LL for breaching covenant of quiet
Does NOT protect against trespassers with no relationship to LL
because he has no better right to land than tenant and LL has no duty to
protect against him
partial actual eviction which is when LL makes area unavailable to tenant
because of construction, etc.
Tenant can terminate lease, move out, sue for damages
OR tenant can stay in premises, stop paying all rent until partial actual
eviction ends (then start paying again) and STILL sue for damages
Problem with moving out is that ct may find there was no partial actual
eviction i.e. no breach of covenant thus still owe rent and then have to
pay rent when not living there
constructive eviction (not actual eviction but treat it as if it were)
Action by LL that substantially interferes with tenants enjoyment of
landconstructive to actual eviction is like trespass to nuisance law
Can be number of interferencesodors, dirt, disrepair, etc.
Tenant MUST leave promptly in order to sue for covenant of quiet
enjoyment in commercial lease
o but in residential lease may not have to leave to have cause of
action because can instead rely on implied warrantee of
habitability as opposed to breach of covenant


If do leave run risk that ct may find covenant of quiet enjoyment not
breached and then will owe back rent even though not living there
Barash v. Penn Term Real Estatehigh rise building rents to lawyer
who wants it open 24/7. LL says will air condition during the day but
tenant alleges that LL has agreed to circulate fresh air on evenings and
weekends. He claims absence of fresh air is violation of covenant of
quiet enjoyment and refuses to pay rent. Hes arguing that it is partial
actual eviction bc he didnt leave the premises.
o If lease specifically said LL agreed to circulate fresh air then
clear violation of that covenant
o Lease didnt specifically say that and court found that if
anything, constructive, not actual eviction took place and since
P didnt leave premises he had no cause of action
o Even if had left might not have been found to breach covenant
o Cant contract against covenant of quiet enjoyment in residential setting and probably not
in commercial either
Duty to operate
o Can be explicit or implied though courts usually dont read in implicit duties to operate
LL obviously want duties to operate them bc get percentage of rent (if in
percentage lease) and if tenants have duty to operate they will bring in more
revenue which affects other tenantsplus if they fail to operate LL want ability
to evict them bc affects whole center
o Anchor tenants generally able to avoid duties to operate because they are in control of
leases most of time though in outlet shopping centers often see duties to operate
o Signs that there is implied duty to operate
Nominal fixed rent and low threshold for percentage rent
o Signs there is not implied duty to operate
Express language
Parties contemplated idea and did not put it in lease
o Remedy when tenant with duty to operate
Injunctive reliefforce tenant to operate its store in compliance with lease
Two hurdles to getting injunctive relief
o Must prove remedy at law inadequate
Possible that legal remedy is inadequate bc too hard
to ascertain damages from loss of anchor tenant
o Administration difficult
Hard to get injunctive relief because hard to
administer the reliefno way of knowing whether
store is making good faith effort to operate
why should taxpayers be enforcing ten more
years of lease?
Counterargument is that administration/supervision
not so necessary because anchor tenant doesnt want
to ruin brand name by operating poorly even if only
in one storeif force to operate has incentive to
operate well
Cases mixed on whether get injunction to compel express duty to
Injunctive relief may be more efficient from courts perspective bc if D
really doesnt want to comply he can buy out the P even though P in
power position
o Injunction thus gets liquidated to money amt as opposed to
having two week trial for damages


Injunction gets liquidated faster than damages trial might even

though seems counterintuitive bc damages seen as most liquid
o Probably NOT efficient from economic standpoint bc might
unreasonably favor P, but is efficiency from courts
Legal remedyterminate lease and force tenant out and sue for damages
o Legal remedy may be inadequate (thus triggering injunctive
relief) bc even if could ascertain lost rentals from defendant
hard to determine lost rentals from other tenants when anchor
tenant no longer bringing in foot traffic
o Mercury v. WoolworthWoolworth is major tenant in shopping center and Mercury
claims WW was anchor tenant. Generally when these tenants come in its on their form,
take it or leave it since they are anchor tenants. WW wrote the lease in this case which
had rent and percentage of revenue but did not specifically say WW had to make certain
revenues to maintain lease.
Question is whether tenant has duty to operate premises and give percentage rent
in addition to fixed rent or whether is only liable for fixed rent i.e. does lease
have an implied covenant to operate?
What would make us read in an implied covenant to operate?
o Nominal fixed rent combined with percentage rent triggered a
low revenue threshold
What would make us not read in duty to operate?
o Explicit language that says there is no duty to operate
o Parties contemplate idea that tenant shuts down and dont say
terminates lease
o Rare in big shopping center for anchor tenant to agree to duty
to operate esp when lease is on their form though are common
in outlet malls
In this case court does not find duty to operate bc
o fixed rent high and percentage rent never triggered for life of
lease so not a low trigger
o Parties contemplate idea that WW shuts down and does not
say that lease terminatesinstead agreed on fixed rent plus
one third of rent for prior yearsthat is price tenant has to pay
to turn lights off
Implied duty to make premises suitable for intended purpose/implied warrantee of habitability
o Commercialgenerally in commercial real estate NO covenant to make premises
suitable for intended purpose
Must be some sort of fraud to create implied duty (Service Oil)
Service Oil v. WhiteWhite leases land to Service Oil knowing is planning to
use for gas station but city ordinance says there must be 10 ft between street and
gas pump. Pumps used to be 15 ft from street BUT White had conveyed 10 ft in
front of service station to city and now pumps are within 5 ft of street.
Is there implied covenant that premises suitable for their intended
purpose in comm prop?
o As a general rule no covenant to make premises suitable for
intended purpose in commercial leases
o But in this case in particular there is implied covenant bc there
is fraud involved
landlord concealed fact that had conveyed 10 ft to
city (which still is not considered fraud unless)
AND not capable of being discovered by other party
during due diligence which in this case it was not


Do we impose same standard of due diligence for leases as

purchases though?
Normal lessee doesnt examine lessors title way
would if purchasing
Lease is still effective so what are damages?
o Lessee can get lessor to move the pumps and there may be
punitives as well
Residentialgenerally there is implied warrantee of habitability to make premises
suitable for living
First showed up in Housing code, then courts started finding implied warrantee
of habitability
Courts finding the implied warrantees created another body of people
to enforce the housing codes because without judicially imposed
warrantees only inspectors can enforce it and often not successful
Courts use housing codes by analogy but use own terminology like fit
for habitation, etc.
Implied warrantee not violated just because of aestheticsquestion is whether
fixtures, structures, etc. work.
Implied warrantees are NOT waivable (at least in apartments)if they were a
lot of people would be living in substandard positions for cheaper rent
Few states do allow waivers for situations where tenant plans on fixing
the place up
There are pervasive violations of housing codes but is that necessarily
bad if lower rents? Difficult questions
Duty to pay rent is DEPENDENT on LL providing implied warrantee of
habitability meaning dont have to pay rent if LL doesnt meet his duty
Implied warrantee of habitability can be affirmative defense (Jack Spring)
Jack Spring v. Little Ds denied Ps allegations that had violated
covenants to repair and D also wanted to bring affirmative defense
breach of imp warrantee of habitability.
o Court says P should be able to add affirmative defense of
implied warrantee of habitability
can bring implied warrantee of habitability action as
affirmative defense in summary proceedings which is
very important because most low income tenants
wouldnt bring suit on their own
tenants obligation to pay rent is dependent on
landlords implied warrantee of habitability
Damages if breach of implied warrantee of habitability
Damage rules when warrantee breached
o 1) Difference between contract rent and actual value of
premises if tenant still living there
o 2) Difference between value of premises if had been as
warranted and the actual value of premises
o Bonus valuedifference between contract rent and what
would have been worth if had been as warranteed
o PLUS pain and suffering and maybe punitives (Hilda)
If tenant vacates during lease
o If court finds no breach of habitability, then liable under terms
of lease
o If court finds was breach
pre-vacationcourt looks to damages rule above and
chooses one of them


post-vacationcourt can only award bonus value bc

no longer paying rentdifference between value
premises would have been worth if as warranted and
contract rent
if tenant does not vacate during lease but stops paying rent
o LL brings unlawful detainer action and in summary proc.
tenant can bring affirmative defense of breach of habitability
o Pasttrigger one of two damages rules above but if damages
less than rent then tenant has reasonable time to pay difference
o Futurecourt might say
tenant doesnt have to pay until LL fixes damages
which puts pressure on LL but may be problem if has
no money to make repairs
rent should be paid to court (though reduced rent bc
damages) and put in escrow until repaired but then
get back rent
receivership statuteif court doesnt think the above
will work then court appoints third party to take over
building and rent still paid into escrow who uses that
to repair the buildingworks well in middle class
buildings but not so well in lower income ones bc
receiver often cant get loans, tenants wont pay rent
to receiver and owner might just abandon it
Hilder v. St. Peternothing works when she moves in. Toilet doesnt
flush, vermin, broken glass, plaster, etc. very bad situation, essentially
o This could have been breach of covenant of quiet enjoyment
but because she didnt actually leave she cant bring cause of
action under constructive eviction and this was clearly not
actual or partial actual eviction
o Instead she brings suit arguing there should be an implied
warrantee of habitability
o This is easy case bc she paid rent entire time and place clearly
uninhabitableusually more complicated
o Ct even grants her punitives in addn to all the rent she paid
which is very rare
Implied duty to make general repairs
o Commercial (assumes lease is silent re: repairs)
Generally landlord has no duty to repair if it is not laid out in lease
Tenant also has no duty to repair
BUT must protect against waste and keep property wind and water tight
fix roof, windows, etc
Acts of Godtenant usually no duty to restore building but still
responsible for lease and must continue to make monthly rental
payments even if building is gonelease still effective bc was created
in time when buildings incidental and would say dirt still there
But parties can contract and have tenant duty to repair in commercial setting
Still notion that whatever the parties agree to will be enforcedmuch
less likelihood in commercial setting to nullify contract
though must be specific if really want tenant to be responsible for
o i.e. after Hadian clear that must specifically mention
earthquake retroffiting if want tenant to be responsible


Triple net leaselandlord has no obligations except right to

collect renttenant is obligated to make all repairs, pay all
real estate taxes, insure property for benefit of landlord, etc.
(regular net is just repairs, double is repair plus tax, etc.)
Not unfair in commercial setting because parties
agree to it thus is product of market because rent is
much lower
Law is free in allowing commercial net leases but in
contrast would not allow this in residential setting
o Ground leaseperson leases raw land and builds on it but
technically when lease ends improvements belong to landlord
(but most of these leases are 90 years or so) bc he has
reversion on land and improvements
i.e. Marina Del Ray city leased lands to developers
and if own a building on a ground lease then must
make sure tenant developer pays rent otherwise
landlord may end up owning building early (before
the 90 year lease ends)
when developer gets loan lender takes
mortgage not on fee simple absolute but on
90 year ground lease unless landlord signs
mortgage which usually dont
mortgage thus applies only to leasehold
interest and are very careful to be sure that
rent is paid
o more common where land is very expensive
Six factors help us determine whether lease intended repair to be tenants or LLs
responsibility (Hadian factors)
Cost of repair v. total value of lease (if disproportionate, probably not
tenants responsibility)
Term of lease
Relationship of benefit of repairs to lessee to that of reversioner
Structural v. non structural repairs
Degree to which tenants enjoyment of premises affected by repairs
Likelihood that parties considered the application of repair involved
What else affects who is responsible?
the more the repair is tied to tenants use the more likely tenant will be
responsible (i.e. installing elevator for disabled vs. earthquake
landlords may want to put every single repair in the lease as tenants
responsibility and as result tenant might demand reduction in rent,
deductible, etc.this addl info enables negotiation and forces parties
to consider every possibility and negotiate accordingly
if LL has insurance does that mean he should be responsible over
tenant? Not necessarily bc may discourage purchasing insurance
Hadian v. SchwartzH leases building to S for bar. Lease is net lease, three
years renewable for five more for 650/month. Lease specifically says lessee
responsible for all repairs (structural and non structure and regardless of whether
repair result of tenants use or elements), tax increases and being in line with
ordinances but landlord pays casualty insurance and base taxes (so not triple net
lease bc LL pays for insurance and taxes) Inspectors come out and say building
must be repaired for earthquake at 34k. LL fixes it sues tenant for cost of repair.
Is there implied duty on landlord to make general repairs in this single
net lease?


Lease is specific in that tenant is responsible for all repairs

regardless of whether damage is result of tenants use
o BUT lease does not specifically say tenant responsible for
earthquake damage thus court finds it is not a net lease
o Even if was net lease tenant still not responsible for
earthquake retrofitting bc
Amt of damages disproportionate to rent (34k v.
short lease
tenant not likely to seriously benefit from repairs in
comparison to LL
structural repairs (but in lease said tenant
liable for structural repairs so not relevant
here since explicit in this case)
tenants enjoyment probably interfered with
while repairs occurring
did parties contemplate application of law or
order involved? Didnt explicitly say
earthquake in lease but did say most repairs
General repair clausesusually specified in the lease and says tenant will return
premises in same condition took it in, reasonable wear and tear excepted
If lease not silent but has this clause tenant may be liable to rebuild
when property destroyed as result of Acts of God
Chambers v. North River Linegeneral repair clause in lease and
property destroyed and court says tenant obligated to rebuild property
Generally landlord has duty to repair
Tenant generally has no duty to repair
Acts of Godallowed to terminate lease if building destroyed

i. Security Deposits

Security deposits
o How much can LL demand?
o Does security deposit trump claims of other creditors?
Come before IRS, mortgage, other creditors
o What if LL sells building during term of lease
Is cause of action against original or new LL or are both liable
o Interest on security deposits? Not usually but sometimes
o CA statute
a) only with residential real estate
b) Security deposit used for damages beyond ordinary wear and tearright to
impose ordinary wear and tear on premises
Can be used for cleaning of premises ONLY if tenant doesnt return in
as clean condition as when got itmust be less clean then when went
into possession
c) Security deposit cannot be more than value of two months rent
This does not prohibit advance of payment of 6 months if lease is 6
months or longer
o Could mean have right to pay 6 mo in advance
o Could mean have right to pay security deposit of up to 6 mo in
advance not more


Maybe means sec deposit not limit to paying rent in advance if

get lower rent that way
d) security deposit gets paid back before general creditors (but this probably
does NOT mean comes before mortgage or IRS bc of govt supremacy clause)
e) no interest on security deposit (though in some states there are)
if view it as LL holding trust for tenant then tenant deserves interest on
trust but most litigation like this failed and held not a trust
f) within three weeks after tenant has vacated premises LL must send tenant an
itemized list of damages and if fail to do so can argue bad faith thus can get
statutory damages up to two times security deposit plus actual statute but
CANNOT get attorneys fees
in NM if fail to send this letter no recovery of damages at all (Garcia)
and tenant can recover damages plus attorneys fees
Garcia v. ThongLL Garcia enters into lease with Thong who ruins
premises. He left $200 security deposit but she sues him for $1,700 for
damages to apt. but does NOT provide Thong with an itemized list of
damages for keeping her security deposit.
o ct says since she didnt comply with statute by providing him
an itemized list of damages to keep his security deposit, she
cannot sue for damages and must pay his attorneys fees
Garcia argued that didnt have to send letter bc
damages were more than value of security deposit
Court disagrees, says counterintuitive that have to
send letter if lower damages but not higher ones
o If in CA LL would have had to do it within three weeks and if
failed to do so then may be called bad faith effort and tenant
can recover up to twice amount of security deposit plus actual
damages (security deposit itself) BUT no attys fees
i) nothing above precludes LL from recovering from tenant compensatory
damages in excess of security deposit received though in NM failure to send
notice took that right away from LL
even if this wasnt in statute have law of waste
If LL sells building can either
return deposit to tenant or give it to new LL
if LL fails to do this then both predecessor and new LL are jointly and severally
liable for the security deposittenant can recover from whoever he wants/easier

c. Transfer by Landlord or TenantAssignees and Sublessees

Two relationships between tenant and landlord when in lease relationship

o Privity of contract
o Privity of estateboth share interest in state, present and future
Tenant can transfer in two ways
o Assignmenttenant essentially transfers all the tenant hasno reversion
Assignee makes payments to LL but may pay tenant if lease has bonus value
Could also be negative bonus value and original tenant loses money
Assignee is in privity of estate with LL
Liable on all of lease and gets benefit of and is burdened by vast
majority of provisions of lease (95%)
Tenant is now only in privity of contract
Still liable on all promises of lease thus is jointly and severally liable
with assignee so LL has two pockets to look for unless LL specifically
grants tenant freedom from lease


Retains right of entry even though not a reversion because he is still

personally liable on that lease
o Though some states (CA) say right of entry makes it a sublet,
not assignmentmeans assignee or LL may not be able to sue
Tension btwn looking at formalistic approachif
reversion then automatically assignmentand intent
approach which looks at other factors (ACS)
o Could be bad for either party depending on who wants to sue
o Sublettenant reserves reversion
Sublessee not in privity of contract or in privity of estate with LL
L cant sue sublessee for anything and sublessee cant sue LL either
o Exception is that LL can sue S for waste and in residential
contracts S may be able to sue for breach of warrantee of
o Also, may lose possession
S pays rent to tenant and expects tenant to pay LL
and if LL isnt getting check then LL may clear out
the place so though S not liable on rent
Maybe bc sublessee and LL together do not represent total interest in
estate but still doesnt fully explain why not in privity in estate
Tenant remains in privity of estate and in contract with LL
L can sue T for anything and T can sue LL
Many sublessees in supermarkets nowbanks, coffee shops, etc.
Many tenants thus want to be able to sublease part of the large property
for other services
How to determine whether sublease or assignement
o Formalistic
Tenant reserves reversion
Tenant has right to enter alone is enough in CA
o Intentusually this is in favor of alienation for tenant though in ACS goes other way
with formalistic in its favor and intent not
o Problem with evaluating on intent is that difficult for court to get involved
o American Community Stores v. NewmanLong term grocery store lease btwn LL and
tenant ACS. ACS goes out of business and assigns lease to Nash Finch then ask for
consent from LL. LL does not consent. ACS then changes agmt with NF to sublet
instead since that is allowed in contract that does not require consent. There was
provision in lease that gave tenant 20 days to cure default so ACS and NF fix default with
those 20 days. NF then turns around and assigns its sublessees interest to new operator.
LL says tenant just changed name from assignment to sublease
Court says sublease
Tenant has both reversion for two days at end and right of entry at any
point which together make it a sublease, not an assignment
Intentcould argue that intent is for assignment, not sublease because
started out as sublease and reversion only two days
o In this case formalistic approach supports alienation instead of
intent but usually intent supports alienation which is why
Public policy favors clarity and a reversion is a reversion regardless of
how long it is or what the intent is
LL right to consent to sublessee or assignee
o Majority rule is that if there is a provision that cant sublet without LL consent then the
court does not care whether LLs denial of consent is reasonable or not


Clause absolutely forbidding transfer is enforced and clause requiring consent

will be enforced even if withholding consent seems arbitrary
BUT the lease will still be construed very narrowly and ambiguity resolved in
favor or alienability
If say cant sublet without permission, doesnt cover assignments, and
if say cant assign without permission, doesnt cover sublets
If lease contains no clause restricting alienation cts will generally not
read one in bc dont want to go against alienability
And must comply with positive law and not violate civil rights
Minority rule reads unreasonableness into clause so denials of consent are only
enforceable if reasonable
Reasonable reasons to deny consent
T2 financially insolvent
Suitability of T2s use of property
Legality of use of property by T2
Need for alteration of premises for T2s use
Nature of occupancy
obj to use of property like environmental LL and T1 transfers to mining
co. MAY be reasonable but not specified in the above so uncertain
Unreasonable reasons to deny consent
LL wants to protect increases in rental value
Doesnt want tenant to collect on bonus value when LL considers it his
Kendel v. PestanaLease says LL has right to consent to any sublessee.
Purlich who subleases to Bixler who subleases to Pestana. Bixler wants to
assign sublease to Kendel bc rent now more than it is under sublease so wants to
capture bonus value that Purlich would otherwise capture as original tenant
Court is in minority state where reads reasonable into the consent
clause meaning consent must be reasonable to be enforceable
o Says wanting to capture bonus value is NOT reasonable
because if the lease had gone down in value Bixler would be
responsible so he should benefit from bonus value, not Purlich
Wellencamp v. B of Abank wanted to forceclosure of mortgage bc wants
benefit of higher int rate and court found NOT reasonablebasically says
mortgagor benefits from low int mortgage bc gets higher price
After Kendall CA legislature codified the rule that any reasonableness will be read in if
no standard given for restriction on tenants right to transfer
This resulted in much more specific leases by LLs in terms of transfer
LL can prohibit all transfers or prohibit transfers with bonus value or
give bonus value only to LL so long as is explicit in contractthis
doesnt necessarily prohibit transfers but puts LL in bargaining position
AcquisitionsLL must also specify for acquisitions bc otherwise
lessee can sell company to new owner and though essentially this is a
transfer if nothing specific in lease court will resolve in favor of
transferability and tenant gets bonus value
o Hypo30 year lease to corporation with 100% shares to
Green. Lease has bonus value and Nelson wants to take it
over. LL doesnt consent bc wants increase rent. Green can
sell shares to Nelson. Same LL, same lessee, but Green is able
to take over bonus value. Can say there has been no transfer
so allowed. Court will interpret this in favor of alienability
even though this is in substance a transfer


Involuntary transfersLL must also specify what happens involuntary

transfer as result of death of insolvency bc otherwise court will
interpret lease to allow transfer bc favors alienation unless specified
o Hypo30 year lease to Nelson. Nelson dies. He leaves to his
kids. LL tells him to give lease back bc wants bonus value.
Clearly theres been a transfer even if involuntary but ct will
allow it unless specified
This tells us that for pro-LL k must be explicit otherwise reasonableness read in
For pro-tenant put which consent may not be reasonably unheld bc
that means cant deny consent to capture bonus value and hard for other
side to say want to be unreasonablepsych tactic
Advantage to tenant here is that at least it has to be explicit and tenant
knows what is getting into
If this had never been codified may have deterred long term leases or long leases
with indexed rent bc LL would have been too afraid that reasonableness might
be read in by courtsso at least keep rent fixed now even if cant capture bonus
valueprob better for tenants that was codified
The new rule also made due on sale clause enforceable even if not reasonable so
long as specific
Though LL right to consent to sublessee or assignee is a forfeiture or promissory restraint on
alienation it is NOT considered unreasonable restraint on alienation as it would be if this were a
fee simple instead of a lease
o If fee simple: O conveys to A and heirs but if A transfers title without Os permission O
has right to reenterunreasonable forfeiture restraint on alienation
o If lease: tenant shall not assign or sublet without LLs permission or LL can terminate the
leaseforfeiture restraint but not considered unreasonable restraint on alienation in
majority rule
On the other hand, if lease said that transfer was void bc of lack of consent that
would be a disabling restraint on alienation thus unreasonable and unenforceable
most transfers still valid even if without consent and breach of k
If tenant assigns without getting consent that assignment is valid and only if LL
has termination clause can he terminate the lease
Anchor tenants usu dont require any right of consent to transfer which makes their leases valuable
o Kmart bankruptcywent bankrupt, old stockholders lost all equity. Reorganized,
reopened at 10/share but now close to 100/share. But they arent even making money.
when Kmart went into bankruptcy wasnt really bankrupt bc owns incredibly valuable
leases. When bankruptcy pending Lambert went to bondholders, bought them all up until
had stake in company. He and other new bondholders got to convert to stock in new
company. Kmart had hundreds of long term leases executed when it was anchor tenant.
No transfer clause probably said NOTHING so tenant can transfer freely based on
alienability. Why didnt shareholders or lawyers realize this?
d. Covenants Between LL and Tenant

LL sues
o Tenant subleases or assigns
No assumptionsT2 generally has benefits and burdens that touch or concern
property but not those that are separate from the property (i.e. rent does pass but
giving LL a bath does not)
Assumptionsif T2 assumes the lease then he is liable on EVERY burden on
lease not just those that concern and touch the land bc puts T2 in privity of
contract as well as privity of estate

Often LL will consent to assignment only if T2 assumes the lease bc

now A has all liabilities that T had so sometimes forced to assume


Landlord sells
Tenant now has duty on covenants that touch and concern lease to LL2 but not
on other covenants
i.e. no duty to bathe LL2 if that was in lease bc different person but T
still has duty to bathe LL bc privity of k
o LL sells and tenant subleases or assigns
If assumed the lease, T2 has burden of everything in lease to L2
If didnt, just burdens that touch and concern land
Tenant sues
o Tenant subleases or assigns
LL had duty to repair to tenant and duty to bathe him he now has duty to repair
but not duty to bathe bc doesnt touch and concern land
o LL sells
LL2 has duty to repair bc covenant to repair runs with the land
o LL sells and tenant subleases or assigns
Benefit runs to T2 and burden runs to L2 so L2 has duty to repair to T2
Obligations of T and T2 when assignment to T3
o Obligations of T2
If T2 has signed assumption then liable to LL even after assigns to T3 and even
before he took on the assignmentboth before and after his privity of estate
(though may try L to agree no past obligations exist)
If same thing happens WITHOUT assumption (T leases to T2 who leases to T3)
then T2 ONLY has privity of estate and once he assigns to T3 he has NO
liability to L
Thus ONLY T is liable for T3s default if T2 didnt assume lease
o Obligations of original T
Original tenant is still liable if T3 defaults on rent even if T2 assumed lease so
LL can go after either T or T2joint and severally liable
if LL and T2 changed terms of lease in such a way that prejudiced the T
(made lease worse by raise rent, longer terms) original T not liable
o If change made lease better then T still liable
Sometimes after assignment LL will let T off hook (i.e. if assignee has
stronger balance sheet than original tenant) but short of that still liable
Gerber v. Pecht5 year lease to Pecht. Pecht assigns with permission to
Moscowitz. He in turn assigns to Christensens without consent. Christensens
default on rent. Gerber sues Moscowitz.
Is Moscowitz liable for Christensens default?
o Interprets lease from Pecht to Moscowitz as assumption even
though didnt directly say that
If there was no assumption on Ms part then would
not have been liable
o Says that between Pecht and Moscowitz Pecht is surety and
Moscowitz is principle debter (Gerber is creditor)
This labeling does not mean Gerber can only sue one
or other of themlabeling them this way has no
impact on LLhe can pick and choose who is liable
Court says Gerber can go after either Pecht or assignee Moscowitz first
whatever he pleasesand both P and M liable
o Though f Gerber and M had changed terms of lease that made
lease worse for tenant then P would not have been liable at all
bc no longer same lease
o Relationship between T and T2


If T2 assumed then T and T2 both liable and T is surety on lease, T2 is principal

but LL can go after either of them for default of T3
original tenant can only pass what he has, no more
o Neal v. Craig BrownBrown Sr. leases for 15 years to 60 minutes who subleases to
Hutchinson who has right to two five year renewals. Hutchinson assigns to Neal. Brown
dies, son takes over. 60 minutes then goes into bankruptcy. Bankruptcy court instructs
Hutchinson and Neal to make rent payments directly to Brown now that 60 minutes gone
did so for 13 years. Then Neal says notified Brown in writing that is exercising an
option to renew for five years and he puts 6k of work into the place. Brown says
terminates what he calls a tenancy at will. Neal then sues saying there was a lease.
Neal says that lease terminated when 60 minutes bankrupt and that he paid rent
for many years to Brown and was substitute lessee under terms of original lease
Court says no, bankruptcy does not destroy lease
Neal also argues that he is in effect an assignee under the 60 minutes lease
Ct disagrees because 60 minutes had only given Hutchinson a sublease
(bc retained two months) and therefore what Hutchinson assigned to
Neal was its own interest which was sublease, not assignment
Neals right to renew on the sublease have no effect on Brown because
he has neither privity of k or privity of estate
Options in sublease dont work because they are not binding on Brown
only on Hutchinsonnot assignee of 60 minutes bc 60min only sublet
to Hutchinson
Case seems unfair
Neal had paid rent for 13 years directly to Brown
Made improvement on propertiesintended to stay there
Argument that could have maybe worked for Neal?
Neal could have argued hat with Brown Jr. that he was fixed tenant for
15 years
Though oral lease violates statute of frauds he may still prove was fixed
tenant by part performance doctrinegive tenant chance to explain
why he paid rent, made agreementscourt still needs to be convinced
that oral agreement existed and there is evidence of it part-perf takes
down bar of statute of fraud and allows in evidence
Implied assignmentssometimes court may find an assignment even when it is not specifically
written thus that a covenant applies to what was really just a sublesee
o Abbot v. Bobs U Drivelease on building for five years to Bob Thompson who owns
both Bobs U Drive and Continental. Bob assigns the lease to Bobs U Drive but
Continental is operating out of premises and some of the cars Bobs U Drive rents are
owned by Continental. LL thinks Bob avoiding a lot of rent by having cars in
Continentals name since rent is fixed plus number per car owned by Bobs U Drive and
Agreement to arbitrate was in lease. LL sues Bobs U Drive and Continental over rent
and says that arbitration clause should apply to both.
T argues that what Continental and LL have is at most a sublessee which means
it is not in privity of k or estate and cannot be sued by L
LL argues that agreement with continental is an implied assignment thus they do
have privity of k and estate and bound by covenants touch and concern lease
Court agrees with LL (even though doesnt make much sense bc lease
and assignments have to be in writing to survive statute of frauds)
o Court says Continental became coassignee with Bobs U Drive
before assignment
o Says when party is paying rent to LL there is presumption that
he is an assignee i.e. implied assignee


This is a big jumpcould have been license of sublease

especially considered oral agreement and court evades this
o Court is motivated by the fact Continental acting in bad faith
Now we know assignee does arbitration touch and concern land?
o In this case easy answer since arbitration is ABOUT rent
which does touch and concern land
o Also, agmts to arbitrate so common that reasonable transferee
would think it does bind them which is the best test to
What perceived evil is court trying to avoid
Says was trying to pierce corporate veil and keep Continental from
enjoying benefits but not being subject to burdens of lease
But since Bob is liable for every covenant on the lease and he owns
both companies probably would have been held liable anyway
o Only situation LL would have to worry about is if Bob going
through bankruptcy and transferred all assets to Continental
but otherwise Bob is NOT off the hook even if Continental is
so this opinion doesnt make much sense
How do we know when promises touch and concern lease
o Promises that courts have held clearly touch and concern land
Duty to pay rent
Duty to repair
Use restrictions
Servicesheat water
Agreement not to sublet
Lease renewal
Insurance most of the time (but not in Chesapeake)
Arbitration agreements (Abbot)
Security deposits
Promise to return security deposit to T does NOT touch and concern
land when L transfers to L2 unless L specified that security deposit was
transferred for repairs
Doesnt usually run from T to T1 unless T specified so
o Court has also laid out three tests
If promise made either tenant or LLs interest more valuable then touches or
concerns the lease
This is horrible test bc people wouldnt litigate unless thought made
them better or worse off
If promise intimately bound up with the land
Again, not better than touch and concern except word intimately
If promise is such that reasonable assignee of tenant or LLs interest would
believe he or she was bound by the promise then it touches or concerns lease
Would reasonable businessperson believe bound by promise?
Good bc takes into account current circumstances
i.e. agmts to arbitrate so common that reasonable transferee would
think it does bind them which is the best test to examine
LL enters into long term lease in warehouse building and T, corporation, assigns to Chesapeakea
corporation. T agrees to maintain casualty insurance on building with L as named insured.
o Does promise to insure building touch and concern land?
Most of us today would say yes bc very common in triple net leases


Court said it did NOT touch and concern lease because benefited ONLY LL
once got insurance money LL had no obligation to rebuild the property so fact
that benefit was one sided led court to find no obligation
This analysis makes sense but belies general rules today

e. Termination of Lease

o Notice of termination (for PERIODIC tenancies only) must be effect to terminate and
give an effective date that is at least 30 days after the notice is receiveddisagreement
among states and no maj opinion
One opinion
if notice not within 30 days must send new notice with 30 days before
eviction otherwise notice is invalid and tenant never officially evicted
thus not considered unlawful detainer and only liable for rent didnt pay
during holdover
Davidson v. KennyDavidsons have one year lease with Kenny who
holds over so now month to month. Davidsons want to terminate lease
even though he pays the rent. Draft letter saying leave premises by
September 30 but letter doesnt get into tenants hand until September 6
so not 30 days notice. Kenny doesnt leave until December 9.
Davidons bring this action for the rent not paid for October, November,
half of December
o since not sufficient and in minority state, Kenny effectively
never evicted so just liable for single rent he never paid, not
considered unlawful detainer
other opinion and restatement agrees with this one
if notice not within 30 days eviction period is effective for next rental
period so tenant liable for the unlawful detainer damages starting that pt
Usually unlawful detainer is worth double the rent from day of eviction
until action leaves
o When is notice required?
Notice is required in periodic leases but not in fixed tenancy leases because
there is a specific end date which automatically terminates the lease
o Proceedings/self help
When tenants holds over LL has three options as learned before and one of
them is to treat tenant as trespasser
LL used to be able to use self help to evict trespassing holdover tenants but now
we have FED or unlawful detainer statutes which allow for summary
Summary proceedings are usually quick way to get rid of tenant and
were created to disincentivize LL use of self help
o Lindsey v. Normet said summary judgment statutes NOT
unconstitutional even though cant bring every counterclaim
because they were created to limit self help and be efficient so
not unreasonable that limited defenses can be brought
o 48 days until judgment of eviction
o tenants used to not be allowed to bring counterclaims but now
tenants may bring the important implied warrantee of
habilitability and the covenant of quiet enjoyment
o judgment is limited to 25k even in comm settings so comm LL
usually go to superior court
o there is right to jury trial but usually waived


tenant usually loses

marshall then goes to get rid of tenant so from beg to end takes
90-108 days
appealusually tenant cant stay even if appeal unless post bond to
guarantee LL that if loses money will pay rent pending appeal
o court said 2x rent bond is unconstitutional but not 1x rent
court has held that these summary judgment proceedings do NOT
violate due process even though cant bring every counterclaim
pro self help
tenant always loses (95%) and save money in judges, marshals etc.
let tenant sue if LL wrong
allow in repossession of chattels (cars) why not apts?
other tenants end up paying for rent that holdover tenant doesnt pay
happens even in states where not allowed (this could go other side too)
Con self help
possibility of violence? Yes, but LL could deal with thatwait till
tenant leaves to change locks
homelessness may be part of the reason legislatures are unwilling to
allow self helpwant to give people 3 mo free rent even though this
doesnt sound good politically
without self help LL need to screen more carefully and fewer people
will be able to get housing
UCLA article found that even if more efficient self help too traumatic
Majority opinion
no self help, summary judicial proceeding for eviction (CA)
Minority opinion
some self if peaceful
Abandonment: tenant moves out of premises and law says that tenant is surrendering rights to
o If LL accepts surrender lease ends and both parties out of contract
o If LL doesnt accept surrender then
LL may get judgment against tenant and doesnt mitigate
waits certain amt of time and dont go into premises so lease still in
effect then sue for all the rent accrued
o Risky bc may have duty to mitigate and/or T may be insolvent
In some leases there are acceleration clauses saying all rent under lease
presently due and payable by NPV rent so LL doesnt have to wait and
can try to get all the money immediately
o if acc clause not accepted may still get anticipatory
repudiation which says that tenant is signaling to world that
will never perform and is still liable for NPV of rent
o also same risk of duty to mitigate and tenant broke
If get this judgment premises still belong to tenant even with
acceleration clause
LL gets judgment against tenant and mitigates
fears will never collectwant cash flow even if have right to force
tenant to pay rent
When put another tenant in lease is terminated BUT still have right to
damages for amt of k rent less amt rented for NPV for rest of leaseif
k rent less than current then no damages besides costs of reletting
Is there is a DUTY to mitigate
Majority rule says LL does have duty to mitigate


Sommer v. KridellD entered into lease with LL then backed

out bc engagement off. LL did not mitigate even though
several people asked to rent it.
court takes this case as opportunity to review whether
LL has duty to mitigate and takes on majority rule
that LL has duty to mitigate
Reasons against
o From property point of view no duty to mitigate bc tenant has
land for certain amt of time and LL does not interfere with it
Reasons for
o From k point of view have to mitigate damages
o Also, dont like valuable property sitting there empty
Damages for mitigation
o MajorityDiff btwn reasonable value of mitigation and doing
Even if market price higher than k price still sue for
cost of reletting
o Minorityif dont mitigate then no recovery from tenant
o Usually wrongdoer has burden of proof on whether non
breaching party failed to mitigate but here burden is on LL to
prove reasonably tried to mitigate
Easier for LL to prove that he did try (agent, ad) than
tenant to prove he didnt try
Tenant often tries to find replacement so not liable on
Reasonable mitigation
o For less or more rent so long as reasonable price depending on
o Must treat apt empty because of breach exactly same as treat
normal inventory
Lease terminates without abandonment
o Who gets the improvements/detriments on property once lease ends?
Want to tear down premises bc losing money
Tenant has duty to leave as found it, reasonable wear and tear excepted
Want to build to make more money and LL in favor of the building
Default rule says on silent lease LL gets improvements once lease ends;
if lease authorizes improvements then LL definitely gets them
Exception is trade fixturesbolted down counters, chairs, built in
refrigeration, etc in restaurant, partitions in office building, not furnace,
air conditionertenant can remove them so long as doesnt damages
structure or pays for damages caused by removing them
o Condemnation before lease ends
Default rule says that lease is terminated as soon as the property is condemned
If bonus value in lease (lease for 20k, worth 24k) then get NPV of 4k year for
rest of lease

7. Easements
a. Nature, Types, Creations

Easementnon-possessory (in corporeal) interest in land

o Unlike license cannot be revocable by will of owner and is not transferable
o Can be very valuable asset even if non-possessory such as pipeline across company
Types of easements


Appurtenantseasement tied to landare conveyed with dominant estate whether or not

specifically in real estate
Dominant estate need not abut servient estate, just need be close by and need the
easement to reach road, lake, etc. though usually are contiguous
o Grosseasement not tied to landmost valuable easements bc for benefit of owner
i.e. oil pipelines not tied to land, railroads, but could still argue that certain
pieces of real estate being benefited from easement (refineries) so could say
appurtenant but generally call easement in gross
behind every easement is eminent domain bc otherwise there would be holdouts
every few miles by one landowner who refuses to sellgovt forces these
landowners to sell easements otherwise huge efficiency problems with public
utilities, etc. even with eminent domain hard to create long easement in gross
conveyance will only mention servient not dominant estate
o Profiteasement plusgives right to go on land like easement AND take profit from
land (oil, timber, gravel, etc.)
Usually profits are in gross because once take from land can usually take it
wherever please (though could argue have profits in appurtenant if had lumber
mill and owner of lumber co. uses land for timber for his co. on other land)
Duration of possessory and non possessory interests
o Forever: non-possessoryperpetual, possessoryfee simple absolute
o For life: non-possessoryeasement for life, possessorylife estate
o For fixed period: non-possessoryeasement for years, possessoryleasehold for years
o Revocable at any time: non-possessorylicense, possessorytenancy at will (though we
talked about how holdover tenants could have been considered licensees but court instead
chose to call them tenants at will)
Factors indicating easement, not license
o Easements need to be in writing by SOF whereas licenses can be oral
o For specific period of time (licenses usually not specific time)
o For designated area
o Substantial consideration paid
o Appurtenantlinked to other land that is fee simple or possessory
o Right of easement holder to make improvements
o Milbrook Hunt v. Smithlarge tract of rural land. In 80s owner conveys something to
Milbrook Hunt. One piece is conveyed as lease75 years (maybe clubhouse, storage
facility, etc.). Problem is with rest of area where get easement (argues P) or license
(argues D) to hunt foxes for 75 years. Owner sells to Smith who wants land as nature
preserve and is against hunting.
P argues that it is an easement, thus owner cant revocable
D argues its only an license thus he can revoke it when he wants
Court finds there is an easement
Specific length of timesays 75 year length indicates easement and
licenses usually dont use specific time periods
Particular areaPs right is not in one particular area which weighs
against easement (esp given D has right to develop land)but court
says that alone doesnt mean not easement
AppurtenantThough court doesnt mention it fact that was attached
to admitted lease may have weighed in favor of easement
Right was for benefit of hunt
This is clearly a close case but court says there is an easement
Creation of easements
o Creation by grant or reservation MUST be in writing bc governed by SOF unlike licenses
99% of time easements created by deed (only lease not created by deed)


owner of servient land (lot 1) grants easement to owner of dominant

land (lot 2) to use driveway, sewage system, etc.
owner of entire parcel grants dominant part of parcel to new owner (lot
2) and agrees to grant land together with easement for roadway
purpose over his servient parcel (lot 1)
title examiner looking at either parcel will recognize easement
owner of entire parcel sells servient part of parcel (lot 1) to new owner
but reserving, however an easement for roadway purposes through
that lot 1 for himself who owns dominant parcel (lot 2)
o easements by part performance if just oral agreement
take out of statute of frauds and makes valid easement from oral or defective
o created by implication (implied easement)
may happen when easements oral or defective conveyance
o created by prescription
Easements v. licenses or fee simples
o License v. lease
Hotel guests/lodgers/boarders are treated as licensees, not leaseholders
But if change them just a little could have been leaseholds
Normal tickets licenses but season tickets might be easements (Cubs case)
Kiosks in malls are licenses but could be leases
o Easements v. license
License is revocable, not lease
Not transferablesee lease section for more
License dies with need for its use, easement goes on forever
o Easement v. fee simple absolute
Whether something is easement depends on language when it was created and
how specific that language was
Much easement litigation on rails to trials area
Many RR have conveyed land to state for hiking trails, and if RR
originally had fee simple absolute then conveyed interest to govt
agency then govt agency owns fee simple in the RR and can create RR
hiking trails, BUT if was originally an easement then still easement
Sample easement
o No ambiguity about what is being created
Clearly not lease bc says easement in several places
Refers to easement or right of way
o Specifies location of servient land and easement
Describes future servient tenant
o Makes clear easement is appurtenant rather than gross
Says whereas grantee is seized in fee simple of another parcel of land near
grantors land
Dominant estate need not abut servient estate, just be close
o Specifies location of dominant land
Again, says dominant land nearby
o Describes scope of easement
Says it is a driveway through much verbiage
o States duration of easement
Says it is perpetual though not explicitly (would be better if were explicit)
Mentions heirs and assigns


Presumption statute is that if have ambiguous conveyance of estate in

land it is fee simple and even though not estate here same appliesif
dont say length of time assume perpetual
Makes easement nonexclusive
Says with others having like rightprobably several lots share driveway
b. Easement by Contract

99% of easements created by contractin this section we deal with contracts that were oral in
nature or otherwise do not meet statute of frauds and court must decide whether or not the k valid
o In contrast if was just a license can be oral bc do not have to meet SOF
Easements by k are governed by statute of frauds bc usually longer than 1 year which means must
be in writing and have certain key elements
o part performance doctrinebar of Statute of frauds lifts if easement holder makes
payments, possession or improvements on land
o estoppel reliancedont need to prove discrete acts of part performance pointing towards
existence of kjust need to document reliance such that would be unjust not to have
Ricenbow v. Krauseclassic implied easement case but court treats as easement
by kHannah asked Knutsen in 1901 if could have easement across his land for
water. He said said. Oral conversations turns into irrevocable easement
between two new owners in 1950.
Knutsen intended to grant oral easement but doesnt meet statute of
o Part performance? Could argue Hannah installing drain is part
performance but at best this allows evidence into court, still
doesnt prove k
o Estoppel reliance? Court says this theory applies and that
Hannahs reliance upon oral license makes it an easement bc
otherwise would be unjust
This case could be viewed instead as estoppel to revoke license, not
actual irrevocable easementunsure of which is really is
o Result would be the same even though license EXCEPT
If govt condemned land licensee would get nothing
whereas holder of easement would get something
Durationrevocable license only lasts as long as
drain is there whereas easement would continue
regardless of use
the way the court views the relationship has significant affect years
later bc everything really points to this not being an easement
o ct seems very influenced by long use but court instead could
have viewed it as Hannah taking advantage of Knutsen
(easement lowers his value of land)
Floating easementseasement that isnt in particular place (like power line where just say goes
above some part of land)
o can render title unmarketable and lets buyer out when discover it bc can ruin plans for
o most floating easements not huge problems bc once prior floating easement is physically
located easement holder must release claim from land then landholder has clean title
o Berg v. TingCahill, Hansen and Young want to subdivide property. Bergs are against
it but agree if they get an easement. Cahill then sells to Tings. Tings dont get any
documents about easement on their land, probably bc title insurance company made a
Bergs lose, court says no easement


Though it could be a floating easement court rejects this bc says it isnt

sufficiently described but this is incorrect bc the easement recording
had attached a description of the Tings property so it was discernable
where it was
o It really was a classic floater and court was wrong
Easement violates statute of frauds because the recording doesnt
accurately describe where the easement is
o Part perf also fails bc no improvements, or possession
Bergs argue that they have payments in form of
considerationallowing subdivision to go through
Court says this isnt enough, even though it agrees
that improvements or possession arent possible in
easements bc easements are not possessory
o Estoppel reliance fails as well bc didnt rely on it yet
This case is odd bc there is clearly a complete easement and good description of
property yet court finds no easement
If Tings had never bought property and action Berg v. Cahill court
probably would have found for Bergscourt seemed swayed by fact
that Tings bought property unknowing of easement
Court instead could (should) have allowed easement and forced title ins
co which made mistake to pay the Tings for their loss
If no title mistake at all Tings have more applealing suit but still could
have had someone look at it

c. Easement by Implication

Easement by implicationeasement created in connection with written conveyance even though

no express language to that effectnormally written document is conveyance of fee simple
interest and easement is implied from
o Prior useonce owned by one owner and easement implied by use of property just not
put in actual conveyance in writing
o Necessity (way of necessity)
o Plat
i. Easement by implication from prior use/quasi easements

Easement implied from quasi-easement or prior use

Two types of implied easements
o GrantC owns lots 1 and 2 and 1 has driveway for house on 2. sells 2 to Rebecca and
does not say that she grants an easement with it
Law usually allows implied grants because seems like parties intended it to be
o ReservationC sells lot 1 and doesnt say reserve easement though should have
Law more divided and courts more suspicious in these cases bc C is attacking
her own deed whereas in implied grants other party attacking the deed
Some states dont allow implied easements in cases of reservations
Some states that do usually apply reasonable necessity or strict
necessity standard in order to find implied reservation
Other states dont distinguish between reservations and grants and
apply reasonable necessity to both
o Otero probably in this group bc court grants easement even
though was implied reservation and BFP


Sewer there when Pacheco owned two houses and

when conveyed lot 4 should have reserved easement
for sewer over 4
o Campbell v. Aerieunsure whether implied grant or
reservation bc dont know whether c/o conveyed motel or
restaurant firstif conveyed out restaurant first then implied
grant of septic tank on other property, whereas if conveyed out
motel first then c/o should have reserved the easement
Four elements must be met to establish implied easement
o 1) Land at one point in common ownershipimplied easement cannot exist where
neither party or their predecessors owned one parcel of land
o 2) Quasi easement must have existed prior to split (not actual easement because only one
o 3) Reasonably necessary for enjoyment (strict necessity in some states that allow implied
o 4) Apparent before splitif not apparent before split no implied easement
Apparency at time of split
Goes to intentif easement in place at time of split off then probably
intended to convey it
Apparency at time of later purchase
Even if apparent at time of split element may still not be met if BFP
(bona fide purchaser) doctrine comes into playrecording acts issue
If new owner takes land without notice of outstanding easement interest
and pays fair price then he is a BFP and easement should not be
This only comes into play if there is no actual or constructive notice bc
if so, then not BFP
o Constructive notice satisfied if
easement recorded in title
easement reasonably apparent from inspection
o BOTH of these two issues actually dealt with recording act, not apparency at time of split
o Otero v. Pacheroc/o, Pacheco, owns lots 4 and 5. Public road between them. House on
lot 4 and 5 both dump sewage into road over lot 4. Pacheco conveys lot 4 to intervening
grantee who later sells to Otero. sewer begins to back up into Oteros house. Otero
discovers other house. Otero sues Pacheco for injunction to stop dumping sewage
Apparency is the main issue
Ct doesnt discuss apparency at time of split though they should have
bc if not apparent at time of split then no implied easement can come
into being at allbasically assume apparent at time of split
Court says that reasonable inspection would have disclosed this fact
thus Otero is not a BFP bc was on notice thus he is burdened with this
easement and Pacheco can keep dumping sewage into Oteros line
Though drain doesnt seem like enough to be constructive notice, and
esspecially given this was by reservation, surprising holding here
o Campbell v. Aerieone original owner of a parcel with motel on one parcel and
restaurant on other parcel. Motel and restaurant both hooked up to septic tank. In 1950
c/o conveys out motel and rest parcel to different parties. There are intervening owners
before the current ones. Campbell who bought motel realizes that septic tank on his land
is servicing the restaurant. He seeks to stop this.
Again apparency is the issue
Though the easement was apparent at time of split, it was cut off later


Campbell asserts BFP doctrinehe argues that was on notice that there
was septic tank but not that Aerie was using it even after reasonable
Court says that since Campbell not put on notice of the easement by
reasonable inspection or recording of deed there is no easement by
Aerie could have tried to argue easement by prescription (AP) but it
was not open and notorious bc not apparent

ii. Easement implied by strict necessity

Related to quasi easement but nevertheless distinct

o Similarities esp between easement implied from quasi easement by reservation and
easement by necessity
In some implied reservation cases strict necessity is required
Similarly easements implied by necessity require strict necessity
o But different
easement by necessity does not have apparency requirement
easements implied by quasi easement becomes permanent whereas easement by
necessity is ephemeral
So though easement by implication easier to prove bc dont need to
prove apparency, still may prefer easement by implication
necessity usually applies only to roadways and sometimes utility easements
When cts find strict necessity tries to interfere least disruptively in servient land
o Common ownership at one point
o Dominant estate severed from servient tract
o Strict necessity existed created by the conveyance
Though in Hurlocher ct says doesnt have to be at the exact time when lands first
split off, only that created when lands split from common owner
Hurlocker v. MedinaInitially both parcels owned by SDC but then SDC
conveys east land to ASA. ASA conveys that land to Bartons at same time SDC
conveys their land to Bartons. at that point bc public road along north later
closed. So when lots initially split off, there was no strict necessity. Later,
Bartons convey their two lots to bank. Bank then conveys east lot to Medina in
84 and keeps the north lot. 8 years later conveys that one to Hurlocker for half
price bc of easement problem. Hurlocker has no access to road.
Medina argues necessity not created by the original splitoff bc there
was another road at that point
But there was necessity when the lots when the lots were continguous
and owned by the same person (bank)
Court says it doesnt matter whether necessity created when owned by
same party or whether created when the original owner owned the land
Public policy v. intent approach
o PP used to be approach of whether to determine easement by necessity
based on fact that landlocked land not good bc land will be unused
so long as easement necessary to use land ct will find easement under
PP doctrine
But in age of environmentalism may not want to use all land
o Some courts (Hurlocker) take intent approach instead
At least doing it for the right reason but less clear
More litigation


Less predictable
Not so necessary to use all land in environmental age
then taking issue usually must ask whether easement is taking land and deserves
compensation whereas intent approach makes it just a bargain between parties
Bank told Hurlocker there was problem with access and he bought it
dirt cheap because of itdidnt pay FMVthis suggests bank did not
intend to create easement
This isnt greatest of intent but suggests no easement intended
o Half states now allow party who needs easement to condemn an easement through
servient estate
Means dominant estate owner only has to pay FMV, servient owner cant extort
Gives power of govt to private individual
FMV is diff between value of lot with and without easement so difference is
condemnation award
but still must be placed in way that doesnt interfere with servient
Example: c/o owns one tract of land with public road next to it and on other side no road at all. If
c/o conveys the landlocked portion to another party then because that land is landlocked and bc
conveyance creates landlocked condition that party gains easement by necessity
o If c/o retains the landlocked parcel there is easement by reservation bc of strict necessity
instead of by grant so can come into being with either grant or necessity
o Not a quasi easement bc no easement there before the split

c. Easement by Prescription/Adverse Use

Easement by prescription
o Literally means pre-writing
o 99% of time think about it as adverse uselike AP
o 1% of time think of lost grant theoryassumes that long time ago there was a written
easement that has been lost but it was there at some point
Theory is that if used land long enough that belonged to someone else must be
bc it did belong to them at some point
this theory is pretty much dead but once in a while reference to fiction of lost
grant is still made
only still affects act of protest by underlying owner
protest strengthens AP claim bc makes more adverse to true owner
protest in prescription claim has opposite effectstops continuity and
prevents easement by prescription bc suggests that there is no lost grant
even in absence of lost grant theory public policy suggests that protest
should stop adverse use or possession bc may result in fewer lawsuits if
protest is enough to stop clockputs burden on wrongdoer (AP or
user) to keep the clock going instead of owner to stop the clock by
initiating a lawsuit
o prescription can cause birth AND death AND change in scope of easement
if servient owner blocks easement for length of statute of limitations and
dominant owner allows it then may be death of easement by prescription
Can also expand easements by prescription, meaning adverse use which would
otherwise be surcharge but met all elements of prescription that would become
expansion by prescription
Glenn v. Pooleused road for years, widened it, and ct said increased
scope by prescription
Requires same elements as adverse possession of land
o Intent


Dont often consider intent as deeply as in adverse possession

Instead nonpermissive use is enough
o Open and notorious
Doesnt require actual notice anymore than in AP, just constructive
o Continuity
Also required here but not as much continuity as in AP
Can be as little as using a road once a day, week, month bc what is created by
prescription is an easement geared towards use
So if use once month during period of statute then get easement for
once a month
Under AP
the following interrupted continuity
o Tacking between nonprivity owners
o permission
o filing suit
but protest by true owner strengthens AP case
under easement by prescription
the following interrupt continuity
o protest by true owner (only under LGT, not AP theory)
o blocking easement
o tacking under gross easements
the following do not interrupt continuity
o tacking not a problem with appurtenant easements bc when
dominant estate is sold the easement goes with it to new owner
o Exclusivity
Usually not required in adverse use because no reason 5-6 people individually
can get easement by prescription at same time true owner uses land
o Color of title and payment of taxes
Relevant in AP
Constructive APmay give constructive AP of whole even though
possess only part
Some states had shorter statute of limitations when AP operating under
color of title
In some states like CA can ONLY acquire AP if pay taxes
Not as relevant for adverse use in easements
Often people who have no taxes or color of title may try to achieve
easement by prescription if cant get AP
Whereas dont lose title by AP by abandonment can lose easement by
prescription by abandonment
bc dont actually own title to land then if something happened like
found gold underneath land adverse user wouldnt get it but AP would
depending on nature of land, there may be certain assumptions about whether use is adverse or not
(just like in AP) BUT all of the elements still need to be met and question is whether permissive or
o Hester v. SawyerSawyer is landlocked. No easement by implication or necessity bc no
c/o. Hesters land fenced in by three sides. Sawyer uses one road for many years. In
1922 golf club on side of Hesters parcel puts fence up so Hesters parcel fenced in four
sides. Sawyer allows fence but tells golf club he needs easement and makes a new,
slightly different route which he uses for more than ten years (AP statute in NM)
Court says easement by prescription exists on later road (though not earlier one
bc presumption is if land not fenced in then use permissive)
The elements arent really discussed


Court focuses on presumption, says if land IS fully fenced there is a

presumption of adverse possession
So later road which was created within fully fenced area was
prescription and used for longer that SOL means easement by
Court doesnt address whether it mattered that third party, not true
owner fenced in property
o Shanks v. Floomtwo houses next to each other. Original owners Shieltz and Floom.
They agree to make a common driveway and share the cost. Shieltz sells to Shanks and
Floom gives to his son, Floom Jr. These parties dont get along.
Issue is whether Shankss use of Flooms half of driveway is an easement by
Like Hester, this case is decided by presumptions
Majority says there is a presumption of adverse use
o Benefits to presuming adverse use is predictability and
Dissent says presumption of permissive use
o But even with this presumption there still could have been an
easement bc could argue reliance on oral k like in Ricenbau
which makes an irrevocable license bc parties relied upon it
(though like in that case, would it be easement or estoppel
from revoking license?)
o But could have specifically said in writing that license is
revocable regardless of reliance
o Licenses by definition revocable but once relied to detriment
made irrecovable by reliance
Easements in gross by prescription (i.e. for public)
o Hard to prove prescription in easement in gross bc
May not have identifiable people using the lake.
If different people then not in privity
Courts have held that it is not many trespassers but instead the
government who is the adverse users
but then how would private owner keep from easement in gross by prescription
occurring? Maybe by granting permission so not adverse use
would think this might limit taxes property owner has to pay bc land worth less
since cant build on easement area (value of land might go down 90%)
o some states (NJ) deal with public beach property by public trust doctrinegovt owns wet
sand area up to mean high tide land for public use
ct said unless there was access to it ownership useless so held that public has
right of reasonable access to the area
public has right of easement to wet sand as well reasonable recognition
on dry sand which is pushing the envelope
Purchase prices in NJ reduced accordingly but problem is when the rule first
comes into law and owners of beach land paid more for it
Why not condemn land and force govt to pay for it and split cost among
taxpayers? That is the other side of the argument
Other issue is whose property gets the easement
Ct said chose not to use implied dedication or prescription bc didnt have to
o CA used implied dedication theory
Gion CA caseprivately owned land on beachpublic used it as a beach for as
long as people could remember.


Court said not prescriptive easement but implied dedication by owner

because he did nothing to keep the public off the beach so essentially
estopped from keeping people off the property
Angered people bc didnt even prove elements of prescription
o Owner who did nothing gave easement to the government
Result of this was soaring sales of chain link fences, guard services,
and Dobermans to bar publicso was this good public policy? No,
people kept from beach
Legislature eventually enacted statutes to keep this from happening (at
least in case where govt had taken no action)
o said to reverse prescription all have to do is go to county
recorders office and give public permission to use the beach
which makes more sense from a public policy standpoint bc
public can use beach but owner retains property
rejected implied dedication when govt has taken no action to make
area available for public
BUT did allow implied dedication where govt has expended substantial
funds to make area avail for public (like reliance estoppel)
impact of easement on beach is much more substantial on landowner than road easement
bc is over entire beach area

d. Scope of Easement and Interpretation

Surchargeimpermissible use of the easement that violates underlying landowners rights

Appurtenant easement
o Usually two issues
Violation of purposeSome actions are per se violations of purpose
Adding land to an easement is a per se surcharge
o Brown v. Vossbrowns have easement across Voss land for
their use of Lot B. They purchase lot C as well as B and want
to use easement for both of the parcels. Voss say this is
surcharge on easement.
Court says adding property to easement is a per se
surcharge irregardless of rule of reason
BUT court denies injunction to Voss bc of estoppel
relianceVosses waited and allowed Browns to
spend 11k
In effect court says no injunction, $1 in damages is
all the Vosses get and that includes future use
If location of easement is specifically laid out or was floating easement
and then fixed to a location then changing location of easement is per
se surcharge on the easement
o Dominant owner can NEVER move it:
Reduces value of servient land bc unsure of where
easement is
o Servient owner may move bc choosing to depreciate own land
o Courts allow modifications of easements and often limit
height of roadway easements for landowners based on
reasonable use
o Generally only way can change location is if one party agrees
to it and gets paid what it wants for it


Minority rule says that if easement is not initially defined and

grant does not preclude moving it, it can be moved so long as
passes balancing test: party pays for it themselves and does
not frustrate burden and does not lessen utility of right of way
after taking into consideration prior use of grant
Lewis v. YoungB family conveys part to J and part
to K. J and K connect to this road on Bs property. B
conveys to the Youngs who get perm from J and K to
move rd. Youngs tear down old house and move
road. Mr. Y, delays, L and K sue Mrs. Y for an
injunction to compel her to move the easement back
where it was which would force her to tear down the
tennis court.
Court says easement can be moved
o Extortion?
Ys relied on promise that
could move the road
o If Ys hadnt torn down house the
court may have applied the
traditional rule and said moving
easement was surcharge
Court creates a new test in New York says
balancing test is appropriate for undefined
Balancing test is based on the impairment to
the parties using the easement v. work done
Though seems this case more about money
already spent then whether allowed
Subdivision of property reasonable foreseeable, not per se
Change in use of dominant easement foreseeable, not per se
Reasonable evolutionary change not per se easement
o i.e. Technological changes reasonable, not per se
OR Overuse
Even if purpose not violated overuse can still be a surcharge
o i.e. even if no per se violation, if subdivision causes overuse
could still be surcharge
o i.e. if trucks go from 2 to 50 no change in purpose but
probably surcharge from overuse
Reasonable evolutionary change
change in use of dominant estate and in technology is allowed and not
considered a surcharge
Cameron v. Bartonexpress appurtenant easement saying right of
passway originally used for horsedrawn carts, now trucks, originally
slaughterhouse, now highway garage.
o Court says no surcharge because certain amount of tech
change is foreseeable as is change in use of dominant
o if easement had specifically said only used for slaughterhouse
or horse drawn carriages then would be surcharge but not the
Other casefarm with easement divided into 12 lotsnow instead of
tractors and trucks going over road have cars, etc. of 12 parcels.


Generally this is considered evolutionary instead of

o But if burden on servient tenement becomes much more
substantial may be surcharge in use
Courts will often find an evolutionary change when the environment changes in
a way society favors and a revolutionary change where the environment has
changed for the worse based on societal notions
Fristoe v. DrapeauDominant side is lemon grove. For years
easement over servient tenement used to harvest lemon grove.
Dominant side wants to buy a house and servient owner says surcharge
on easement. His objection is not to what easement says but that
change in use to dominant estate results in surcharge of easement
o Why wouldnt servient owner want house on dominant estate?
Nature of lemon business is probably seasonal so
weeks and weeks without single truck whereas with
house the easement will be used daily
o Presumption that society favors single family dwellings so
court says evolution not revolution
o On the other hand, what if change was from lemon grove to
cattle feed lot?
Court would probably find that was a surcharge even
though seems evolutionary because still agricultural
bc environmentally/offensive
o Easement litigation used to control other things like what
neighbor is doing
o Baseline is the language of the easement itself
They can be drafted as narrowly or broadly as can imagine
Can specifically say five car trips a day
But most easements not drafted specifically i.e. easement for ingress or
o Scope of easement can be expanded by prescription (Glenn) if expansion of use meets
element of adverse use
Glenn v. PooleGlenn trying to get a determination that there is no easement or
if there is to narrow it. Poole family have used road for 80 years, first in lumber
business, then gravel pit business, now repair garage. They have also widened
the easement. Court says of course there is a prescriptive easement.
Court says no surcharge
o Pooles had widened easement but court says that is allowed
because it was for safety reasons
o Court says that even under a prescriptive easement some
change in the use of the easement is permitted
Court says that cannot only create easements by prescription but can
also expand easements by prescription
Gross easementmuch more complicated surcharge issues in gross easements
o Exclusivity
If exclusive, only easement holder can make (assign) further grants in same area
If not exclusive easement, landowner can make further grants
BUT landowner cannot grant easement that interferes with original
easement holders useoriginal easement holder has preference
Pasadena v. CA Water Co. Pasadena doesnt want competition for
water service. Five foot pipeline easement granted to city of Pasadena
to lay water pipes. Later on, landowner makes second grant. Grants


similar easement on same space to CA water co, competitor of city of

Pasadena. City tries to enjoin water co. to lay pipes in easement.
o This case rides on exclusivity.
If it is an exclusive easement then only city of
Pasadena can make further conveyances of the
o Court says it is not an exclusive easement thus landowner had
right to grant easement to CA water co and easement holder
cannot stop the grant of easement
Divisibilitywe know easements assignable from above but divisible?
If exclusive (most are), easement holder can divide, otherwise not bc landowner
has right of division
But still must ask whether purpose and quantity of use is a surcharge
If not exclusive further division but only by landowner
Current case on gross easements
RR companies has sold right to lay fiberoptic cable on the railroad right of way
and not paid landowners. Many class action suits by landowners but problem is
no real damagesalso lawyers end up making most money bc no real damages
Many appurtenant easement cases courts have allowed road easements to grant
to public utilities even though purpose seems differentcourts have said public
utilities are not inconsistent with roadwaysagain basically saying no surcharge
just because no additional burdenso court may cite these appurtenant
easements cases in order to say the fiberoptic cable grants are not surcharges
Assume they find against RR is this good PP?
Not necessarily bc problem that fiberoptic cable will not happen
Is society better off with fiberoptic cable considering it is a minimal
imposition on landowners? Probably

e. Extinguishment of Easement

Ways to extinguish easement

o Release the easementmost common way to extinguish
dominant owner releases servient owner in deed form used to convey estate
may be oral release but then statute of fraud applies so need part performance or
o Quitclaim deeddominant owner releases servient owner in quitclaim deed IF only one
easement and it is the only interest then can issue quitclaim deed for servient tenement
o Mergerdominant and servient tenements merge into one ownershipif servient
tenement later sold to new party probably at most quasi-easement and back to implied
o Easement simply ends
Easement for years comes to term
Easement by necessity no longer necessary
o Foreclosure on servient tenement
Mortgage foreclosureif bank forecloses on mortgage on servient tenement and
a new purchaser buys it, then the easement evaporates even if still there
When acquire easement ask bank if will subordinate its mortgage to the
easement but bank wont have much incentive to do thatnothing in it
for them since that will decrease value of servient tenement
Tax foreclosure on servient tenement
Generally new buyer owns in fee simple absolute with no easement
o Means owner of dominant tenement is concerned with
whether servient owner is paying taxes


Though in some states taxes on the dominant tenement include the

easement (taxes with appurtenant properties) meaning owner of
dominant tenement may have been paying taxes on easement thus
shouldnt be foreclosure on it because taxes paid on that portion
Condemnationwipes slate clean on servient tenement so no easement
Dominant owner usually gets part of condemnation award because he has lost
some value
Two Possible Measures
o Diminution value of dominant owners property value
difference between value of dominant land with and without
easementmore cases follow this even though state doesnt
like to value property that it is not taking
o Diminution value of servient owners property value
difference between value of servient land with or without
Abandonmentcant abandon fee simple absolute but can abandon easement
Mere nonuse with oral statement of intent alone are not abandonmentneed
evidence that did not intend to use the easement
acts by DOMINANT owner
i.e. if used often for years then stopped that doesnt mean abandonment
on its face but if blocked the easement that physical act on top of
nonuse (and oral statements) demonstrates intent to abandon
o so nonuse and oral statement can support intent combined with
other acts that demonstrate abandonment
Hickerson v. BenderFagan develops subdivision and conveys out lot
20 to Benders and reserves easement in favor of all other lots over the
E 15 ft for ingress and egress to gull lake. Hickersons buy one of those
lots. Benders built tree, house, etc., into the easement. Encroached on
easement significantly. Now Hickersons want to use it.
o Why does the court find abandonment?
no clear intent to abandon at all
no physical act on part of easement holder
no oral statements
some evidence this persons predecessors DID use
o Adverse possession plays role here
Benders had taken back easement by prescription so
ct probably didnt want to destroy finding of trial ct
when would reach the same result given that there
was destruction of easement by prescription anyway
Esp bc normally easement holder abandons
estoppel to assert easementvaguer than abandonmentmay only be good for certain
period of time and ct may be more likely to find it when it is for a short term bc otherwise
closer to abandonment
acts by SERVIENT owner and dominant owner allows creating detrimental
reliance on part of servient ownermatters what servient owner thinks, not
dominant owner
i.e. if dominant owner sees servient owner block the easement and allows it
(maybe even supplies lumber for it) then that may be estopped to assert an
easement (may also be abandonment but if not enough for that then probably
in this case may only be esopped for life of building or some sort of
time limit


if building there for statute of limitations then servient owner may take
back easement by prescriptiondeath of easement by prescription
i.e. dominant owner sees servient owner plant crop in easement and allows it
then may be estoppel
but probably only estopped to assert easement for the life of the crop
short life of estoppel may lead court to find estoppel because not as
hard to find short time as long term estoppel bc becomes closer to
Abandonment in Rails to Trails area
Railroads had both fee simple absolute and easements
Hard for railroads to acquire fee simples in some states (MO) so if not
successful in acquiring fee simple title, stuck with easement
But some conveyances for right of ways for railroads are viewed as fee
simples, not easements a RR right of way
If abandoned, easement is owned by individual la ndowners so RR tries to say
not abandoning it bc still using for RR purpose
still used for transportation
o but some courts have said this is remotely connected to RR
railbankingsave for later RR use
o but some courts have said too nebulous, not really being used
for that
Courts have said not RR purpose thus abandonment and then taking for trails
Landowners losing one of their bundle of rightsto exclude others
But did the landowners really have right to exclude others when RR in
control of the easement? Not really because if RR had exclusive
easements then they had the right to divide the easement, not the
landowner and we dont know whether the easement is exclusive or not
Glossameyer v. USRR gave easement to state govt by Rails to Trails
act. Underlying owners of land sue, say easement was abandoned thus
belongs to them, not state.
o Landowners argue easement not used for original purpose
Trials not same as RR
but state says
still used for transportation
o but different form than before
railbankingmay be used later for RR
o but court says too nebulous a
conceptjust a hypothetical
o if no RR purpose in hiking and biking trail, court says this
federal statute works a taking and the landowners must be
o thus RR still own easement in this case, not landowners or
local govt
But the Rails to Trails has survived in other states

8. Sale and Financing of Real Estate

a. Contract of Sale and Escrow

Earnest money contract one to three months of escrowclosing

Escrowcontract is pendingused a lot in Southern CA
o A week after sign EMC sign escrow agmt with escrow company




Escrow company handles all payments, draft deeds, deliver deeds

Split between buyer and seller
When buyer examines title and finds something they dont like, they send the objection
letter to the escrow company who then in turn relays to seller
Escrow companies generally allow buyers and sellers to do what they want so long as
both parties agree
Charge 0.5% of purchase price
In other states realtor or title insurance company handles this which makes sense bc
realtor and title insurance companies have incentive to make sure deal goes through
Much cheaper than escrow companies and title insurance not any more
expensive so not paying more in other areas, just custom to charge less
If seller dies in interim still valid deed under escrow but not otherwise
Escrow arrangement allows deed to be valid bc party signed while alive
One benefit is that escrow companies supposedly neutral third party

b. Marketable Title

Buyer wants to ensure clean title

o Old system: monopoly of lawyers
Real estate lawyer go down to courthouse, examines title, and sends opinion to
Used to be suspicious of that system but by and large cheaper than title
insurance system
o New system: title insurancehas become dominant
Obtain prelim title report which lists encumbrances on the title which are not
covered by insurance
Mortgages (though may be satisfied by sale)
Buyer then comes back and may say title is unmarketable unless can get rid of
one of encumbrances
most important thing buyer does is react to prelim title report but often
they dont
Title company may say that will insure that item with additional
premium from seller who pays for buyers title insurance
Title insurance company then sends new title to buyer with the problem areas
gone BUT this just makes the title insured, not necessarily marketable
o Abtract systemsome states dont use title ins in average house sale
Abstract title is history of piece of land
Examined by lawyer who says whether title marketable or not
Solvency of law firm stands behind it if they screw up
o Torrens system
State issues certificate of title to new buyer but will still have exceptions to fee
simple title
Even in that system crucial for buyer to realize state is just going to issue title
subject to encumbrances
Marketability principleprimary protection for buyer pre-closing
o Usually explicit but marketability can be implied
majority approacheven if not expressly in k usually implied covenant of
marketability unless expressly negated (which is allowed)


even if say that will only give quitclaim deed at time of closing that
will NOT negate the promise of marketability whether express OR
ONLY express rejection of it will negate it
minority approachmerely providing for quitclaim deed is an implicit rejection
of implied covenant of mtkability bc seller only promising to give what own,
nothing else
bad public policy bc buyer is forced to close even if finds out
o Buyer may choose to waive marketability requirement but must be explicit
o Doesnt mean perfect title, just free from reasonable doubt
o Mergeronce transaction closes the title merges into the deed so can no longer argue
that title not marketable after closing
Buyer may sue for any number of reasons (damages, specific performance, even
just remorse)
Marketability problems
o break in chain of title
may mean seller doesnt own titlemost serious objection
example: say A conveys to B conveys to C then separate deed from N
to S who plans to sell to Lcant find anywhere that C conveys to
anyone else so break in title between C and N
o at worst this may mean C still owns property and S trying to
o at best (99% chance) S really owns land and person who C
sold to just forgot to record the deed
o also may be that S owns title through AP if S and N in privity
with each other and 15 years together
o but AP renders title unmarketable anyway in majority opinion
so this doesnt solve the problem
why? lawsuit about marketability of title btwn S and
L cant decide whether AP is present or not bc C is a
party to the lawsuit and is missing from this action
civil procedure
C cant be bound by judgment not a party to so unless
she is party to lawsuit AP does not cure unmktability
Though odds are S owns doesnt make it marketable
if AP is the reason S owns the title
Longer back the break in the chain, more likely to ignore it
o encumbrances
more common objection than break in chainencumbrances render title
unmarketable unless type that buyer has agreed to take subject to
any claim by third party again the real estate
o buyer may want to take over mortgage so not unmarketable
o most of time when mortgage on property does not render
unmarketable bc will be paid off with proceeds of house sale
o but mortgage by third party does render it unmarketable
judgment liens
o when debtor gets judgment entered against her, that judgment
becomes lien on any land debtor has on ANY land in county
where recordedeven may be in entire state
restrictive covenantsCC and Rs


ability of third parties to limit how an owner uses his or her

real estatelike negative easementeasement right to use
someones real estate, covenant right to restrict use
o like with zoning ordinances, current violations of CC and Rs
render title unmarketable regardless of whether buyer takes
subject to certain CC and Rs
o Buyers usually buy property subject to all restrictive
covenenants so long as dont materially interfere with use of
property as a residence
so if do materially interfere that also renders title
unmarketable in this case
Defeasible fee
o Generally renders unmarketable
Unpaid real estate taxes
zoning ordinances
o traditionally have not been enough to render title
unmarketable even though technically claim by govt against
real estate
ONLY renders unmarketable if at time of sale
property violates zoning ordinances
o Traditionally dont render unmarketable as leases may be what
is driving the sale
Laba v. Carreyclassic buyers remorse case. Objection to title is
outrageous. Buyer just doesnt want the building but no real objection
to mktability.
o General promise in this k is not marketability but insurability
but ct later uses marketability standard even though not in k
o But one certain thing said marketability
o Buyer agrees to take subject to covenants, restrictions,
easements of records now enforced providing they are not now
o Encumbrance:
All of the sidewalks in the neighborhood violate
restrictive covenantsthey are one foot below what
they are supposed to be
Court allowed S to build sidewalk against covenant
and provided waiver to it
Title company said this was not a violation given
situation and agreed to insure that sidewalk does not
now violate restrictive covenant
Doesnt mean 20 years from now may have
to change, but now doesnt violate any
restrictive covenant
o Court says that if this sidewalk makes title unmarketable then
every sidewalk in NY is unmarketable so cant get out of this
on grounds of mktability or insurability

Encroachmentsif neighbor encroaching on land renders title unmarketable but
must discover before the closing
Marketability v. insurability
o Most ks require marketability, not insurability but if only insurability then buyer cant
get out so long as insurer will cover it even if not mtkable bc agreeing to less sound title


Some unmarketable titles may be insurable bc insurability lower standard than

insurers do actuarial analysis of risk and charge more for riskier title
more likely to take risk than lawyers bc can calculate real risk and
company is on the line, not individual lawyer
Buyers should be more averse when extremely valuable commercial real estate
because even if can get insurance on it (for extra $) have to worry about whether
insurance co could really pay it off if litigation occurred
o possible to have unmarketable title that is good, thus insurable
AP examplelawyers more risk adverse than insurers
Mortgage on land which may or may not be validinsurers will cover this but it
does make the title unmarketable
o also possible to have marketable title which is actually bad (probably insurable though bc
ins co probably made same mistake)
deed from B to C is forged and N doesnt know when C conveys to N
may have situation where title marketable even though bad bc no way N could
have known about it
buyers remedy options before closing
o restitution
money paid for transactionearnest money, payments for title insurance,
realtor, etc.
will seek this if no benefit of bargain i.e. land worth less than contract price bc
doesnt want to be in the deal
if use English rule this may be only option if seller made a good faith breach bc
in that case cant get damagesbut this is dying out rule
o damages
loss of benefit of bargainbought for 200k but FMV 250k buyer gets 50k
easy remedy if third party has already bought the land so know exactly what loss
of bargain was
o specific performance
just have to show that had k, seller in breach, he performed, and no other
damages equitable
usually not hard to prove normal damages not sufficient bc land is
unique and deserve land
if FMV more than contract price then this is best remedy for buyer
this may not be possible if third party BPF bought land
but then damages might be easy bc can show what they bought it for
and exactly what loss of bargain was
sellers remedies before closing
o sues for earnest money as liquidated damages
but if liquidated damages clause considered penalty then cant be enforced
sometimes buyer will make EMC more like option bc says only get earnest
money if the deal falls through
o damages
seller has to prove that FMV less than k
but then seller is making himself look bad to the jury so not a great
remedy for sellerprefer specific performance bc no jury and price not
relevant at all
o specific performance
force buyer to pay the contract price
even in seller cases not hard to prove other damages insufficient even
though just talking about money, not unique land
best remedy for seller if buyer has money


c. Financing

Pointone percent of loan amountfee for processing loan

o Usually either slightly higher interest rate plus point or lower interest rate plus point
if going to stay longer then choose point
if shorter may choose higher int rate
History of mortgages
o Equal payments over 30 years and pay more interest in the beginning, less at end
o Balloon loans
made monthly payments of mostly interest for five years
then have to convince lender to give another balloon mortgage or find another
lender to pay off that mortgage through new balloon loan
this worked in 20s and 30s because property rising in value
Great Depressionbottom fell out and lenders no longer wanted to loan
Even employed people lost home ownership bc they had no available financing
o Subsidization of mortgages
1935 congress set up FHA who came up with idea of 30 year mortgage
created FHA insurance so that if lender willing to lend up to 95% of
purchase price for 30 years at fixed rate, evenly amortized then govt
will insure the loan
FHA insurance paid by borrower by tacking on extra pt to interest rates
GI bill enabled young men to go to college and gave them VA mortgage
insurance which allowed zero down loans again insured by govt
o Private lenders realized default rate so low didnt even need insurance
Began making 30 yr fixed rate loans on their own but usually required 20%
down without insurance
From 40s through early 60s boomtime in American housing
At the same time govt regulated savings and loans interest rates and savings and
loans would tack an extra 2% on for mortgages
o Inflation problems
Mid 60s drove up inflation rate and people began to put money in govt bonds
instead of savings and loans for more interest
Congress then deregulated savings and loans rates which increased their savings
rates in order to compete with the govt bonds rates
Savings and loans assets were mortgages which were fixed rate with no
due on sale clauses yielding only 4-5% so they were earning 4-5% and
paying 10-15%
Many S&Ls shut down and govt paid off savers bc the accts were
o After that S&Ls did three things to protect themselves
created due on sale clauses and congress made them enforceable in 1982 so
sellers couldnt pass on low interest mortgages to buyers
invented ARMsadjustable rate mortgages tied to market rate so protected from
started prepayment penaltiesdidnt have affect at time bc rates still going up
if pay off early pay percentage penalty to discourage prepayment when
interest rates dropeconomic reverse of due on sale clause


for some reason back in 80s Fannie and Freddie decided they would not
buy loans from lenders who charge prepayment penalties
o may be that wanted to appear reasonable to consumers and
didnt think ahead to dramatic drops in rates
o congress then said S&Ls could act like banks and lend for any reason bank could loan
take restrictions off them to help them
some of them did fine but a lot of them shut down again because of
incompetence and fraud
didnt have reservoir of cash like banks did so made bad loans
Govt came in in late 80s and created RTC resolution trust corporation to sell off
the assets of the thrifts, many at low prices
o Secondary market became very important in 90smade mortgage mkt liquid
Banks or thrifts lend to homeowners
Take the money and keep the safest loans (ARMs) and sell the others to
the secondary market Fannie, Freddie and Ginnie Mae
Fannie Mae, Freddie Mac used to be govt owned corporations and in
70s privatized and are now two of largest corporations in world (though
still fed connection bc govt appts board, lower lending rates)
o Those orgs then sell to investors across the world
o There is big push to regulate them or private them completely
and create new corporations
Mortgage bankers lend to homeowners but
They dont hold any of the loans in their portfolios
Sell them to secondary market within 60 days
Purchase/Financing Example
o cash transaction buyer will deliver check for asking price less deposit to seller
conventional financing buyer will get mortgage (80% LTV) so buyer gives another 60k
down to seller and note worth 240k to the seller for 300k purchase
lender may then sell loan on secondary market
they dont get enough money from savers to hold all of the loans so sell to
Fannie or Freddie and then have enough cash to loan money
o They borrow at low rate bc quasi govt and buy mortgages from other
o they either save money or sell them piecemeal to the public all over
world who are essentially financing our home mkt
o public buys them bc think secure money BUT those companies are no
longer govt and not certain that govt would bail out
unconventional loans are insured by the govt (FHA, VA) and allow almost no down
borrower pays premium for insurance through addl interest (bc usually dont
have cash)
private lenders also allowing zero down payment loans now
o some use private mort insuranacePMIs
o others dont even use itrisky loan
Ginnie Mae (govt entity) buys FHA and VA loans and sells them to public just
like Fannie Mae didinvestors especially like these bc underlying loan insured
by FHA and then GMgovtinsures again
If interest rates drop dramatically homeowners may prepay w/o penalty and then
investors take $ back when dont want it yetwant to stay invested
Seller financingcommon during times of high interest rates
Lot of buyers cant qualify for loans when interest rates are very high


In order to sell homes sellers would take back mortgage themselves bc otherwise
too hard to sell their homeprefer to get 300k at their own financing than 280k
at a regular mortgage
o If mkt rate 17% gives loan to buyer at 14%
o Usually short term mortgage with balloon so lump sum due after time
(would be crazy to do 30yrneed to get cashed out at some pt)
o buyer hopes lower interest rate so then refinances and has enough cash
to pay off the lump sum
o Elderly people liked it bc got down payment plus income every month
in form of mortgage payment
But when seller does own financing not getting stated purchase price bc if she
was cashed out could have put the money in govt bonds and made more than on
mortgage, instead has to wait till balloon payment to get cashed out and loses on
money could have made at higher interest rate
Buyer gets two mortgages
Second mortgage more risky bc wiped out if first mort forecloses
Sellers sometimes takes on second mortgages bc riskier, higher interest rate than
first so
Parents as well do this bc if just give money there might be divorce and parent
doesnt want money split
Buyer takes over loan
When interest rates rise buyer wants to take over lower priced loan and may
even be willing to pay higher price
o dont have to be veteran to take over VA or FHA loan
Due on sale clause may disallow this on some mortgages

d. Foreclosures

History of mortgage foreclosures

o In CL England had landowner/grantor who would borrow money from lender who could
would take possession of land for five years and if landowner did not pay back on a
certain day (law day) then he would not get his land back
This is like fee simple subject to condition subsequentif grantor pays on law
day then he has a right to re-enter
Lender couldnt charge interest (considered usurious) so instead took possession
of land and collected rents and profits on the land during that time
o This was very harsh system bc if two days late with payment lost land
Resulted in creation of court of equity bc after turned down by court of law
would go to kings chancellor (equity) to explain why late with payment and
then might get land back if fair and equitable
Equity courts realized wasnt really fee simple subject to condition subsequent
was a mortgage (security for debt) and shouldnt pass real title
Borrower still has equitable title and lender only has legal title
Equitable title trumps legal title
Equity of redemptionright to pay late so long as reasonable
o word equity now used in many ways today and synonymous
with real ownership
With less predictability (hard to predict what is unreasonably late) lenders less
likely to lend so equity courts created remedy for lendersforeclosure
Strict Foreclosurelender would go into equity court seeking writ of
foreclosure and equity court would enter order saying if debtor comes
up with full amount in certain day then debtor gets his land back,
otherwise lender get it


Lenders could now collect interest but could no longer take over
possession because that was just in absence of interest option
Current state of foreclosure
o What causes foreclosures
Divorce, unemployment, illness
Anti deficiency rule in CA may encourage foreclosures bc no personal liability
If have 200k house and 300k mortgage then may just want to leave and
stop making payments
o This happened a lot after the earthquake where people who did
not have earthquake insurance lost much value on house and
still have big mortgage on it
BUT credit system pushes in the other directiononce have bad credit
hard to get any other mortgage
Sometimes may be worth the risk if have a lot of cash and dont need
new mortgage
o Foreclosure sales routinely yield less than FMV
Cant inspect property same way normally could
Homeowner could allow inspection bc might increase price but usually
upset that being foreclosed so dont
Similarly if rational could have tried to sell house selves but dont
Have to be sold in one day no matter what
Wont yield same as in normal transaction
Statutory redemption
Up front costs of title research bc seller not promising marketable title
o Mortgage starts with signing promissory note plus debt
Cannot have valid mortgage without promissory note and debt
can have promissory note without a mortgagejust an unsecured debt
Some states are still title states and thus give lender legal title with mortgage
which comes from the old notion of lender taking possession
Most are lien theory where lender only takes title once foreclosure
o Default occurs
Acceleration clausemortgagee can demand balloon payment for full amt once
mortgagor defaults but NOT before due to statutory redemption
Statutory redemption
o Normal statutory redemption
Until valid foreclosure sale debtor has equity of
redemptionright to pay late and any agreements
waiving or limiting right to foreclose at a public sale
are illegal and clog equity or redemption
o Post statutory redemption
after foreclosure sale that is end of story in 60% of
in other states have post sale redemption3 months
to a year to pay the purchaser for what ever they paid
at foreclosure saleNOT just mortgage owed
foreclosure buyer will bid less bc essentially
only get fee simple defeasible since
mortgagee has right to re-enter
but could argue they might try to bid more
bc then less chance mortgagee might be able
to take it back


this is slowly going awaythe time period is getting

less and less
Once lender has validly accelerated debtor must pay full amt in order to create
equity of redemption
Once acceleration occurs, have public sale in 48 out of 50 states (2 still have strict
Theory is that public sales better for debtors because forces price up more than
strict foreclosure
Some states have public foreclosure sales and others have judicial public
60% have power of sale/non judicial foreclosure (at least in addn to
judicial foreclosure)
o less time consuming and costlylender sends notices to
parties and publishes one in newspaper that foreclosure sale
will take place on certain date and the sale wipes out equity of
redemptionstill takes at least 5-6 months, usu 7-8
o but even in states that have non judicial foreclosure sometimes
still use judicial foreclosures because
it is the only way to get a deficiency judgment (even
in CA if not in 1-4 family dwellings)
if dont have power of sale clause in mortgage then
have to use judicial foreclosure
if dont know mortgage priorities cant use power of
sale, must have court determine priorities
o power of sale can be in lender, sheriff, or other deed of trust
with power of sale in trustee
dont know why call trustee bc doesnt have trust
function with fiduciary duty
deed of trust to trust what panda is to bear
40% states have judicial public foreclosure which is like regular
judicial proceeding and time consuming costly to lenders
o lenders dont like it bc each month mr in possession lender
loses income from that property
o NY and FL have only judicial foreclosures but most allow this
or power of sale
o These do have slightly higher interest rates but also lenders
dont lend as often
At foreclosure mortgagee gets paid off and jr mortgages and mortgagor take surplus
If no surplus jr mortgages becomes unsecured and in most states lender will get
deficiency judgment that mortgagor still owes the balance
Debtor is personally liable on debt in addition to land being liable
CA has anti-deficiency statute which says that if you are debtor in purchase
money mortgage on 1-4 family house (mortgage used to buy real estatenot
second mortgages, etc.) on residential real estate and it is occupied by mortgagor
debtor has no personal liability on debtno deficiency judgments
Law of priorities
When have more than one mortgage, priorities come into play
Second or third mortgage it is not as good as the first mortgagegreater risk to
lender bc if first mortgage forecloses only have right to surplus
Second mortgage will be paid off by surplus after senior mortgage paid
from foreclosure price if there is anysecond mortgage gets paid
before the mortgagor does
Essentially mortgagor assigns right to post senior surplus he would
have had to second mortgage when takes it out


But mortgagor takes surplus from all of the combined mortgages if any
Purchaser at foreclosure sale should put himself into shoes of original owner of
house at the instant before the mortgage in question signed (assuming all tax
liens paid bc those are senior to first mortgage)
Lender is at an advantage at the sale bc they get their mortgage back as a credit
so dont have to put up nearly as much cash
If lender is owed 100k and bids 100k gets 100k credit and pays nothing
Uniform non judicial foreclosure actif different mortgagees agree then money
from sale will be used to satisfy all mortgages on property and there need not be
any real foreclosure sale, just a private sale. If any of parties does not agree
have auction sale away to try to get highest possible price.
first mortgage in favor of Wamu for 100k
second mortgage from BofA for 60k
o BofA should check value of house and determine whether
there is equity beyond mortgage
o Want to make sure FMV of real estate will equal or exceed
sum of two debts160kbc come in behind first if default
Mort 1 defaults
o Pricethe most purchaser should pay is FMV because Wamu
will be paid off by proceeds and BofA debt will be wiped out
o Say sale price=175kpay off mort 1 and 2 and mr gets 15k
o Say sale price=140kpay off mort 1 and 40k to mort 2 and
nothing to mr
Mort 2 has right to deficiency judgment against mr
and try to go after his other assets
o Say sale price=75kpay 75k to mort 1 who will then get
deficiency judgment against mr (if NOT in CA) for 25k, mort
2 will get deficiency judgment against mr for 60k as well (he
can get deficiency judgment bc not purchase money mortgage
second mortgage)even if in public sale where usually
cant get deficiency judgment mort 2 can still get judgment on
Mort 2 defaults (may default first bc drop in property value will affect
mort 2 first)
o Pricemost should pay is FMV LESS value of mort 1
because that will be paid off first even though mort 2
forecloses first
In shoes of original mortgagee bc when take out
second mortgage already have first mortgage
New purchaser will take over mort 1 or pay it off
o Say FMV=175k, then shouldnt pay more than 75k
o Say FMV=140, then shouldnt pay more than 40kthat 40k
will go to mort 2 who will have deficiency judgment against
mortgagee for 20k
o Say FMV=110k, then should pay no more than 10k and mort 2
will get deficiency judgment for 50k
o Say FMV=90k, then should pay NOTHING bc net worth less
than zerothough possible mort 2 will buy it back and make
payments on mort 1

d. Deeds and Title Covenants


Land contracts must satisfy SOF

o Violation of SOF: either
Oral so no written k
But need only be some sort of writingif oral k but there is letter,
writing on napkin, series of letters, anything in writing dealing with k
that will satisfy SOF

If contract violates SOF does not make k void, just means neither party
can enforce the k by specific performance or damages
o k may have validity for other purposes
o if have oral earnest money k, then close the deal the
transaction is valid once closedfact that earlier oral agmt
does not matter
o even if never closed and no valid k, there still may be tort
action bc of interference with k even if oral kvalid for that
o part performance doctrinesome oral ks get enforced if can
satisfy PP and take out of SOF
Or written but no missing any of the requirements below
identification of land
o though again, not enough in Berg v. Ting even though knew
plot of land and gen area of easement
o generally street address or my farm (if only have one farm)
is enough though some courts require legal description of land
by reference to US survey
by reference to official subdivision
metes and boundssimply calling distancesthese
can be frustrating bc sometimes never closejust
three sides of rectangle
o if seller financing then terms of mortgage must also be
reasonably complete
dont need date of closing
o court will read in reasonable time for closing
o normally SOF says signed by party to be charged meaning the
party against whom seeking enforcement (defendant)
o some statutes say it has to be signed by vendor/seller but
problem is that vendor seeking enforcement can sign it any
time before lawsuit so makes no sense
leg probably assumed buyer usually sued seller but
not necessarily
o initialing may be enough for signature bc courts generally very
o but now we have esignatures and those can be enough
can just typing ok really be enough? May be
o part performancelifts statute of frauds and allows in evidence of oral agmt to come into
evidentiary theory
requires payment, possession, improvements
this theory argues these are unequivocal evidence that a sale of land
took place and thus should weigh all evidence equally
o this doesnt make much sensecould be evidence just of lease


under this theory the evidence can be used by EITHER party so if seller
wants to prove PP by buyers actions this theory is preferable (Pierson)
Roundy v. Wanerparents convey by deed house to their daughter and
son in law. Classic example of why if we didnt have distinction
between equitable and legal title would be easy case. Everyone
concedes daughter and son in law have legal title but not equitable bc
parents still live in the house and plan to redeed to parents later. Only
deeded to younger couple in order to get second mortgage bc they
couldnt get it themselves. So Waners dont have full title but they do
have limited ability to pass title to other people if new people were
BFP. Falling out, Roundys say they want their title back. Daughter
counterclaims that court should recognize that they have the real title
because in oral agmt the Roundys agreed to deliver real title to Waners
if they paid off the mortgage and repaired the house.
o Waners thus have payments and improvements but no
Waners argue not only paid off mortgage but paid
mother otherwise
Repaired houseimprovements
Sold house to move closer to parentsclear reliance
o Court says they relied upon them thus they get land
Burns v. McCormackBurns live in Boston area and have oral deal
with elderly man wherein they agree to care for him and he will give
them house when he dies. They sold their house and business and
moved in with him. When dies, other relatives say house is theirs.
o Court uses equivocal evidence theory
Says moving and providing service is not
unequivocal evidence of land k
Not even possession bc lived there with man, not
So Burns never get to say what oral agmt was
Court probably thinking since man cant tell his story
not fair for the Burns to tell their story
Pierson v. Garnerowner of commercial building who enters into oral
k to sell building to dentist. Dentist moves into building and pays 10k
down. Dentist modifies building. Dentist moves out. Seller brings
motion for specific performance, wants price of land, not just damages
bc that remedy inadequate. Wants to force dentist to pay for building.
o This case is different bc usu buyer uses PP to prove k existed
but here seller
Evidentiary theory would be easier to use here bc not
as dependent on who did the actions as reliance
theorycan say dentists actions would be enough in
combination with his allowing those actions to prove
k existed
estoppel reliance theory
requires payment, possession, improvements
under this theory these requirements are actual evidence of reliance
this theory can only be used by the party claiming part performance
o Piersonseller can still argue his case in a reliance state but
must argue that by allowing buyer to do certain acts he relied
Giving up other purchasers
Bought another building
Moved to another city


Allowing dentist to modify the building

Burnsif had used reliance theory probably enough to take
out of SOF
sometimes part performance not enough to make it a k (Berg v. Ting) even when
everything in writing except one thing
so would assume that easier to take something out of SOF if only one thing not
in writing but everything else is but not necessarily true
Essential elements of deed
o Usually formal document but doesnt have to be
Can literally write a deed on a napkin
o Must be in writing to satisfy SOF unless lease for less than one year
o Mostly same requirements as EMC except dont need price: requires:
Identification of parties
Land described though street address or my home (if only one home) may be
Evidence of intent to convey
Notarized because in order to be recorded must be notarized
Delivered to grantee
Death escrow situationproblematicnormally must do by will
Deeds usually say nominal consideration because that has been done
historically but dont even need that
o No, because consideration is in connection with EMC
o Thus gifts are valid deeds even without consideration
Chase Federal v. SchrieberRoss elderly woman befriended by gigolo,
Conoyer. Deed says $10 and other consideration and for love and
affection. Conoyer sells to Perez. Perez get financing from Chase
Federal. Rosss estate (Schrieber) sues to set aside the transfer and get
the land back. He argues that deed to Conoyer invalid because no
consideration and Conoyer not relative.
o Rosss estate argues that Perezs not BFPs because had
constructive notice bc deed was recorded and said
consideration was love and affection
Ross cant argue fraud so relies on consideration bc
would have to prove not only fraud but that Perez and
Chase knew of it
Ross has already gotten money from sale against
Conoyer but wants the land maybe bc Conoyer broke
o SC FL rejects idea that deeds need consideration even when
given to non relative
Dont even have to say anything about consideration
buyers remedies after closing
o Can no longer sue for unmarketable title even if turns out nonmarketable
mergerafter closing can still try to get earnest money back if title
o can sue title insurance co, maybe lawyer
o can sue seller for breach of warranty
but warranty deed only good as solvency of seller
limited warranty deed only guarantees that the seller didnt hurt the title, doesnt
guarantee anything from before
Regular warranty deed will protect from all previous owners so more protection
quitclaim deed which make no assertions of marketable title
Three kinds of deeds


1) Warranty deed
o Covenants to protect buyers after closing
o Includes PRESENT and FUTURE covenants
In many states carefully spell out five or six covenants
But some states (WA) say can have warrantee deed without saying much
Warranty deeds may just say conveys and warrants for warranty deed
o Full warranty deeds make sellers very liable so understandable why sellers dont want to
convey full warranty deeds
2) Limited warranty deed
o Only protects buyer with respect to things grantor did to title, not anything that previous
owners might have done to titledont go all the way back
o Again may be specific or may just be in language like bargain and sale deed or grant
In CAlimited warranty deed is custom, called grant deed
not mandated, just custom, but bc everyone gives it then almost everyone does
o can only sue with defects the grantor created, not earlier defects
o contains ONLY present covenants in CA so cant sue any earlier grantors
3) Quitclaim deed
o Only conveys that the buyer has in the land but doesnt promise has anything
o Makes no warranties whatsoeverbuyer beware, rely on title insurance or examination,
not seller
o release, remise and quitclaim
Present covenants
o 1) Seisinseller saying I own the title and there is no break in chain
o 2) Right to conveyalmost irrelevant bc if own have right to convey but aimed at times
when seller is using agent to convey
o 3) Covenant against encumbrancestracks marketability encumbrances
o Third party claims against land
Easements, mortgages, liens, leases, restrictive covenants, zoning law if there is
a present violation but NOT building codes bc nothing to do with title
To find easement by reservation is literally to attack ones warranty deed bc then
coming back and saying warranty didnt mean what it said
o Statute of limitations on present covenants start to run on day deed is delivered and
usually runs about six years
o Who may be sued
Only Ps immediate grantor
Covenants dont run with land
o A conveys WD to B with a floating easement then B conveys WD to C
C cant sue A for damages in reduction of value on present
covenant bc can only sue B
o A conveys WD to B with floating easement then B conveys QC to C
Now even worse bc cant sue B bc no liability
o But VERY small number of cases allow C to sue A (assuming SOL
hasnt run) regardless of whether B conveys WD or QC to C
Theory is that when B QC to C he assigns his right to sue A
What constitutes a breach?
Failure of title or existence of an encumbrance when deed is delivered
Future covenantsunlike present covenant they DO run with the land so can sue earlier party if
the breach of warranty first happened with that party conveyed
o Covenant of warranty and quiet enjoyment used to be separate but now treated as one
Track three present covenants


Further assurances
Only one of five/six warranties that can be enforced by anything other than
money/specific performance
Aimed at if there is problem with title and grantor can cure it court will compel
grantor to execute document to make title good if it is within his power
o Court order for specific performance for further assurances
Who can be sued
Any predecessor in title of plaintiff who gave a future covenant (usually by
WD) so long as problem w/title existed before that predecessor conveyed
o A conveys WD to B who conveys QC to C who conveys WD to D
Suppose D is evicted by APwho can he sue?
Obviously C bc SOL just begins to run after eviction
Cannot sue B bc only conveyed QCcant be held
liable by immediate OR remote grantees to QC deed
o Unless in that same minority of states where
the QC is said to assign all rights
D can sue A IF AP had taken place before that point
cant hold anyone responsible before problem
Brown v. Lober assuming different scenario:
o Suppose coal company bought land and didnt realize the third party
Could sue Brown on violation of covenant of warranty of
quiet enjoyment if evicted
Could also sue Lober bc future covenants run with the land
What constitutes a breach?
an evictionoriginal owner takes back property
or constructive eviction
o threat by paramount title holder
o grantee buys from, surrenders to or settles with paramount title holder

must be sure that person really has valid claim

otherwise no cause of action against grantor
o these are all the same with easements
Example: Suppose grantor gives full warranty deed to grantee and didnt catch
valid mortgage
o If dont sue within six years then cant sue on present covenants
o Unless that party comes and tries to get the property the future
covenant is not triggered so cant sue
o Actual evictionif they are actually evicted then new statute of
limitations starts and have six years from then to sue
o Constructive evictionif pay off mortgage to stay on property then
that is constructive eviction so long as was valid mortgage
Brown v. Loberlober conveys all minerals to Brown. Later Brown decides to
sell them to Coal Co. who discovers during invest that third party has rights to
minerals and Browns only own one third of coal rights. Brown sues on warranty
deed against Lober
o SOL expired on present covenants so cant sue on covenant of seisin
which would have been valid cause of action
o Brown tries to sue on future covenant (violation of warranty of quiet
enjoyment) because no eviction
No actual OR constructive eviction


Original owner never came back nor did Brown pay off that

Limits on recovery
o How much grantor received for land
No built in inflation rider or value for improvements on land
o Actual lossif not damages by encumbrances, no damages
o But can look to more than one deep pocket to get damages (150k from A, 50k from B)
Estoppel by deed
o If grantor convey defective warranty deed purporting to give all interests then later
acquires that interest then he is estopped from denying that title transferred
o Does not apply to QC deed bc making no representation of now or the future
o MortgagesA gets mortgage from B then turns out she has no interest in landif later
gets it then mortgage effective
o Example: Assume after Brown conveys to Lober one of his relatives dies and he gets the
rest of the title that he didnt have before now must give to Lober
e. Recording Acts

Encourage alienability of lands bc easy to check title

o Recording not required for valid conveyance but done anyway
What are CL ruleswhat rules would be followed if we had no recording acts
o First taker gets title because grantor had nothing to give to second taker, regardless of
what either party paid
o Examples:
O to A (1st taker), then to B (2nd taker)
A owns it bc after O conveyed to A he had nothing to give to B
Issue under recording acts is when subsequent taker can prevail as against a prior unrecorded
conveyance where he would never prevail under the common law
o One rule always prevails1st taker has title if records prior to 2nd taker taking delivery
o If 1st taker (A) doesnt record before then what happens depends on which state one is in
and what the court considers notice and value
o Recording acts apply to ALL interests in land except for short term leases
Four types of recording acts
o Race statutesdoesnt matter whether know 1st taker or not
pure raceLAwhoever records first gets the title
doesnt matter who paid value, etc.clean system bc first one to get it
on the registry has the title
this is also UCC law as regards chattels
only exception might be if criminal act is involved to keep someone
from registering
modified raceDEonly few statesB prevails if records first and pays value
but can be on notice and still get the property
doesnt protect donees bc need to have paid value to fall under this
need not prove not on notice thoughcan fully know of other partys
o notice statutesalmost all statesB must be BFP
pure notice (half of notice states)B must only be BFP
B doesnt EVER have to record
B takes notice even if A records before him so long as is AFTER his
purchase and once he takes delivery of deed


Though B still wants to record to protect against later purchasers

notice-race (half of notice states)CAB must be BFP and record first
if A records first B loses
What parties can assert recording acts against prior purchasers who did not record (assuming
notice state where subsequent purchaser must be BFP)
o Subsequent purchaser who pay value (not donees except in LA)
i.e. buy land second but so long as paid and didnt know of earlier unrecordee
purchase then can get the land either automatically (n) or if record first (n-r)
o Subsequent lessees who pays value (again must be for value except in LA)
i.e. competing lesseeslease property for money and dont know of earlier
lessee then can get property either automactically (notice) or if record first (n-r)
problem with this is if new lessee on property i.e. in possession then on
constructive notice and dont get property
i.e. new ownerlease property for money and dont know that LL sold building
and no longer had right to lease
problem with this is in this case new owner probably recorded sale so
hard to prove
o Easement grantee who pays value
o Mortgagees (must pay value but at most changes priority)
o Option holders
BFP has two requirements
1) have paid value
o does NOT require fair market value, just paying significant amount
o Doesnt matter whether A paid value, only B
o Even if just get promissory note, just actual paid value yet, still value so long as pays
ANY money down but if dont pay any money doesnt may not be value depending on
type of note
Long as B gives some down payment it is value even if gives note for most of it
But if non negotiable not and no down payment may not be value--must be
negotiable and meet UCC recordings
This really shouldnt matter--still promissory note
o With creditors must have paid present value from lease, not earlier value
if second mortgage, fine, bc new loan
but if lien that later added mortgage as security only considered value if gave
some consideration like longer term or more money
and if JL only considered mortgage in some states where cost of getting
judgment is considered value but still may get priority in other states if BFP
buys at execution sale and not aware of E1
2) and not have notice of any other interest in the property
o actual notice
actually knows about other party
o constructive notice as per recording acts
public records
parties in possession bc considered equivalent of recording
if LL and tenant have cheap lease and going to buy buildingsince on
constructive notice about cheap lease if tenant in possession should pay
less than FMV
o in MO no constructive notice as far as possession so should
never look at building if thinking about buying!
o Encourages carelessness bc dont want to be on notice
Some interests CANNOT be recorded (AP, prescriptive easements) which puts
purchasers in especially bad position bc still considered on notice if the party is
in possession:


Adverse possessorsAPs dont have anything could record but one is

still assumed to be on notice of possession by an AP
o If AP is open and notorious assumption is it will put third
parties on notice as well as the true owner
o But is the possession really constructive notice?
Some AP is only seasonal so might no be in
possession for the whole year
And if AP takes title then leaves for a time that is still
considered possession though impossible for buyer to
know about it
o Nevertheless, law says if AP is satisfying rules of AP for that
piece of land the third parties ARE on notice
Easements by prescriptionsame principledeemed to be on
constructive notice even though no writing capable of being recording
o Again open and notorious requirement should put third party
on notice as well as true owner just like in AP
o Incentive for lawyer to say title subject to parties using the
land or have to go out and check himself
Easements by implication by quasi easementsagain no writing
capable of being recorded
o One of requirements was apparency at the time of split for
easement to come into being AND must be apparent to third
parties later on
Split hereOtero says underground sewer is enough
apparency but other cases say not apparent thus
might not be constructive notice
Also interests may be recorded after the fact (mech liens) which also creates a
problem bc buyer has no way of knowing when buys the house that a lien will
later be recorded except by inquiring into liens and trying to cover via title ins.
Mechanics lien--anyone whose goods or services used to permanently
enhance a piece of real estate are called mechanics (includes architect,
landscapers, etc) and can get lien on real estate and become secured
rather than unsecured creditors (strong lobby reason for this)
o Get lien on date of first improvement, mechanic records lien
soon after that and lien good for 6-12 months, then it dies if
mechanic never filed an action to foreclose (may died bc paid
or just bc mechanic let it go)
o Mechanic can actually foreclose on house but even if dont
makes it very difficult to sell bc of lien
o When buy house in interim before mechanics lien is recorded
but after work is done (happens a lot bc people often fix up
houses before sell and even if buy new house bc whole house
could be lien!) considered to be on constructive notice of this
even if not recorded yet
Thus should require title insurance that covers
mechanics liens--often title insurance will give this
and wont charge the seller more for it but might
charge them, unclear
o In some states homeowner may just be liable to the general
contractor, not to all the subcontractors and everyone else so
subs cant file lien claims so long as generals paid, but this is
not how it works in most states including CA so if pay
contractor for whole price the subs can still file liens


ExampleMO woman has lien filed on house bc

paid for gen contractor but he never paid supplier of
air conditioner and committed suicide bc law was
against her and she couldnt afford to pay both
Legislature of MO changed rule so that payment to
general=payment to sub but kept it same for all other
Best way to deal with this is get lien waivers from
subs but hard to know whether have them all
o Priority on mechanics liens?
Most states treat them all alike and start them all at
date of first improvement regardless of whether that
mechanic started work on that date or not
Also tax liens, assessment liens for sewers, etc. judgment liens condemnations
create problems bc recorded in areas other than county recorders office
Mortgage priorities under recording acts
o When recording acts defeat prior unrecorded mortgage does NOT make mortgage invalid
just results in loss of priorities
o Then question is when E2 can defeat an unrecorded E1(putting LA aside bc pure race)
Notice states
E2 always pay valuethey give money for a loan
E2 may also not be on notice (actual or constructive)
E2 gets priority automatically in states where dont need to record first
Notice race states
All of the above plus records firstgets priority at time of recording
But so long as E1 records first then E1 always gets the priority
E2 is then forever senior to E1 from the pt of recording (nr) or automatically (n)
So if E2 forecloses purchasers at sale wipe out E1 even if the purchaser
knew about E1priority frozen at time of recording
And doesnt matter whether E1 records 20 times before foreclosure so
long as E2 has already gotten priority
o What about antecedent E2s?
i.e. E2 is unsecured creditor who later gets mortgage on land
if E1 hasnt recorded E2 may be able to get priority over E1 but only if pay
present value
if add extension of years to pay on debt or promise not to foreclose for
a few years then that may be considered value on antecedent mortgage
but if E2 doesnt change the loan at all at that point then no present
value and E2 cant use recording acts to his advantage
o what about unsecured creditors
if creditor obtains judgment against debtor it becomes a lien on any real estate in
the entire county
suppose treat judgment lien just like subsequent mortgage lien
judgment lien might not get benefit of being able to assert recording acts under
prior unrecorded interests depending on whether value said to be paid
group of states say judgment creditor is deemed to pay value for
judgment thus can use recording acts to advantage
o argue that JL pays value bc has to have trial in order to get the
lien on the property
o so if JL has no notice of E1 as of date of judgment and deemed
to pay value then it has a perfected lien that defeats prior
unrecorded conveyance


forever engraved in stone as senior to E1 even if E1 then

records before the foreclosure
but other states say pity the plight of the judgment creditor and that
he didnt pay present valuejudgment based on debt from 5 years ago
so even if no notice no value so no benefit of recording acts
o only if purchaser at execution sale is BFP (doesnt know about
E1 and pays value) then and only then will P wipe out E1 and
so JL will get his credit satisfied first but otherwise still jr to
unrecorded mortgage
o and if at any time prior to the sale E1 records, JL has no
o circularity problemsuppose in this type of jurisdiction and
mr borrows further money via mortgage from E3 at this point
then so long as JL had recorded first he is priority
so JL junior to E1, E3 junior to JL and E3 trumps E1
under the recording acts

f. Torrens system

8 or 9 states still under torrens system

o Comes from EnglandCanada and Australia is torrens system
o In large measure state has role in real estate title much like its role in auto title
o How does a state become torrens? Individual landowners must bring their land under
torrens system
Had it in a lot of suburban areas bc after WW2 with rush to suburbs developers
discovered cheaper to have torrens than other systems
Benefits of torrens system
Instead of bringing ct into to determine disputes bring torrens
registration dispute where judges know everything about property law
Literally title is one piece of paper
If any third party in world wants to know who owns lot can just go to
torrens office and find in 30 seconds state of title bc torrens office
issues certificate of title just like with cars
o Dont have to hire title co or do work selves
Protection to owners bc no one can buy land without
o Deed from sellers
o Possession of owners duplicate certificate of title
o Much harder to screw up a title bc can execute any deeds to
anyone without owning it at all whereas in torrens system
would ask who is the seller or buyer
Fund to compensate people who bought title that didnt exist
o But very small fund
No AP of torrens real estate
Drawbacks of torrens system
Long delays so problem if buy and sell several times per year
When buyer of house gets new mortgage and loans sold on secondary
market that mkt demands title insurance even though torrens real estate
which is insurance in itselfso not much incentive to bring land under
torrens system
Hard to find torrens examiners in small towns
Rest of states role limited to having recording system, paying judges and courthouses
g. Title Insurance


Title insurance popular in Canada now bc torrens offices got slower and slower at issuing title
o Outsourcing benefiting us bc deals done in US without even looking at records
Title insurance now pervasive in US
o Prior to closing
Executory period
Escrow system
Preliminary title report
o Buyer usually has 5-10 days to examine the report otherwise
waive all objections to title
Says who owns property, encumbrances that title ins
co found against property
Must request documents about particulars like
encumbrances in order to read them
o If buyer does nothing and close then week after closing title
insurance property will send agreement to new owner and
these same pages will appear as exceptions to coverage
Tile insurance used to be very pro title insurance company
o Didnt protect against some of the most important risks such as
Boundary and area
Public or private easements unless disclosed of record
Rights or claims of person in possession not recorded (APunder constructive
notice of those under recording acts)
Mechanics liensunder constructive notice of them and not protected from
them unless workers have always recorded their liens
o And also has exceptions for actual defects that title report found
o But if buyer demands it ins co will provide coverage with usu not that much more
premium to seller (seller pays for buyers title ins in CA bc is custom but diff in other
New title insurance gives very good coverage
o Covers the following if recorded
Forgeriesvery common esp if forged release of mortgagesomeone else
claims right from forgery
Easement (any kind)
Except for those already in the title report incorporated by reference
Unrecorded mechanics lien incurred before or after policy date
Forced divisions of property
Forced moving of structures bc encroaches on other property (though deductible
amt here if involves fence but full coverage if house)
Forced moving of structures bc encroach on easement or setback line even if
they are in the exceptions section
Existing improvements or modification made to them are damaged bc of
extraction of minerals or waters from land even if rights to that mineral or water
are in the exceptions section


In CA land usu subject to mineral land of someone else

This protects against oil company damaging property by taking oil
o Title insurance company will require survey for this type of coverage though
Buyer/seller must pay for the survey
and some title ins companies are giving these policies even w/o surveys
They can do this bc risk of payout is very low (4.5% gross rev paid to claims)
compared to other insurance companies
Big part of this 4.5% is probably attys fees
They are in possession to assess risk that buyers cant bear
o Covered up to purchase price of property if problem occurs
either owner sued and title ins co pays for attys fees
or title ins pays to have the defect removed by paying off third party
i.e. if find encumbrance they missed like mortgage theyll pay it off so
long as doesnt exceed value of coverage
some with easement
o even some coverage after sale (though mostly for during ownership
If insured conveys RE through WD then held liable for it may look to title
insurance company for protection
Also ensures not only that the title is in fact good but also that it is marketable
when try to sell it later
But title insurance cos will obviously not protect against anything that the
insured creates
Lenders also have title insurance up to value of the mortgage itself
o If lender wants to sell loan on 2nd mkt must contain mortgagees title insurance policy
Insurance goes with the loan so moves to 2nd market
Usu buyer pays for the premium on title insurance so if lenders get lower prices
bc of volume business usually pass that on to sellers
o Lenders policy gives better protection than buyers bc ensures lien priority as well as
everything that the buyers policy protects against
o Title insurance on mortgage passes if new buyer bc stays so long as loan still outstanding
o Junior lenders often dont require title insurance bc dont sell on secondary mkt
Plus they know that there will be title ins for senior lender and even though that
doesnt protect them gives them good idea of where there title fits in with the
Sometimes junior lenders get prelim title report for purpose of finding out where
there lien is on the property but then dont get the actual insurance

9. Restrictive Covenants

Three ways of dealing with use of land by neighbors/externalities

o Law of nuisance in common law
o Restrictive covenants which have been around 300-400 years
Amalgam of k and property law
o Law of zoning
Restrictions can be simple or complexsort of like negative easements
o Buyer must analyze them after seeing them on prelim title report and get copy from
recorders office
o Usually say things like can only use for single fam dwelling, can only use for residential
purposes, how close to street can build (setback line) and how close to side can build
o What these restrictions make clear is that everyone who purchases a lot and their
successors in interest are both bound by covenants and benefit from them
o Remedy usually injunction bc too hard to determine damages


Everyone in the subdivision has had their rights violated and too hard to add up
the damages
Relationship btwn restrictive covenants and zoning law
o The more restrictive of the two governsmust comply with both
Unless for some
o Houston only has restrictive covenants, no zoning

i. Formal Restrictive Covenants

Formal restrictive covenants99% of litigation over covenants is in this area
o In CA called CC&Rs
o Regular subdivisions
Usually city council approves plat, then developer records set of restrictions
Every lot conveyed on constructive notice of restrictive covenants under
recording acts bc they were recorded before purchase
Each lot sold subject to restrictive covenants which bind and benefit
each subsequent purchaser
Externalities are something that one neighbor does that affects another
and restrictive covenants usually enacted to deal with externalities
Sometimes there also an independent owners assn like in condo but usually not
Sometimes architectural committee of owners after subdivision created which
has final approval if someone wants to build a story on house, etc
These are usually allowed so long as acting in good faith
Usually less important after committee owners no longer around
o Condos
Condominium is a vertical subdivision
Like regular subdivision and before any unit is sold set of bylaws is recorded
which is similar to restrictive covenants in reg subdivision
ALSO creates owners assn
Owners assn basically like mini city councils because make rules and
regulation (chosen by developer)
Assn has right to levy monthly assessment for maintenance and
assessment for capital improvements
o Essentially have power to tax bc have to maintain the
common areas
o If don t pay fees then owners assn has right to asses lien and
foreclose on the house
o Is this any different than not paying property taxes and city
foreclosing on house?
o Yes bc foreclosure on house takes years whereas months in
condo bc nonjudicial foreclosure
State legislatures around country are stretching out
time period for foreclosures to give owners more
time but dilemma is that have broad base of people
sharing time to foreclosure from state taxes but only a
few bearing it in condo assn and may be really
affected by it
o Also, tax liens have priority above everything whereas condo
liens are junior to mortgages or to anything recorded before
they levied their lien
Assn also has right to amend bylaws which doesnt happen with reg
restrictive covenants
Usually reasonableness test applies to regulations by owners assn
No cats ruleCA SC upheld this, said reasonable


Externalities more intrusive in condos than in regular subdivisions bc very close

to each other
Ambiguity main reason for litigation
o Public policy argument against restrictions (majority rule)
Ambiguity usually resolved in favor of free and unfettered use of landalways
use this argument if against the enforcement
Groningercourt follows the unfettered rule
o Public policy argument for restrictions
Careful private planning is a good thing and is beneficial to society so should
interpret restrictions in favor of planning
o Build v. use restrictions
Building restrictioncan only build residential structures
some covenants say one story only
o this may reduce FMV though probably there to keep views
o could argue ambiguous and build 40 ft high one story house
o some court will even say so ambiguous they wont enforce it
o should specify how tall a story is
Groninger v. Aumillerdeveloper of subdivision keeps model home
for himself until sold and it is used as the base for the contracting out of
homes in the division. Deed says structures used for residential
o Question is whether this is a building or use restriction
Word purpose may go to how you use or how you
o Court resolves in favor of free and unfettered use of land
Says purpose goes to build but once build can use
structure however please
Use restrictioncan only use property for residential purposes
The way use restriction is drafted is crucial
o For example Metzner shall only be used for residential
purposes is too broad
bc may mean more than single family: could allow
leasing, group homes, day care centers (esp if just
own grandchildren) and other things so not a very
concrete restriction (though the building restriction in
that particular case hurts this argument)
but in that case court said day care center not
residential but minority decision and seems ct could
have read it more broadlythe building restriction
probably suggested meant to be more restrictive
o But if say cannot use for any commercial purpose as
opposed to only use for residential use then different
a lot of people work from home and can argue
reduces pollution, fuels, promotes conservation
thus people working from home may appear less
commercial than those going to work every day
o may want to distinguish btwn those that have externalities
(people coming to home, etc.) than those that dont
o some covenants say single family dwelling only for those
related by blood or marriageclear covenant so not void for


crystal clear covenants but end up being helpful for

immigrants bc may have huge family but all related
but same sex or heterosexual couples are not included
If the formal covenant is not ambiguous ct may still find it unenforceable
o constitution
Shelly v. Kramer (specific performance of covenant) Barrows v. Jackson (same
thing but damages)
Shelly limited in its application bc of the state action doctrine
Says judicial enforcement of discriminatory covenant is state action but
cant apply this in situations where no judicial enforcement
Most race issues dealt with by ordinances or federal statutes which require equal
o State and local ordinances
Could be state open housing statute that makes discrimination (either race,
creed, color, origin, disability, maybe marital statusonly in CA) unlawful
o Federal statutes
FHAprohibits availability of land for disabled buyer or renter but can have
restrictions on density of use
What times of group homes not covered by FHA?
Sex offenders and other recovering felons are not handicapped by
definition so not forced to take them
Drug addicts and alcoholics are handicaps under FHA and many
externalities like drug dealers in the neighborhood
o Public policy
o Example: covenant only allowing single family dwellings by those related by blood or
marriageclear covenant so not void for ambiguity, must try other paths
Could argue violates right of privacy but state action problem
State and local ordinances
In CA covenant unlawful bc discriminates based on marital status
o Example: group homes (most litigation in this area)restrictive covenant says no group
State statutes
Some permit group homes by calling them residential if limited number
Federal statute
FHAprohibits discrimination against disabilities
So even if carefully drafted provision violates FHA
Public policy
Who bears the burden on society by having low income housing, group homes, etc.?
o Homeowners in poor areas bc land too expensive in rich areas
Putting aside the power issue of having the $ to litigate and keep the group home
or low income housing out of the neighborhood
o Nelson argues that should condemn one lot of land in every subdivision and have the
burden shared

ii. Informal restrictive covenants

Informal restrictive covenants
o Piecemeal restrictive covenantssituations where four or five lines in some deeds but
not in all of the deeds in the subdivisionno owners assns or anything formal like that
Sometimes deeds are sold separately and some are sold free of restrictions then
other ones with restrictions sue for injunction to enforce same restriction upon
the other parties who dont have restrictions in their deeds



Some cts say no one has right to enforce restrictions against other
But most say can bring the litigation and if seems like subdivision
meant to be one common plan then bound by common plan
o Argument is that physical configuration of subdivision puts
him on constructive notice of RC on other deeds and make
him abide by it as well even though he may have paid more
for his lot bc no restrictions
Conveyance informal restrictive covenants
A owns lots 1 and 2, sells 2 to B with restrictive covenant on it
No conveyance informal restrictive covenants (horizontal privity issue)
A owns lot 1, B owns lot 2 and no conveyance at all and A and B get together
and execute bilateral agreement where both agree to limit use to single family
dwellings then record the document which says binds and benefits A and B
Courts often didnt enforce these bc said no privity btwn A and B and
some jurisdictions still like this
o Restrictions not created incidents to conveyance of real estate
o No money damages
Equity courts say can get injunctive relief so long as other party is on
noticedont care about horizontal privity
o So this only comes up if someone selling for money damages
but not in equity for injunctive relief
o Generally bound so long as have notice
iii. End of Restrictive Covenants

How do covenants die?

o covenants usually expired and require certain % to be renewed
sometimes dont get renewed at all
but frequently they do bc some people are aware that covenant will expire
if dont renew may amend with certain percentage
amendments usually have uniformity requirement bc otherwise some
people may vote to change a covenant that will help them but hurt
o similar to spot zoning where only affects some people
o mergertwo lots with restrictive covenants end up being owned by same personthen
no more restrictive covenants
this will virtually never happen in large subdivisions
o eminent domainif govt condemns corner lots then the govt can do whatever it wants to
those lots bc the restrictions are no longer in affect
but does it affect the rest of the lots? May change char of neigh so no more
and who gets paid? How are the compensations paid out? Restrictive covenants
are negative easements and thus most courts say every person in the subdivision
is entitled to compensation as result of condemnation (though those closer to
condemnation have largest damages)huge mess
o tax foreclosurenew owner buys at the sale and usually say buyer gets title free and
clear of all mortgages and restrictions
but is it fair for him to do whatever he wants even though rest of subdivision
subject to restrictive covenants
many states say when buy at tax sale the covenants remain


though others still say the restrictive covenants remain which may result in some
lots without restrictions and some with it and that may also result in destruction
of regular character of neighborhood then no more res restrictions at all
o prescriptioncan one destroy restrictive covenant by prescription just like easement?
i.e. if house is in sideyard restrictive covenant for many years can argue the
restriction dies after a certain time? No cases on this but once damages statute
expired essentially destruction of prescription
kind of like laches bc P is at least barred from bringing equitable action but can
still damages BUT once even damages action gone almost like prescription bc
cant bring any actions
some judicial defenses to restrictive covenants also destroy the restriction (but not all)
o these do NOT destroy restriction, just keep one person from bringing suit or defend D
unclean handsif P has violated same or similar covenant cannot seek equitable
relief against another person from violating that covenant bc must come to
equitable court with clean hands
court may find that the Ps violation is not the same bc it is more minor
or not similar qualitatively or quantitatively
o Pietrowski v. Dufranelarge subdivision, single family,
residential. Defendant accused of building detached garage
when already had attached garage. Restrictions in essence say
only get one garage. Next door neighbor (Pietrowski) put D
on notice from day 1 that they were violating restrictive
Court said no unclean hands even though P had also
violated covenant bc she also had built in her
backyard but hers was tool shed, not same as addl
two car garage
Waiver or acquiescenceif allow neighbors to consistently violate similar
covenant then either waived right to enforce of acquiesced right to enforce and
prohibited from bringing an action
Sort of like EP concept of selective enforcement
o Pietrowskiagain court says other neighbors violating the
covenant in a much more minor magnitude than the Dufranes
Lachesused to be called equitable statute of limitationsabout unreasonable
Laches can bar a P from bringing an equitable restrictive covenants
action must faster than statute of limitations
If statute of limitations on restrictive covenants (for bringing only
damages action) is 6 years then laches restriction (for equitable action)
may be much less
o Even two years may be considered unreasonable delay bc
allowed person to build, spend money, etc.
Estoppelinvolves P doing something affirmatively to mislead defendant
i.e. P in Pietrowski says what a beautiful garage, then brings action bc
led person to rely on their words
sometimes distinction between estoppel and laches is minor bc saying
nothing may be either laches or estoppel
Pietrowski doesnt meet laches or estoppel bc asserted her rights from
day 1
Often laches and estoppel results in people going to court to avoid
having that defense brought up so ends up incentivizing litigation when
a letter would do
innocence as defenseif D subjectively knowingly (not constructively) violate
the restriction then court may automatically order injunction for P but if instead


D was innocent then court applies balancing approach as to which party has
been hurt more and may or may not issue injunction
only applies to sideyard restrictive covenants?
Often D will just slice the violation off from the building to avoid
having to pay damages to whole neighborhood
o Once he slices it off no one else has cause of action but if pays
damages then owes it to everyone
o Much easier to pay off P as a result of encroachment than
violation of restrictive covenant like in this case bc have
everyon suing
But some do destroy the covenants
Changed circumstances
To prove changed circumstances must either
o Prove that that the residential character of the neighborhood
no longer exists
Destroys the major restriction in the covenant which
is single family use, residential purposes only
o Have wholesale changes to surrounding area or to the
subdivision itself
If surrounding area becomes commercial then that
may destroy residential restrictions in subdivision
o Pietrowskicourt says fact that everyone has sheds on yard
does not destroy res nature of neighborhood thus does not
destroy all residential covenants (though uses word
abandonment really talking about changed circumstances)
o i.e. if many people in neighborhood are running business out
of their homes then could say change in residential character
of neighborhood
To prove abandonment only need prove that
o Result is only that the single covenant is void, not all of the
covenants related to residential use
o Pietrowskieven arguing the garage restriction abandoned
would probably fail bc other peoples sheds not same as
o i.e. a lot of covenants used to say no TV antennas on roofs but
one could argue that wholesale disregard as to that (if assume
satellite dishes same as TV antennas) then ct may find that
particular covenant abandoned by wholesale violation but does
NOT change residential character of neighborhood