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2L REAL PROPERTY ONGOING OUTLINE
I. Introduction to Property
A. What Is Property?
- Lawyer view: set of rights in the land/house; you own that “bundle of things” (estate)—intangible set of rights
- Liens can be on real property, but not personal property
- Most common type of personal property is money
- Legal rules may change re land and chattel but big pic. Basically stays the same
- Inherited Characteristics of land v. chattel: o Each piece of land is unique (bc of the location) o One moveable one isn’t o Land may come w. other things on it o Fixed supply v. not being fixed: Ø Fixed: man made island like a palm tree Ø There is some personal property too hard to re-create (original Picasso) o Minerals use to be real property (land) but now counts as personal property o You can abandon personal property, but you cannot abandon land o Personal property often destructible, land isn’t B. Right to Exclude
- True owners have the right to exclude people from their land; one of the main concerns when it comes to property rights
- Jacque v. Steenberg — builders moving home across owners yard after they exercised their right to exclude them from doing so. o infringing on someone’s property is a type of tort (trespass) o nominal recognizes hard was done, but wasn’t actual Ø as in they where in the same position as they were before
- Ploof v. Putnam —public necessity; life > property.
o Dealing w. right to exclude; case shows right to exclude isn’t absolute, may be
exceptions such as this case (had to throw some of man luggage off to save some passengers; ER services) Category “Thing” Examples Personal property Land and fixtures therto Undevel. Land, land w. house on it Personal property Chattels, moveable tangible objects Car, watch Personal property Intangibles Stocks, bonds Intellectual property (sub.-cat of personal prop.) Work of ownership, invention Gone w. the wind, Wicked, Coca-Cola
- Hitman v. Pacific Air Transport —you can only claim airspace to the area of the sky you are able to use as yours. o However, diff. conclusion if brough during earlier time of ad-coelom (owned from the center of the earth to the heavens) o Think of high rises v. actual housesà explains why air rights function as a functionality than airspace being an absolute right C. Other Rights of Ownership
- Property is “a bundle of rights”—one defining characteristics is to think of the diff. rights they have; they can be divided o Can be divided across time o The right of possession (sometimes called a “possessory” right); o The right of use (sometimes called a “usufructuary” right) o The right of destruction (may often be limited) o The power of alienation —i.e., the right to or transfer ownership to someone else which can be further decomposed into Ø The power to make a gratuitous transfer ( a gift) Ø The power to transfer in exchange for valuable consideration (sometimes called the right to “ sell” or “vend” or the right of “market-alienation) Ø The power to dispose of property owned during life after death by will (sometimes called the testimony right, or the right to “devise”) Ø Whether the power to alienate ownership includes the right to abandon ownership (to alienate the property from oneself w.o. transferring ownership to another) may depend on type of property involved o **always going to be exceptions and limitations
- Ownership v. Possession are two diff. things o Possession and use are two diff. things Ø Might own right to use, but doesn’t own the right to possess o Ownership does not automatically trump possession
II. Possession and Initial Allocation
- assuming a current owner could trace their rights of ownership back through a series of successive vol. transfers from rightful owners (called a chain of title )— first link in that chain must be something other than a transfer from a prior rightful owner.
- CL holds that initial ownership of a heretofore unknown thing goes to the first to possess that thing—first in time is first in right. A. Initial Allocation of Chattels
- Possession has two elements: o Actual physical control o Intent of the party exercising physical dominion/control
- Pierson v. Post (fox case)—fox was originally unknown and was on unpossessed wasteland o The person who would get the office would own it; whoever “occupies” the animal
§ in the case of navigable public water, such use must not interfere w. the concurrent and superior rights of the public to recreation, navigation and commerce o Have natural flow maintained § Gives riparian owner certain protections against acts that would cause the water to flow less freely or to become sustainably deeper or shallower o Free of unreasonable pollution § Where adjoining water is navigable, subj. to superior right of the public for use and transportation of the water o by our law, term of 20 yrs of exclusive uninterrupted enjoyment has been held a conclusive presumption of a grant or right
- Riparian Rights: Theories o Natural flow: prohibits any use or diversion by an upstream owner of the water that materially diminishes or alters the natural flow, even if the downstream owner still has plenty of water for his own needs and therefore suffers no real harm § Said serves to limit use of the water to the extent to the extent reasonably necessary for domestic purposes only § No commercial use or diversion or transportation of the water is permitted - When a riparian owner adjoins navigable public water, the owner’s rights are subject to the superior right of the public to use the water for transportation and commerce o Reasonable use: no unreasonable interreference w. another’s reasonable use § Similar to the law of nuisance § Holds that any kind Domestic or natural use superior to artificial or non-domestic use is superior to any artificial or non-domestic use - No commercial or artificial use can be made at all except insofar as there is more than enough water to facilitate all domestic uses w.o. materially altering the flow/quantity of water o Commercial and artificial uses may be made of the water, but only if there’s enough water to satisfy all domestic uses without material alteration of the water’s flow or quantity. (look for hints, like inadequate water supply) - May use all she reasonable needs for domestic purposes w.o. regard for the rights of others to make nondomestic use
§ Reasonable use analysis applies as bw multiple riparian owners competing for water to make domestic use § Lastly, no riparian owner may completely divert or block the flow of the water, or block access to it. o A riparian owner may capture surface water on his own land for any purpose and regardless of whether doing so causes damage to his neighbor. o Prior appropriation (mostly in western states where water is scare): use rights go to the first riparian owner to make beneficial use of the water whether use is riparian or non- riparian § Priority = superiority (2) Percolating found water/underground water
- Wells, aquifers and other underground reservoirs but not underground streams
- Issues often arise when diff. landowners draw their water from a common natural reservoir o One’s use of the reservoir often results in the temp. or permanent inability of other landowners to access the same source
- Diff. JDXs have adopted diff. theories to govern their respective rights o Absolute ownership theory : each L.O. can make whatever use she wants of underground water beneath her land w.o. regard for harm caused to others § Some JDXs req. at the very least a L.O. cannot use the underground maliciously or in a way that amounts to willful waste o Reasonable use(historical): two different alt. approaches § Historical approach —respective rights of L.O. w. a common underground R. depended largely upon whether the water used for purposes connected w. use of the land - Almost no regard for its effect on others § Or transported away from the land for use somewhere else—liable for harm; modern factors § No malice § No willful waste § Reasonable use (modern): looks a lot like the law of nuisance - Either doesn’t or Less extreme preference for domestic use - Whether water transported away is not a decisive factor - No malice; willful waste o Correlative rights doctrine: limits each L.O. use of the U.R. to his or her proportionate share—rarely seen
III. Found Property
- “Prior possession does grant rights”—Boone
- Armory v. Delamirie (chimney boy and lost jewel)—bc chimney boy had possession and prior possession, jewel had to be given back o Gold smith only had after/later possession (once boy gave it to him) o Chimney boy, w. having the possession first has the right over everyone except true owner (not in case)
- If found abandoned, then no rights to prove true owneràso gotta go hard to prove
- Lost—unintentionally, unknowingly
- Mislaid—placed it there then walked away/forgot o Owner of the premise gets superior right except to true owner
IV. Adverse Possession
- Elements of AP: 1) Hostile (perhaps under a claim of right) 2) Exclusive; 3) Open and notorious 4) Actual; And 5) continuous for the requisite statutory period
- Rationale: awarding productive use; society getting benefit of the use
- Owner is “sleeping on his rights”
- Doctrine of repose: after a certain amount of time, better to leave things as they are than to go back and to change them (think of Boon mom neighborhood ex.) o Think of two diff. types of AP: Ø If on someone’s land and doing it on purpose v. AP who doesn’t have a clue (think land is theirs by GF)
- Filing suit stops AP clock from ticking
- Making use of the land so it isn’t exclusive
- giving them “permission” to use land technically doesn’t interrupt hostility
- Can’t aversely possess from the govt o Govt is the ppl, which includes you; cannot adversely possess from yourself.
- In GA, have to possess/enter into it w. GF o If find out after it doesn’t matter bc went into originally w. GF—this is the minority rule
- GA has two types of Quiet titles:
- one relating only to one deed/ saying a deed already filed and has a prob. w/ it and just file to fix it
- or quiet title against all potential claims
- CL: livery of seisin A. Actual Possession (and Exclusive)
- In the manner that reflects the possessor’s dominion and control
- Tieu v. Morgan —“actual use/possession” of the strip of land used by Ds for their daycare (the adverse possessors) o Use usually gains adverse possessor the title
o Ds gave Ps permission to use the land—thus was acting like the true owner of the disputed land o Exclusive primarily means not sharing land w. true owner; not to exclude everyone from the property o Case of mistake, rather than knowingly trespassing o D actually gained title in 2008, not 2011 when suit filedà bc title actually vests when all elements are basically satisfied à once title vests doesn’t matter what they do in the future
- Can’t aversely possess from the govt o Govt is the ppl, which includes you; cannot adversely possess from yourself. B. Continuous
- “Continuous for a period of time” o Period of time? = looks to how it takes to eject a trespasser
- Doesn’t mean you always have to be there; “ as a true owner would use the property”
- Continuous and actual often described together bc if one satisfied, such as actual possession 9/10 continuous is satisfied too, but not always
- Must meet SOL of JDX basically
- For some cts., such as Mannillo v. Gorski holds that minor encroachments are not open and notorious w.o. actual knowledge on the part of the title owner.
- Sill has some SOL exceptions, such as tolling for certain reasons: (tolling, see below) o Owner not of age yet o Incapacities (besides minorities) o Sometimes incarceration o Military services abroad (sometimes)
- Only going to toll SOL if condition existed at the time (beginning of possession)à if so tolled
- Have to meet all reqs. For it to qualify as AP, then time starts to run C. Hostility and Intent
- Subjective v. objective view o Subjective is what the adverse possessor thinks Ø Aggressive trespasser—doing knowingly Ø Good faith—mistaken belief in ownership o Objective is what a reasonable person would…
- Hostility = nonpermissive/w.o. permission of the owner o May have state of mind rqs.
- If true owner granted permission it isn’t hostile o permissive possession can become hostile if the possessor's acts of possession are sufficient to send a clear enough signal that the continued possession is hostile and without regard to the true owner's previous grant of permission— Majority
- The majority of American jurisdictions, and nearly all reputable scholars, have recognized this and have concluded that the adverse possessor's state of mind --
entry must be "made with the clear and unequivocal intent to invade and challenge the right of the holder of the adverse possession and to retake possession." Rosencrantz o some limited support for this view in the case law, but the better view is: the mere granting of permission, if unacknowledged by the possessor, would not be sufficient to convert the possessor's continued possession from hostile to permissive G. Tolling
- There are certain circumstances under which the statutory period will be "tolled" even though the claimant may have possession that satisfies all of the other elements of the adverse possession standard. o Owner not of age yet o Incapacities (besides minorities) o Sometimes incarceration o Military services abroad (sometimes)
- "Disabilities" statutes either prevent the statute from beginning to run until the disability is removed, or by allowing the statutory period to run, but giving the owner a specified number of years after the disability is removed in which to bring their cause of action. H. Color of Title
- Claim of title, an intent to use land as one’s own, is distinct from color of title, which describes taking possession under a defective instrument (like a deed based on a mistaken land survey)
- Title seems less effective than what it appears to be
- “color” of title b/c they don’t actually have title
- Can affect what happens in two ways:
- Some states (CA) if AP goes into possession under color of title, statute may be shorted from the reg. SOL needed under AP
- Met all statute elements and statute time, what boundaries will they own? § Title AP gets is defined by where they actually possessed the land, not like the entire Arce (in general)
- But if entered into w/ color of title, AP is entitled to entire parcel of land basically I. Adverse Possession of Chattels/Personal Property
- Think Cyprus church case — replevin; met time; actively looking for them; etc.
V. Real Property Contracts
A. Contracts in the Sale of Land
- Broker and seller in a K; seller and buyer also in a K for land of sale o Three types of K for sale of land: Ø Earnest money agreement Ø Land of sale agreement Ø Land installment agreement (owner goes into poss. But last about 30 yrs or so) o Agent of buyer has a fiduciary duty to seller bc of how K is set up bw broker and seller (built in clause for if buyer gets an agent too; if soà spilt commission) o But buyer K will mess it up, so normally got to work it into one of the 3 agreements
- Express Terms of the SoF ¨ Writing evidencing the agreement ¨ Containing the agreement essential terms; and ¨ Which is signed by the party to be charged ¨ SN: No req. there be a K at all; one may convey title w.o. K Ø if no K, no req. under the SoF that the K must be written ¨ Stat. merely reqs. Some written memorandum of the K; a ltr, note or set of escrow instruct. May be qualify by the party to be charged and contain essential terms ¨ The K’s essential terms may vary, But, they generally include: Ø Traditional Contract Formation Issues; ¨ Property Description Ø Doesn’t necessarily need have a legal description; Ø Just unambiguous and cannot be confused w. other property ¨ Parties; Ø Doesn’t necessarily req. Formal, complete names § one cannot confuse the party w. anyone else § Seller and buyer are. Not suff.; but owner might be ¨ Intent to Obligate the Parties to Buy and Sell; ¨ Price ; Ø Whether price is req. is based on JDX Ø Many cts. Presume party intended a reasonable price if it isn’t mention ¨ Payment Terms; Ø Usually express how the buyer is to pay the seller Ø Sometimes might omit this term, unless the parties agree otherwise, ct. will presume terms of payment Ø For most part, RE esp. w residential properties deal w 3rd^ party financial help Ø Buyer traditionally places GF deposition in escrow w. broker or seller’s atty
B. Equitable Conversion
- When through equity, is a particular’s party interest converted to a different kind of interest
- Conversion = when that change happens in the middle
- Real property interest will be in the buyer
- Although specific performance rarely available in regular K cases, S.P. dealing w. sale of land always has S.P available and is used
- “equity looks on that as done, which ought to have been done” o Treat it as being done (in equity) Ø Which is why we say buyer has real property interest now, although they do not have legal title yet.
- Traditionally, covenants in a contract of sale merge into the deed at closing. A deed executed in pursuance of a contract for the conveyances of real property supersedes and merges all prior negotiations or contracts relating to it. o However, under the modern trend, merger does not apply to matters that are collateral to or not mentioned in the deed. The majority rule under the modern trend is that promises to make repairs are "collateral" and survive acceptance of the deed.
- Who has title during executory period? § Equitable conversion— treats the buyer as owner for certain purposes prior to closing - Based on the idea that bc the K is specifically performable by either party, equity regards “as done that which ought to be done “ o Basically meaning buyer bears the ROL - Equitable conversion is only a default rule - Nearly all sales Ks include a ROL clause, which expressly assigns the ROL, usually to the seller, in the event of damage or destruction prior to the close of escrow § Uniform Vendor and Purchaser Risk Act, the risk of loss is placed on the seller in the event the subject property is destroyed prior to closing, through no fault of either party, unless the legal title or possession of the property has passed to the buyer - If the jurisdiction has adopted the modern Uniform Vendor and Purchaser Risk of Loss Act, the purchaser is deemed the true owner of the land (and thus bears the risk of loss) only as of the date of the closing or the date the purchaser goes into possession of the land, whichever comes first.
- Brush Grocery Kart v. Sure Fine Market —dispute over what purchase price would be under the option; and who is responsible for damages for the fire o CL: whoever has the real property interest bears the loss (cts. Don’t really like this anymore)
Ø Slim majority of states place risk of loss on the vendee from the moment of contraction, on the rationale that once and equitable conversion takes place, the vendee must be treated as owner for all purposes o Handful of other states: follow “Massachusetts Rule,”—under which the seller continues to bear the risk until actual transfer of the title, absent an express agreement to the contrary o Person in possession was/is person who could’ve prevented the fire (one of the modern twists on the rule) o In absence of a right of possession, a vendee of real property that suffers a material casualty loss during the executory period of the K, through no fault of his own, must be permitted to rescind and recover any payments he had already made
- Grant v. Kahn —if lien attached before sale, then it could’ve bc Ganz would’ve still had real property interest and legal title still o If lien did attach and Kahn had forced sale, Grant could’ve sued Ganz o If contingency presentàother party has to perform; o If not present, then doesn’t have to perform Ø Make SP not available yet o Contingency protected the buyer (Grant) Ø Can only be waived by that one party it protects and K will still be enforceable Ø Since he can waive it and in ct., he can get SPà equitable title passed through equitable conversion
- Equitable conversion occurs when it is enforceable in equity under SP o May have conditions that must be met, but vast majority protects buyer, meaning buyer can waive them Ø Can have some to protect seller, but would have to waive them before SP available
- Greenspan v. Caison — SoF; had the description of the land but was insuff. So unenforceable at trial; judge said they erred and reversed the judgment o Est. need adequate description of the land
- Johnson v. Curto — if there is SoF, can we get around it? Appraisal price was slightly lower than selling price, still orally agreed to the 110k sale but backed out near closing; sellers relisted house at 100k and sold for 94k after commission to broker o If took buyer to ct., could’ve had SP against them for the 110k o Then sued Johnson for damages Ø “loss of bargain” price supposed to pay (110k) and the fair market value at time of (breach) § “FMV” ct. normally says it is the price it sold as § SoF not applicable here bc of Johnsons part performance Ø But what if FMV higher? § Then there is no loss of bargain; no general damages
¨ Each of there’s are available to a non-defaulting buyer or seller D. Damages generally § Two most frequently addressed damages are: compensatory (loss of bargain) and liquidated damages (agreed to by the parties) § However, in some circumstances, non-defaulting party may also recover reliance damages § Seller cannot provide good title to buyer, then what are the damages?
- American rule: loss of bargain damages
- English rule: recission ¨ w/ recession, taking parties to put them in the position they were before the k ¨ but if seller acted under BF, other damages may be available (in both views) § If buyer breaches, seller can still get equitable relief through the ct., why?
- Mutuality ¨ Because SP will be available to buyer ¨ We’re going to make it available to seller as well
- Real estate market too unpredictable o Normally just find another buyer, if sells for lower price, seeks diff. from original buyers as damages 1) Compensatory Damages ¨ Goal is to put NDP in same position they would’ve been in if both parties had performed K Ø Seller : Typically is K price – Property Market Val. @ time of breach § If resale for some amountà that’s the FMV § for the seller, amount is determined when one subtracts the MC from the K price § for a seller, comp. damages is an attractive remedy when the K price is higher than the property’s fair MV @ time of breach § same reasoning process applies when the contract price exceeds the market value at both the time the parties enter into the contract and at the time of the breach—from 3- 1 - 1 - 1 ex. § seller would not find compensatory damages to be an appropriate remedy when the market price is higher than the contract price — bc technically would be no loss/damages and would be worth more, so technically has a gain, not a loss Ø for buyer : MV – K price § thus buyer compensatory damages an attractive remedy only when the K price is lower that the fair MV @ time of breach § compare what happens to the buyer when the contract price exceeds the fair market value at the time of the seller's breach
- technically buyer wouldn’t had suffered any loss—so comp. damages wouldn’t work
2) Liquidated damages ¨ damages agreed by the parties to a K when they include a provision stating a sum certain or a formula for determining the amount Ø ex. Marketing contracts typically provide for the seller to be able to retain as liquidated damages all deposits the buyer actually makes under the contract or all deposits the buyer is required to make pursuant to the contract. § In the second option, the seller’s liquidated damages would include both the deposits the buyer made and any additional deposits the buyer had not yet made but which the buyer was obligated to make under the agreement ¨ best suited for a seller, bc Ø Actual damages for the benefit of the bargain only benefit the seller when the K price is higher than the MC; Ø SP often is inadequate w.o. the buyer’s retaining a loan commitment through the litigation process; and Ø Terminating the K leaves the seller desiring compensation for “loss opportunity” ¨ By contrast, liquidated damages as a remedy allows the seller to collect the agreed to amount of damages and move on to another sale, often w.o. significant delay ¨ NOTE, however, generally, the effect of a valid provision for liquidated damages precludes recovering actual damages, unless the contract specifically provides the non-breaching seller has the option to recover either actual damages or liquidated damages. ¨ To enforce a liquidated damage, a liquidated damages provision: Ø Must not be designed as a penalty to the breaching party Ø Parties must have agreed in arms length negotiations that they were unable at the time of the contracting to determine a reasonable method of ascertaining the non-defaulting party’s actual damages in the event of a breach; and Ø Once the breach has occurred, the liquidated sum must reasonably relate to the actual loss suffered 3) Reliance damages ¨ Include title costs, atty fee’s, surveyor’s fees, broker’s commissions, financing fees, moving expenses, etc. ¨ **Usually only available when the parties foresaw them or reasonably contemplated them as possible damages in the event of a breach of their K
- Specific Performance** ¨ Best suited for a buyer who wants to force the recalcitrant seller to convey title ¨ It is an equitable remedy
Ø But if a date is included and any party pushes it back the closing, the other party can make it a time of the essence thing w. the new date
- SN: can make explicit promises in the deed/title too
- What is Marketable title? ¨ Refers to the title that a reasonably prudent buyer would accept under the circumstances Ø Buyer need not unwittingly purchase a lawsuit ¨ Title not marketable if: Ø Reasonable likelihood of future litigation Ø Debatable ques. Re: validity, extent of title § **mere trivial defects or remote possibilities of litigation do not breach the IWMT - Possibilities v. probability: ¨ Mere possibility does not impair marketable title, but the probability of future litigation will amount to a breach of implied warranty of marketable title
- Specific Situations: IWMT Breached: ¨ Generally any encumbrances on title will render it unmarketable Ø Mortgages Ø judgment liens § some servitudes - Real covenants/equitable servitudes - Easement § May also include any unexpired, enforceable leases on the property ¨ Zoning regulations: Ø Prevailing rule: mere existence of zoning regulations affecting property § Will not render title unmarketable § Often accepted by the buyer in the K Ø Existing zoning violations on the property § Violate IWMT bc it breeds litigation ¨ Adverse Possession and Marketable Title: Ø Minority : title obtained by AP is unmarketable unless seller bring QT and est. title by judicial decree Ø Majority : title obtained by AP may be marketable, seller must satisfy his obligation to produce marketable title by either: § File a QT action against record owner § Or may bring to bear enough evidence to convince the buyer or the ct. his title by AP is good - If buyer sues to rescind, seller bears burden title by AP is good **title by AP alone is never marketable if K calls for marketable record title, unless seller files QT action, etc ¨ physical defects in the property are not considered defects in the title
VI. Deeds and Title Assurances
- What is in the deed? ¨ A deed is (1) A writing that is the writing signed by the grantor, (2) that is necessary under the SoF, (3) to transfer property from one living person to another ( inter vivios) Ø will: estate of dead personà living person ¨ May be no promises in the deed; “you get whatever rights I have” (quitclaim deed) ¨ “There may be convenance of title in the deed”; may give all or may limit them (general warranty/limited special) Ø Normally give all convenance
- Once deed received/closing due, can only sue for/on promises in the covenant of title , not things from IWMT that didn’t transfer
- mere creating of a deed generally not enough to convey title; you need delivery, intent and acceptance
- deed is a single use document that is used to transfer title; need a new deed for every transfer
- deed doesn’t need consideration reqs., so you technically can “gift” land ¨ must meet JDX reqs. Though (too) for deed to be recorded in that county
- What is conveyed by the deed? ¨ Presumption that deed transfers fee simple absolute Ø But can describe in a deed you are transferring less Ø Exceptions and reservations can be conveyed but not always used correctly § Exception: “except” is include, basically saying keeping art of the land - May reference prior deeds/transfer to show dif. Of what’s being kept basically § Reservation: grantor Is reserving certain rights or interest in the land, but not the actual land ¨ In CL : the grantor and grantee would physically go to the land, and grantor would hand over some dirt to grantee in front of the public (livery of seisin) Ø In contrast, written conveyances called “charters”—were treated w. skepticism; considered inferior form of evidence bc of the risk of forgery ¨ Deeds convey presently : no ascertainable grantee in a deed for a present interest may result in the deed being invalid and ineffective Ø Conveyance lang.. That uses word “will” as the very may be interpreted as being testamentary intent instead of a present intent to transfer § need to know who grantee actually is ¨ Land Descriptions ( Walters v. Tucker )— when there is no inconsistency on the face of a deed and on application of the description to the ground, no inconsistency appears, parol evidence is not admissible to show that the
