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Property II


Transfers of Land A. Overview of Land Sale & Land K 1. Four stages of a land sale (1) Finding the buyer (a) Seller (S) selects real estate broker – aka listing agent (LA) to represent S in the sale (b) S and LA enter into listing agrmt – Terms: (i) LA agrees to find a buyer willing to pay a stated price acceptable to S (ii) S agrees to sell (c) B makes offer to purchase (i) Form of offer = written K that satisfies SF, with condtns: (a) Physical condtn of prpty (b) Financing (c) State of title– S must deliver marketable title to B (d) If any condtns fail, B walks away w/earnest money (ii) With k, B delivers earnest money (iii) S signs K if he agrees to sale (2) Negotiating the land K (a) Agents typically represent B & S. (3) Preparing for closing (a) Between K formation & closing is called the “executory period” (b) B & S both have things to do during this period (c) B will sign promissory note & execute mortgage to secure repayment of loan (d) During executory period, B will evaluate the state of the title (i) Option 1- attorney search & certification of Title


(ii) Option 2- attorney review of title abstract prepared by a title abstract company (TAC) (iii) Option 3- (supplemental to 1 or 2): Title Insurance (4) Closing the transaction (a) Closing supervised by attorney or escrow agent (b) Generally, at closing (i) Title conveyed from S to B by delivery of deed (ii) Loan is made by lender & full purchase price is paid by B to S (iii) LA and CB are paid their commission (iv) Deed and mortgage will both be recorded 2. The actors in a land K a) Principals b) Seller – aka grantor, vendor, or party of the first part c) Buyer – aka grantee, vendee, party of the second part 3. 3 kinds of listing agrmts (1) open listing agrmt- gives no exclusive right for agent to sell prpty (2) exclusive agency K- forbids S fro selling the house through another agency, but doesn’t prevent S from finding own B (3) exclusive right to sell agrmt- forbids anyone other than la from selling prpty

B. Role of Broker 1. Legal duties that broker owes to buyer & seller a) Fiduciary duty of loyalty, good faith, competence owed to Seller b) No fraud or conflict of interest 2. When is a commission due? a) CL Rule- commission due when K is signed (Ohio) b) Progressive Rule- commission due at closing c) Or expressly agreed on time between parties C. Forming the Land K (Statute of Frauds) 1. rqmts of SF a) in writing, essential terms, signed by party agnst whom enfrcmt is sought b) can be evidenced by single memorandum or series of related docs, but must


indicate a final agrmt c) don’t need full legal description in land K (but do in the Deed) d) must be adequate to identify the land with REASONABLE CERTAINTY (1) What if description is incomplete? May be cured by parol evidence. (2) What if acreage is inaccurate? May fail if substantial inaccuracy. (3) What if price not states? Not necessarily fatal, but probably is unless parties agreed to reach price later. (4) If no closing date stated, closing is in rsnbl time. (5) Rule- SF won’t interfere if agrmt is already performed; SF won’t undo a fully executed oral agrmt D. Marketable Title 1. Rule: Physical condtn of prpty does NOT affect title. 2. 3 ideas to remember (1) every owner’s title to land is different (2) can’t pass a better title than seller has (3) title to land is separate from physical condtn of land 3. Buyer can walk away if S doesn’t deliver the title agreed to in the K 4. If K is silent on kind of title to be transferred, then a marketable title must be delivered. This is both a condition and a covenant. a) Condtn begins when K is signed and ends at closing. If S delivers unmarketable title at closing, then covenant to deliver marketable title is merged into the Deed covenants. b) LK covenant re: marketable title = Title free from REASONABLE DOUBT, but not every doubt. c) Two circumstances when title is definitely unmarketable (1) Failure of title in terms of estate conveyed or acreage conveyed (but small difference won’t render title unmarketable) (2) Where prpty is subject to some lien or encumbrance that B did not accept (court looks at what rsnbl B would accept) d) Another definition of marketable title recognized by courts- rsnbly prudent person w/full knowledge of the facts and legal consequences would be willing to accept e) Unmarketable if rsnbly probable that a purchaser would be subject to litigation


then recission of the K.Duty to convey MT begins when K is signed and ends when Deed is delivered at closing. but may bring C/A for damages for failure of MT later. Time for S to render MT – generally. g) Legal effect of failure to – if covenant breach. easements.AP Title = MT if TO has no serious claim (b) Minority Rule. 5. Two Scenarios involving failure of MT a) Title failure (1) Lesser estate (2) Under acreage (substantial (3) Defect in chain of title (4) Special Problem – Adverse Possession (a) Majority Rule. (2) Minority Rule is that S can’t pass title until it has been Quieted.What if Seller produces a deed that is based on adverse possession? Can such a Seller tender a marketable title to Buyer? (1) Majority Rule is that a S with title through adverse possession CAN pass marketable if the likelihood of the title being litigated is minimal.f) BAR Question. leases. curable defects = mortgages.MT = successful through Quieted Title action (5) Defect in Record Chain of title (deed forged. physical encrchmts (2) Excepted encumbrances are OK (3) Ancient (expired) encumbrances OK (4) Zoning ordinance is NOT an encumbrance (5) Visible encumbrance problem (a) Newer cases – doesn’t render title unmarketable if visible 6. if condition failure. at closing. Buyer waives right to receive MT if he accepts deed at closing. Buyers remedies if S can’t deliver MT a) Recission 4 .right of interest in land other than an estate which reduces value of land or restricts use of land.) (6) Distinguish title from condition of prpty (can have a MT to Unmarketable land) b) Encumbrance (1) Encumbrance liens. etc. undelivered. h) When duty arises. then damages. postponing closing for rsnble time to cure 7.

under equitable conversion. equitable conversion is not used. equity regards the land as being owned by the buyer although the seller has legal title to the land until closing. The atfault party bears the loss. Doctrine of Equitable Conversion . B has equitable title to the land) 2. Equitable Conversion 1.risk of loss is on Seller where substantial loss (2) Uniform Vendor & Purchase Act – says party in possession bears risk of loss 4. Misc. notes on MT a) The fact that Buyer may not be able to reach prpty does not in itself make title unmarketable b) Hazardous waste on prpty does not render title unmarketable c) Ordinance violation may make title unmarketable.b) Restitution c) Specific performance w/price adjustment d) damages 8. The money. 3. BUT Exceptions: a) Fraud b) Fiduciary relationship c) Active concealment d) Partial disclosure (half-truth) 5 . Duty to Disclose (non-title) defects 1. (So. UNLESS one of 3 things happens: (1) Equitable conversion does NOT happen if Seller can’t convey MT (2) Parties can contract out of equitable conversion (3) When one party is at fault. is owned by the seller even though the buyer holds the money until closing. BUT there are 2 minority positions that are utilized in some states: (1) Mass. What happens if there are insurance proceeds? Whoever bears the loss gets the insurance money. S has equitable title to the money.As soon as the K is entered into. F. but the ordinance itself does not affect the status of a MT E. This is the rule. Equitable conversion is the CL majority view. Normal rule = “caveat emptor” – no remedy for mere silence by Seller as to defects.

Seller is under a duty to disclose defects that are not readily observable and not known to Buyer.” 6. then Buyer not held to strict doctrine of caveat emptor 3. 5. if any.2.unknown defects needn’t be disclosed. BUT if defect not subject to discovery on reasonable inspection. 4. Misc. nondisclosure constitutes a basis for recission as a matter of equity. Merger Doctrine a) General Rule . Latent defects. but have a duty to disclose defects that are not readily observable e) Exceptions to Merger Doctrine (1) Recission is still OK for fraud 6 . the K merges into the deed & Buyer can’t sue the Seller on warranties. that are in the deed d) 2 types of defects: (1) Title Defects. must sue before conveyance of deed c) When Buyer accepts deed.whether rsnbl person would attach importance to it in deciding to buy (2) subjective test.whether the defect “affects the value or desirability of the property to the buyer.Sellers must provide MT or Title that meets express provisions of K between buyer and seller (2) Condition defects. Notes on Seller’s duty to disclose defects: a) May be duty to disclose “noisy neighbors” b) “As Is” clauses – are upheld so long as defect is rsnbly discoverable to Buyer 8.General rule is that contract merges into deed when buyer accepts deed and buyer can’t sue on warranty (duty to deliver MT) b) To sue on title defect. then there is not fraud a) 2 different tests used for materiality of defect (1) objective test. If defect is NOT material. Where a condition has been created by the seller materially impairs the value of the K and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the transaction. 3 situations when silence is NOT misrepresentation as to material defect: (1) unknown by Seller (2) when Buyer has same opportunity as Seller to discover the defect (3) when Seller is NOT aware that Buyer is under misapprehension 7.normally no duty to disclose.

builder’s defenses (1) defects not attributable to him (2) defect is result of age or ordinary wear & tear (3) previous owners made substantial changes (4) some jurisdictions only allow warranty for initial purchasers H.(2) Merger does NOT apply to non-title covenants G. Standard of quality = “customary standard of skill and care” 2. Remedies for Breach of the Sales K 1. but is implied 4. policy = to protect innocent Buyers 6. Three Remedies are available to the nondefaulting party (1) Damages (2) Retention of deposit (by Sellers) or restitution of deposit (for Buyers) (3) Specific performance of the K 2. warranty does apply to subsequent purchasers 3. Implied Warranty of Quality 1. B gets restitution + costs (2) American rule.B gets the benefit of the bargain 3. applies to latent defects 5. privity not rqd. Limits on the Implied Warranty of Quality (1) Latent defects only (2) Not discoverable by rsnbl inspection (3) Rsnbl period of time (4) P must show causation btwn defect & workmanship 7. Other notes 7 . does not originate from K.if Seller breaches b/c of title failure. Summary of Remedies to Know a) General Rule for party seeking damages for breach of K to convey real estate is the Difference btwn the K price and the Fair Market Value at time of breach b) Buyers Damage for breach by Seller is the Value of the prpty at time of breach – K price c) Liquidated damages will be enforced if rsnbl in light of actual damages d) Specific performance is usually available for land K deals b/c land is unique e) Seller’s breach due to title defect (1) English rule.

Majority Rule on Acknowledgement a) Witnessing or notary public = acknowledgement b) Acknowledgement does NOT affect rights as btwn the parties. habendum clause – may function to limit the estate granted in some way 3.Where deception or trickery is used to get Grantor to unknowingly transfer his deed.(1) Special damages may be awarded if damages resulted from natural and probable consequences of the breach & were rsnbly foreseeable by breaching party (2) Punitive damages may be awarded for willful & wanton breach or reckless disregard of contractual obligation I.warrants title against all defects in title.contains warranties agnst the grantor’s own acts. if any 2. then it can’t be recorded or recognized as public record 4. The Deed. but is deceived by fraudulent representations as to the facts outside the instrument itself (2) DOES NOT void the title. BUT a subsequent Bona Fide purchaser who is unaware of the fraud prevails over grantor c) Fraud in the Execution (1) Ohio Rule . Three General types of Deeds (1) General Warranty.A grantor’s signature whose signature is forged to a deed prevails over ALL persons. and is aware of the nature and character of the instrument he or she executed. BUT title is VOIDABLE e) Summary of Ohio Rules (1) Void Title – where a “forged deed” OR “fraud in the execution” 8 . even Bona Fide purchasers b) Fraud – Deed procured by fraud is voidable by grantor in action agnst grantee. BUT if a deed is not acknowledged.contains no warranties. only conveys whatever the grantor has. Forgery & Fraud a) Forged Deed . whether they arose before or after the grantor took title (2) Special Warranty.Warranties of Title 1. title is VOID d) Fraud in the Inducement – (1) party fully understands what he or she is signing. but not the acts of others (3) Quitclaim.

perform all acts necessary to provide further assurances of title1 and requires the grantor to take affirmative steps to cure any defects in the grantor's title. lien.2 It is prospective in character3 and runs with the land conveyed. BUT begins to run on a future covenant at time of eviction or when covenant is broken in the future. but unrecorded encumbrance (e. c) SL begins to run on breach of present covenant at date of delivery.breach when grantor had no right to convey (3) Covenant agnst encumbrances. so no breach of warranty. not a title problem.g.breach occurs when estate granted was more than grantor owned (2) Covenant of right to convey. (b) Other jurisdictions look at 2 different types: 9 .1 The covenant of warranty is an agreement by the grantor that upon the failure of the title which the deed purports to convey. mortgage.warrants that there are no encumbrances on the prpty (e. Various covenants a) Present covenants (1) Covenant of seisin. easement)? (1) Split of authority on the issue: (a) Some courts view as a condition.g.(2) Voidable Title – where “fraud in the inducement” 5. he or she will make compensation in money for the loss sustained (2) Covenant of quiet enjoyment (3) Covenant of further assurances – the only covenant that allows for injunction (a) covenant that the grantor will. on demand. etc) b) Future covenants (run with the land) (1) Covenant of general warranty (a) grantor covenants to warrant and defend the title conveyed by the deed against the lawful claims regarding the title conveyed. d) Issue: Is covenant agnst encumbrances breached when there is a visible (open & notorious).

minority = yes J.Does the covenant of seisin run with the land? Majority rule = No. Example: If O conveys property she doesn't own to A by warranty deed. There is not title defect and parties should handle such problems inside a K. Basic Concepts of Mortgage Law 10 . then title immediately passes to A. but some other act may qualify) L. then damages is the cost of removal (b) if not easily removable.Rules (1) No injury = no damages (2) Damages for breach of covenant of seisin or right to convey = return of purchase price (the consideration) (3) Breach of covenant agnst encumbrances (a) if easily removable. (2) Issue.(i) Public easement = not a breach (ii) Private easement = breach of covenant agnst encumbrances b/c it is expected that Seller has power to remedy the encumbrance (unless agreed to by Buyer) e) Damages for breach of Deed Warranties . Deed is only effective on delivery from grantor to grantee 2. Deed requires intent + delivery (usually physical delivery. K. The Mortgage 1. then damages = difference in value btwn land with encumbrance and value of land without the encumbrance (c) In ALL cases however. damages limited to total price received by warrantor (4) No damages due when warranty is breached. aka “after acquired title doctrine” 2. Estoppel by Deed 1. Undelivered deed is void. but P hasn’t been dispossessed f) Other rules (1) Claim for breach of covenant agnst encumbrances cannot be predicated on the necessity to repair or alter the property to conform with land use regulations. but O later acquires title to that land. The Deed – Delivery 1. passes no title 3.

statutory redemption right exists c) Theories of Mortgage Law (1) Title theory – mortgagee holds title until note satisfied (2) Lien theory (Majority in use) – mortgagor holds title. then deficiency judgment for remainder (4) Two types of foreclosure by sale: (i) Judicial foreclosure (ii) Power of sale (5) Statutory Right of Redemption.after a foreclosure sale.a) The Instruments – Note & Mortgage (1) Promissor note evidences the debt and is secured by the mortgage (2) Mortgage is an interest in land given to lender to secure the loan (SF rqmts. (2) Strict foreclosure – judicial process by which mortgagor’s right of redemption is terminated after certain period of time. After a certain time. mortgagor is foreclosed from redeeming with Power of Sale e) Foreclosure Priorities (1) All mortgages are NOT equal 11 . Substitutes (1) Variants – alternative arrangements to finance land sale that follow mortgage law (eg deed of trust) (2) Substitutes – financing arrangement used to avoid pro-mortgagor principles of mortgage law (3) Deed of Trust. surplus goes to mortgagor. owner/mortgagor has additional time period to redeem prpty (varies by statute. 3 to 18 months) (6) Until valid foreclosure sale. equity of redemption right exists (7) After valid foreclosure sale. is recordable) b) Evolution of the Basis Mortgage Concepts (1) Equity of Redemption.process in equity that allows a defaulting mortgagor to redeem land. (3) If foreclosure by sale results in proceeds in excess of debt. mortgage has lien (3) Intermediate theory d) Mortgage Variant vs. If debt exceeds proceeds.

etc. Title Assurance 1. but system is largely private b) Recording deed does NOT validate a weak title nor invalidate a good title c) Deed must be acknowledged by notary or else not acceptable for recordation d) Statutes dictate method and rules and practice for recording e) Main purpose of recording acts is to protect purchasers and lien holders from unrecorded interests f) Subsequent Bona fide purchaser is protected agnst prior unrecorded interests g) 4 steps to a Title Search 12 . The Recording System – Intro a) Records are public. lower interest rate (b) Junior (second.” (i) Equitable factors: substantial equity held by mortgagors (ii) Bank knew of recent appraisal (iii) Bank knew of P’s attempts to cure g) Discharge by Prepayment M. third. mortgage) f) Transfer of Mortgagor’s Interest (1) Rules for foreclosure sale: (a) Mortgagee must use rsnbl effort to obtain fair price for subject prpty @ foreclosure sale (b) Mortgage has duty of good faith and due diligence to obtain fair price (i) Bad faith = intentional disregard of a duty or purpose to injure (a) Damages for bad faith = FMV @ time of sale – actual sale price (ii) Due diligence = is satisfied if a rsnbl person in lender’s place would have acted the same as Def (c) Absent fraud or irregularity. inadequate price alone does not demonstrate bad faith unless price is so low as to “shock the conscience.(a) Senior mortgages (first mortgage) (i) Preferred status for lender (ii) Les risk.

Chain of Title Problems a) Chain of title = Series of records linked by to a piece of property and passed btwn subsequent parties b) The effect of misindexing (1) Majority – indexing the deed is NOT essential to recordation. prevails over prior unrecorded interest (3) The notice provision helps avoid fraud on the prior grantee c) Race-notice statutes (about ½ of states) (1) Subsequent purchaser prevails ONLY if (a) No notice of prior instrument (b) He records before the prior instrument is recorded 3. even if he does NOT record. bankruptcy) h) Some basic rules (1) Default Rule (if no recording act) = “first in time. first in right” as long as constructive notice (2) But BFP prevails if no constructive notice by prior interested party (3) Actual notice will always defeat a BFP (4) Misindexing does NOT prevent the deed from imparting constructive notice=Majority rule 2.(1) search Grantee Index – to build a “chain of title” (2) Search down the Grantor Index – to find encumbrance (3) Read all relevant documents (4) Perform collateral search in other record bases for other docs that affect land titles(probate. Types of Recording Acts a) Race statues (1) First to record prevails (2) Notice is irrelevant b) Notice statutes (about ½ of states) (1) Whoever records first wins. so misindexing is not fatal and still imparts constructive notice (2) Minority – index is essential part & there’s no constructive notice until properly recorded 13 . unless first recorder had notice of prior grantee (2) BUT. one problem – subsequent purchaser.

Persons Protected a) Who’s protected under recording act. thus this recording is a wild deed b/c is springs up and falls outside the chain of title. but no further 14 . there is obligation to search these deeds 4.c) Land Descriptions – 3 different ways to describe land (1) Metes and bounds – series of directions and distances that trace boundary of prpty (2) Description by Gov’t Survey (most common) – essentially formed all land into rectangular tracts (3) Subdivision plat method – developer subdivides prpty into lots d) Chain of Title – two standards (1) Standard title search – minimum search rqd by the jurisdiction (2) Extended title search – when the state requires a searcher to look at enlarged time periods. f) Extended title search problems (1) Wild deed and late recorded deed problems (a) (Hughes) Deed becomes operative without new execution by grantee. but was not aware of plaintiff’s K with seller as to the right of first refusal (2) Majority rule – BFP is protected to extend of payments made prior to notice.subsequent purchasers b) Who’s not protected – donees are not protected c) BFP example (Anderson) (1) The new buyer purchased property. inserts his name in the blank space left for the name of the grantee (2) Duty to search collateral title chains (3) Early recorded deed problems g) 4 problems that fall outside of normal rule (1) wild deeds – not expected to find it (2) early recorded deed – old cases = yes. then sells to a buyer who then records. but detached from chain of title (happens when one fails to record a deed. new cases = no (3) late recorded deed – not expected to find it (4) collateral deed search – often yes. with either express or implied authority of grantor. to find more documents e) Wild deed – a deed that is recorded.

award land to holder of interest & award buyer the payments made.Actual possession is constructive notice to all the world that the occupant has rights in the land c) Rule.(a) 3 possible remedies. is void and no BFP can receive good title because a thief can’t pass good title. Marketable Title Acts a) Why MRTA? To remedy ancient title flaws. MRTA fixes a root title. BFP pays value and gets good title (a) Shelter Principle. Notice a) 3 kinds of notice (1) actual – when one is personally aware of a conflicting interest in real prpty (2) record –notice based on properly recorded instruments (3) inquiry – based on facts that would cause a rsnbl person to make inquiry into the possible existence of an interest in real prpty (a) Important Rule – can get inquiry notice of an unrecorded instrument if that unrecorded instrument is expressly mentioned by a reference in a recorded one (b) Inquiry notice from possession – if another party is in possession. but pay remaining installments to holder of outstanding interest d) Indexing – majority rule is that indexing is NOT essential for deed to be considered as recorded 5.representation that something is genuine but is not. It’s goal is to simplify and maybe shorten A TITLE SEARCH (1) Forged Deed.signeing of deed not in free will transfers a 15 . award buyer fractional interest in the land proportional to the amount paid prior to notice.BFP can pass a good marketable title to someone with Notice of the fraud (3) Fraud in the Execution. (2) Fraud in the inducement.Possession of land by a stranger is inquiry notice to a subsequent claimant 6. so grantee then has a voidable title. allow buyer to complete the equivalent of theft of land. then you are on inquiry notice b) Rule.

g. zoning. Title Insurance a) 2 types. 30 years or 40 years) go back 30 years and then back a little farther to the first available deed and that is the root whether or not it is a nullity.but apparently valid. ROE) 7. marketability (8) physical damage or condition of prpty. or other encumbrance II. eminent domain) 16 . (1) Future interests that existed before root title are extinguished (a) UNLESS these interests are recorded in chain of title after the fixed date of the root title (2) Person who has easement and in order to prevent from slipping past the root must rerecord. b) MRTAs fix root title to some period of time (e. (3) Anything listed in root deed is good with the land (4) MARTA shapes RECORD NOTICE (5) MARTA does NOT affect adverse possession c) Curative acts set a statutory period that a title or deed defect (1-2 years) if it goes beyond then there is no problem with the deed or title d) Statutes that Terminate Ancient Interests in Land (1) Bar certain types of very old. to land for example (POR. Land Use Controls (nuisance.void title and is the same as theft.homeowner’s policy protects owners up to value of property and lender’s policy protects bank up to amount of mortgage b) only covers record defects (whereas warranty deed covers record and offrecord defects) c) Risks NOT covered by title insurance (don’t make title unmarketable) (1) Losses caused by gov’t ordinances (2) Eminent domain losses (3) Title defects or encumbrances that were agreed to by the insured (4) Title defects known by insured but not disclosed in insurance company (5) Known risks that insurance companies exclude from coverage in policy (6) usually does NOT insure the quantity of the land (7) economic value of land..

comfort. with or without harm if: (a) Enters land. Difference btwn nuisance & trespass a) Nuisance = interference must be substantial. or as result of abnormally dangerous activity. safety. or ultrahazardous 3. enters land in possession of another or causes 3rd person to enter land and causes harm to land. reckless. private) (1) intentional (a) with purpose of causing or with knowledge that the result is near certain (b) subject to liability of intentional invasion when conduct is unreasonable under the circumstances (c) how do we know what is unreasonable? 1) balance harm agnst benefits. Judicial Land Use Controls – Nuisance 1. nontrespassory invasion of another’s interest in private use and enjoyment of land 2. or fails to remove from the land a thing which he is under duty to remove 4. not so for trespass b) Trespass is a physical invasion. 2 Types of nuisance recognized: 1) intentional.Does the level of interference cross some threshold that marks the point of liability (2) unintentional (a) when conduct is negligent. peace. public vs. or convenience (3) conduct proscribed by statute or ordinance (4) must be of a continuing nature b) private nuisance 17 . remains on land. nuisance is a nonphysical interference (1) Trespass as an intentional invasion of land (2) Trespass as an Unintentional invasion of land (a) Recklessly or negligently. 2) unintentional (also. private nuisance a) public nuisance (1) an unrsnbl interference with a right common to the general public (2) conduct that significantly interferes with public health. public vs. 2) threshold test.A. Nuisance = substantial. (3) Liable for trespass.

the lot that is burdened (there’s always one) b) Affirmative or Negative (1) Affirmative. must show special injury. Private Land Use Controls – Servitudes – Easements 1. Permanent damages (a) Permanent damages (b) Temporary damages B. does not run with land) (a) CL says in gross easement is transferable for commercial prpty (such as railroads) (b) example involves right of passage where sale is to person and extinguishes upon their death or where the rights are exclusively 18 . must have authority as a public official or have standing to sue as a rep of the general public (2) Temporary vs. to get injunction for public nuisance. General a) Dominant estate and Servient estate (1) Dominant. Lot that benefits from the easement is the Dominant Estate and the lot that is burdened by the easement is the Servient Estate (2) In Gross – benefit to a single person (not his land) & does not involve a dominant estate (so.involves right to use servient prpty in some manner (2) Negative. Remedies a) Injunction b) Damages (1) Note – to recover damages for public nuisance.(1) private nuisance is a non-trespassory invasion of another’s interest in the private use and enjoyment of land. Allows easement holder to forbid landowner from doing something they normally would be able to do. These easements have a very serious impact upon use of burdened land therefore these were limited in England for a handful of circumstances (light. 5. c) Appurtenant or In Gross (1) Appurtenant – benefit it to the land (runs with the land). view.the estate that benefits (not always one) (2) Servient. airflow. support).stipulate some restriction on use of servient prpty for benefit of dominant prpty.

signed by grantor (2) Areas of ambiguity (a) FSA or easement conveyed? (b) Is easement appurtenant or in gross? Must look to: (i) Language (ii) Purpose/circumstance of grant (iii) Constructional preference is for appurtenant as default b) By estoppel (license that crystallizes into property right of easement) (1) Elements (a) Representation & entry on land (b) Reliance (substantial) and reasonable (c) Substantial investment/improvement (d) Attempted revocation c) Implied from prior use (power lines) (1) Elements (a) Quasi-easement under CL owner (b) Severance (i) Conveyance of Q-D tenement.implied grant (ii) Conveyance of Q-S tenement-implied reservation (c) Existing Apparent (d) Continuous Use (e) Necessary that Use Continues after severance (2) Majority rule for ‘implied reserved easements’.not transferable 2.written memo. Creation a) Express 90% of easements (1) SF must be met.permitted upon strict necessity (a) Other rules on reserved easements by Grantor (i) Restatement – permitted reservation is a factor to consider in ascertaining party intent (ii) English – no implied reserved easements (iii) US minority – same as for implied grants of easement 19 .

then NO prescription-. must use) (b) Progressive.burden of proving permission is on the true owner (3) Presumptions (a) Use of presumptions (i) Reject any use of presumptions (ii) Majority – unexplained use presumed adverse (iii) Minority – unexplained use presumed permissive (b) Two special presumptions 20 .“rsnbl necessity” – met if esmt is beneficial of normal use of land (e. even costly.(3) Can be opted out of if strictly written into deed. at the time of severance (i) How much necessity? (must be at time severance occurred) (a) Majority-strict necessity (if access. d) Implied from necessity (sole purpose of accessing landlocked land) (1) Elements (a) Unity of ownership of D & S estates (b) Severance rendering one parcel landlocked (c) Necessity.g. alt way is costly or difficult) (c) Termination – when no longer a necessity (d) Continued necessity (2) Justification for finding implied easement (a) Public policy – access to land (b) Intent of parties e) By prescription (only easements obtained unilaterally by longstanding use without the consent of the owner of the servient property) (1) Elements (a) Open and notorious (b) Hostile and adverse to owner’s right (c) Acquiescence by owner (NOT permissive though) (d) Continuous & uninterrupted for statutory period (e) Under claim of right (2) Permission – if permission. not merely convenience.

some enlargement permitted but to a lesser degree (b) New use must be consistent with: (i) General conduct that created the easement (ii) PE for pedestrian right of way not upgradeable to motor right of way 4.(i) Unenclosed lands – light use presumed permissive (ii) Initial use pursuant to license – presumed permissive (4) Limits to prescription (a) No negative easement by prescription (5) Divisibility of Easement in Gross (a) Doctrine of Mountjoy’s case – divisible.Old rule said NO.Can one reserve an interest in prpty in a stranger? (1) Rule. Termination – 15 ways to terminate (1) At end of stated term (eg 5 years) 21 . Assignability & Scope a) Appurtenant – auto-assignability b) Easements in Gross (1) Majority – assignable if parties intend (2) Restatement – all assignable c) Issue. but courts now give effect to intent of grantor d) Easements – Scope (1) Basic Rule – prpty esmt in appurtenant can’t be enlarged to serve non-dominant land (Voss) (2) Relocation of easement (a) Old Rule = No (b) New rule = nuanced rule. but must be used as “one stock” f) Implied restrictive reciprocal negative easement (1) Need common grantor & notice (2) A majority of courts imply negative restrictions from a general plan(Sanborn) 3. subject to limitations (3) Enlargement of prescriptive easements (a) PE not frozen into original use.

US case) (5th amendment. actual. frequency intensity of use of servient estate is ok for rsnbl enjoyment of servitude or to accommodate normal development b) Subdivision of dominant land (1) Esmt is appurtenant to each lot. wipes out esmt if the esmt is older than the root title (unless the deed is mentioned in a later recorded deed or esmt is visible much be very specific as to where easement can be found in the land record) (14) destruction of the servient land (15) eminent domain (typically with compensation) ( Preseault v.nor shall private property be taken for public use without just compensation) 5. or inquiry notice) easement extinguished (10) merger of dominant and servient parcels under common ownership (not revived upon severance) (11) estoppel (if creation by estoppel is possible then losing land by estoppel is possible as well) (12) mortgage foreclosure on servient land (foreclosure wipes out junior esmt) (new purchaser gets land as it was at the time of the mortgage) (13) market record title acts (MRTA.(2) When a condition is breached (easement extinguishes upon breach) (3) When purpose of esmt is accomplished (4) When purpose of esmt becomes impossible (access invoving the use of a bridge and the bridge burns down) (5) release executed by holder (owner conveys back to serviant owner) Note must be a written document because it is an interest in land. A Coda on Negative & Other Easements a) Evolving use of servient and/or dominant estate (1) Change in manner. constructive. but S estate can’t be burdened to greater degree than contemplated at time esmt was created (a) 4 lots = rsnbl growth 22 . (6) excessive use or misuse by holder (court of equity could cancel) (7) abandoned by holder (8) prescription – adverse use (interference) by servient owner (9) conveyance of servient land to BFP (no notice to recording of easement.

(b) 40 lots = unrsnbl burden (2) relocation of esmt (a) old rule = Not allowed (b) new rule = nuanced rule. “Real Covenants” – Covenants Enforceable at Law a) real covenant – a promise with respect to use of land that automatically binds successor landowners. know these rules: (i) Majority – burden will run with the land if the covenant is wrapped up in the deed btwn grantor and grantee 23 . some enlargement permitted (b) New use is consistent with: (i) General conduct that created the esmt (ii) PE for pedestrian right of way can’t be used for motor use later C. look to purpose & circumstances of covenant (3) Privity of estate (a) Horizontal privity (K btwn original parties) (b) Vertical privity (K btwn successive parties) (c) Focus – must determine whether burden. that if breached. description. subject to limitations (3) enlargement of prescriptive easements (a) PE not frozen into original use. or both must run (d) 2 Qs to ask (i) Do you need horizontal privity? (a) For the burden to run. gives rise to an action for damages at law GENERALLY make land more profitable because has power over other land in some fashion. benefit. Private Land Use Controls – Servitudes – Covenants Running With the Land 1. b) General Elements for creation & to bind original parties & successors: (1) Formalities (a) Statute of frauds – in writing. signed by Grantor (2) Intent to bind successors (a) Language – “heirs and assigns” bound (b) If language unclear.

(b) Bigelow test – focus is on FMV of PR’s & PE’s land -> if covenant lessens value of PR’s interest in the land. then there’s no horizontal privity) (iv) 2 states-Massachusetts and NV – promisor and promisee must have a mutual simultaneous interest in the prpty (b) for benefit to run: (i) don’t need horizontal privity (ii) Do you need vertical privity? (a) For burden to run (i) “same estate” standard – same estate burdened must be conveyed. if the covenant increases value of PR’s interest int the land.(ii) Minority – no horizontal privity rqd for privity to run (iii) English standard – must b LL-T (if not met. then adverse possessor takes prpty is free from the covenant (b) For benefit to run (i) Relaxed state standard (4) Touch & Concern (a) Clark test – a covenant that runs with the land must affect the legal relations – the advantages and the burdens – of the parties to the covenant. successor no bound if different estate passed to him. if successor didn’t buy from promisor. which on the other hand increases the value of a different interest in the same or a related land? (c) Special rule for benefits in gross 24 . then the burden is deemed to T&C the land. then the benefit is deemed to T&C the land (i) Q to ask is .Does the covenant impose on the one hand a burden upon an interest in land.

don’t need burden or benefit to run (2) Suit btwn original promisee & successor promisor. “Equitable Servitudes” – Covenants Enforceable in Equity a) Elements: (1) formalities (implied) (2) original intent to bind successors (3) Privity of estate other promise holder B. Horizontal privity (proper legal relationship).(i) CL didn’t like idea of burdening land for benefit in gross c) Two types of real covenants (1) Affirmative covenant – obligate landowner to perform some affirmative act concerning his land (requires to do something) (2) Negative covenant – prohibit landowner from performing some act concerning his land (requires not to do something) d) Two ends to every covenant (the law separately analyzes the legal sufficiency of the burden and the benefit) (1) Promisor – promises something that burdens his land (2) Promisee – receives a promise of something that benefits his land e) Four litigation scenarios (1) Suit btwn original parties.burden must run (3) Suit btwn original promisor & successor promisee – benefit must run (4) Suit btwn successor promisor & successor promisee – burden & benefit must run the successor (4) touch and concern the land 3. T & C. can sue under K law. privity Must be in writing. Vertical Privity. Covenants – Creation a) Created by original parties – formalities. intent to bind successors. signed by grantor and accepted by the grantee to comply with the SoF b) Intent that benefit and/or burden of the covenant run to successors of the original parties 25 .

language “heirs and assigns bound” B. look to the purpose and circumstances of the covenant.Every covenant has a burden and a benefit A. or capricious (2) unrsnbly burdens a fundamental Const right (3) imposes unrsnbl restraint on alienation (4) imposes unrsnbl restraint on trade or competition (5) unconscionable 5. language “heirs and assigns bound” B. c) Privity. Is horizontal privity required? 1. but strictly. Is vertical privity required? 4. look to the purpose and circumstances of the covenant. If language is unclear.A.must be grantor-grantee relationship. Covenants – Scope a) Rules of construction (1) If language is ambiguous. or violate pub policy – examples (1) Servitude that’s arbitrary. Majority. court will construe in favor of free enjoyment of prpty & agnst restrictions (2) Court won’t imply restrictions on the use and enjoyment of the land (3) Court must interpret a covenant rsnbly. “covenant shall run with the land” C. If language is unclear. “covenant shall run with the land” C. Covenants – Validity & Enforcement a) Equity provides 3 rqmts in order for covenant to be enforceable (1) Intent that benefit and/or burden of the covenant run to successors of the original parties A. so as not to create unrsnbl construction b) Policy notes (1) Public policy favors recognizing small group homes as families (2) Home-based businesses? Usually found to be residential usage if no 26 . B. unconst. spiteful. (2) Notice on the part of purchasers of original promisor (3) Covenant must touch and concern the land b) Servitudes are invalid if illegal.

court said it would enforce the covenant unless covenant holder’s actions in standing on his covenant were “unconscionable or oppressive. conditions. & restrictions) a) Generally CCRs are valid if reasonable. developer denied a nullification of restrictive covenant with neighboring prpties so he could build a shopping center. grounds for denial was that the purpose of the covenant was not thwarted and the changed conditions of the neighborhood were not such that any benefit from the covenant was dispelled (b) Example 2 – In Rick v.” 7. Common Interest Communities & CCRs (covenants. unconst. West. Covenants – Termination (1) Defective formation (no horizontal or vertical privity. if benefited and burdened prpties merge. court enforced covenant where P sued to have the covenant extinguished so an industrialist could build on the prpty. the change must completely thwart the purpose & eliminate all the benefits of the covenant in order to terminate it (a) Example – In Western Land v. etc. Truskolaski.burden/impact on neighbors (3) Racially restrictive covenants are never enforceable 6. court enforced the covenant b/c there was still benefit to the person seeking its enforcement. no T & C. or violates public policy (3) Covenant is set to expire after a # of years or upon an event (4) When release granted by person benefited by the covenant (need S/F of course) (5) Loss by Eminent Domain (compensation by the government) (6) Merger – like with esmts. no intent to bind successors. then cvnt destroyed (7) Abandonment (occurs when conduct of the party entitled to the benefit demonstrates an intent to relinquish the rights) (8) Condemn (Eminent Domain) (9) Estoppel (10) Prescription (11)Change n neighborhood cndtns.) (2) Servitude that is illegal. Burden is on challenger to show 27 .

unreasonable. Cambridge • Court set aside zoning ordinance as it applied to P’s piece of prpty b/c it was arbitrary & irrational as to P’s prpty. Termination of nonconforming use occurs by: • 28 . giving 3 times when unreasonable (1) Arbitrary (2) Burden outweighs benefit to community (3) Violates public policy D. b) Nahrstedt court said CCRs are void if unreasonable. so can be sold and new owner can continue nonconforming use. having no substantial relation to public health & welfare o The Nonconforming Use • Nonconforming use = Preexisting use that now violates the zoning ordinance Amortization period = window of time given the occupant to fulfill and terminate his investment (or to eliminate the nonconforming use) • • • About ½ states allow amortization regulations Require rsnbl period of amortization (varies from 1 to 30 years) Factors to determine rsnblnss of amortization period: o o o o o Amount invested Number of improvements Public detriment caused by the use Character of the surrounding neighborhood Amount of time needed to “amortize” the investment • • Nonconforming use DOES run with the land. exercise of state’s police power b/c not arbitrary and is substantially relate to public health & welfare Loss of 75% of prpty value alone will not strike down a zoning ordinance • o Nectow v. Intro o Village of Euclid • Zoning ordinance is valid as Const. Legislative Land Use Controls – Zoning 1.

Requires detrimental reliance that was reasonable Must be substantial investment. usually requires: (a) Undue hardship would result to landowner/developer without variance (i) Self inflicted hardship does not count (ii) Efforts to try to ameliorate the hardship are evidence of hardship considered by the court (i..e. but requiring certain conditions be met before grant of the exception. and on what the money has been spent. or Abandonment The Vested Rights Doctrine • A proposed use might be protected if sufficient commitments have been made e. site preparation. plans drawn. perhaps mistaken approval. b) Variance (1) Variance is a violation of a Master Plan (2) To grant a variance. construction begun -> in reliance on existing zoning rqmts that are subsequently changed in a way that invalidates the proposed use Vested rights doctrine varies in practice from jurisdiction to jurisdiction. efforts to sell the land for rsnbl price) 29 .g. but possible in rare situations. procure neighboring land. permits obtained. Flexibility – Variance & Special Exceptions a) Variances vs.• • o Destruction. but the critical factors relate to how much money has been invested in good faith. other good reason for the reliance • • 2. Special Exceptions (1) Variance = authority extended to a landowner to use his property in a manner prohibited by the ordinance (2) Special Exception = allows landowner to put his property to a use which the ordinance expressly permits. • • o Estoppel: • Normally not assertable against the government.

sq ft. must not: (these are “negative criteria”) (i) Cause substantial injury to public health. (5) PUDs (planned unit development) – similar to cluster zones. some states say these are too vague and don’t allow them (4) Cluster zones – technical area restrictions relaxed (setback. etc. then eminent domain may be called for and compensation must be paid (4) Other notes on variances (a) Hardship must relate to the use of the parcel of the land. having relaxed restrictions.involves a reservation for a certain type of zoning to spring up later. cluster zones involve area variations. & (ii) Would not impair the intent and purpose of the zone plan (3) Note – if public health/negative impact is so great as to preclude grant of the variance. while PUDs involve area and use variations 4. (b) Area variances (e. residential. not personal hardship such as personal infirmity. a few states have adopted these laws.g. Flexibility – Zoning Amendments a) Post Euclidean Means for Achieving Flexibility in Zoning (1) conditional zoning – is an agrmt that you won’t use the prpty for certain uses (2) contract zoning – is an actual bilateral agrmt (whereas conditional is unilateral) btwn owner & zoning authority (3) Floating Zone. 3. cmmrcl. etc.(b) Variance. but that is indeterminate at the time of the master plan. etc.) so that developer can give the parcel/neighborhood some character by arranging properties in some irregular way so as perhaps to arrange for interesting landscaping features.g. possibly industrial) (6) So. if granted. Expanding Zoning – Aesthetic Regulation a) Majority of jurisdictions – prohibit zoning ordinances based strictly on 30 . setback rqmts) as opposed to a use variance are more likely to be permissible. but constitutes a deliberate plan of mixed use (e.

poss & non-poss interest in land. court feel less inhibited in admitting the legitimacy of the aesthetic objectives E. etc. Eminent Domain & Takings 1. it ought to be clearly shouldered by the taxpayers at large.formal proceeding whereby the state takes title (ii) inverse condemnation – involves a lawsuit by the private owner alleging the gov’t has taken his prpty and seeking compensation (b) 2 means (i) physical takings – permanent physical occupation (ii) regulatory takings – gov’t has subjected the prpty owner to a reg that substantially deprives the owner of the value of his prpty.” b) Two justification for the taking clause: (1) to protect citizens from state’s ability to single out citizens by depriving them of their prpty (2) fairness – where the public benefits. to pay or to 31 . without just compensation. (2) What do we mean by taking? (a) They occur in 2 contexts (i) formal condemnation . Eminent Domain a) 5th Amendment limits this – “…nor shall private prpty be taken for public use. intangible prpty.aesthetic considerations (1) These regs DO usually pass Const. C/A involves P bringing an inverse condemnation suit and if P wins. covenants. muster b/c they are not drafted strictly on aesthetic considerations (often have economic. other purposes cited) b) For historic zoning and historic preservation legislation. is only const if the gov’t pays just compensation. the line that is crossed is from a valid exercise of police power to -> deprivation of all value. rather than on the private party c) Key Concepts of Eminent Domain (1) What is private property? Personal prpty. then the state has 2 choices.

despite the federal standard. after Midkiff. Supreme Court provides the floor under the Constitution. but immediately transferred from Trust holders to lessees for reasonable payment (b) Case established level of judicial review – rational basis test (c) Thus.abandon the reg (3) What is public use? (a) Old test was ‘physical use test’ – looked at who the end use was. if it was the public. (b) things to take from the case: (i) Prpty does not have to be blighted to be taken (ii) This decision also means that states legislatures can determine what needs justify taking. but the states provide the ceiling 32 . then that was public use and the taking could go forward (i) this changed when railroads came into being and necessitated taking of prpty to go to a common carrier (b) Berman Test – central element is that “if the gov’t has the right to control land for police powers. the state can set stricter rules for eminent domain (iii) Midkiff is the floor – every state must have some sort of restraint that prevents private-to-private transfers that serve no public purpose (iv) So. City of New London (a) Issue: Whether the city’s proposed disposition of nonblighted prpties that just happen to be in the middle of a “comprehensive plan” involving future development qualifies as a “public use” within the meaning of the Takings Clause of the 5th Amendment. thus. it has right to take power for eminent domain” d) Important Cases (1) Midkiff ( Hawaii case) (a) State never handled the property. no more “physical test” or physical handling by state rqd for a taking (2) Kelo v.

Teleprompter Manhattan CATV Corp (a) Issue: whether a minor but permanent physical occupation of an owner’s prpty authorized by the gov’t = a “taking” for which just compensation is due under the 5th & 14th Amendments of the Constitution (b) Rule: Presence of a permanent physical occupation by gov’t action is always a taking (i) But if there is merely a temporary physical occupation.2. Balancing Rules a) Balancing factors to determine whether the gov’t action = a taking: 2 Factors: (1) Legitimacy of the gov’t action (a) Taking is more likely if gov’t physically invades the prpty (b) Less likely a taking if gov’t merely interferes (c) Q to ask is – “Does the reg advance a legit state interest?” -. Physical Occupations & Regulatory Takings a) 2 Categorical Rules regarding phys & reg takings: (1) Categorical Rule 1 .Any permanent physical occupation by the gov’t or authorized by the gov’t is a taking (Loretto) (2) Categorical Rule 2 . Prpty restrictions agnst creating nuisances predates the Const. d) Important Case: (1) Loretto v.Balanced Against -(2) Economic impact 33 .When gov’t exercises its police power to suppress a nuisance it is NOT a taking b) NOTE – Most judges/attorneys divide takings according to a 2-Part Architecture: (1) Physical takings (2) Regulatory takings c) Side-Note on regulation of nuisances: (1) Gov’t has always been able to regulate nuisance w/out it being a taking b/c the right to create a nuisance has never been considered one of the rights in the bundle of rights. then the Court does a Balancing Test under Penn Central 3.

the Court required some (any) nexus btwn the condition placed on the grant and the development c) Second Rule – Rough Proportionality (1) In Dolan. that “rough proportionality” (rsnbl rltnshp) be required btwn the exaction imposed and the impact caused by the development. the Court went further by requiring in addition to a nexus. A Categorical Rule (re: denial of all ecnmcly bnfcl use of land) a) Categorical Rule 3 – Where the state deprives a landowner of ALL economically beneficial use of his land. he must be compensated unless the state can show that the use proscribed by the state reg/state action was merely suppression of nuisance (1) Sub-rules (a) No presumption of validity (b) Burden of proof falls on state to show the reg applies to prpty only to suppress nuisance 6. Regulatory Takings a) 2 Types (1) where reg authorizes a permanent physical occupation (Loretto) (2) where reg denies all economically beneficial use of land (a) b/c this essentially = to a physical taking (b) b/c such deprivation does not = balancing of benefits to public and burden on landowners 5. d) Categorical Rule 4 .(a) Measured by looking at extent of interference with investment-backed expectations b) Other considerations: (1) Diminution in value alone does not = a “taking” (2) Does the reg interfere with the primary expectation concerning use of the parcel? 4.Exactions need a nexus btwn the public interest & the 34 . Exactions a) Exaction = quid pro quo where gov’t grants developer permits in exchange for developer giving up some prpty right or provide some certain good in exchange b) First Rule – Essential Nexus (1) In Nollan.

Nuisance control never rqrs compensation 3. 4. denial of all econ benefit = comp rqd.need nexus btwn pub interest and the condition & must show rough proportionality Covenants vs.condition imposed. Easements Covenants Formalities Intent to bind successors Privity – horizontal and vertical Touch and concern Notice = a defense Equitable servitudes Formalities Intent to bind successors Privity – don’t need horizontal or vertical privity Need T & C Notice = defense 35 . Exaction. & in addition there must be rough proportionality btwn the impact caused by the development and the exaction sought in exchange e) Summary of the 4 Categorical Rules: 1. Phys takings always rqr compensation 2.